Sean Barrett (Independent) | Oireachtas source

I move recommendation No. 5:

In page 22, between lines 36 and 37, to insert the following subsection:
?(2) This section shall not come into effect until the risk equalisation scheme (within the definition of the Health Insurance Act 1994) is under the direction of the Central Bank of Ireland and fully compliant with the Central Bank of Ireland?s regulations.?.

My concern in putting down this recommendation is that this area has been in a state of disarray for some time.

Ireland resisted before the European Court of Justice the transfer of the regulation of health insurance as a financial service to the Financial Regulator. I gather the transfer has happened very recently. The Minister may have seen the reports that a completely different version of risk equalisation was proposed by both VHI and the Department when they went to see the regulator. My concern is that the previous system was overturned by a unanimous decision of the Supreme Court. The theory is that risk equalisation should help older people to acquire health insurance, but even that is disputed as is the extent to which the payments exist.

The key evidence is in the Milliman report which found that VHI was far too concerned with telling everybody how many older members it had and far too little concerned about getting value for money. The report sets out that a treatment which would require under best practice 3.1 days in hospital was requiring 11.6 days. Susan Mitchell's recent material published in The Sunday Business Poston the price of drugs is also relevant. Are we financing high-cost producers and inefficiencies in a sector in which staffing doubled between the 1980s and the peak or is there a genuine risk equalisation payment? Staff numbers increased from 55,000 to 110,000. The Minister for Public Expenditure and Reform, Deputy Brendan Howlin, and the Minister for Health, Deputy James Reilly, are having great difficulty in reducing staff numbers to 103,000.

I put the marker down that we need to know what constitutes genuine risk equalisation in the field rather than to be told what it will take to keep VHI going. I have therefore proposed that the section should not take effect until a risk equalisation scheme has been decided by the Financial Regulator and the Central Bank of Ireland. I gather that Mr. Elderfield is taking an interest in it. The previous system of risk equalisation was a source of cost inflation and damage to the Exchequer and appeared to be designed to protect a State health insurance company while damaging its competitors. We must find out what exactly Mr. Elderfield makes of a risk equalisation scheme before we endorse what is going on now given that it has been exposed to so much criticism, in particular in the Milliman report.