Sean Barrett (Independent) | Oireachtas source

I welcome the Minister to the House. The theme of our debate on this issue was continued in The Irish Times summary yesterday on the McLoughlin report which urged health care insurers to query bills. The Minister has said this so many times. This is a sector in respect of which premiums have increased rapidly. The Minister for Finance, Deputy Noonan, stated here last week that premiums had increased by 86% over a four-year period. The Minister proposes to go in the opposite direction and provide universal health insurance. Are we in this regard applying for a further derogation from the European Court decision? The Minister will be aware that there was a substantial difference of opinion at the beginning of this year between the Department and the VHI in regard to risk equalisation, as reported on 18 February last in The Irish Times. The issue of whether the VHI would receive a capital injection and whether we could satisfy the competition requirements of Europe by the end of this year were to be addressed. Reports published in the past few weeks indicate that a further derogation is being sought. It would be a pity if that were the case.

The Minister is correct in what he is doing to tackle the problem which he inherited. The insurance companies should have been told ten years ago to tackle the cost base. The cost of health insurance in Ireland should not be, as stated in the Milliman report, based on unnecessary admissions. According to that report, average lengths of stay here are substantially in excess of international averages. I know the Minister shares the concerns expressed by Senator Colm Burke in relation to the high cost of drugs in Ireland. Is the whole system wrong in economic terms and are we now trying to correct it? What will happen to the tax reliefs referred to in section 2? The Minister for Finance gave a strong indication that as the cost of providing tax relief in this area has escalated to €500 million and is now heading towards €1 billion, it will be necessary to put in place a cap in this regard.

We need to move to a situation whereby competing health insurers are in a position to offer lower premiums because having implemented the recommendations of the Milliman report, the Minister's advice and what was recommended in the McLoughlin report, there are no longer unnecessary admissions or lengthy stays in hospitals and they have moved to the DRG system described by the Minister. During the Second Stage debate I asked the Minister if there was scope for the Health Information and Quality Authority to set policy in regard to the length of time in respect of treatments and whether expensive hospital admissions are required, thereby eventually moving as many as possible of such treatments to the general practitioner system. We have discussed in other forums the deskilling of GPs near hospitals because it is easier for them to refer patients on to consultants rather than treat them.

I welcome the Minister's proposal to move from an unsatisfactory inherited model to a new model. We were supposed to have a competitive health insurance market in 1994 but it still remains distorted and prices remain high. I appreciate the Minister's concerns in that regard. In The Irish Times article mentioned earlier, Mr. John McManus stated: "Reilly's optimism on VHI at variance with the facts." I appreciate that the Minister has tried to tackle this problem, particularly in the past year. I welcome his decision to have further reviews of the VHI undertaken by the Milliman and Mr. McLoughlin groups. It is important we confront the cost problem in this sector. I suppose that is what the troika is saying in the background. I appreciate the difficulties and problems this creates for the Minister, including the revelations of recent times in regard to voluntary organisations topping up pay and increasing their cost base.

As stated in the Milliman report the obsession of the incumbent and previous monopoly insurance company with its older client numbers has diverted its attention from a least cost approach. Milliman referred in the report to his being unable to find much interest in cost effectiveness but a great deal of data on older people. Last week, I asked the Minister the reason we do not have open enrolment, which means no patient is required to state his or her age. The insurer would then be admitting people. To make the risk equalisation payments we have to know people's age. This encourages the high cost model we are dealing with today. Could the issue regarding older people be tackled in any other way? For example, could the VHI when it reaches a particular quota, refer people to one of the competing firms? Could lists of older people be supplied to competing firms? I accept the Minister's point that while we have open enrolment, community rating and lifetime cover, by skilful marketing the new entrants have only 6% of old people even though their market share is substantially in excess of that.

Normally in a market an attempt is made to ensure that people swap and shift. They do this in response to a price saving or they can decide to stay. In subsidising them to stay we will never get the type of shift required either in the cost curve which the Minister desires or in market share. The health insurance ombudsman could deal with people who have been refused cover by the new entrants. We need, particularly in the environment about which the Minister spoke last week, to move to a situation whereby old and young people can gain by shopping around for alternative suppliers of health insurance.

The protection given to VHI, which the European Court and Central Bank have criticised, and I gather, if newspaper reports are true, is to continue for another year is obstructing what we are trying to do. There has been a tradition in the Department of trying to protect the VHI, using old people as the excuse for doing so. If we were concerned about the insuring of old people and their refusal of cover we could have accomplished that goal in other ways. We have ended up with a system that is now losing members, has a large increase in costs and is diverting the Minister and us away from the goal of universal health insurance.

In opposing this section I am seeking a change in the definition of "net premium" to take account of full costs rather than the cost when taxes have been written down. We need to get to a situation whereby insurance companies in competing with each other act on behalf of the consumer and the wider society by negotiating much better deals from health service providers.

I assure the Minister of any support we can give him from these benches in achieving his goal. The cost base of hospitals and the health service in Ireland needs to be tackled and the Minister does not face a very popular task in doing so. However, it is necessary because otherwise this situation would have got out of control as the Minister for Finance, Deputy Noonan, said here last week.