Seanad debates

Tuesday, 7 July 2009

Health Insurance (Miscellaneous Provisions) Bill 2008: Committee and Remaining Stages

 

SECTION 1.

12:00 pm

Photo of Pat MoylanPat Moylan (Fianna Fail)
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Amendment No. 1 has been ruled out of order as it is in conflict with the principle of the Bill.

Amendment No. 1 not moved.

Question, "That section 1 stand part of the Bill," put and declared carried.

Sections 2 to 5, inclusive, agreed to.

SECTION 6.

Photo of Frances FitzgeraldFrances Fitzgerald (Fine Gael)
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I move amendment No. 2:

In page 7, to delete lines 12 to 15.

It is strange that amendment No. 1 was not allowed because it was deemed to be in conflict with the principle of the Bill. There was much discussion about that issue on Second Stage and I thought it would be allowed.

Section 6 prevents any sale or promotion for any period shorter than 31 days. I imagine that the thinking behind this is the need to protect consumers, but we in Fine Gael worry that this provision stifles competition and only serves to benefit the insurer with the deepest pockets, which can sustain a sale for this amount of time. It could be said this constitutes interference in normal commercial practice. I do not think this provision applies in any other financial services market in Ireland and I would like the Minister to explain why this period of 31 days is specified and what is the justification for it.

It could be argued that the section stifles competition. I can certainly see the intention, but does it not constitute interference in normal commercial practice? Why is it necessary in this area when we do not protect people in other financial markets?

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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I do not think the provision stifles competition, nor does it interfere with it. In fact, it does the opposite, and protects the consumer, who is given ample opportunity to check out the product. I must point out that in no other market do we have community rating. That is the current position.

To provide further clarification, the primary purpose of the clause is to support the effective operation of community-rated insurance as it prevents insurance companies from introducing products that are available only to specific consumers and not to the broader public. Removing the subsection to facilitate such practice would not be in the best interests of the consumer.

If a product were introduced in the absence of the 31-day limit, or even a shorter limit, the sharks in the industry would be first in and the ordinary consumer would not have the opportunity to be aware of the product or its benefits. I again underline the fact that there is no other market that has community rating and the provision is there to provide protection in this regard.

Photo of Liam TwomeyLiam Twomey (Fine Gael)
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Is the Minister of State saying the 31-day limit is in place to prevent people from being misled?

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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Yes.

Photo of Liam TwomeyLiam Twomey (Fine Gael)
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What is the normal timespan for most financial products?

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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We cannot compare most financial products because we are talking about a community-rated product. The same does not apply to other financial products, and that is why the 31-day limit is there. The effect is the opposite to what Senator Fitzgerald suggested. It is there to protect the consumer and ensure that the product is properly marketed and that the public become aware of it, rather than particular segments who deal specifically in that area. It would not apply to any other financial product but only this species of product in a community-rated market.

Amendment put and declared lost.

Section 6 agreed to.

Section 7 agreed to.

SECTION 8.

Photo of Frances FitzgeraldFrances Fitzgerald (Fine Gael)
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I move amendment No. 3:

In page 10, line 46 to delete "10" and substitute "3".

This section raises similar issues. Section 8 requires that all new products be submitted to the Health Insurance Authority, HIA, ten days prior to their being launched onto the market. When the Bill was initiated this was 20 days. I welcome the fact that it has been changed to ten, and clearly there has been some compromise from the Minister in this regard. I take the Minister of State's point about the context of community rating, but one could again say that this provision stifles competition within the market and the opportunity for competitors to react to market conditions.

This provision would effectively give an insurer a ten-day lead time in which to sell a product exclusively without being matched by a competitor. Is this not an impediment to a normal competitive environment? Is there any rationale or consumer-based justification for putting it in? Our concerns in this regard are similar to those about section 6, namely, that it stifles competition and prevents other insurers from reacting to a product and thereby give the consumer more choice. I recognise, however, that the time has been changed from 20 to ten days.

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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I understand the Senator's point of view. Again, this provision is to protect the consumer, and it is also intended to provide protection to insurers. The provider can go to the authority to make it aware of a product. There have been examples in the past in which a provider introduced a product without fully researching its compatibility with existing legislation and it turned out to be in conflict with existing legislation. One that comes to mind is the cash plans introduced by a certain group some time ago, which contravened existing legislation. Thus, it is also an attempt to provide a certain level of security for providers.

The relevant section provides that the insurer shall submit samples of proposed contracts to the HIA ten days in advance of offering them. When the Bill was initially published, the specified period was 20 days. Having considered representations from the industry and from Opposition Members and colleagues, including Deputy Reilly, the period was reduced from 20 days to ten.

The amendment proposed for this section by Senator Fitzgerald would reduce this period to three working days. Given the time necessary to enable the authority to consider any proposed contracts and to reply, if necessary, the proposed timeframe is not feasible. Perhaps this should have been better explained on Second Stage. The provision offers certain protections to providers to ensure their offerings are compatible with existing legislation.

Photo of Liam TwomeyLiam Twomey (Fine Gael)
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Will the Minister of State confirm that no change has been made to the minimum requirements for health insurance?

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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That is correct.

Photo of Liam TwomeyLiam Twomey (Fine Gael)
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Will the Minister of State also confirm there are no plans to change the minimum requirements for health insurance plans?

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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There is no attempt to make any change in that regard. The purpose of these provisions is purely to assign a timeframe. This was initially set at 20 days and has since been reduced to ten. The thinking of the Department in this respect was to ensure there was space to allow any provider entering the market to explain its product, check out the possibilities and ensure there is no conflict with existing legislation. I referred to the instance when cash plans were proposed and had to be withdrawn from the market. To be fair, this created unnecessary public relations upheaval for the company involved. We are seeking to ensure that does not recur.

Amendment, by leave, withdrawn.

Section 8 agreed to.

SECTION 9.

Photo of Frances FitzgeraldFrances Fitzgerald (Fine Gael)
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I move amendment No. 4:

In page 12, line 33, to delete "person." and substitute the following:

"person,

where that information is held by the health insurance business in respect of insured persons.".

This deals with the obligation to make information returns. Section 9 requires significant information to be provided to the Health Insurance Authority, including personal public service numbers. Insurance companies may not be in possession of all relevant information for existing contracts because this was not required in the past. Information requested should only relate to contracts effected from the date of the signing of the legislation as opposed to the enactment date. Exact details of information required will be specified and insurers will only be required to commence collecting such information at the renewal of existing policies or inception of new policies. I am interested in the Minister of State's view on this amendment.

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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This amendment would give insurers an unnecessary level of discretion in the collection and provision of information. The latitude proposed by the Senator is not considered appropriate. Subsection (1) already provides an undertaking to make all reasonable efforts to obtain the information. In other words, we are asking providers to do only what is reasonable. This strikes an appropriate balance.

The data requirements in respect of personal public service numbers have been discussed with the Data Protection Commissioner. The obligations under this legislation are much more restricted and less onerous than those contained in the Bill as initially published. The Revenue Commissioners require personal public service numbers to assign tax credits. As such, the steps proposed in the legislation are not unreasonable. I cannot accept the amendment.

Amendment, by leave, withdrawn.

Photo of Pat MoylanPat Moylan (Fianna Fail)
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Amendment No. 5 is out of order as it is merely declaratory in nature.

Amendment No. 5 not moved.

Photo of Frances FitzgeraldFrances Fitzgerald (Fine Gael)
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I move amendment No. 6:

In page 16, to delete lines 7 to 11.

This amendment was discussed in considerable detail in the Dáil. Section 7E(3), as inserted by section 9, allows the Minister to appoint a person whom he or she considers to be competent and qualified to advise and consult the Minister on ministerial functions under this section. In her Second Stage speech, the Minister, Deputy Harney, outlined how much expert advice and support was made available to her in devising the new levy. Given the current fiscal position and the number of advisers currently in place in the Department, why is it necessary to build into legislation the need for yet another special adviser? The Minister referred in the Dáil to the actuarial assessments that had to be made and the complexities arising from the court rulings relating to community rating. I take her point in this regard. However, it is surprising, given the amount of work the Department has had to do in this area and the amount of discussions that have taken place in committee, that this provision is now proposed. Senator Feeney referred to the lengthy discussions that took place in committee in respect of the VHI and community rating. I am puzzled that it is considered necessary to appoint yet another special adviser and that the expertise in the Department of Health and Children is not adequate to deal with the demands that may emerge.

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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The Senator referred to the number of advisers available to Ministers. I am reminded of Deputy Burton's comment in the other House that Ministers of State are sent out at night when everybody else has gone to bed. That is my brief tonight.

Photo of Liam TwomeyLiam Twomey (Fine Gael)
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The Minister, Deputy Harney, must be gone to bed.

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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It is important to differentiate between actuarial advisers and general advisers. This provision relates to very specific advice. The Minister has made the point that rather than having actuaries on the payroll permanently, the best advice is to bring in expertise as required. Section 7E, as inserted by section 9, provides for the evaluation and analysis of information returns, the compilation of the authority's related report and the Minister's consideration of such reports. Amendment No. 6 proposes to delete section 7E(3) which provides for the Minister to avail of expert advice in considering the authority's report. Under the subsection, the Minister will be able to avail of specific advice rather than having a person in situ within the Department waiting for that advice to be requested. This provision relates to a very specific issue in respect of which it is necessary to take the advice of competent and qualified persons. We are talking about very complex calculations in regard to tax credits and the nature of the process involved in any reviews of the credits and levies. The Minister is required under the Bill to evaluate a report from the Health Insurance Authority of actuarial expertise and to advise the Government thereon. This is a specialist area requiring the engaging of experts to advise on technical issues relating to health insurance. In that context, I cannot accept the amendment. All the Minister's predecessors since 1994 considered it necessary to rely on such advice.

Photo of Liam TwomeyLiam Twomey (Fine Gael)
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What was the situation prior to this legislation? The Minister has been getting bucketloads of advice on risk equalisation and community rating and the Government has been up and down to the High Court for the past five years dealing with the issue. It is difficult to comprehend the necessity for the inclusion of this subsection. I do not wish to tax the Minister of State. As he said, senior Ministers need to be tucked up in bed at this time of night.

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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I understand the Minister took the advice of the Senator some time ago when he asked about value for money. Rather than having a person on the payroll 52 weeks of the year, advisers are brought in to provide the specialised expertise required in respect of the authority's report. The Minister took advice from the Opposition and from her colleagues to ensure there is value for money in the process. It is better not to have people sitting idly by waiting for a report.

Photo of Frances FitzgeraldFrances Fitzgerald (Fine Gael)
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I am still of the view that it is odd to include this provision in legislation. I assume Departments, on an ongoing basis, hire people for specific purposes and for short periods for advice on specific legislation. I do not understand the reason it must be written into the legislation. One would expect actuarial advice to be available to the Department. Such advice has probably been sought in this complex area in the past. Did the Minister of State indicate that provision was made in previous legislation to appoint a special adviser to provide actuarial advice in this area or that Ministers had used actuaries previously?

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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I am advised that such provision has been in place since 1994 and has been used accordingly since then.

Amendment, by leave, withdrawn.

Section 9 agreed to.

Section 10 agreed to.

SECTION 11.

Photo of Pat MoylanPat Moylan (Fianna Fail)
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Amendments Nos. 7 and 8 are related and may be discussed together.

Photo of Frances FitzgeraldFrances Fitzgerald (Fine Gael)
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I move amendment No. 7:

In page 21, to delete lines 30 to 48 and in page 22 to delete lines 1 to 6.

The amendment relates to the information that must be contained in advertisements and other information sheets. The provision directly overlaps with the large-scale advertising guidelines set out by the Financial Regulator to which competitors of the VHI must adhere. Health insurers argue that adding an additional layer of regulation to competitors is ridiculous as it means they will be required to deal with two sets of advertising rules under regulation.

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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The Senator's amendment would remove from the Bill provisions aimed at protecting the position of the consumer in respect of advertising and the provision of information concerning health insurance contracts. The thrust of the related amendment to the preceding subsection put forward by the Senator's colleagues in the other House was accepted on the basis that it enhanced the provision of information to the consumer. Retaining the subsection under consideration is consistent with the approach taken to the subsection in question. For that reason, I cannot accept the amendments, as proposed, as they would not be in the interests of consumers.

Amendment, by leave, withdrawn.

Amendment No. 8 not moved.

Section 11 agreed to.

Sections 12 to 18, inclusive, agreed to.

Question, "That section 19 stand part of the Bill", put and declared carried.

SECTION 20.

Question proposed: "That section 20 stand part of the Bill."

Photo of Frances FitzgeraldFrances Fitzgerald (Fine Gael)
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I will make several points on the levy on insurers. The concern is that the levy has forced up the price of health insurance for health consumers. The cost of premiums has increased in VHI, Quinn Healthcare and Hibernian Aviva Health by 26%, 16% and 22%, respectively. I note, however, that Hibernian Aviva Health has indicated that increases will be kept in separate accounts and returned to consumers if the European Commission does not approve the levy.

There is a concern that the levy will make private health insurance unaffordable and will result in a contraction in the private health insurance market of at least 10%. As Senators will acknowledge, families are finding it increasingly difficult to afford private health insurance and will continue to leave the market as a result of the economic position in which they find themselves. The introduction of a levy on health insurers will result in an increase in the cost of family premiums of as much as 20% on typical plans, rising to 32% for some cheaper family plans. Such increases would put considerable pressure on those who are just managing to stay in the private health insurance market. If premiums continue to increase, families will leave the private health insurance market, thus placing even greater pressure on the public health system. People believe they need private health insurance and want the choice it offers.

The levy will also increase the costs of employee benefits for companies, an issue that was addressed in the other House. It will increase the costs of trading here for the companies in question, many of which supply health insurance as part of their package to employees. The levy could amount to an increase in costs of €12,800 for a company with 100 employees and could be much higher for larger companies. The impact on a medium size enterprise of 50 people would be an additional cost of €6,400. This is a problem because the costs of premiums, which are increasing as matters stand, will increase as a result of the levy. As a consequence, the market for private health insurance could shrink. I will make several further points on subsequent sections.

Photo of Liam TwomeyLiam Twomey (Fine Gael)
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On Second Stage I asked the Minister of State what was the position in a case where someone pays another person's health insurance premiums and he indicated that such persons could claim tax credits. Does a limit apply in such cases? Senator Feeney, for instance, pointed out that she pays the cost of private health insurance for five adults. If the Senator was paying the premiums for five elderly relations, could she claim tax credits for all of them?

An elderly person on an old age pension who has small savings and does not enjoy credits because his or her income is relatively low will have to pay a premium of up to €3,000 per annum. Until now, such an elderly person would pay perhaps €1,800 for health insurance but that person will soon pay €3,000. I ask the Minister of State to clarify the position.

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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I acknowledge and respect the concerns expressed by Senators about the increase in the costs of private health insurance. However, to accept the Senator's viewpoint would fillet the Bill and prevent the proper functions of the tax system. The increases implemented by insurers reflect the issue of medical inflation and, more importantly, the absence of intergenerational solidarity. The overall impact on the market will remain neutral. In acting on an interim level, it protects those generational concerns, as well as taking medical inflation into account. Senator Quinn spoke on that specific aspect and posed the question as to what would happen if the opposite of medical inflation occurred. The fact remains, however, that that is the purpose of it.

The amount being paid in levies is being paid out in tax credits. I am unable to answer the question about how the elderly who may have no tax credits can be recompensed. I will try to come back to the Senator on that before the debate ends.

Photo of Frances FitzgeraldFrances Fitzgerald (Fine Gael)
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I thank the Minister of State.

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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Section 22 primarily provides for the granting of credits for the system to work effectively. Sections 20, 21, 23, 24 and 25 were drafted and prepared on the basis that they are necessary and for that reason I cannot accept the amendments. If the Senator so wishes, I will outline the overall structure and purpose of each of the sections that have been proposed.

Photo of Frances FitzgeraldFrances Fitzgerald (Fine Gael)
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The Minister of State talked about ring-fencing money for intergenerational solidarity. I also read Senator Quinn's contribution to this debate, which was very interesting. The levy, however, is not ring-fenced as such. The VHI can use the proceeds from the levy for any other purposes it may choose, including expanding its business. However, section 3 sets out the principal objective of the Minister and the Health Insurance Authority in ensuring intergenerational solidarity. Despite this there is no requirement that the recipient insurer should use the State funds concerned for the direct purpose of bolstering intergenerational solidarity, which is such a key aspect of community rating and the Minister's intentions. It does appear open for the recipient insurers to use this large-scale State support, raised by what we consider to be an inequitable levy, on the provision of other insurance - for example, travel, life or motor cover - at a lower rate. Perhaps the Minister of State can say what he thinks about that in his reply. Surely there should be some ring-fencing, if he is saying he wants the levy to be used to deal with intergenerational solidarity. If there is no ring-fencing of some aspect, does it not defeat the purpose? Perhaps the Minister of State can explain why that is not in the legislation. Should it not be considered?

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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As to why it is not in the legislation, I do not think it was intended even to take it into consideration. It was presumed that there was protection there by way of intergenerational solidarity. In the first instance, health insurance premiums are charged on a net premium basis, after the reduction of credits to all persons, irrespective of their level of income. I do not think that would arise in that context. The legislation makes the point that it is an interim measure. Health insurance premiums are charged, as I said, on a net premium basis, so there is protection there.

Question put and declared carried.

SECTION 21.

Photo of Paddy BurkePaddy Burke (Fine Gael)
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Is section 21 agreed to?

Photo of Frances FitzgeraldFrances Fitzgerald (Fine Gael)
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No.

Question, "That section 21 stand part of the Bill", put and declared carried.

SECTION 22.

Question proposed: "That section 22 stand part of the Bill."

Photo of Frances FitzgeraldFrances Fitzgerald (Fine Gael)
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I want to raise a particular query concerning section 22, which is about making the provisions of the Bill retrospective from 1 January 2009. If the Bill is passed, will the levy be applied twice to certain contracts? I am worried that might be the case, given the dates outlined in section 22. If so, that could have serious financial consequences. Will the Minister of State respond to that point?

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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The short answer is "No". Section 22 inserts a new section 470B into the Taxes Consolidation Act 1997. This new section provides for additional age-related tax credit in respect of health insurance premiums paid to authorised insurers, excluding restricted membership undertakings, within the meanings of section 2(1) of the Health Insurance Act 1994, under relevant contracts renewed or entered into on or after 1 January 2009, or before 1 January 2012 in respect of insured persons aged 50 years or over.

As regards premiums paid under contracts of insurance falling within section 2(10)(d) of the Health Insurance Act 1994, certain international health insurance plans or contracts of insurance relating solely to the charges for public hospital inpatient services under the Health In-Patients Charges Regulations 1987 do not qualify for the age-related tax credit. In the case of each insured person aged 50 years or over but less than 60, the tax credit is €200. Therefore, the answer is "No", they are not paying twice.

Photo of Liam TwomeyLiam Twomey (Fine Gael)
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I made the point that an elderly person was paying for her private health insurance out of her own resources. The basis is that one will put a levy on people under 50 and will give a tax credit to those over 50. If elderly people aged 70 are paying for their own private health insurance, they will be expecting a tax credit of around €950 back per year. If they are not earning enough to pay tax, however, there is no opportunity to give them this sum back every year. This is a new structure for private health insurance; it is not the regular community rating, risk-equalisation model we have been using up to this point, because that was thrown out by the courts.

In the normal community rating the premium would be slightly different for everybody. This individual will not get the €950 back per year. That is my interpretation of it. There is nothing in the legislation that will in any way look after that elderly person who, for some reason, is paying his or her own private health insurance.

I also noted that patients who came into the practice had their VHI card tucked in behind the medical card. The Minister of State will be aware of this. Therefore, even patients with medical cards make stringent efforts to pay for private health insurance. I would like to know how we are going to get around this problem where elderly people pay for their own private health insurance. How will we give them back the €950 if they do not have tax credits?

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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I take the point the Senator has raised. The levy is on insurance companies, not specifically on the customer or purchaser. Tax credits are granted at source in the same way as the levy or existing relief. Elderly people are securing a tax relief of 20% but the levy is on the company not on the specific customer. The companies would have to recognise their customers' age profile, while taking account of the fact that the levy is on the company, rather than the customer.

Photo of Liam TwomeyLiam Twomey (Fine Gael)
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Which means they could pass it on.

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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Yes. That is what they are doing.

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
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Looking at the age of the patient and so on, does this mean they would pass it on accordingly?

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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That is exactly what I am saying. The levy is clearly on the companies which will make up the shortfall by whatever means they decide, and they will pass on that charge.

Photo of Liam TwomeyLiam Twomey (Fine Gael)
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They do not have to pass it on.

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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No, they do not have to do so. If the companies are living up to their own standards by protecting the elderly, they clearly should not be tempted to pass that on. The bottom line is that I cannot say for definite. I presume that if a levy is added to existing charges to an insurance, the possibilities are that those charges will be passed on, or at least the temptation will be there to pass them on.

Question put and agreed to.

Question, "That section 23 stand part of the Bill", put and declared carried.

Question, "That section 24 stand part of the Bill", put and declared carried.

Question, "That section 25 stand part of the Bill", put and declared carried.

SECTION 26.

Question proposed: "That section 26 stand part of the Bill."

Photo of Liam TwomeyLiam Twomey (Fine Gael)
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When we were debating this on Second Stage, I spoke about these levies that are being applied. The Minister of State may say that the same levies may have come into play if risk equalisation were in place, but I do not know whether that is true. It is a significant levy on young families. If we take a mother, father and three children, there will be an additional tax on young families of €500 per year. That is a significant sum of money.

Does this highlights the potentially sorry state of the finances of the VHI, or is that the VHI is being fattened up for privatisation? The 40% reserve for the VHI is way out of kilter with what is needed for health insurance. Health insurance is not like insurance for storm damage and so on and is pretty predictable over the course of a number of years. I do not think there is a need for it to be at 40%. I cannot understand why the Government has not advised the Financial Regulator to lower this to 25%, which is the figure in many other countries. Even after a pretty disastrous investment year, the reserves of the VHI are still at 27.5%. If the level was dropped to 25%, the VHI's reserves would still be adequate. It may well be good enough to hold it at that rather than introducing another levy on young families. The Government should think a little bit more politically about families rather than thinking purely economically from the point of view of the VHI.

Rather than bringing this Bill through, we should have sorted out the mess that is risk equalisation. Every single individual in this House supports the concept of community rating and the need for risk equalisation, but this does not deal with that problem and the court case that has just come about. This is a sort of quick-fix solution, but it is a huge levy on young families and this section is now authorising that levy.

I have seen nothing whatsoever about controlling costs within the VHI. I spoke at length on Second Stage that invoices and bills from the VHI are almost made up. Hospitals bill the VHI with bills that would be unacceptable to any major health insurer in the US or in mainland Europe. People can basically add in their fees without any major checks and balances. The hospital is not inclined to push that sort of check because it is income for the hospital and in these difficult times, the hospital needs every single euro it can get its hands on. I do not know whether the VHI is controlling its costs to the best of its ability. Other avenues should have been examined, such as reducing the reserve and looking at the cost base and making savings there rather than hitting young families with a new levy.

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
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I am in agreement with Senator Twomey on many of his points, especially those regarding cost. How do members of the VHI have a say in controlling the company? It was brought to my attention by a consultant yesterday that the VHI has written to consultants to inform them that they are making proposals whereby consultants must call the VHI before admitting any of the company's customers. We will be going down the wrong road on this and I would question patient care as well as patient safety if that was to be brought in. Can the Minister of State find out if there is any truth to this? I was told about this yesterday by a consultant.

Photo of Phil PrendergastPhil Prendergast (Labour)
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I would like to support Senator Feeney's request for clarity in this area. It was pointed out on Second Stage that patients going into hospital for maternity care cannot access a private room and therefore pay the hospital the money due for the room unless they are private patients of the consultant. This is a widespread anomaly throughout the country. It is an extremely narrow-minded view on the collection of funds by the hospitals. It is a massive resource that is not being exploited and is widespread practice.

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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To respond to Senator Twomey first, this is not an attempt to fatten up the VHI for whatever ulterior motive may be down the road. Neither is it a quick-fix solution. I would prefer to call it an interim measure.

Photo of Liam TwomeyLiam Twomey (Fine Gael)
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That is a quick fix.

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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There is a bit of a difference. Sitting over there on the Opposition benches, it is a quick fix. Over here on the Government side, it is an interim measure. It was well thought out by the people to whom we referred in previous amendments, such as expert advisers and son on. Section 26 provides for the application of the levy on the health insurance companies. It has been amended since publication to address issues raised by the industry. It is worth noting that the levy now applies only to contracts renewed or entered into after 2009.

I am not aware of the issues raised by Senators Feeney and Prendergast, but they are obviously very important and we will check them out immediately. Under the Bill, the VHI will be only partly compensated for the additional cost it faces as it has more older members. That point was often made in the committee rooms when representatives of the VHI and BUPA were also before them. This ensures the company will continue to focus on controlling costs.

I do not think we can lean on the Financial Regulator who is independent and must make an independent assessment. The Senator spoke about the 40% reserve but we must allow the Financial Regulator to make that assessment independently rather than pressurising the regulator.

Photo of Liam TwomeyLiam Twomey (Fine Gael)
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When the Minister of State is looking into the issues raised by Senators Feeney and Prendergast, perhaps he will also examine another matter I would like to highlight. When some private hospitals do an MRI or CAT scan, the patient in question does not have to do anything other than present his or her VHI card. In other private hospitals, however, patients have to pay in advance of the scan before claiming that money back from the VHI. Indeed, such scans are not covered at all under the VHI in some other private hospitals. VHI customers have a range of options when they are choosing private hospitals. Depending on the hospital, the VHI might pay upfront, pay when an invoice is submitted or not pay at all. I ask the Minister of State to examine why there are such variations between the private hospitals.

Photo of John MoloneyJohn Moloney (Minister of State, Department of Education and Science; Minister of State, Department of Health and Children; Minister of State, Department of Enterprise, Trade and Employment; Minister of State, Department of Justice, Equality and Law Reform; Laois-Offaly, Fianna Fail)
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I was not aware of the issue mentioned by the Deputy. I will take it on board.

Question put and declared carried.

Section 27 agreed to.

Question, "That the Title be the Title to the Bill", put and declared carried.

Bill reported without amendment.

Photo of Paddy BurkePaddy Burke (Fine Gael)
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When is it proposed to take Report Stage?

Photo of Geraldine FeeneyGeraldine Feeney (Fianna Fail)
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Now.

Question, "That Report Stage be taken now", put and declared carried.

Question put: "That the Bill be received for final consideration."

The Dail Divided:

For the motion: 25 (Dan Boyle, Martin Brady, Larry Butler, Ivor Callely, John Carty, Donie Cassidy, Maria Corrigan, Mark Daly, John Ellis, Geraldine Feeney, John Gerard Hanafin, Cecilia Keaveney, Terry Leyden, Brian Ó Domhnaill, Labhrás Ó Murchú, Francis O'Brien, Denis O'Donovan, Fiona O'Malley, Ned O'Sullivan, Ann Ormonde, Kieran Phelan, Shane Ross, Jim Walsh, Mary White, Diarmuid Wilson)

Against the motion: 14 (Paddy Burke, Jerry Buttimer, Ciarán Cannon, Paudie Coffey, Paul Coghlan, Maurice Cummins, Frances Fitzgerald, Fidelma Healy Eames, Michael McCarthy, Joe O'Reilly, John Paul Phelan, Phil Prendergast, Brendan Ryan, Liam Twomey)

Tellers: Tá, Senators Labhrás Ó Murchú and Diarmuid Wilson; Níl, Senators Maurice Cummins and Liam Twomey.

Question declared carried.

Question put: "That the Bill do now pass."

(0 o'clock)

The Dail Divided:

For the motion: 25 (Dan Boyle, Martin Brady, Larry Butler, Ivor Callely, John Carty, Donie Cassidy, Maria Corrigan, Mark Daly, John Ellis, Geraldine Feeney, John Gerard Hanafin, Cecilia Keaveney, Terry Leyden, Brian Ó Domhnaill, Labhrás Ó Murchú, Francis O'Brien, Denis O'Donovan, Fiona O'Malley, Ned O'Sullivan, Ann Ormonde, Kieran Phelan, Shane Ross, Jim Walsh, Mary White, Diarmuid Wilson)

Against the motion: 14 (Paddy Burke, Jerry Buttimer, Ciarán Cannon, Paudie Coffey, Paul Coghlan, Maurice Cummins, Frances Fitzgerald, Fidelma Healy Eames, Michael McCarthy, Joe O'Reilly, John Paul Phelan, Phil Prendergast, Brendan Ryan, Liam Twomey)

Tellers: Tá, Senators Geraldine Feeney and Diarmuid Wilson; Níl, Senators Maurice Cummins and Liam Twomey.

Question declared carried.