Tuesday, 21 November 2017
Health Insurance (Amendment) Bill 2017: Second Stage
I am pleased to have the opportunity to address the House on the Second Stage of the Health Insurance (Amendment) Bill 2017. This is a short technical Bill comprising seven sections dealing with specific issues of health insurance, in particular the risk equalisation scheme which supports our system of community-rated health insurance. More than 2.1 million people in Ireland hold private health insurance. Health insurance in Ireland is community rated which means, in general, that everyone can buy the same health insurance policy at the same price. Older and sicker people pay the same amount as young and healthier people. Community rating means health insurers must offer health insurance policies at the same price to everyone regardless of the person's current or potential health status. The Health Insurance Acts require all insurers to apply community rating.Older and more sick customers, however, are not shared equally across the Irish market. Some insurers have higher risk profiles than others given that they have a much higher proportions of older members. The number of older customers insured is spread unevenly across individual health insurers, which is a legacy issue arising from the relatively recently arrival of competition. Before that arrival, there was a monopoly market and all customers, young and old, were covered by a single insurer. This is a central issue within Irish health insurance and, in order to support community rating and reduce the incentives for insurers to target or avoid particular groups of people, some form of risk equalisation is required.
Risk equalisation supports community rating by providing cross-subsidies between insurers with different risk profiles. It is essentially a financial transfer mechanism whereby money flows from insurers with healthier members to insurers with sicker members. The overall goal is to channel competition in the health insurance market in a way which benefits everyone who wishes to purchase private health insurance. Risk equalisation reduces insurers' incentives to attract only low-risk consumers or to charge higher prices for products that are marketed to high-risk people.
A permanent risk equalisation scheme was introduced in Ireland in 2013. Under this scheme, credits are paid to all insurers for their older and sicker members. These credits are funded directly by stamp duty levies on all health insurance contracts. In effect, the scheme redistributes funds between insurers to meet some of the additional costs of insuring older people and sicker members. None of the stamp duty on health insurance contracts goes to the Government. It is all redistributed to compensate for the additional costs of insuring older people and less healthy people. In this way the cost of insurance is shared between all insured people and we can ensure that sicker and older people are treated fairly.
Legislation is needed each year to update the amount of credits paid to insurers under the risk equalisation scheme and the amount of stamp duty levied on health insurance contracts to fund the credits. As part of the process, the Health Insurance Authority carries out an evaluation of the market and recommends the level of credits which should apply next year. The Minister has considered and accepted the recent recommendations made by the authority for the rates next year, which were: a general decrease in the amount of risk equalisation credits payable in respect of those aged over 65 based on age, gender and level of cover; the stamp duty to remain unchanged in respect of advanced contracts at €444 per adult and €148 per child; and a reduction of stamp duty in respect of non-advanced contracts to €177 per adult and €59 per child.
Lower levels of risk equalisation credits will be provided to insurers next year. The provision of lower credits is possible because there has been a reduction in the market average claims cost per insured person in the previous 12 months. As the scheme is designed to be self-financing, with the total amount of credits provided matching the stamp duty raised, the main stamp duty levy on health insurance products remains unchanged next year. In addition, the stamp duty for non-advanced contracts is being reduced by 20%.
In previous years it has been necessary to significantly increase the stamp duty on all policies in order to fund the rising cost of an older and less healthy population of insured people. Health insurers have often cited increasing stamp duty rates as contributing directly to increases in insurance premiums. The Minister for Health is therefore pleased that it has been possible this year to maintain the stamp duty at the existing level. Furthermore the credits and levy rates proposed for next year strike a fair balance between the need to sustain community rating and the need to ensure that young people continue to avail of health insurance. Small increases are also proposed to the existing level of hospital utilisation credits provided to insurers under the scheme, increasing to €100 per night for overnight stays, currently €90 per night, and to €50 for day case admissions, currently €30.These utilisation credits are a proxy for health status and will provide additional support in respect of less healthy people. This change will result in a higher proportion of credits being directed to sicker lives than to older lives. This is a step towards improving the health status element of the scheme within the boundaries of the current risk equalisation scheme.
While the changes to the credits will help to maintain levels of support for community rating, further improvements to the scheme are also planned. The Minister is committed to making the risk equalisation scheme as effective as possible in a way that promotes fair and open competition. As the scheme is a state aid, it requires approval from the EU. The current scheme has been approved up to 2020. For the purposes of its further continuation, it is planned to enhance the sophistication of the scheme. This requires a more refined measure of health status. The most appropriate measure is based on diagnosis-related group activity data, which allows for better targeting of credits to everyone who requires a higher level of health care. The Minister has asked his officials to focus on processing this in conjunction with the Health Insurance Authority in the months ahead. A working group has been established to inform the private hospital data collection aspect of this process and any implications arising. Refining the health status measure using diagnosis-related group data will further reduce the incentive for insurers to attract low-risk people and avoid high-risk people.
The Bill makes a number of changes to the lifetime community rating scheme that is in operation in the health insurance market. The scheme was introduced in 2015 to encourage people to take out insurance at a younger age. The clear impact of lifetime community rating can been shown by the increase of over 150,000 in the number of people holding health insurance between January 2015 and January 2017. Earlier this year, the independent Health Insurance Authority reviewed the operation of the lifetime community rating scheme and made a number of recommendations to the Minister. The changes that are being made now will ensure the scheme continues to operate smoothly and in a fair and balanced manner.
Under the existing scheme, people holding health insurance who leave the country to go abroad for work or other reasons may incur loadings on their return. The changes included in the Bill mean that people will be able to work, travel or live abroad without incurring loadings on their return. People will also be permitted to have breaks in insurance cover of at least six months while living in this country without incurring loadings upon the resumption of cover. A change being made to take account of time served working in the Defence Forces or as an EU staff member working in this country will ensure that loadings are not unfairly incurred when people in such groups seek to purchase health insurance with Irish providers. The Minister is ensuring that loadings are payable for ten years only rather than for life, as is currently the case. This is a fairer and more reasonable approach to loadings on health insurance premiums. This Bill provides the basis for these amendments to lifetime community rating. Following the enactment of this legislation, the Minister will make a regulation next year that will set out the specific details of the changes and further enhance the operation of the lifetime community rating scheme.
I will now outline the specific sections of the Bill. Section 1 defines the principal Act as the Health Insurance Act 1994. Section 2 amends section 7A of the 1994 Act to expand the Minister's regulation-making powers in respect of the operation of the scheme. It also provides that when increases in unadjusted net premiums apply, they are payable for ten years only.
Section 3 amends section 11C of the 1994 Act to provide for 1 April 2018 as the effective date for revised credits to be payable from the risk equalisation fund. Section 4 amends Schedule 3 to the 1994 Act to provide for the revised amounts payable from the risk equalisation fund in respect of the hospital utilisation credit in the cases of health insurance contracts renewed or effected from 1 April 2018. Schedule 3 contains revised amounts for the provision of inpatient services on an overnight basis and on a day-case basis. Section 5 replaces table 2 in Schedule 4 to the principal Act, with effect from 1 April 2018, such that the applicable risk equalisation credits payable from the risk equalisation fund in respect of certain classes of insured persons are revised. Section 6 amends section 125A of the Stamp Duties Consolidation Act 1999 to specify the applicable stamp duty rates for 1 January 2018 to 31 March 2018 and for 1 April 2018 onwards. Section 7 provides for the Short Title, commencement, collective citation and construction of the Bill.
Fianna Fáil supports the Health Insurance (Amendment) Bill. These types of Bills, which amend health legislation, are somewhat akin to the Finance Bill or the Social Welfare Bill in that they seem to arrive at this time every year. The measures set out in the Bill before us are designed to support risk equalisation and sustain community rating in our health insurance market so that older citizens and people with illnesses can afford to take out insurance and are not discriminated against in favour of younger healthier people. Risk equalisation and community rating are principles we have always supported. No increase is being proposed for advanced cover levies next year, which is welcome, as is the reduction in the levy for non-advanced cover. The limiting of lifetime community rating loadings to ten years is also welcome, Fianna Fáil having previously tabled amendments seeking such a change. We are also pleased the lifetime community rating rules will exempt members of the Permanent Defence Force.
I cannot count the number of people who have come into my surgery to express concern about increased health insurance premiums in a context where they were already struggling to afford their plans. Many of these people were worried about buying school books or putting diesel in their car. In those circumstances, health insurance is one of the things people may have to give up. In 2009, Fine Gael expressed fears that the introduction of a health levy of €160 by the then Fianna Fáil-Green Party Government would make private health insurance unaffordable and that it amounted to an anti-competitive measure which would serve to prop up the dominant State player in the market. Fast forward to 2018, however, and Fine Gael in government has approved a levy of €444 for 2018. In fact, the levy was effectively doubled by the then Minister for Health, now Senator James Reilly, when it increased during his tenure by 178% for adults and 179% for children.
The Health Insurance (Amendment) Bill 2017 seeks to amend the Health Insurance Act in order to change the risk equalisation credits payable to insurers in 2018. It also seeks to maintain the main rate of stamp duty levy on health insurance contracts next year and decrease the amount of stamp duty levy on lower level health insurance contracts. The Bill will also make some amendments arising from the review of lifetime community rating which led, two years ago, to the introduction of measures to encourage people under 35 years of age to take out private health insurance. The lifetime community rating provisions sought to address the inequity in the system whereby persons who wait until they are older to take out health insurance were paying the same as those who were health insurance consumers for decades. A system of loadings, or additional costs built into the price of insurance policies, were introduced in 2015 to encourage people to take out a policy at a younger age. Those who signed up for health insurance later in life were slapped with penalties and increased price points while those who signed up before a certain age were spared the additional charge. We absolutely do need to encourage young people into the health insurance market, but we also must acknowledge that a person coming in at 30 years of age should be given some credit relative to the person taking out a premium at 55 years of age, when he or she is more likely to need to access health care.
Can the Minister of State offer us any insight into the Taoiseach's confusing remarks when, as Minister for Health, he said that lifetime community rating is a step on the way to universal health care? That is simply not true. As we move to universal health insurance, where insurance will be compulsory, the issue of lifetime community rating will no longer arise. In fact, it arises only in circumstances where one has a choice as to whether or not one takes out insurance. If everyone is insured, there is no need for lifetime community rating. Is this a case of wrong information coming from the Taoiseach? It would not be the first time we have seen evidence of confusion within Fine Gael in respect of its policy on health insurance. In 2006, for example, the Sunday Independentreported that the then Fine Gael leader, Deputy Enda Kenny, had signalled his opposition to the introduction of risk equalisation. However, for the seventh year running, Fine Gael in government is legislating for something to which it was apparently opposed in the past.
Will the Minister of State provide clarification on the section of the Bill setting out provisions for breaks in health insurance cover of at least six months for persons living in the State, up to a cumulative total of three years, without incurring loadings on resumption? What is the rationale for this change?
We in Fianna Fáil have been firm in our view that the principle of solidarity should apply in private health insurance as well as in public health services. Our values as a people are to support the elderly and the sick, not just out of a sense of obligation but because we respect and value older people and wish to safeguard the dignity of every person in their illness, medical condition or disability. It is sometimes observed that the moral test of any Government is how it treats those who are in the dawn of life, those who are in the twilight of life and those who are in the shadows of life, including the sick, the needy and the disabled. We should always be mindful of those principles.
My colleague, Senator Swanick, has covered most of the points I wished to make. Many of the proposals the Minister of State brings to this House are welcome, and lots of people will be grateful for what she is bringing forward in this legislation. In particular, taking on board the concerns of members of the Defence Forces shows the Government has been listening to at least one group whose members were encountering a specific difficulty in later years. However, the only members of the forces these provisions will actually accommodate are those holding a commission. Members of the enlisted ranks never could and probably never will be able to afford health insurance. I do not say this in a mean way but merely as a statement of fact that will prevail until we have soldiers with a rate of pay that allows them to purchase such things as health insurance.
My only other concern regarding this Bill is that we are driving people into insured health care. That is not necessarily a bad thing but, on the other hand, it is happening in a context where anybody who walks around Dublin city will notice the contrast between all the private hospitals that are popping up all over the place and the fact that waiting lists continue to lengthen in the public sector. If everybody is driven into insured health, God knows what the situation will be. Most likely we will see queues in both private and public hospitals. However, as things are at the moment, anything that helps people to avail of health insurance is to be welcomed. I thank the Minister of State for bringing forward a Bill that sorts out a number of issues about which I had concerns.
I welcome the Bill the Minister of State has brought before us. Risk equalisation is important in ensuring there is a level playing field for all, regardless of age. It is an indication of the upturn in the economy that 150,000 more people have taken out health insurance in the past two years and more than 2.1 million people are now covered. We must acknowledge the contribution the private health sector makes to health care. My understanding is that more than 40% of elective surgery is carried out in private hospitals. Were it not for that provision, the public system would not be able to accommodate the demand that is there. Nevertheless, I agree with other speakers that there should not be a clear divide between those who have health insurance and those who do not. Just as we have a level playing field in respect of insurance provision, we must ensure the same applies when it comes to the ability to access health care, whether or not a person is insured.
In regard to health care generally, one of the things we need to do more effectively is take account of demographic changes and their impact on the provision of services and facilities. There is a particular issue in Cork, for instance, where we have had a population increase of more than 130,000 but no pro ratarise in the number of hospital beds.For instance, in the Mercy hospital up to 40% of elective surgery was cancelled in 2016 because of admissions through its accident and emergency department. Therefore, it is important when we are developing new facilities that we make sure there is a clear divide between ensuring there is adequate space for accident and emergency admissions and that it does not interfere with elective surgery. That is extremely important.
I also welcome the proposed changes to the Bill with respect to no loading applying if one is working abroad. That is extremely important as many people are out of the country for a period and then return. Senator Craughwell referred to the issue regrading the Defence Forces, who are making a valuable contribution to this country and it is important they are not penalised for being out of the country.
In the overall context of the Bill the clear division in the costs between male and female in terms of contribution in respect of risk equalisation is interesting. I note from the Schedule that in the case of a male aged 70 or over the loading is €1,750, in other words, that is the contribution made from the fund towards his insurance, whereas in the case of a female the loading is €1,250. This raises the issue of men's health care. Women are living longer. They are more conscious of and act faster when they have health problems. Education is needed in that respect.
I read a report this morning which showed that 15% of all cancers are identified as a result of people being admitted into accident and emergency care whereby they present for a medical complaint and a cancer is identified. That raises the issue of education. If we want to reduce the number of people being admitted to hospital, we all have a duty of care in making sure we look after our health. I refer to a number of areas, including smoking, drinking and obesity. We have a job to do in that area to reduce the level of admissions. If the level of admissions is reduced, the cost of health care will be reduced. It is extremely important that we address that.
I thank the Minister of State for bringing forward this Bill. It is important that it be put through and that we continue with a level playing field for all the people who buy into private health insurance.
I welcome the Minister of State to the House. I question whether health insurance is fair, the extra burden that is carried by citizens given their PRSI contributions and that they are trying to keep the health system going. We deal with a Bill like this one every year and it is about taking the risk away from insurance companies. It aims to be Exchequer-neutral but I wonder why are we involved in discussing, meddling and assisting the private sector. The health system is on its knees and it has been bled dry. Some 46% of thereabouts of the people who struggle to afford private health insurance are thinking it is better to have a safe clause for themselves and their families than none at all. That is the reality. They are held by ransom as the health system buckles under the weight of demand and need.
We still need to talk about systematic change. It is the elephant in the room and should be prioritised. We are discussing this legislation when the health sector is on its knees with an absolute health emergency and discussing the future of health care should be prioritised.
Last year, when speaking on the risk equalisation Bill, the Minister stated "We need to encourage our insurance companies not to use this as an excuse to hike up insurance premiums" and I sincerely hope he does more than encourage good behaviour.
I would appreciate an outline of how the impact of risk equalisation is conducted in Ireland. Has it been conducted and what has been found since this policy was brought forward? If the Minister of State cannot provide that or does not have those statistics, I will need to consider tabling an amendment on the impact of assessment. I urge her to seriously consider this as encouraging private health insurance is not enough. We need transparency, oversight and value for money, especially if it is coming out of the public purse.
The social justice issue of health insurance is not about equity of premium but is about the inability to pay. That is what we should be discussing here today. I imagine the argument would be that risk equalisation benefits the ordinary person who may be more sick or more at risk than their neighbour but we would not need this benefit if all our citizens had access to a properly functioning public health system. That is the real risk we should be reviewing and managing today.
I want to pick up on a point highlighted last week, which other Senators may also have raised even thought it is not directly related to this Bill. A person may be on a waiting list for a particular investigation, scan or whatever it may be, but if one has the required €600, one can get it down within 48 hours. In one case in St. Vincent's hospital, there is only one machine to do a particular investigation. Why is it that if one has €600, one can have the investigation done within 48 hours, but it will take up to three years to have it done if one goes on the public waiting list? There is a small number of medics who seem to use our public property, our public machines, whatever they may be, for their own gain. I find that disappointing, which is a polite word to describe it.
On behalf of the Minister, Deputy Harris, I thank all the Senators who have contributed to this Bill and particularly to the previous debates, of which I was not a part. One Senator offered congratulations on the bringing forward of this Bill. However, that is due to many people who spoke on the Bill previously and who have, in many ways, steered the Bill in the direction it is going. People's views are heard contrary to what one sometimes hear. It is a very important Bill. I have noted a number of the questions raised, particularly those raised by Senator Devine, which I may not be able to answer but I will ask the officials to come back to her on those.
I thank all the Senators for their contributions. I have come in on this Bill at a very late stage. I was asked to take it on behalf of the Minister. I thank all the contributors and advise if there is some specific matter on which I have not touched, they might email the Minister's office and I will make sure they get a response to it. I thank everybody for their views.
To recap, the main purpose of the Bill is to specify the revised risk equalisation credits, and corresponding stamp duty levies, to apply on health insurance policies from April 2018. Community rating is a fundamental cornerstone of the Irish health insurance system. This means that people who are old or sick do not have to pay more than the young and healthy, whereas in other health insurance systems the level of risk than an individual presents directly affects the premium paid.
Under the risk equalisation scheme, all the money raised in levies from insurers is paid into a fund for the sole purpose of supporting the market in the form of credits payable. The credits and levy rates for next year strike a fair balance between the need to sustain community rating by keeping health insurance affordable for older, less healthy consumers and maintaining the sustainability of the market by keeping younger, healthier consumers in the market.It is very important that the Bill reflected this in the context of the number of young people who have joined policies in recent years. I can only think of my own family, particularly the younger members, who have taken out policies for the first time. I am of the view that what is proposed is really encouraging in the long term.
The Bill also makes a number of changes to the operation of lifetime community rating to ensure the continued smooth operation of schemes in this regard in a fair and balanced manner. Senator Swanick asked if the amendment will permit breaks in the insurance cover of people living in Ireland for at least six months up to a cumulative total of three years. These changes, coupled with ongoing increases in employment, which is the key driver in the demand for health insurance, will support the health insurance market and everyone who wishes to purchase private insurance. The amendment is on foot of recommendations made by the independent Health Insurance Authority in order that those experiencing unemployment, financial hardship or caring for their parents will not suffer under the loading process. The Bill allows us to maintain our support for the core principles of community rating. The latter is long established and well-supported Government policy for the health insurance market. The Bill will ensure that we can continue to provide the help and support necessary to ensure that the costs of health insurance are shared across the insured population.
It is very important to make a final remark on the Bill. Dealing with this matter on a weekly basis at my clinic, and understanding issues that Senators have raised about people coming to their clinics, I am aware that many people who have had health insurance for a long time have had to allow it lapse for many different reasons, whether as a result of through illness, the loss of a job or even due to making a decision not to continue with it. I compliment the people working in all of our hospitals, but particularly those in public hospitals, on the tremendous work they do, sometimes in very difficult circumstances when accident and emergency departments are really packed. I want to continue to support these people. There are still those who, even thought they have private insurance, attend public hospitals and, rightly so, because I believe our hospitals should be there for everyone.
I agree with Senator Swanick when he says that there are many private hospitals popping up and that if one does not have X, Y or Z, one is not allowed in. That is a shame, to be honest. If one has the ability to pay for the type of scan to which Senator Devine referred. one should be able to go in and pay, particularly if one has private health insurance.
On behalf of the Minister, I thank Senators for their input in respect of the Bill. I will relay some of the issues that were raised back to him. I thank Senators for allowing me the opportunity to read the Minister's proposal. I also thank the officials, who I met for the first time shortly before I came into the House, for all their work on the Bill.