I move:
That Dáil Éireann calls on the Government to ensure that the VHI Recovery Programme is altered so as to rescind the decision to abolish the drugs refund scheme by availing of alternative policy options which would remove cross subsidisation of plans and allow a more actuarial approach to health insurance.
During the Dáil recess the Government announced a recovery programme for the VHI. The public and this House were already aware that due to the complacency and delays of the Minister for Health in dealing with the financial crisis in the VHI there would have to be a very severe package of measures but no one ever supposed that it would involve the abolition of the drugs refund scheme. It seems incredible that this Government should inflict such hardship on over 40,000 families in such a callous way.
In moving this motion the Fine Gael Party, with the assistance of the rest of the Opposition, will seek to rectify what has been an appalling proposed injustice on people who have not caused a problem for which they have been asked to carry the principal burden in rectifying. In my contribution I wish to outline in detail the hardship that many patients will suffer because of the abolition of this scheme; the reasons why this is the wrong option to resolve the VHI's problems; why our total drugs situation is in chaos in this country without any response from the Minister; alternative VHI options in terms of financial recovery and the future direction of the VHI.
There are umpteen long term illnesses or recurring illnesses that require expensive treatment and drug usage to control. Perhaps the best highlighted of these is asthma. There are at least 100,000 asthmatics in this country. It is estimated that 10 per cent of GMS drugs expenditure in 1987 was for asthmatics. Somewhere between 10 per cent and 15 per cent of all children are asthmatics and 6 per cent of adults are asthmatics. It is very common for families who have asthmatics to have more than one child suffering from it. It is also common for monthly drugs expenditure to be of the order of £70 per month. Yet, because of the expense of inhalers and tablets there is substantial evidence of under-treatment with the proper drugs. It is simply vital that asthmatics get their proper drugs with the proper financial assistance if they are not to become so ill as to require hospitalisation.
Kidney sufferers require very expensive and continuous medication and treatment to deal with renal failure. I have received many individual letters from people suffering from what I term minority illnesses that do not have such a high public profile or public awareness. Specifically I refer to Chrohn's disease; people suffering with colostomies and other long term illnesses that break down immunity in the body; heart disease and arthritis are two very common ailments, particularly among the elderly, which require constant medication. Hypertension or blood pressure equally requires a steady constant flow of medication to control. People who are unfortunate enough to have a glaucoma or high cholesterol levels require regular monitoring and drugs. We have the whole series of psychiatric illness in which we have seen in recent decades a transformation in the type of care from institutions to a community care approach simply because of the evolution of drugs and injections to cater for mental illness.
All of these people have been specifically targeted by the VHI, the Minister for Health and the Government as being the scapegoats for their mismanagement and incompetence resulting in the financial position of the VHI and the subsequent proposal to abolish their entitlement to a drugs refund up to the level of the State drugs refund scheme i.e. £7 a week maximum. This is a fundamental injustice because it cannot be argued in any way that this aspect of an out-patient scheme which has an excess policy of £170 only caters for cases of hardship and which is not open-ended is the cause of the VHI's problems.
The cost of the drugs refund scheme last year was £7.6 million. If one analyses the VHI accounts prior to, during, and after their financial difficulties one sees that there are a number of factors whereby changes have taken place. I am referring to the increase in expenditure on administration, the huge claims now being made under diagnostic services, the advent and exploitation by high technology private hospitals through new claims and the increase in moneys paid to public hospitals for pay-beds. How it is that those factors, which can be directly attributed to the changing circumstances of the VHI are not items for the single largest saving in their recovery programme but rather instead they go for the soft target of a scheme that has been in operation since 1967 which operated for almost 20 years without causing the VHI financial difficulties and which was not a major factor in the transformation of circumstances for the VHI?
The consequences for the VHI of this proposal if it is allowed to go ahead will be first, that many people whom I have referred to with long term illness will instead not maintain their membership of the VHI simply because they need that money to pay for their drugs. Thus, the increased membership which the VHI obtained over the years because of the drugs refund scheme and for which they actually canvassed at the asthma organisation and other functions, will move away in disillusionment and reduce VHI premium income.
The second effect of this ill-conceived proposal is that those patients with long term illness in the community who are controlling their health care and maintaining their quality of life through proper and adequate provision of drugs will be unable to afford such medication and will relapse into a greater spiral of sickness and ill-health resulting in very expensive in-patient hospitalisation, often in beds costing £1,200 per week. The whole thrust of agreed health policy of successive Governments over the past ten years has been to develop the primary care, community care and out-patient services within the health system. This decision flies in the face of all that thrust. This serves to underline that this Minister has no palpable overall health policy or strategy that is based on optimum care for the public and maximum cost effectiveness.
The drugs refund scheme as operated by the VHI is one of the few schemes for which there is a maximum possible payout for any individual subscriber, as the maximum anyone can claim is £336 a year. This is even in spite of the fact that a lot of health boards are charging £5 per month to administer the drugs refund scheme, resulting in the State drug refunds scheme only commencing at the level of £396 per year.
I have many times publicly referred to the unacceptable situation in relation to drug costs in this country. This Government persist in an agreement with the Federation of Irish Chemical Industries that allows for UK prices plus 10 per cent to be paid for most drugs. Many drugs that are commonly used and paid for under the VHI drug subsidy scheme can be bought at least half the price in many EC member states, if not a majority of those states. It is not acceptable to wait until 1992 or in the nebulous expectation or hope of some parallel imports to rectify this situation. The Minister has not only not got a good deal for the taxpayer in terms of the price paid for drugs but also has allowed a situation where there is no effective competition or price control for private drug usage. The common mark-up of drugs among pharmacists is 50 per cent for both the long-term illness scheme and the provision of drugs through sales directly to the public. It is simply anomalous that the State pays a different price for drugs through different schemes. We have at the moment the medical card scheme whereby drugs are paid for, the long-term illness scheme for some 15 classified illnesses and the State drugs refund scheme operated through the health boards. There is an urgent need for some rational approach to this.
I am referring specifically to the fact that a chemist is paid £1.24 per item through the medical card scheme but he gets a 50 per cent mark-up on the same item if it is done through the long-term illness scheme. It makes no sense. CEOs in health boards are replacing medical cards with long-term illness cards.
In the last election Fianna Fáil specifically referred to hardship for individuals with a high drug requirement. In the Programme for National Recovery under the ironic heading “Caring for Basic Values” they specifically say:
we will take immediate steps to ... search out ways to improve the system for individuals yet at minimal or no cost to the State. An example is the problem of sufferers from long-term illness using the drugs refund scheme who are now expected to make large outlays each month. Most of this money is eventually refunded by the State. Having to provide money for several months is often difficult for limited eligibility patients.
What is being done by this Government to assist those individuals? Nothing except a total worsening of the situation by an increase of the threshold for the drugs refund scheme and the proposed abolition of the VHI drugs refund scheme.
Again, we see a delay and inaction from this Minister in relation to the introduction of a proper national formulary for generic drugs and effective guidelines to ensure their operation so that people do not have to pay for the same drug using a more expensive brand. All aspects of the medical profession are agreed on the potential savings in this area.
Similarly, it is now quite obvious that of the 800 over-the-counter drugs that were delisted from the medical card scheme when Deputy Woods was Minister for Health, there are still some 40 drugs out of that list which have caused the taxpayer a lot more expense by virtue of the fact that because cheap over-the-counter drugs such as antacids are no longer available and very similar products such as Tagamet costing a multiple of those referred to are being prescribed by doctors.
If we analyse the drug situation in Ireland and if the Minister has any real genuine concern for those with long-term illness there is a variety of different options he can pursue to help them. They are a renegotiation of the deal that allows for excessively high prices to be paid for drugs in Ireland relative to costs in Europe; a rationalisation of the number of State drug schemes ensuring a uniform system of payment to pharmacists; new effective guidelines for the greater use of generic drugs for all patients and a greater usage of limited over-the-counter cheap drugs for some basic illnesses. The Minister recognised these problems in Opposition and yet almost two years later had done nothing to rectify the system but unfortunately instead exacerbates it through this proposed abolition of the drugs refund scheme.
It is important in this debate to reflect on the VHI position in order to ensure a proper reversal of the decision relating to the drugs refund scheme. It is undoubtedly true that if the Government had produced their present recovery programme—or any recovery programme —a year earlier, in December 1987, the saving to the VHI subscriber alone would have been of the order of £13 million. In any business a problem undetected and not rectified is exacerbated if accumulated losses are allowed to develop and in this instance deplete reserves to an extraordinary low level of £4 million from a February 1987 high level of £29.3 million. Right throughout last year the Minister for Health denied the existence of a financial crisis in the VHI and accused the media, myself and others of being alarmist and scaremongering when we suggested net losses of £22 million for the two year accounting period. As it transpired his complacency in awaiting more reports on the VHI board from the team of consultants and others as well as his general inaction have resulted in the present recovery package having an excess of severity because of these accumulated losses.
The reasons for the VHI crisis are, first, the lack of proper cost control in the VHI. It is quite obvious that the VHI entered into commitments in recent years which were not properly costed. They simultaneously failed to negotiate with key elements of the health service including the Department of Health, private hospitals and the medical profession, and were, therefore, wide open for exploitation by all concerned. This resulted in all claims jumping at a multiple of the rate of inflation and at a far greater rate than any possible premium and revenue increase.
It has been argued that lack of premium increases is the problem in the VHI. I have heard it suggested by those in private hospitals and elsewhere that Deputy Desmond's refusal to give premium increases was the nub of the problem. I reject that because, prior to the recovery package, fees increased in the VHI by 53 per cent since 1984 while the consumer price index for the same period was some 17 per cent. We had a fee increase of 8 per cent in December 1987 and a further proposed fee increase now between 3 per cent and 25 per cent all of which is above inflation. The VHI have increased fees very rapidly over recent years. It is wrong to say that denial of fee increases by successive Governments is the reason for the problem.
Secondly, it is undoubtedly the case that the mismanagement of the public health sector resulting in indiscriminate loss of beds and wards had a direct knock-on effect on the VHI with more people claiming on the VHI and demanding services that were becoming inaccessible through the public health service. This, coupled with the very large increase in the per diem rate in pay-beds in public hospitals were a major drain on VHI resources. Some private hospitals would argue that this per diem rate increase was the major problem. I disagree. I have to point out that on any comparative costings there is no doubt that this private daily rate charge in public hospitals to VHI subscribers is still heavily subsidised and good value relative to private hospital care. The capital and equipment charges are not included and therefore, it is not an economic charge.
Thirdly, the VHI allowed a huge increase in hospital capacity in recent years. I am referring to the provision of two new high-tech private hospitals, Blackrock Clinic and the Mater Private Hospital. These are drawing down in the order of £20 million per annum from VHI funds. Blackrock Clinic were allowed an open-ended claim system that was completely non-viable in insurance terms and which bears such scrutiny. When D and E plans were first negotiated it was agreed that if a patient covered under those plans went to the Blackrock Clinic all maintenance charges would be paid. I know that the VHI legally tried to resist some of the whopping bills that came in but found that they could not overcome the problem. I am glad that because of the public outcry in this regard, negotiations that the VHI have been trying to conduct in relation to cost control are now meeting with success. Open-ended insurance of this kind could never have been viable.
The Mater were allowed to increase fees at a critical stage and predominantly gave cover to people who were not insured for it in the B and C plans. Unfortunately—and this is the tragedy and reality of health economics at home and abroad in any report one reads—it is very clear that need equals capacity. If capacity is increased in an uncontrolled and unbridled way it will be fully utilised because the managers of those hospitals will ensure virtually 100 per cent bed occupancy.
The VHI wrongly projected that the hospital claims rate from their subscribers for those under D and E plans would be the same as was the case across the other plans of approximately 14 per cent per annum. They were wrong in their calculations. This did not apply as people consciously got extra cover if they suspected that they would require expensive in-patient hospital treatment. Moreover, the target of 10 per cent of VHI subscribers joining plans D and E has not materialised to date. All this allows hospitals to compete on technology, which is very expensive, without competing on prices. Simultaneously the medical profession, most notably consultants, were allowed to inflict on VHI subscribers a situation where full indemnity was not being offered for consultants' services and extra payments had to be paid by patients over and above what the VHI would cover them for. It is quite common now for someone having a cardiac bypass to have to pay £1,000 to the surgeon on top of what the VHI allow. Little cost control was exercised in the area of diagnostic fees in relation to pathologists who, through new technological developments, were obtaining in some instances huge incomes because of an unfair system of payment. Also, it seems that there was no comprehensive medical audit to monitor the necessity for the increased level of diagnostic testing generally which seems to have been of minimal benefit to patients but which was extremely costly. Once one has a machine one should ensure that it is used in such a way that it pays for itself.
Fourthly, administration costs have increased at a rather excessive rate. I am aware that the VHI argue that they are in line with international comparisons. However, it does seem that they were more competitive heretofore. In the latest accounts we see that administration costs rose during the past year by over 21 per cent. In comparative figures, between 28 February 1975 and 28 February 1985 administrative costs per insured member rose from 99p to £5.54. This change of over 460 per cent seems to be unjustified and well in excess of inflation for the same period.
It is quite obvious on any fair analysis that it is impossible to include that the VHI drugs refund scheme which had been in operation for over 20 years was responsible for the present mess. Consequently, it is simply unfair and unjustified to make this unwarranted attack on the long term ill in this recovery programme. It is this inherent injustice, rather than any political consideration, that has motivated this motion tonight and must surely oblige the Government to rethink their position.
I would now like to outline some alternative recovery measures for the VHI. When one looks at the financial returns for 1987-88 for the VHI one will see that claims rose by 28 per cent to £141.6 million, and income by just under 13 per cent to £126.4 million. One can see therefore that there is an urgent need to increase income and control costs, to put it in its most simplest terms. In relation to raising income, one has to accept that premium increases cannot be the sole basis for increasing revenue as premiums can reach and probably are reaching unaffordable levels, especially in the context of trying to gain new membership from middle to low income families who perhaps need the VHI most. There is substantial growth potential in membership; 34.1 per cent of the population are members of the VHI. Before I continue, a Cheann Comhairle, I forgot to mention at the outset that I would like to give ten minutes of my time to Deputy De Rossa.
