At the outset may I express my gratitude, a Cheann Comhairle, for allowing me the opportunity to raise this very important matter in which I seek to find out the views of the Minister for Health and his Department in relation to the opening up of the health insurance market to foreign competitors and the implications that will have for the operations of the Voluntary Health Insurance Board and the basic concept under which that company operates — the notion of community rating.
In todays Irish Independent there is an article which indicates clearly that a British health insurance company, Private Patient's Plan, which has a significant proportion of the UK health insurance market, have been in a touch with private hospitals in this country. Indeed, I understand they are to have meetings with the hospital administrators of the public hospitals with a view to providing an alternate health insurance to the VHI to patients and the public at large. I understand that the international manager of that company, PPP, confirmed last night that his company were proceeding with plans to seek approval from the Minister for Health to offer such medical insurance on the Irish market.
Before there is any opening up of the market I think it is very important that the Minister and the Department have a very clear view of the consequences of opening up the market, the implications that would have for the VHI and, more especially, the implications such competition would have for the ordinary man or woman in the street and the cover they enjoy at present from the VHI. Unfortunately, because of the erosion of the health services a disproportionate number of people are dependent on private health insurance, a proportion that was never envisaged when the VHI was established initially. I want the Minister to tell the House now what plans the Department have made in relation to this competition. Would the Minister indicate the situation in regard to EC law and competition rules? Perhaps he could spell out whether the Irish health insurance market will be open without hindrance to any EC company who wishes to come in and sell health insurance on the Irish market. I hope and trust that the Minister has already researched the implications of this and where we stand in relation to existing EC law.
My basic objective in raising this matter is that I fear for what will happen to the notion of community rating, which is the fundamental principle that anchors the work of the VHI. VHI have a statutory role and operate on the principle of community rating. This is a cross subsidation of insurance premia whereby those who are particularly vulnerable, whether they are suffering from ill health, sickness or advanced age, do not have to face exorbitantly high premia and are assured of cover. If there is an opening up of the market I am fearful that this bedrock principle will be eroded and that we will be faced with a free for all where some vulnerable members of the community will be left without cover or with the option of cover at a prohibitive cost. Neither of these options are acceptable to me and I hope neither will be acceptable to the Minister for Health. We have seen examples of free competition policy in so far as they apply to motor insurance. In that case the very young, those up to 25 years of age, find it virtually impossible in many instances to get motor insurance cover and those who are quoted are quoted outlandish rates.
Health insurance is far more important and far more basic. You should be able to afford to be treated for a medical condition should you become ill, sick or the victim of an accident, but I am extremely fearful that market forces would be allowed to set the pace or set the standards. It would be totally unacceptable if that were to be the case. It is very important that the Minister would have clear guidelines and that he would explain to me in the House how he intends to protect the ordinary insured person in this country in the opening up of the market as is envisaged. It is fundamental to establish the ground rules of operation before there is any advance in the opening up of such markets. I sincerely hope that the Minister is at an advanced stage in preparing for such an eventuality. The threat of such opening up of the market has been on the horizon for some time. Perhaps the Minister would confirm whether he or the senior Minister have had any discussions with the VHI on this issue and would indicate what contingency plans he has in relation to this matter. He might also indicate the level of recovery in the VHI this year and the projected level of profits for 1990.
I have viewed with alarm the role of consultants in this matter. I understand that the Irish Hospital Consultants' Organisation have had discussions with UK insurance companies, as is their entitlement. I further understand that they are intending to host a conference of such companies in this country in the future. I can understand that some consultants might be anxious to have an alternate paymaster to the VHI, but I would be fearful of the consequences if individual consultants and hospitals were to be able to play one insurance company against another to contract their skills, with prohibitive prices being demanded by consultants for their services. This would not be a desirable development.
There are serious problems looming on the horizon in relation to health insurance. We have already gone through a period where the VHI were in great difficulty. A programme of rationalisation and austerity was put into place in that company and some of the consequences have already impacted very adversely on the public. I mention the withdrawal of the drug refund scheme which has caused serious hardship. Despite the promises of the Minister for Health to have an alternative drug refund scheme in place by last summer we are still waiting for the Minister to conclude his negotiations and put a scheme in place. Month after month people who got the £28 refund from the VHI are left £7 a week poorer until the Minister reaches a conclusion on that front. His action in that regard does not augur well for the handling of health insurance in general.
Last year we had a major hike in VHI rates. People were literally forced out of private insurance and are now left vulnerable without insurance of any kind. That is unacceptable and deplorable. These are the consequences already. The Minister confirmed to me today by way of parliamentary reply that he has another application for an increase in VHI premia on his desk but has not yet sanctioned a particular increase. No doubt that too will come on stream and put increased pressure on ordinary VHI subscribers.
Despite the rationalisation and the additional hardship caused by the cutback in services in the VHI, we are faced with another major challenge — the opening up of the health insurance market and the consequences for the notion of community rating. I hope the Minister will tell me that the fundamental system of community rating is sacrosanct and spell out the mechanisms he proposes to institute to protect it. He should also tell us what discussions he has had, the plans that have been made and the contingency work which has been done in the Department.
