Dáil Éireann debate -
Wednesday, 18 Oct 1995

Vol. 457 No. 2

Adjournment Debate. - Voluntary Health Insurance.

Mrs. Geoghegan-Quinn

Ba mhaith liom ar dtús mo bhuíochas a glacadh leatsa as ucht go dtug tú an deis dom an cheist seo a ardú ar an Athló. Ba mhaith liom freisin mo bhuíochas a ghlacadh leis an Aire agus leis an Aire Stáit as ucht a bheith i láthair sa Teach chun an cheist seo a phlé.

We pride ourselves on having a good mix of private and public health care and also because our public health service can, for the most part, provide many of the required services. However, the Minister has acknowledged that there is a necessity for private health insurance. That has been provided by the voluntary health insurance company in a totally non-competitive market and with considerable freedom to operate on its own without regard to either its members or the Government of the day. The VHI has a very important role to play in the marketplace, a role I have supported and which I hope will be strengthened when the Minister introduces legislation in the Dáil.

However, I am appalled, and I am sure the Minister will be equally appalled, that the VHI should suggest charging higher premia to older people living in this State who wish to join. I am appalled because, as we all know, it is when we come to our latter years that we have most call on the health care service. The vast majority of the people who avail of the public health care service are older people. The VHI must be conscious of that and have stated strongly that if competition is to be introduced there should be no out for any competitor coming into the market whereby they would deal only with younger and healthier people. I accept that and think it proper.

The last time I raised this matter the Minister was favourably disposed to the introduction of a consumer's council for members of the VHI. I suggest this again because I am concerned, and I am sure the Minister is equally so, that the VHI should be not alone answerable and responsive to the public and to its members, but should be seen to be so.

Not alone did the chief executive of the VHI warn about the possibility of older members being asked to pay higher premia when joining the VHI, he also announced to all and sundry that there would be another increase in premia next year of at least 3 per cent. We on this side of the House will oppose any move by the VHI to charge older people higher premia, but if another general increase is granted it will mean that in the past two years the VHI will have increased its fees by 21 per cent, almost seven times the rate of inflation. I do not believe either the chief executive officer or the VHI generally have justified such a level of increase. They are way out of line with inflation which is currently running at about 2.4 per cent per annum.

We have all come to realise that the VHI has been allowed to increase its premia on a regular basis and is not answerable to it members. It is time the VHI came out from behind the cloud, as it were, and became answerable to the Members of this House, because it is a company which is answerable, through the Minister, to this House. It might be no harm were the chief executive and senior management staff of VHI to come before one of the committees of this House to answer the genuine concerns of Members of this House regarding the way it conducts its business.

Subscribers are always helpless when price increases are announced by the VHI. The establishment of a user's council must now be an immediate priority. It would give the members of the VHI a say. The VHI has over one million subscribers to whom it is not answerable. It certainly does not give us an opportunity to have an input into its operations or its policy. It is important that we put our comments on the record, not to be in any way mischievous, but because of genuine concern about the direction the company is taking.

For far too long the VHI has stood for high insurance costs. If we are to resolve the position whereby we are insured for everything but covered for nothing, the VHI must be made answerable and I rely on the Minister to make that happen.

Mr. Noonan

(Limerick East): I thank Deputy Quinn for raising this issue. As the publicity attached to a particular speech by the chief executive of the company has caused some concern, I welcome an opportunity to set out the Government's policy in this respect.

The Deputy referred to increases granted over the last two years and quoted figures in that regard. However, it is not correct to say the increases were granted. While the VHI is statutorily obliged to inform the Minister, I do not have discretion in the matter. In other words, I cannot refuse a proposal by the VHI to increase its fees. It is not a question of me granting increases, it is a question of the VHI proceeding to implement increases and announcing them as it deems fit.

The Deputy also referred to justification for the increases. The VHI is a non-profit making organisation and medical inflation runs far in excess of consumer price index inflation. The most recent VHI returns reveal that, after drawing down income from past investment, income barely matches expenditure. The company is trading at a loss on a daily basis. As a non-profit making insurance organisation it is obliged to make ends meet but it is not in a strong financial position. I have inherited that difficulty and it causes me a great deal of concern.

I hope shortly to introduce legislation in this regard. From a user's point of view, there are not enough members on the board of the VHI and two of them are consultants. They represent the supplier rather than the consumer. The legislation will extend the board's membership to approximately 12 and during the debate on the legislation we can discuss the validity of the Deputy's views on a user's council. VHI subscribers, rather than suppliers of the service, would be well represented on a board comprising more members.

The people have been well served for many years by the VHI, particularly by community rated health insurance. That is the key to addressing the Deputy's fears about older people having loaded premia. The community rated health system has been, and continues to be, the basis on which private health insurance is available to a large proportion of the population. More than 35 per cent of the population is covered by private health insurance, three times the percentage covered in the United Kingdom, which operates a system that relates premium to the risk of the individual.

Community rating works. It ensures that a high proportion of our population is covered by health insurance and, compared with the United Kingdom, a much greater percentage of our elderly is covered.

Equally, there has been a significant level of stability in the Irish health insurance market for many years in terms of membership. It has not been prone to the fluctuations in membership levels of other risk-based insurance markets that are heavily influenced by general economic conditions. I am, of course, fully aware that membership could fall here as in any other country if insurers do not control their costs but community rating can help to provide a stability in the market, particularly for the vulnerable groups; the elderly are a very vulnerable group.

Adherence to the principle of community rating ensures that the same level of premium is charged, for the same level of health insurance cover, to all persons regardless of their age, sex and health status. It thereby ensures that health insurance cover is available to the elderly and chronically ill at a rate no higher than that charged to less vulnerable groups. In a risk-rated system such persons could find private health insurance beyond their means and such a situation, with the worry it would cause to the vulnerable, would be unacceptable to me as Minister for Health and to society in general.

The principle of community rating and its preservation in our health insurance system is regarded as so vital that it has been enshrined in law. The Health Insurance Act, 1994, which regulates the sector in a Single Market context, made it obligatory that all insurance undertakings wishing to conduct health insurance business provide health insurance contracts on a community rated basis. Accordingly, the law of the land requires that private health insurance be sold on a community rated basis only and I have no plans to change this position.

In terms of entitlements to be insured, the Health Insurance Act, 1994, provides for open enrolment and lifetime cover. Therefore, private health insurance undertakings could not refuse to provide or renew cover by reference to age, sex or health status. Also, there are reasonable and legitimate measures built into the policies of insurers which can be regarded as coaxing subscribers to join early. These various measures involve periods, which vary according to the age of the individual, during which the subscriber must wait before benefit will be payable. In addition, under the draft minimum benefit regulations health insurers must pay a grant towards the hospitals costs of childbirth. Extensive regulations which include under-pinning these principles are being finalised by my Department.

It is of course desirable that the community rated system which ultimately exists to serve all the people equally should be subscribed to as widely and as early as possible. It relies on solidarity between the generations whereby the young and healthy subscribe in the knowledge and confidence that the system will be there to serve them well in later life should the need arise. There are positive incentives to persuade people to join health insurance at an early age.

Charging higher premiums to older people joining the VHI is inimical to community rating and is, therefore, contrary to the law. I have no plans to change the law in that regard.