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Dáil Éireann debate -
Thursday, 7 Dec 1995

Vol. 459 No. 5

Voluntary Health Insurance (Amendment) Bill, 1995: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

I welcome the introduction of this Bill. It is very important legislation which will allow the VHI to move into the next century in a strong and positive manner.

People must recognise the tremendous service provided by the VHI which was established under a Government led by Fine Gael. We must be very proud of the role it has played during the past 40 years. In the region of 35 per cent of the entire population contribute to the VHI and are under its care. It is a non-profit making organisation and the wealth it has created has been reinvested in the provision of health care for its contributors.

The fact that the VHI's administration accounts for only 6 per cent of its overall cost is a tribute to how it has been managed. The health insurance industry is entering a competitive market and we must ensure that the people who are most vulnerable obtain and retain health insurance at a reasonable cost. I specifically refer to the elderly and chronically ill. Health insurance is mainly family-based and has been extremely beneficial. However, the country is faced with an ageing population. We must ensure that the VHI, in its new format, and any new competitors do not engage in cherrypicking and abandon vulnerable sectors of the population to a difficult situation.

The health service will change dramatically in the coming years. The Minister and his predecesssor worked closely with the health boards as they move into a new era of health care. It is envisaged that people will spend shorter periods in hospital and convalesce at home or in nursing homes and the VHI must gear itself to take account of that. If necessary people could be paid an allowance which would enable them recuperate at home instead of in hospital.

Consultancy services in rural areas, particularly in Cavan-Monaghan, should be improved in order to provide a service for people close to their homes. People would not have to travel to the Blackrock Clinic or the Mater Private Hospital if health care services were decentralised. The Bill gives an opportunity to the VHI to be better placed to meet the challenges of the future and that is one of them.

Middle income families with children at college or facing other extraordinary costs find it difficult to meet, in many cases, exorbitant VHI subscriptions. They must pay their doctor's bills and medication, dental care and physiotherapy bills. The VHI should devise a package that would give access to such care at a nominal rate. The membership of VHI is such that a package could be offered at a relatively low cost. Group schemes are in operation which offer discounts to participants and perhaps a similar scheme could operate for ordinary medical care.

As there is peace in Northern Ireland we should consider aligning our hospital care facilities with those in Northern Ireland. When we consider the level of health care in Altnagelvin Hospital it seems sensible to have an arrangement not just at health board or Government level but at VHI level with that hospital. In Cavan-Monaghan and in Louth many people have family connections in Northern Ireland and it would be more convenient for them to be hospitalised immediately north of the Border or in some of the extremely good hospitals in Belfast. During the troubles in the North great expertise was built up in such hospitals, particularly in the Royal Victoria. This could be tapped into in providing ordinary health care service. The Minister and the VHI should examine this possibility. It would introduce competition which might help to lower costs. It might also result in speedier access to treatment which would help those suffering from chronic illness.

Services have been developed at local level. There is a scanning machine in Cavan hospital and major improvements were made in Monaghan hospital. This has resulted in the earlier diagnosis of illness at local level.

The Minister examined the area of private care for the elderly. It is right that he should have control over that and ensure proper services are available but he might also look at the level of care in private hospitals. The majority of patients in private hospitals receive extremely good care and treatment but we must be certain that the best care possible is available particularly when State or VHI funds are involved. We must be certain that top quality nursing and medical care is available. In general hospitals there is continuity of nursing staff. That is important as a term in hospital for a person is a traumatic time for the patient and the family. We must ensure that patient care, for which the consumer is paying a hefty insurance premium, is of the highest quality. The experience of some families who pay high premiums and are hospitalised in private hospitals is that the level of care is less than what they anticipated. They would also have experience of care available in general hospitals. The Minister should examine this matter.

The VHI should have customer help lines. That may be difficult to operate but the customer is often alienated from the provider. This particularly applies to those who participate in group schemes. People should know what services are available and if they have a problem they should have access to somebody who will help resolve it.

For example, if a person is diagnosed as having cancer he or she should know exactly what treatment is available. There should also be a fair complaints procedure. I hesitate to suggest the office of an Ombudsman in the case of the VHI because of the danger of it being unable to negotiate with hospitals and so on. However, people must be able to have their complaints dealt with.

The VHI has provided a great service for many years. Many people owe their lives to it because the health services could not have coped with the increasing numbers of open heart surgery, triple by-passes and so on that have been carried out in recent years if the private hospitals, which are funded mainly through VHI, had not been available. The majority of people are satisfied with the service provided by the board.

The health care consultative forum which the Minister proposes to establish next spring will play an important role in the provision of public and private health care and the VHI has a major role to play in that. I wish its chief executive, Brian Duncan, every success in promoting further changes in the system and this Bill will enable the board to compete successfully in the next century. In any business changes are necessary, otherwise we would move backwards. There is an onus on the chief executive, the board and all concerned to ensure that the VHI provides as good a service, if not better, in the next century.

The VHI is a major business. In the last financial year £224.5 million was paid out in hospital and consultancy care, £107 million of which was paid to private hospitals, £60.3 million to consultants and £57.2 million to public hospitals. When account is taken of the number of public hospitals perhaps that balance should be re-examined to ensure that as many people as possible are treated in their home environments. The fact that 35 per cent of our population are members of the VHI is a tribute to the service and the operation of the board. It is interesting to note that only 12 per cent of the UK population are covered by similiar health insurance.

As costs are bound to increase, the VHI must endeavour to make the best deal possible with hospitals and consultants. It is important that the Minister maintains some control to ensure that increases are at a minimum. If costs are too high young people may opt out of health insurance and, while this would provide them with cash in their pockets in the short-term, it would have serious implications for them and the VHI in the longterm. It is important that the VHI, in consultation with the Minister and the Department, ensures that increases are kept to a minimum and that a maximum number of people are covered by health insurance, thus providing a good balance between private and public health care. Our public health care is of a high calibre. If one compares the position in places such as the United States and Canada one must acknowledge the major improvements that have been brought about in health care here, through a mix of private and public services.

Is maith liom an deis seo a fháil labhairt ar an ábhar seo mar tá cúrsaí sláinte bunúsach dúinn go léir. Tá sé tábhachtach go bhfuil an Bille seo faoi bhráid na Dála anois. Cuireann sé íontas orm go minic cé chomh mór is a ghlacaimid leis go bhfuil an VHI ann.

Ta an costas réasúnta dar liomsa agus mar atá ráite tá sé ag freastal ar os cionn milliún den phobal. Dá ndeánfaí scrúdú air is dócha go bhfaighfí amach go bhfuil sé ag freastal ar bhunáite na ndaoine nach bhfuil cártaí leighis acu.

Mar atá ráite in óráid an Aire má chuireann tú é sin i gcomparáid leis an mBreatain Mór tá céatadán i bhfad níos aoirde den phobal anseo gafa le hárachas sláinte príobháideach ná mar atá thall.

Cruthúnas é sin ar cé chomh mór is atá an VHI taréis dul i gcionn ar an bpobal.

Níl aon amhras ach oiread ach go bhfuil athraithe móra ag teacht ar chúrsaí árachais sláinte sna blianta beaga atá romhainn.

D'fhéadfaí a rá go bhfuil céim chun tosaigh á thógaint leis an mBille seo. Caithfidh mé a rá áfach go bhfuil beagán íontais orm nach bhfuil ceist na hiomaíochta pléite go hiomlán sa mBille. Is beag tagairt atá ann dáiríre do cheist na hiomaíochta in óráid an Aire. Sin í an cheist is mó a bheidh an VHI ag díriú air as seo go ceann blianta beaga.

This is an important Bill. The VHI has served us well over the years and provides a service about which I have had relatively few complaints from my constituents. Its monopolistic position enabled it to operate community rating in a true sense. If the market opens up it may be impossible to prevent cherry-picking. If a new operator comes into the market and applies the same rules as the VHI it would automatically enjoy a huge cost benefit.

The VHI does not accept members over a certain age but, as it has been in the business since 1957, a large proportion of its membership is over 65 years. Consequently, if new players are allowed to enter the market in future on the same terms — the Minister appears to favour that without much equivocation — they would have to accommodate a similar proportion of people over 65 years. In other words, they could not be allowed to apply the same age restriction rule as, if they did, it would be many years before the age profile of its members would be the same as that of the VHI. If a new player came into the market and did not accept members over 65, it would be at least 30 or 40 years before the average age profile of its members would be similar to that of the members of the VHI. If we were to allow a service which has been provided on the basis of equity to be cherry-picked, those who remain with the VHI would be at a cost disadvantage with the result that fewer young people would opt to join and, in turn, the age profile of its members would disimprove. Costs would also increase and we would find ourselves in a vicious circle.

I have been a member of the VHI for a long number of years although in recent years I have not availed of its services. Those in good health believe it is important to take out health insurance cover. They know the time will come when they will have to make a claim and, therefore, appreciate the concept of community rating.

The VHI cover a family for most services at a reasonable cost. I estimate that one is not talking about much more than £100 per person per annum in plan C when tax relief is taken into account. If competition was introduced, would a similar service be available, irrespective of age?

It is obvious that, proportionately, older people are in need of more medical care than younger people. It is also my experience that families with very young children avail more frequently of the services of the VHI. There is a need, therefore, to ensure that any new players on the market are not allowed to cherry-pick those whom they consider a good bet.

While I would like to see the range of packages available widened — there has been reference to cash cover — it is important that the core business of the VHI is maintained. It is akin to the social insurance system to which one pays into to ensure that unexpected medical expenses are covered. There is a saying in Irish, Ní hé lá na faoithe lá na scolb. If the VHI did not exist, many people would not make provision for such cover.

Most of those who do not have a medical card automatically take out voluntary health insurance cover. This is a simple procedure whereby one buys a certain package. If competition was introduced, people would be inundated with offers of various packages. It is my fear that people would see this as an extra they could do without. We have to guard against this.

Many employers offer their employees insurance cover through the VHI. When I was an employer I organised a VHI group scheme for my employees and others in the community. This was convenient for them and simple to operate. It also meant that, as an employer, I was selling the only product on the market. They were asked to select the plan they wanted to pay into and those who joined — we encouraged people to do so — knew what they were getting.

If competition was introduced, employers would feel that there was an onus on them to check what was on offer elsewhere on the market. As a consequence, fewer employers would be willing to collect health insurance payments from their employees as they would be required to make value judgments as to which scheme offered the best value. This would require much research. The implications, therefore, of opening up the market need to be further researched.

It should not be accepted that there is no downside to competition. When competition was introduced in Europe in some instances the results were good, but in others they were questionable. In this context, questions were raised by the ESB this week. In the case of health insurance, I do not believe that VHI cover is expensive when one considers the service provided. I am not convinced, therefore, that we would end up better off if the market were to be opened up.

It is curious that competition may be introduced in services which in previous times it was considered, because of the enormous infrastructural costs involved, should be provided by a sole provider, in the case of health insurance by the VHI as we wanted to adopt the concept of community rating. As I pointed out in another place, there is no evidence to suggest that the introduction of competition in the motor insurance market has resulted in lower premiums. In tandem with this, two of the most expensive services provided by the State — education and health — are being brought more and more under State control.

We should compare the cost of VHI cover and the service provided with the vast sums of money spent on public medical services. I have not done the sums, but if one takes the figures I have given, the average, including the Blackrock Clinic and so on, works out at £178 per person per annum. For this one has access to a private bed and consultant without having to queue. I often wonder if the State would be better off taking out VHI membership for the remaining two million people and letting the private sector administer the system. That is a great dream. Under such a system people would be asked to pay an extra £100 per year through the social insurance system in return for which no one would have to queue for a hip replacement operation or heart surgery.

One of the advantages associated with VHI membership is that people can save time by attending the casualty department at Galvia Hospital in Galway, otherwise one has to wait hours on end to have even the most simple procedure performed. On the other hand we have noticed that if one rings Galvia Hospital, one can be in and out in an hour. How, on £178 per annum per person less tax relief, can top private facilities be covered? If one discards the private bed and non-medical elements, the cost comes down considerably. At the same time it seems to be impossible to provide services for public patients without huge queues. That puzzles me and I would love to get a rational explanation for it. It is about time the public service sector of medicine studied how the private sector manages to operate without constant queuing. If a private patient requires cardiac surgery or a hip operation, he or she does not have to go to North America or to outside providers but the public sector is always looking for outside facilities to which it can direct the queues. This question must be answered.

It seems to be a matter of fundamental principle to so-called socialists in this country that the State provides and the State decides. A similar type arrangement to that which applies to private patients when choosing consultants should apply to public patients. I do not see why the State should choose who carries out treatment even if one is going public. Few of us would allow the State decide what garage would service our motor cars. It is extraordinary that we think it axiomatic and reasonable that the State should decide who treats our bodies.

There is an artificial division between public and private medicine. Private medicine is similar to the social insurance dentist scheme where one picks from a panel. If a person is eligible for public services, the situation should be similar. There should be an element of competition meaning that the consultants who were not delivering would not get customers. Public patients could pick from panels of consultants on various disciplines. The list for public patients would disappear fast because there would be an incentive for consultants operating in the public service to provide services as they do privately.

It is important to ensure a geographic spread of medical facilities. This matter has been raised several times during the recent debate but cannot be repeated too often. There is not a full cardiac facility available in Galway. The western region is a huge geographically dispersed region which lacks this basic facility. Rather than having a number of such facilities in the capital, it would be more important to spread the service on a reasonable geographic and regional basis.

There seems to be a belief that when one gets to Galway one has reached the most western tip of the country or that Castlebar and Ballina are as far west as one can go. It is often forgotten that, for many people, Galway, Ballina and Castlebar are 50 or 60 miles to the east on the way from the west to Dublin. In Connemara, a large number of people live 60 miles west of Galway city and must travel on bad roads. A journey to Dublin is 200 miles. Those who make decisions forget that there are people who live more than 130 or 140 miles from the capital.

I welcome many of the changes proposed. However, as Deputy Geoghegan-Quinn said yesterday, we must take a more fundamental view of the health area. Many things require change and we should not accept anything at face value. Rather than introducing competition to a service which has worked well on a community and no profit basis, we should examine the possibility of creating more competition within the provision of health care to ensure that all the people, whether in public service or private service, are provided with the care to which they are entitled.

Tá áthas orm go bhfuil an Bille seo á thabhairt ar aghaidh. Sílim fhéin go bhfuil sé beagáinín teoranta agus béidh mé ag súil le leasaithe móra ar cursaí sláinte sa tír seo sna blianta atá le teacht.

I wish to share my time with Deputy Kavanagh.

Is that agreed? Agreed.

I congratulate the Minister for Health on bringing forward this timely Bill which addresses the important issue of competition in the insurance market, particularly in the context of the EU directive implemented last year. In an era of increasing competition which is largely dictated by developments in the European Union competition law has become the norm for the providers of public and private services throughout the European Union. All European countries are finding great difficulty in coming to terms with the completion of the Single Market. This Bill represents the need for competition in the health sector. Many people will make comparisons with competition in other insurance markets including motor insurance or life assurance. Both providers and customers of health insurance wonder if we will find trends in the health insurance area which are similar to those experienced in other insurance sectors. We have often been told that competition from overseas companies will inevitably provide lower premia for motor and other insurance. Nothing could be further from the truth. Recent experience has clearly indicated that if other factors are not taken into account in our jurisdiction, the directives and legislation we enact to provide competition, lower premia and better value for money are ineffective. The same situation will arise with premia levels for subscribers to the VHI unless we take fundamental action in respect of cost control.

Worrying trends developed in the VHI, resulting in the need for a financial package to recover the financial fortunes and reserves of the VHI some years ago. This clearly indicated that costs were out of line, that premium levels were rising too fast and that the company was out of step with the normal expectations of subscribers as to what they were prepared to pay and what they could afford to pay in order to maintain their level of health care cover. Even though people had tremendous foresight in 1957 in establishing a private health care insurance market through the VHI, we are now in a different era. We are facing major challenges to maintain the strength and position of VHI in the health insurance market.

The Minister for Health stated that 35 per cent of the population has membership of VHI. That is a tremendous share of the market by ordinary standards. I have no doubt the new chief executive, Mr. Duncan, who has much experience in Irish Life and will bring it into the 21st century, will also bring his far-reaching vision to bear on this company.

The dramatic increase in VHI premia in recent years is an indication that it will soon be out of the reach of the ordinary person. Premia levels have increased by about 50 per cent in the last eight or nine years in line with the dramatic increase in medical costs. Improved health facilities and technology in the medical area make many operations in hospitals such as the Blackrock Clinic and the Mater Private Hospital very expensive.

It is necessary to consider section 2 of the Bill, perhaps the most important section, which provides for the development of a greater range of products by the VHI. As Deputy Ó Cuív rightly pointed out, there is a danger that young people will discontinue membership of VHI if attractive packages are not introduced. Even though assurances have been given that cherry-picking will not be possible, there is a danger that it will be practised by outside competition. The status of community rating must be maintained and the only way that can be done is by introducing a competitive package for all sectors of the community, particularly those who are least likely to make claims from the VHI, namely, young people. A regulator is required in the health insurance area to deal with the interests of outside companies in the health insurance market and ensure the VHI is not at a disadvantage vis-à-vis other companies who wish to become involved in this area.

I welcome the section that provides for an expansion of the board of VHI. In the light of future competition, a tremendous amount of experience, which is available in the State, is needed in the VHI. There are many excellent people in the commercial world of life assurance and other forms of insurance who could guide VHI into the future. Section 2 also deals with value for money and gives the VHI power to compete with insurance providers. It also provides for the containment of costs which is important to the future of VHI in terms of retaining the market share it has so valiantly built up over the years.

Section 3 provides that the Minister may prevent automatic premia increases, which I welcome. The informal arrangement that existed between the VHI and the Minister for Health needed to be formalised. There is always a danger that companies will seek premia increases rather than control costs within the company. Attention is focused on the need for the board in the first instance to seek the minimum increase in premia. A Minister for Health cannot be expected to sanction an irresponsible increase if the VHI board has not put its own financial house in order first.

I support the retention of tax relief on VHI payments, which has been part and parcel of budgetary decisions by successive Ministers for Finance down the years. The tax regime allows many people to become subscribers to the VHI who could not otherwise afford it. Subscribers are encouraged to continue to be part of a private health care system, without which an extra burden would be placed on the State through the public hospital system. The tax allowance is very important in making VHI subscriptions attractive. I hope that in the next budget and future budgets the allowance will continue to assist the VHI in retaining its market share, which is essential if it is to become competitive and build up the financial reserves necessary to meet increased claims in the years ahead.

I wish to declare my interest in this Bill in that I and my family have been members of the VHI for many years. I first joined when I was employed by Wicklow urban council and it is a great relief to know that one's health expenses are covered in times of need. I have contributed much more to the VHI down the years than I have claimed. Insurance schemes operate on the basis that a larger amount is received by way of premia than is paid out in claims; if everybody claimed more than they contributed the scheme would obviously collapse.

I also have an interest in this matter as chairman of the Joint Committee on Commercial State-sponsored Bodies. The VHI is one of the organisations that has been recently investigated by that committee. A report containing 19 recommendations was brought before both Houses of the Oireachtas. It would be useful to make time available to debate reports by committees of the House. This is one report in which there was great public interest and such a debate would inform people of the work carried out by committees on their behalf.

The Bill before the House incorporates a number of the recommendations — we would have welcomed acceptance of them all — by providing for some important changes to the VHI.

There are a number of reports dealing with the operations of the VHI which cover aspects such as relations between the public and the VHI. Many of the reports call for the abolition of the tax allowance on VHI payments. The joint committee, which is representative of all parties, believes the tax allowance is very important to membership and strongly supports its continuation. I will not repeat Deputy Hogan's argument, but he made a strong case that that recommendation be adopted by the Minister though obviously it is not part of the Bill nor should it be. The committee recommended the retention of the tax allowance on VHI payments. There is considerable demand among VHI subscribers for full indemnity against the cost of consultants' fees. The joint committee endorses the VHI's policy to attain full indemnity. At present 65 per cent of consultants have agreed to that and are participating in the scheme. People are irritated by being asked when attending a consultant or hospital if they are members of the VHI. Many subscribers feel it is perceived that a member of the VHI can afford to pay more towards medical expenses as well as paying the hospital bill.

The joint committee also believes the VHI should publish the names of participating consultants for the benefit of its members. This was resisted by consultants but despite strong opposition from vested interests their names were published in the joint committee's report. I recommend to the Minister that their names be published as it is important that members should be informed of the areas of expertise covered by consultants and the number of consultants available in different specialities covered by the VHI. Members wish to know the full list of the names and addresses of participating consultants and details of their specialities.

The joint committee does not recommend an attempt to regulate consultants' fees by law. I note such a provision is not included in the Bill and I am glad the Minister accepted that recommendation.

The VHI suggested that an official licensing system should be introduced to regulate the use of new medical equipment in hospitals, including public hospitals, to prevent duplication in the provision of expensive equipment. The joint committee proposes that such a system should be introduced by the appointment of an assessor or ombudsman to deal with claims from consultants and private hospitals. Such a system is fair. It operates in the banking and insurance industries and an ombudsman deals with claims related to the operation of the public sector.

Most members who have spoken on the Bill agree with the recommendation of the joint committee that the VHI's policy on community-rating should be preserved as much as possible to ensure that vulnerable groups, such as the elderly, should not be exposed to large increases in subscriptions. Given that the VHI has provided a service for 40 years, members who joined it when they were young and healthy may now be heavily dependent on it. That sector represents an increasing number of members and it requires the Minister to ensure that the community-rating policy is maintained even in the face of severe competition that may result from opening up the insurance area as a result of the implementation of the 1994 European Directive.

The joint committee recommends that the VHI should not be involved in the ownership or operation of hospitals except for the most compelling reasons. It cannot be the payer and the operator at the same time. The Minister should ensure that important guideline is adhered to in his dealings with the VHI. However, the scope of the VHI's activity should be extended to cover a variety of health insurance related activities, including preventative health programmes, cash schemes, holiday insurance and other related services, and section 2 provides for that. I am sure we would all agree that if the VHI provided such a variety of health insurance cover the cost of members' subscriptions could be kept down to some extent. It would also ensure that members of the VHI would only have to deal with one insurance company for a variety of insurance packages.

The joint committee recommends that the VHI should become a State company. That does not appear to be included in the Bill, but the committee considered it an important recommendation and I understand it has been taken up. The committee also recommended that the number of directors on the VHI board should be increased to nine and I note the Minister has provided that the number will be increased from five to 12. The joint committee considered that members' interests should be widely represented on the increased membership on the board. The joint committee recommended that the VHI should review its organisation and personnel with a view to changing from a monopoly to a competitive organisation in the open market.

I thank the Chair for the opportunity to speak on this Bill to extend and update the 1957 Health Insurance Act. I welcome the proposals to develop new health insurance products. I hope the implementation of the EU directive in the area of non-life insurance to open up the market will not lead to higher health insurance premium costs. I also hope the new players to be allowed into that market will not cream off the crop and that the competition which should be generated will not lead to increased subscriptions for VHI members. If competitors were allowed to pick the best and leave the rest it would lead to higher subscriptions for VHI members.

The impression from the Minister's speech was that the VHI should operate at arm's length, but a reading of the Bill indicates that the Minister must have a short arm as he seems to have his hand on the tiller. I would like as many foreign insurance companies as possible to enter the private sector, an area where there should be more competition to reduce health insurance premiums. We should expect young people to pay for their own health care through membership of the VHI and in return they should get a higher tax allowance. That is the health care area which we should be addressing. I want to pay tribute to the role of the VHI in providing private medical insurance, especially for those who, through failing health, have made excessive demands. As a contributor for many years to VHI as a premium holder, I am aware of its benefits and agree with a previous speaker who said he had probably paid in more than he took out. None of us will have any quibble with that because we knew we must have good cover, which is important. In my experience, there would have been severe hardship in many families down the years if they had not that cover and the service which it provided.

There is an ingrained fear of a breakdown in health and it can cause families great concern unless reasonably priced cover is available. Such cover eases people's concern considerably and it also eases their minds. In the public sector and the GMS which is different, this is noticeable. When you meet people who may be just outside the qualification limits for a medical card, although they may have a good pension they are concerned to have cover to ensure they get necessary treatment during their life.

The Minister stated that opening the market may not lower premia and that the tendency would be to compete more on services than on price. This House does not expect reduced costs in whatever legislation we bring before it because while there have often been promises of the reduction in costs through various legislation, the outcome by and large is a substantial increase in costs.

In no area have costs increased as much as in the health field, they have spiralled from year to year. Despite all the health programmes, we have continued increased demands on visits to GPs from patients on the GMS, increased hospital admissions and drug costs. I have been a member of a health board for over 20 years and I have consistently made recommendations and statements on the costs of drugs.

The substantial increase in VHI premia over the last number of years was outlined here yesterday. The costs are spiralling and nothing seems to have been done in the health field to tackle this problem. We may bring in legislation to cover the VHI but the root cause needs to be tackled. According to the Minister in 1980, VHI subscriptions amounted to £25.2 million with claims of £19.6 million, by 1995 the corresponding figures were £232.6 million and £233.1 million respectively. That is a big increase which came at a time when new procedures and facilities were being provided and still the costs spiralled. Irrespective of hi-tech or new procedures in the hospital field, the cost is astronomical. Being a member of a health board and listening to these consultants who have many subspecialities etc., it seems we will be providing many more jobs to do practically the same thing and the end product is that it will cost more and more.

A few years ago, I was greatly concerned about the cut in the North Western Health Board by the Department of Health. The reply to a question which I put down in October 1991 to elicit the per capita expenditure in each health board area was as follows: Eastern, £453; Midland, £406; Mid-Western, £349; North-Eastern, £301, which is the figure for my health board; North-Western, £501; South-Eastern, £393; Southern, £350; and Western, £462. That caused a lot of concern, we discussed it at length with the Minister for Health at the time and received an assurance that things would change. When the health Act came into operation in 1987 and with the Minister giving pro rata increases as opposed to increases by virtue of need, it left the North-Eastern Health Board, which was starting from a low base, lagging behind. I remember we went to the Minister to put our case strongly to him and were promised everything under the sun; the situation would change even before we got back to Monaghan.

The reply on 24 October 1995 to a similar question regarding the health boards which I put down was as follows: Eastern, £702; Midland, £512; Mid-Western, £513; North-Eastern, £447; North-Western, £658; South-Eastern, £527; Southern, £536; and Western, £657. In those years, the increase in the Eastern Health Board was £249 per head which is almost as much as the North-Eastern Health Board received in 1991. The increases over the period were as follows: Eastern, £249; Midland, £106; Mid-Western, £164; North-Eastern, £146; North-Western, £157; South-Eastern, £134; Southern, £186; and Western, £195.

In that reply in the Official Report of 24 October 1995; Vol. 457, Col. 1035, the Minister for Health, Deputy Noonan (Limerick East), mentioned the demographic factors but the difference between any one of the eight health boards would have been small. The Minister mentioned “the present stage of development of the services” which is the crunch issue. The only way in which the Minister will develop the services is through funding and health boards, which are far behind in so far as occupational therapists, speech therapists and district nurses — and there is a serious imbalance from health board to health board — are concerned, can only address the situation with money. The onus is on a Minister, irrespective of which portfolio he or she holds, to ensure even-handedness. One does not expect this to be brought about over a year but I thought in 1991 I would not be saying in 1995 that the situation is still uneven, unbalanced and unfair.

Basically, that is the way it is when the Eastern Health Board has £702per capita, an increase of £249. In that health board, I believe a person can walk into a private operator, take an eye test and it is paid for by the health board. It is wrong that they are able to bring their spectacles home with them on the same day while people in my health board area have to wait up to six or 12 months. The only activity many old age pensioners can enjoy is reading the daily paper and I am very annoyed that the necessary funding has not been provided for them to have their eyes tested.

Given that my county had the best hospital in the country and a good psychiatric hospital, the county council decided to invest the money in capital development. As a result the other three counties in the North-Eastern Health Board area have been allocated funding, to which they are rightly entitled, for certain facilities and we have suffered in terms of the funding provided for such facilities.

I understand it has been decided not to proceed with the reduction in cover for psychiatric patients. One of my constituents told me that if the length of cover had been reduced from 90 to 40 days he would have had to pay an extra £3,500 in hospital charges earlier this year. I am glad it has been decided not to proceed with this proposal.

The VHI provides cover for 35 per cent of the population. This is a very high percentage given that only 12 per cent of the population in the UK are members of the voluntary scheme there. Deputy Ó Cuív said that it may be beneficial to privatise the scheme and let the State pay the VHI or a similar body to provide this service. There would be nothing wrong in doing this and it certainly would not cost any more than the public sector payments under the GMS. The Minister said that he is considering setting up a health care consultative forum. Given the cost of health care and the requirement for new services, such a forum should be established as soon as possible.

In recent years there has been very close co-operation between the North Western and the Southern Health Boards in Northern Ireland and the North Eastern and North Western Health Boards here. This is an ideal partnership as the health boards cover all the areas along both sides of the Border. There has been much co-operation in terms of the facilities provided and I hope this can be extended, particularly in the area of community care for old people. For example, it should be possible for old people in the South to visit day care centres in the North and vice versa. In the general hospital sector, the ENT consultants in Omagh Hospital attend the out-patient departments of the Cavan-Monaghan hospital grouping and carry out the operations. This type of co-operation will not only improve the quality of service provided but will also reduce costs. We have visited the trust hospitals in the North and consideration should be given to setting up similar hospitals here.

I welcome the Bill. I have been concerned about the increases in premiums in recent years. Nevertheless, I congratulate the VHI on the efficient service it has provided since its foundation.

I compliment the Minister on the introduction of this Bill. As a member of the Mid-Western Health Board I thank him for the tremendous improvements carried out in Limerick Regional Hospital. The £20 million expansion announced by him is very much needed in the hospital. His work is as appreciated in other areas as it is in the Mid-Western Health Board area.

I have a specific interest in this Bill as I was a member of the Joint Committee on State-Sponsored Bodies when it examined the VHI in detail. Some of the deficiencies identified at that time have been rectified in the Bill. As Deputy Kavanagh said, the committee felt at the time that the board was much too small with five members. I, therefore, welcome the proposal to increase the membership to 12. Given the rapid changes in the health care sector, it is extremely important to ensure that the proper professional personnel are at the top level to guide the VHI into the future.

Reference has been made to the increased cost of health care. It is recognised that we have an ageing population, which gives rise to increased costs in the health area. In addition, the use of expensive sophisticated technology also gives rise to increased costs. In recent years an additional burden has been placed on the health service, that is, the high cost of insurance for medical practitioners, be they doctors in general practice or surgeons. As in America, there has been an increase in medical litigation and local GPs talk about the escalating cost of insurance which is essential to protect them and their clients.

Deputy O'Malley and I referred some years ago to the VHI's resistance to giving recognition to new private hospitals in the mid-west region. Various packages were prepared with regard to the principle of establishing a private hospital in the area and it would appear these have been resisted by the VHI at all stages. I understand another proposal is being prepared but it will never get off the ground if the VHI do not provide funding for those who avail of that facility and do not recognise the hospital afterwards.

In the Mid-Western Health Board area many VHI members may decide not to go to the local regional hospital but to avail of facilities in private hospitals. They will rightly say they are playing an enhanced membership rate in order to provide for that. We have a private facility in Barrington's Hospital where there are a number of consultants who, in many cases, refer their patients to the regional hospital. In other cases the regional hospital may not have the required specialist services available and they refer those patients to various private hospitals in Cork, Galway, Kilkenny and Dublin. This is unfortunate because in the Mid-Western Health Board area there is a population over 310,000 people, many of whom are VHI members. A segment of the population are disenfranchised in comparison with other parts of the country. Perhaps the VHI will address that issue, especially in view of the competition which may arise in the future if others come into this market.

It is extremely important that community rating should continue. We cannot have new health care companies coming in to the Irish market and creaming off the younger segment of the population, with fewer inherent risks, quoting an unrealistic rate and not necessarily conforming as we would wish. It is important if any health care company wishes to operate in the Irish market that it establishes a profile on age structure and the type of populations etc. which the VHI have to contend with in framing their premiums.

Most politicians encounter situations where because of changed circumstances, probably due to redundancy, a person who was part of a group membership in VHI may decide some months later for economic reasons not to continue their membership. When they get a heart attack or some other serious illness they realise the importance of VHI membership which they no longer have. In many cases such people are not eligible for a medical card, yet cannot afford VHI membership. A segment of the community is trapped in that position. I have encountered many instances of hardship concerning people who were members for many years but, because of changed economic circumstances, are no longer members of the VHI. Having approached the VHI regarding the merits of their cases I have found it to be tolerant. In other cases there may be difficulties in regard to giving some concession or honouring their long time membership. There is a segment of the population which is not eligible for a medical card and which the VHI does not cover.

I ask the Minister of State to bring to the attention of the Minister the case of a VHI member who is admitted to hospital and has an accident there which may prolong their stay by a further couple of weeks. I would not expect the VHI to be liable for an accident which happened in the hospital. I will illustrate this by giving two examples. One is the case of a VHI member who was hospitalised for tinnitus and was put on a trolley, left unattended and fell off and had to go to an orthopaedic hospital for three weeks. Having been admitted to hospital for tinnitus this person came out badly bruised and injured as a result of their experience in the general hospital. I am still awaiting a full explanation from the hospital. Last week a person was admitted for dialysis, for which, I understand, a certain amount of supervision is required as the person may be weak afterwards. The person fell and had to get 15 stitches. One can imagine the frustrations of people who are admitted to a health care environment and come out worse than when they were admitted. Most of these people are VHI members. I do not think the VHI is liable. The health board should share whatever costs are incurred. Those two examples left me rather bemused by the health care system.

Those of us who are members of the VHI appreciate the protection it offers. If we contrast the health care system here with that in the United States we have a fair system. Medical card holders do not have to wait as long as in the past for cataract and hip operations due to Government decisions regarding waiting lists. People who have had a cataract operation are very happy with the outcome and are full of praise for the health care system.

People who are not eligible for the medical card system may avail of the VHI, but some are unable to afford it. Some take a gamble in the hope that nothing will happen. Does the VHI provide a simple package where, in tandem with the health board, it caters for a person who is not eligible for a medical card to ensure they do not have the worries associated with illness at a later date?

I welcome the Bill, which is a step in the right direction. The VHI, because of the great work it has done, needs to be protected from competitive forces. If the market place is fair, if competition is fair and if whoever comes into the Irish market can operate on the same terms, the VHI will prosper and flourish into the future.

I welcome the opportunity to express a few thoughts on this very important Bill. I congratulate the VHI on its great success since its foundation in 1957. I thank it for the support it has given to many thousands of people in times of illness and in need of medical treatment which they would not have been able to afford without VHI membership. Very few of its members have not had to call on its services. I endorse what Deputy Finucane said in praise of the VHI. I endorse his call for an examination of the scheme so that those who are marginally above the threshold for a medical card could participate in an inexpensive scheme that would tide them over in the event of illness. I hope that the Minister will be able to act on this suggestion.

It is no harm to recall that on its foundation 40 years ago, the VHI with State support stepped in to provide a public service which the private insurance sector appeared unwilling or unable to provide at the time. Times change for everyone and the VHI is no exception.

This Bill strengthens the legislative and structural basis of the VHI board to enable it to compete with the many insurers who are now free — and obviously willing — to offer a product under the Health (Amendment) Act, 1994 which implements the EU directive. The legislation enables the VHI to meet that challenge. I am pleased that the Minister is committed to preserving the principle of community rating, open enrolement and life time cover. The VHI operates under this principle and has been able to offer affordable health insurance during the past 40 years. Risk rated insurance cover should never be contemplated by the Government now or at any time in the future because of its unfairness, particularly to old people and those who are chronically ill. To preserve community rating will demand great resolution on the part of the Minister and the Government, but I am sure they will rise to the challenge.

I criticise the steep rise in VHI premiums in recent years, particularly in the late eighties, with the concurrent reduction in benefits in certain cases. Balanced billing is another protracted and unsatisfactory arrangement. I am aware of factors outside the control of the VHI which account for this and I trust that this legislation will place the board in a better position to deal with the pressure for future premia increases and support its efforts at cost containment generally.

The Minister emphasised the need for providers of health care and insurance companies to be more transparent and accountable about the services provided to patients. It is clear there is a common interest between the provider, the insurer and the member patient. Those who provide the service should be accountable to members. They are there to serve the patient, not vice versa. In this context I welcome the establishment of a members' advisory council by the VHI.

I am critical of the VHI's recent attempt to limit insurance cover for those with mental illness. My final criticism is of the capping arrangement that has been agreed nationally between the VHI and the Department of Health on the treatment of patients with VHI cover in hospitals. As a member of the Western Health Board I know the hospitals in our region alone incurred a loss of £500,000 in the past two years as a result of this arrangement. It has led to the anomaly where private patients are being treated virtually free of charge in hospitals at the expense of public patients. The hospital is not being compensated for the service it has provided to the patients once it has reached its cap allocation, yet the consultants who treat the patient are remunerated. This puts pressure on hospital services which have had to be curtailed and this in turn impacts on public patients who are denied early treatment to which they are entitled and have to go on a waiting list. I am aware that changes have been made and the chief executives of the various health boards will negotiate with the VHI directly, not with the Department of Health. I trust this will be more favourable to hospitals in the western area which continue to be under the greatest pressure to meet patient demands because of inadequate funding by the Department of Health.

As well as recommending the appointment of Mr. Duncan as chief executive officer, the voluntary health review group recommended the enlargement of the board from five to 12 members and a change in its corporate status to that of a limited company. It is entirely reasonable for the Minister to leave the change of status to another day when the proposed changes to enhance the range of expertise at board and management level have been successfully effected. I question the wisdom of enlarging the board membership from five to 12. I know a perfectly good reason has been given, namely that the board should have available to it a depth and range of knowledge and experience not only in health but in the actuarial, financial and marketing fields appropriate to the company operating an insurance business. Surely this expertise could be made available to the board without extending its membership. My fear is that when the Minister is appointing members to the board he will come under intense pressure to have the board reflect predominantly vocational rather than business interests. This would not be desirable.

Section 2 enables the VHI to offer new health insurance products to cover situations other than the traditional indemnity it gave members against medical expenses incurred in the treatment of injury, disease and illness. The fact that the VHI has attracted 1.3 million people or 35 per cent of the population to avail of its product against the 12 per cent in the United Kingdom who have health insurance cover is testimony to the success of the VHI. However, the VHI will face competition and in order to survive it will be compelled to offer packages comprising a combination of indemnity and cash cover. This in turn will enable it to target young people, and this is necessary for the success of the organisation that offers cover on a community rating rather than risk basis. In the interests of its clientele it is reasonable that the Minister should retain an influence in the overall direction in which the board develops and in the implementation of any premia increases sought from time to time.

Many Members referred to the increasing cross-Border co-operation between the health boards nationwide, a most desirable development which should continue to be encouraged with its enormous potential benefit for the provision of health care services for everyone North and South. I am sure the Minister and Government will spare no effort in further encouraging such co-operation for the benefit of patients and their requisite services.

The provisions of this Bill are geared at enabling the Voluntary Health Insurance Board provide its health care services to a modern society, the first introduced since the 1957 Act which established the VHI. I am certain its provisions will enable the board to gear itself to meet any challenge presented by its competitors while continuing to provide its members with a satisfactory health insurance scheme. I wish the board every success in its future operations.

I welcome the introduction of this Bill and the opportunity to make a few brief comments on it. The importance of the operations of the Voluntary Health Insurance Board nationwide is evident from its membership of one third of our population, its subscription income of £232 million being further evidence of its key role in the provision of health care for our citizens.

I should like to refer to a matter mentioned by my colleague, Deputy Leonard, the potential for co-operation between North and South, of particular importance to Members like Deputy Leonard and me who live on the Fermanagh border, and my constituents residing closer to the Erne Hospital in Enniskillen than to Cavan General Hospital. It is my understanding that the cost of availing of VHI cover in hospitals in the North — comprising part of the province of Ulster — is prohibitive, commensurate with those required by the Mater Private Hospital or the Blackrock Clinic. Surely it is within the competence of the Department of Health, its counterpart in the North and the VHI to make the VHI health care scheme available to those wishing to avail of its cover and services in the North.

There is much talk at present of co-operation between North and South, a most welcome and necessary development which must be encouraged at all levels and which has been much in evidence in recent years in many areas of activity, such as development of the arts and the protection and maintenance of our common environment. Unfortunately, all facets of life North and South are not easily amenable to such co-operation but there is an unanswerable case for the provision of health care services on a joint North/South basis.

The Joint Framework Document drawn up by the Irish and British Governments earlier this year, in its outline of North-South institutions referred to the need and opportunities to develop constructive relationships between North and South and had this to say:

It is envisaged that, in determining functions to be discharged or overseen by the North-South body, whether by executive action, harnonisation or consultation, account will be taken of:

(i) the common interest in a given matter on the part of both parts of the island; or

(ii) the mutual advantage of addressing a matter together; or

(iii) the mutual benefit which may derive from it being administered by the North-South body; or

(iv) the achievement of economies of scale and the avoidance of unnecessary duplication of effort.

Referring specifically to health the document stated:

Health might include co-operative ventures in medical, para-medical and nursing training, cross-Border provision of hospital services and major emergency accident planning.

On this small island of ours the provision of health care matches each of those aspirations. Indeed no other area of activity could reap such immediate, beneficial effects from such co-operation North an South through the joint provision of such services. Such developments would be enormously practicable, immediately visible and available to all sections of society regardless of their different traditions.

I compliment the officials of the North Eastern Health Board on their initiative in having pushed out the boundaries of such co-operation. For example, the Western Health and Social Services Board located at the Tyrone County Hospital in Omagh provides ear, nose and throat services for those living in the Cavan-Monaghan catchment area. Such co-operation in the delivery of public health care services must be complemented by sensible, practical arrangements in order to render private medical insurance cover possible. Existing levels of co-operation between the North Western Health Board and the North Eastern Health Board and their counterparts across the Border must be encouraged. I must applaud the initiative of those officials North and South who, when the political climate was not as favourable as at present, pushed out those boundaries and developed what became known as the Ballyconnell Agreement of 1992, drawn up between four health boards, two in the North and two in the South. That agreement referred to specific areas where co-operation should exist, covering an area with a combined population of one million.

Furthermore, that agreement recommended that such co-operation should obtain through the exploitation of opportunities for co-operation in the planning and provision of services, the improvement of health and well-being of the population of that catchment area and assist Border areas in overcoming their special developmental problems arising from their relative isolation within national economies and the European Union as a whole through the promotion of Government and European Union awareness of and support for this process. It also envisaged the exploitation of all opportunities for joint working or sharing of resources where such would be of mutual advantage and the joint procurement of any funding available from the European Union.

The people involved in drawing up that agreement were dealing in a very practical manner with the daily problems arising within Border areas, where the respective population catchments within the two jurisdictions may be located nearer to a hospital or health care centre in the neighbouring jurisdiction. That sharing of resources for much of the present very expensive medical care required must be pursued.

The Minister or his Minister of State may have had meetings with their counterparts in the North but, if not, I would strongly recommend such consultation. I assure them that public representatives like myself who represent people in Border areas are very keen that such practical sensible co-operation be developed. It has enormous potential because in no other area of activity will people more readily see its effects.

I wish to endorse the work of the Oireachtas Joint Committee on Commercial State-sponsored Bodies chaired by Deputy Kavanagh on the VHI. The report informed the work of preparing this Bill and was a valuable contribution. The more debate on this issue the better because 35 per cent of the population are affected by the VHI's policies.

The contributions made to this debate signal that there is no disagreement on the need for change in the legislation governing the Voluntary Health Insurance Board. There exists between all of us the common objective of securing the future of the VHI as a financially sound insurance undertaking having a strong commercial ethos and orientation towards customer service.

While there are other, perhaps more radical, ways to proceed in changing the shape of the VHI, orderly and measured change is what the circumstances of the VHI require at this time. In addition to this a commitment and determination exists on my part to explore and implement such future changes as may be identified as beneficial to the VHI. I am satisfied that the Bill, together with the ongoing revamping of the VHI's management structure, represents a genuine momentum towards the better positioning of the VHI to succeed in an open market environment.

I have listened to the suggestions made in this debate and the perspective others have on how the VHI should develop. I will ensure that these are given the fullest consideration in terms of amendments which may be brought forward in Committee. The country will be best served by a financially strong and commercially vibrant VHI. It is essential that this objective be achieved most directly in the interests of its members but also to maintain the public/private health service mix and to secure the continuation of a strong and stable private health insurance market.

I wish to refer again, in brief, to some of the matters raised in the debate. In its 1994 Budget Statement the then Government announced that income tax relief on health insurance premiums would in future only be allowable at the standard rate. In reaching this decision the Government had been convinced by the argument that all taxpayers should be on an equal footing, irrespective of income, as regards the extent of support given through the tax system. It also had regard to the recommendations of various expert groups, including the Commission on Taxation, the Culliton group and NESC, that discretionary tax reliefs should be curtailed.

It has been the policy of successive Governments to move towards the standardisation of tax reliefs. This remains the situation and it is not intended to depart from the broad thrust of taxation policy in respect of the level of relief applicable to health insurance premiums.

The publication of a White Paper on health insurance was suggested. At this stage we have had the introduction of the Health Insurance Act, 1994 and comprehensive draft regulations deriving therefrom have been the subject of considerable and extensive consultation with interested parties. It is, therefore, difficult to see how this can now be regarded as the optimum time to move on a White Paper on health insurance. It can be looked at when there are better indications as to the future shape of the market.

The suggestion was made yesterday that a statutory forum be established to represent VHI consumers' interests. I prefer to see how the Members' Advisory Council recently announced by the VHI will operate. An informal council is more flexible than a statutory scheme and I believe the VHI initiative will be successful.

The exemption of health insurance from the scope of the Competition Act is wholly inconsistent with the thrust of Government policy to foster an open, competitive and efficient economy both for the benefit of the consumer and the better operation of the economy generally. I am not aware that any Government, whatever its political make-up, regarded the Act as other than applying to the economy as a whole, without favour or exception. One clear consequence of our membership of the European Community, now the European Union, was to fully embrace both the principles and mechanisms of a fully competitive single market. Obviously, each sector could make its own good case as to why it should be an exception to the rules of competition. Exempting any sector of the economy from competition law, let alone one as significant as health insurance, would be detrimental to the effective operation of a key instrument of economic policy which the Competition Act represents. The avoidance of abuse of dominant position is the key, not exclusion from the Competition Act itself.

The Minister for Health was asked yesterday for an up-date on the position of the draft health insurance regulations. My Department is in discussions with the European Commission on the draft regulations and I hope these discussions will be completed in the near future. As part of these discussions with the Commission, the Minister has sought enhancement in regard to the original proposals for psychiatric cover. My Department is pursuing that objective during these discussions.

Regarding the issue of VHI premium increases I would like to refer to the mention made by Deputy Geoghegan-Quinn to the 18 per cent change over the past 14 months. During the past two years the average overall increase has been 15 per cent, with 9 per cent in August 1994 and 6 per cent in September 1995. The Deputy may have misconstrued the figures because the August 1994 increases in Plans C, D and E, which have 20 per cent of VHI members, were between 9 per cent and 12 per cent while increases in Plans A and B, which have 80 per cent of members, were between 6 and 9 per cent. It is important to be clear that the overall average increase in premiums to VHI members was not 18 per cent.

In relation to the September 1995 increase, the first within this Government's period in office, the VHI indicated in July last that it proposed to implement a price increase of 6 per cent with effect from 1 September 1995. The Minister for Health concurred with this proposal because of the financial position of the VHI.

The VHI review group disagreed with the making of appointments to the board on a representative basis and it held that such appointments would be inconsistent with the commercial ethos which it regarded as essential. While this approach may be too absolute, it has much to recommend it. Clearly the rationale for expanding the size of the VHI board is that its composition should reflect the balance of skills and expertise appropriate to the board of a commercial insurance company. It would, in my view, fall short of this objective, which is so important to the commercialisation of the VHI, if the composition of the board was to have more to do with the representation of interests rather than the organisation's business management needs.

I consider that the VHI should not engage in activities beyond the scope of health insurance. The VHI has not made any proposal to me that its role should be fundamentally changed for it to own and/or run hospitals. Apart altogether from other considerations, the VHI is not currently sufficiently well placed financially to undertake any such broadening of its operations. Health insurance, and not hospital ownership and operation, is the VHI's area of expertise. There would also be a major question of conflict of interest and equity in its dealings with other providers if the VHI itself were to become a provider.

This Bill is about empowering the VHI to develop and achieve success in a competitive market environment. It is clear that for so long as the VHI remains a monopoly it must be accountable to the Minister. This has been the attitude of the House as demonstrated in the past in terms of questions and motions about the activities of the VHI. The Minister, as the 100 per cent shareholder, must have a role in relation to the policies and strategies of the VHI which have the potential to impact on 35 per cent of our population. Accordingly, it is appropriate that the Bill should provide for the Minister to have an involvement where such major issues as premium increases and new products are being contemplated by the VHI. Indeed, the 1957 Act provided for the Minister to have a role in approving the scope and extent of schemes of health insurance and the Minister has also been consulted on a custom and practice basis when premium increases were in prospect.

The Bill is concerned with providing the capacity for the VHI to raise its threshold of commercial preparedness in order to better compete in the open health insurance market. The focus is clearly on the commercialisation of the VHI. The powers being provided under section 2 are merely intended to put the VHI on an even footing with commercial undertakings generally in regard to the conduct of its business arrangements with providers. A statutory dispute resolution or arbitration system is the characteristic of a public sector type system and is not necessarily the commercial model which is needed in the VHI's case. Furthermore, the VHI would be put at a considerable disadvantage in the open market as newcomers would not be bound by such a system. This would run contrary to the whole thrust of the Bill which is to put the VHI on an equal footing with competitors.

It is, of course, open to the VHI and those representing providers to come to a mutually acceptable arrangement for the referral of disputes, which may arise from time to time and which cannot be resolved through direct negotiation between the parties, to an independent third party for determination. I do not propose to provide for any such arrangements under statute nor at public expense.

I propose to request the enlarged VHI board to address the future corporate status of the board. It should be understood, however, that any change of such a nature would only be considered in terms of the VHI remaining 100 per cent State owned.

Another issue raised during the debate was the licensing of facilities and equipment. The term "medical technology" is often associated with equipment but its true meaning embraces all methods of providing treatment to patients. This is a health service issue rather than a specific health insurance one and is therefore not directly appropriate to the Bill.

This could be a difficult area to regulate from medical and legal standpoints. It is generally the position that technology introduced becomes quickly diffused throughout the system whereas the evaluation of its efficacy and outcomes may often follow far behind, possibly in terms of years. Health care technology assessment has become an area of growing activity in Europe. My Department is considering arrangements for technology assessment with a view to identifying the model best suited to the Irish scene. Furthermore, the Healthcare Consultative Forum, which I mentioned in my speech, will consider, inter alia, the development of Protocols on the enhancement of technological capacity in the health services.

I already informed the Seanad some weeks ago that I am committed to community rating and the Minister made a similar commitment in the Dáil. It is a system which has helped the very vulnerable groups such as the elderly and chronically ill. I will resist any attempt to undermine community rating and the draft health insurance regulations help the system in a number of technical apsects. Anybody who competes in this market will do so in a context whereby if they try to cherrypick customers they will pay into a risk equalisation fund; this will prevent such products from weakening the community rating system.

I am concerned that the VHI should not structure its benefits to such an extent that it pays even more for costly procedures but neglects opportunities for lower cost care perhaps in a community setting. An overdependence on expensive technology will be ultimately destructive of the VHI and health insurance generally.

I am concerned that all insurers will be clear on what they are offering their members. Recent experience in the UK suggests that the small print is often overlooked by the consumer and companies can abuse their position. Under section 13 of the Health Insurance Act, 1994 I have powers to regulate advertising and promotion of health insurance business if there is a problem for consumers. I will keep a close eye on such advertising and promotion to make sure that members understand what is being sold to them. I may add that my Department has established close links with the insurance ombudsman in regard to health insurance and those contacts will continue.

The Bill specifically allows the VHI to develop new products and move away from a complete dependence on indemnity products. I am anxious that the VHI look at all possible areas of product development and I believe that an extended board will have an important role in that area.

The Bill represents a significant strengthening in the commercial hand of the VHI with further changes to be looked at and to be implemented should circumstances warrant. I commend the Bill to the House.

Question put and agreed to.