Vol. 475 No. 1
18 Mr. Cowen asked the Minister for Health if his attention has been drawn to the fact that BUPA's controversial cash plans remain on offer; if this was provided for in the agreement which he reached with BUPA in relation to its health insurance plans; and if, as regulator for the health insurance industry, he plans to appoint an independent person to intervene in the dispute between the VHI and 17 of the country's independent hospitals. [4495/97]
(Limerick East): As I advised the House last week, on 17 January last I announced that, following discussions between my Department and BUPA Ireland, agreement had been reached with BUPA Ireland in relation to a dispute concerning the products it had launched here. BUPA Ireland reaffirmed its commitment to community rating and announced that it intended to introduce a new suite of community rated health insurance products in the near future.
In the context of the agreement reached, BUPA Ireland agreed to cease actively marketing and to replace, as a matter of urgency, its existing cash plans with a new range of cash plans which would be clearly designed to compete in the already established cash plan market. I understand that BUPA is informing those making inquiries about its existing cash plans that they will be replaced within a few months.
I have stated previously in the House that I cannot intervene in the dispute between the Independent Hospital Association of Ireland and the VHI as it would not be appropriate for me to do so in view of my role as the regulatory authority for the health insurance market. It is a matter for the parties to the dispute to decide if they wish to avail of a third party or adopt other procedures which might help to resolve the dispute.
In his press release on 17 January the Minister stated that community rating was a core value in the Irish health insurance system. He went on to say that he had agreed to allow the new competitor in the voluntary health insurance market to come forward as a matter of urgency with cash plans which would respect community rating. Will the Minister agree that the cash plans advertised by BUPA then, and which it is still selling now, do not adhere to the principle of community rating which he has described as a core value in the Irish health insurance system? When I telephoned BUPA today I was told that the cash plans were still on sale. When I said that I thought these plans had been withdrawn I was told I was mistaken.
There have been informal consultations between the Department and BUPA on new products. When will we see these products and when will the Minister insist that companies will be allowed to compete in the voluntary health insurance system only if they adhere to the community rating principle? Why is the Minister allowing the continued sale of cash plans which do not adhere to the statutory requirements for the granting of a licence?
(Limerick East): The Government's policy in this respect is very clear. On the one hand, we are committed to community rating, which, in effect, is the law of the land, and, on the other, we are committed to a competitive insurance market. We want competition in the market and I will not start a witch hunt against BUPA or try to chase it out of the market. BUPA was the first company to provide competition in the voluntary health insurance market and it is very welcome. I hope it will be followed by other companies as we want a competitive health insurance market.
I wish to state equally forcefully that I will not accept a situation where a company which comes into the market refuses to obey the law of the land. While all health insurers are welcome they must compete on the basis of community rating. My officials had consultations with BUPA during the Christmas period and the new year. We have arrived at a satisfactory agreement under which BUPA has agreed to withdraw its cash plans as presently presented and introduce a new suite of products. If that includes cash plans they will not be biased in terms of age and will be community rated. BUPA has committed itself, in a written agreement with me, to cease to actively market its cash plan products in the meantime. This is a reasonable arrangement and it is only proper that BUPA should be given some time on its entry to the market to bring forward new products. It told me on 16 January that it would bring forward the suite of new products in a matter of months. I have offered BUPA the opportunity to have informal consultations with officials of my Department before it puts the new products on the market, and that offer stands.
Previously BUPA launched its products without any consultation. Under the relevant EU directive it was free to market its products without prior consultation with the regulator. However, in light of the difficulty it experienced with the regulator it would be prudent for BUPA to engage in consultations in advance of launching its new products.
BUPA has employed people in Cork and I want it to continue in the market. I am not going to adopt a heavy handed approach to the company when it has complied with the law of the land and has assured me that it will introduce a new suite of products.
If BUPA is complying with the law of the land why is it being required to introduce a new suite of products? If the Minister's long-winded reply means he is in favour of competition on the one hand and is insisting on adherence to the law on the other, then what is the requirement for a new suite of health products? Surely BUPA is being required to introduce a new suite of health products precisely because it is not adhering to the community rating principle set out in the law as a prior requirement for competing in the Irish voluntary health insurance system. That is the position.
Will the Minister agree that the requirement on BUPA was not to withdraw its cash plans, which are still on sale today, but rather to cease to advertise them pending the introduction of new ones following consultation and agreement by the Minister that they meet the community rating principle? Is that the position or is the Minister seeking to mislead the House and have he and BUPA issued misleading public statements? One cannot have it both ways.
The Minister referred to a witch hunt. I am not interested in a witch hunt; rather I am interested in ensuring that a company licensed to operate in the voluntary health insurance system adheres to the requirements upon which the licence was granted. If a company does not adhere to these requirements it should withdraw its cash plans until such time as it introduces new ones which adhere to them. BUPA is continuing to offer cash plans which are not acceptable to the Minister and we are waiting for it to decide when it will comply with the law.
That should be adequate.
Is this satisfactory? Where does the decisive Minister for Health stand on this issue?
(Limerick East): Deputy Cowen misunderstands the situation.
I do not.
(Limerick East): The VHI does not market cash plans, it markets indemnity plans in packages of A, B, C, D and E. When BUPA entered the market it decided to offer not only indemnity plans but also cash plans. As regulator I believed that one reciprocated the other; it is like having two pieces of lego which can be put together easily by a not very intelligent child. That was the difficulty I preceived as regulator.
BUPA wishes to continue with indemnity plans but it also wishes, like other insurance companies, to market cash plans. If it is putting together a package which consists of an indemnity plan and a cash plan I, as regulator, must insist on the cash plan being community rated.
That is my contention.
(Limerick East): The difficulty was that the indemnity plan was community rated but the cash plan was not.
Correct.
(Limerick East): BUPA has committed itself at a very high level——
Big deal.
No interruptions, please.
(Limerick East):——to ensuring that all health insurance products marketed by it will be entirely in accordance with existing legislation and, in particular, community rating.
When?
(Limerick East): It has also said that until such time as it can construct its new suite of products for presentation to me as regulator it——
Will continue as before.
(Limerick East):——will cease to actively market its existing cash plans which are not community rated.
Did the Minister agree them?
(Limerick East): The agreement is foolproof.
It fooled the Minister all right.
Let us hear the reply. The question has been put.
(Limerick East): The proof of the pudding is always in the eating. It would be very easy for a Minister to go out with a big stick, chase BUPA out of the country by threatening it beyond his legal powers——
That would not be the Minister's style.
(Limerick East):——and end up with a situation where there would be no competition in the market.
Nonsense.
(Limerick East): I want competition in the market but if the Deputy inquires from his friends in the VHI——
Who are they?
(Limerick East):——he will find that, despite the widespread advertising that has been conducted by BUPA, the number of people taking out VHI insurance continues to increase.
This is a very important matter. I move on from the admission by the Minister that non-community rated cash plans are presently being used by BUPA.
He spoke about a risk equalisation system review. When will that report by published? If he claims the genius of his negotiating ability was to get a concession that BUPA would comply with the law as a matter of urgency — whenever that will be — when will we see the new suite of plans which will conform to statutory requirements? Will he take action on the continued marketing of these plans by BUPA?
(Limerick East): I will not reply to that.
I got a commitment from BUPA, and agreement with it and the VHI. They welcome an independent review of the risk equalisation regulations. I will consult with them and any other insurer which may come into the market in the meantime on the terms of reference of the review and on its composition. The group is to report by summer 1997. It will have an independent secretariat and consultancy budget, but its recommendations will not be binding on the Minister as regulator.
