Dáil Éireann debate -
Thursday, 31 May 2001

Vol. 537 No. 4

Health Insurance (Amendment) Bill, 2000: Report and Final Stages.

Ms McManus

I move amendment No. 1:

In page 3, between lines 11 and 12, to insert the following:

2.–It shall be a function of the Health Insurance Authority to consider and report to the Houses of the Oireachtas on the extension of health insurance to the whole population with the objective of creating equality of care.".

I tabled this amendment on Committee Stage and was disappointed that the Minister for Health and Children did not accept it. If anything, that strengthens my resolve to put the case again – maybe in more detail this time – to ensure the points I am making in relation to this Bill are taken on board. It is an important Bill which can do more than what it sets out to do if this amendment is accepted.

In terms of inequality in our health service, the Government has not stated how it deals or intends to deal with what is a gravely iniquitous two tier system at hospital level which militates against public patients who are forced on to hospital waiting lists, while private patients can fast track care. It is a system that depends on hospital waiting lists for the two tier nature of it to continue. There is a built-in incentive for hospital waiting lists rather than a built-in incentive to get rid of them. Equally, at primary care level, there is a grave inequality as well in terms of the vast bulk of the population having to pay for their visit to the GP even though across Europe this would not be considered acceptable or desirable.

What we have is a dysfunctional system of health care which has a range of problems, including lack of investment over the years, difficulties in relation to fragmentation of services, geographic inequality, issues relating to management and incentives for good practice. This aspect of equity has not been addressed by this Government. There has not been a declaration as to how this Government will ensure that patients, when they are sick, will be treated as sick people rather than as poor people on the one hand and better off people on the other. It is the central issue in terms of health care reform. Will the Minister accept that in setting up this insurance regulatory authority, there is a resource, a body being established, with a great deal of expertise in the area of health insurance? There is a resource there. A body is being established that will have a good deal of expertise in the area of health insurance. Apart from it being a regulatory authority, part of its task should be to assess the benefits that may accrue from providing a universal insurance scheme. Such an input should not in any way override the policy role of the Minister or Government, although we have not seen much of that policy making in this regard. The body should be a resource to feed in information and direction in terms of knowing how to consider that possibility in an informed way.

I remind the Minister it is not that we are asking that this matter be considered as somehow out of sync with other countries or that this is a bizarre idea the Labour Party has taken on for reasons best known to itself. In examining the issue of health insurance, we considered the position in other EU countries. While there was not a model that could be adopted wholesale to the Irish situation, it was clear health insurance in various forms is not the exception but the rule. It is the norm.

There is a health insurance system in Austria, compulsory health insurance in Belgium, health insurance is compulsory in France, there are numerous insurance funds in Germany, compulsory health insurance in Greece, a national health service based on compulsory health insurance in Italy, compulsory health insurance in Luxembourg, a complex arrangement that includes health insurance in the Netherlands, a national health service based on compulsory health insurance in Portugal and a mix of taxation and compulsory health insurance in Spain.

We have a duty to assess the current circumstances. We have a health care system that is essentially an apartheid one which is gravely iniquitous. It has not appeared overnight and it has deepened in its inequality in recent times. Another aspect of the health system is that almost 50% of the population are taking out private health insurance. Those are the circumstances here.

Many of us might say that if one was setting up a health system, one would not start from here, but we are here. We need to move on to ensure equality is a central element that will be addressed while changes, reforms and the greater investment in our health services occur. That is not what has happened. The budget for Health, which the Minister often trumpets and of which he is proud, has doubled but the returns to the people have not. That increase in the budget has not been seen by the patient on a trolley in an A&E unit, the woman waiting for a hip replacement or by other people living in pain and suffering on a daily basis without any idea when they are likely to get an operation.

I know of a paraplegic who lives at home and cannot begin his rehabilitation because he is on a waiting list for an operation. That man is in grave pain and his family circumstances are extremely difficult in terms of providing him with care and support, but he is stuck. We all know that if he had enough money to pay for private health insurance his problem would have melted and there would be no problem in his progressing as far as he could into good health.

The Minister said on Committee Stage that it is not up to an insurance regulatory authority to consider these matters, but he can see the size of the elephant. He is too close to the problem and to the crisis management that is inevitable in the Department of Health and Children. It is an indication that the Government on entering office had not prepared to resolve key issues in the health service and that money is seen as the solution to all the problems.

The Minister will come back on that and talk about the health strategy. I am pre-empting him by saying the implementation of that strategy will be timed very closely to the next general election. Anybody who reflects on how the Minister is managing and driving policy would question how after four years in Government with unprecedented resources and wealth the Government is only now deciding to develop a policy at the end of its period of office. Due to that absence of policy there was the recent spat between the Minister for Health and Children and the Minister for Finance. The Minister for Health and Children is saying we need more money and he is right, but he is also wrong because he has not dealt with how to ensure that money will be well spent. The Minister for Finance is saying he will not give him money until he can give him value for money. The Minister for Finance is right, but he is also wrong because health reform requires money, but it also requires that we ensure such money is spent in a way that delivers equality, excellence and value for money. The three are interlinked.

I would be interested if the Government could tell me why a health insurance system such as we are suggesting will not work. I have no hang ups about it. If there is a better way I would happy to accept it, but I do not see one. I have examined and judged the current circumstances and needs and come up with the best proposal I can. I accept nobody has a monopoly on wisdom. I do not have the resources of the Department of Health and Children. All I have is a secretary and goodwill from various people who want health reform. It is extraordinary we have not had a comprehensive view from the Minister and the Department about why this suggestion cannot at least be examined by the Health Insurance Authority which has actuaries, accountants and other experts in health insurance, otherwise they would not be members of that authority. It is their purpose to carry out a task given to them by the Government to deal with the pressing issues of health reform. Tinkering around it will not solve the problem. I hope that is one lesson that has been learned by everybody.

If the Minister for Health and Children has failed to convince the Minister for Finance about how he wants to spend the money, and that is what happened at Ballymascanlon, it is difficult to see how he can convince anybody else in the community who has experience of the downside of the health service, who has waited in a chair in an A&E unit or on a trolley like the 94 year old man whose case was reported recently in a newspaper article. We need direction on this. We need a comprehensive policy that is also targeted.

It will be extremely difficult to deliver equality. We all understand that, but the first step is to make clear that the Government is committed to ensuring equality is delivered, not that more private beds are taken out of the public system or private patients are charged the full whack. That would not solve the problems. As Miriam Wiley from the ESRI said, there is a perception that equity is an even bigger problem in the current health system compared to the mid-1990s. Equity is not an easy issue to address and it is perceived at many different levels in terms of the geographical issue, the access issue, the financial issue and so on. I do not think anyone could deny it remains one of the most critical problems to be addressed.

The Government has not made its views on the issue clear even though it says it wants to address it. After four years in Government, the Minister asked very interesting questions at the launch of the health strategy. I find it remarkable that questions are being asked when the problem is so real, pressing and critical that at times people's lives depend on resolving it. Some people would be alive today if they had the money to access the health care they needed. This is why I am tabling the amendment and I ask the Minister to give it consideration. He can give many reasons why this should not be done, such as that the authority has a narrow remit or it will do this, that or the other, but he cannot tell me that if he includes this aspect in the Bill it will not happen because it is easy to set the task for the authority. This is an important aspect which must be put in place if we are to ensure we are making progress on the issue of equal access to health care.

I urge the Minister to take on board what I am saying and not lose the opportunity because of some narrow political desire to make a point or simply because he wants to hold on to this health strategy to sell Fianna Fáil at the next election.

Mr. G. Mitchell

I see a number of young girls in the public gallery and I hope they will grow up in a fairer society than the one we inherited and in which we live.

The unfairness of the system is such that if one is wealthy and can pay for health care, one will live longer, in less pain and not have to wait in a queue. According to an ESRI report, the death rate for higher professionals over the age of 55 is approximately 13 per 1,000 whereas for poorer people and unskilled workers it is almost three times that number. Men in Ireland die younger than women and men and women in Ireland die younger than they do in France. We accept this as the norm because it has happened for a number of years. It is unacceptable that while there is 100% bed occupancy most of the time in private hospitals, the bed occupancy rate in public hospitals is little over 80%. Recent statistics in some health board areas indicate that it is less than 80%.

The Minister has called into question figures I published last week pointing out that there were over 1,800 bed closures last year and, if one includes geriatric beds, the figure would be over 2,000. However, I did not say the beds were all closed on the one day. I will submit my figures to an independent audit if the Minister does likewise. The reality is that while more than 30,000 low income people, not the rich or the well off, were on the hospital waiting list last year, beds in public hospitals were closed, and it is forecast that the figures for this year will exceed those for last year. Why is this the case?

I made it clear in the Fine Gael health proposals that we will engage in a debate on the issue. I also said there should be a White Paper process on a legislative basis for change. We propose extending health insurance cover to everyone through the Exchequer, not just the Exchequer picking up the bill for some people but that everyone would be covered for a basket of hospital services similar to what is available in public hospitals. The effect of that would be that patients would become a source of income to hospitals rather than a charge on hospital budgets, which is currently the case. Everyone who occupies a bed in a private hospital is a source of funding, therefore there is an incentive not to have beds closed. In regard to public hospitals and the block grant system whereby hospitals will not get a per patient flow of funds no matter how many patients are admitted, there is an incentive to keep beds closed rather than open extra beds.

Fine Gael's model proposes introducing managed competition whereby the whole insurance area, including BUPA, the VHI and whoever else comes on board as a result of this Bill, could be dramatically reformed to bring fairness to the system so that patients are admitted to hospital based on the state of their health rather than their wealth. That is essentially what is wrong with the system as things stand. However, this is not where one would begin to introduce such dramatic reforms. We would first need to get our ducks in a row in many other areas, so to speak. That is why I have put forward the proposals in the context of many other reforms such as taking the pressure off secondary care and putting it on primary care and giving poor people the opportunity to get a medical card.

It is absurd that a single person on £101 per week does not qualify for a medical card. It is absolutely outrageous, given that there is an agreement between the IMO and the Government that up to 40% of the population can be covered by medical cards, that only 30.32% or three out of every four people have a medical card, according to a reply to a parliamentary question last week. This means qualifying rates have been set very low, that is, £101 for a single person and £85.50 if that person is single and living at home.

Poor patients who do not have a medical card tend not to go to the doctor because they cannot afford the fees. The health of these patients then deteriorates. Perhaps they smoke more because they have nowhere else to turn or they have no money to pursue other activities. These are the people who end up on hospital waiting lists. I say to the Minister that the health insurance proposal being put forward is not being put forward on its own but as part of a comprehensive set of proposals to completely reform the health system. These include a whole new management structure for hospitals, including accountability, a covenant of rights and responsibilities, an ombudsman to oversee the system and investment in primary care so that people can see their doctors, followed by investment in secondary care together with managed competition. This would transform the system.

The Minister may be critical of the proposals being put forward by saying they will not work. I do not know if his attention has been drawn to an article in the Irish Independent of 29 May by Moore McDowell entitled “Health insurance for all is the answer to our hospital waiting list problems”. While the Minister, Deputy McManus and I may have different views on this issue, surely Deputy McManus's amendment that we should ask the Health Insurance Authority to consider and report to the Houses of the Oireachtas on the extension of health insurance to the whole population with the objective of creating equality of care is a worthy proposal. The amendment proposes that we should not rely on what is in the Labour Party or Fine Gael documents or on what comes out of the Fianna Fáil document, after its fifth year in office, when the Minister publishes his proposals. It proposes that an independent authority should consider the issue. Let us have some independent authority look at the issue so that we can be assured it is an honest broker who has laid down the case for and against.

I would be quite happy to submit my case to that authority and, therefore, support this amend ment. It would be a good day's work if we were to get an independent authority, such as the Health Insurance Authority, which will have expertise in this area and will not be in the pocket of VHI or BUPA or anybody else who comes into the market. If we looked at the issue independently we could say that it was a whole new ball game with what appeared to be three players in the market and that there was an opportunity for managed competition now under these new circumstances. Our job is to give leadership and to try to bring about fairness and justice. The greatest injustice and the most unfairness in any area of public policy is in the area of health. That is wrong and I hope that those girls in the Public Gallery will see the system completely reformed by the time they come to adulthood.

Minister for Health and Children (Mr. Martin)

Part of the remit of the Health Insurance Authority is defined in the White Paper related to the operation and maintenance of the common good aspects of our private health insurance. We are giving additional functions to the authority in terms of risk equalisation. A whole system of risk equalisation will be put in place to facilitate stability within a competitive marketplace. It was never in the White Paper or in the drafting of this Bill that the Health Insurance Authority would become a health policy authority or become some super health policy advisory body to political parties or the Government. Calling on the authority or providing a legislative facility for the authority to study or look at the whole question of extending compulsory health insurance to the population does that. It is open to political parties and the Government to bring forward any proposals they wish in relation to this or to commission specific expert advice on the advisability of moving to another system.

Our own health strategy did ask Deloitte & Touche, in the context of the value for money audit, to have a look at different funding methodologies. In essence what we are talking about here is a funding methodology. It would have implications in terms of how health care would be managed and how priorities would emerge and also have implications for the strategic direction of the health service. Basically, we are looking at different methods of funding the system and irrespective of what our funding methodology is, we still have the same key issues that need to be addressed in terms of the capacity of the system to deal with demand. We have to deal with reform in terms of human resources, medical manpower reform and reform of all those working within the health care system itself.

Inevitably, irrespective of our funding methodology, we will have to look at the modernisation of the health infrastructure which has suffered from under-investment over the last 20 to 30 years. In addition, the whole area of general practice requires fundamental review and modernisation. What is at issue here, whatever political party's view emerges, is that people will have to make choices.

On Deputy McManus' proposition, the Labour Party would not have the same expertise or backup as Government. We are consulting with a whole range of groups on the formulation of the new health strategy. The health strategy is not about the election. Elections come and go. The last health strategy was 1994 and was developed under a Fianna Fáil and Labour Party Government. It was indeed a Labour Party Minister for Health who developed the first health strategy. It was a good start in terms of bringing in the concept of a strategic approach. The ESRI pointed out some flaws in terms of evaluation, monitoring, targets, etc., which we are considering in the formulation of a new health strategy. When the Government changed to the Rainbow in 1996 they continued with that health strategy.

Mr. G. Mitchell

Fianna Fáil are always at this nonsense.

Mr. Martin

These are not partisan views. These are objectively correct views.

Mr. G. Mitchell

The record will show partisan views.

Mr. Martin

The factual objective reality is that the Fianna Fáil/Labour Government formulated a health strategy under Deputy Howlin as Minister for Health in 1994. The Rainbow continued with that policy. We should be mature enough in the House to follow through on strategic visions adopted by particular Governments in relation to the health system. There may be fundamental policy differences but in fact there have not been so many over the years. I could go right back to Dr. Noel Browne's time when his mother and child scheme was followed up and implemented by the Fianna Fáil Party. We have had a strong commitment to social justice and I hope Deputy McManus does not suggest otherwise.

Issues such as the manpower forum report, a policy initiative of my predecessor Deputy Cowen, which heralds a fundamental change in terms of the way we operate within the hospital system from a medical manpower perspective, will ultimately lead to a consultant provided service as opposed to a consultant-led service. That is fundamental policy development but it was done in consultation with the partners and it took time as agreement had to be negotiated. Likewise, the cardiovascular strategy was a very formative piece of policy making, also developed under Deputy Cowen. It will have an impact in terms of the prevalence of heart disease here. The national cancer strategy was formulated under Deputy Noonan's period in office but very little money was allocated to it. This Government allocated huge money to the cancer strategy. We did not dismiss it because it was another Govern ment's policy. We kept the framework, built on it and developed it.

The Labour Party has been very scarce with detail in relation to the extension and its policies in terms of compulsory health insurance. I do not concede that because one is in Opposition one cannot provide details. I was in Opposition for three and a half years with three years on the Education brief. It fell on me to come up with policies right across the length and breadth of the education spectrum which I did with the assistance of people involved in education and the Department.

Ms McManus

I would ask the Minister to give way on that.

An Leas-Cheann Comhairle

We cannot give way on Report Stage.

Mr. Martin

We formulated a comprehensive education policy which I subsequently implemented and we did it in detail.

Mr. G. Mitchell

The Minister must have lost his skill when he came into Government.

An Leas-Cheann Comhairle

If we came back to the health debate there might be less interruption.

Mr. Martin

With respect, I did not start this debate. This debate was meant to be on a Report Stage amendment on the role and remit of the Health Insurance Authority but I had to listen to a fairly long winded story in terms of what we did or did not do. In that context I feel entitled to respond; nonetheless I will accept the Chair's urgings to return to the debate.

Mr. G. Mitchell

Will the Minister for Health and Children meander his way as far as Ballymascanlon?

Mr. Martin

I am interested in Deputy Gay Mitchell's proposition as he seems to say that his party favours compulsory health insurance, but not yet. That represents a significant change from his party's position two months ago.

Mr. G. Mitchell

It is all in my document.

Mr. Martin

Deputy Noonan clarified his party's position in an interview last week when he said it could not be done in the beginning.

Mr. G. Mitchell

It is all in the document which the Minister must not have read.

Mr. Martin

Deputy Noonan said there are other things his party would have to do.

Mr. G. Mitchell

As usual, the Minister did not read the detail of my document.

Mr. Martin

The comments of the Leader of Fine Gael seem to gel with much of my comments of recent times. There is an awful lot to do in the health service in the next ten years to deal with additional demands caused by the increase in, and the ageing of, the population. The proposals in this amendment are neither suitable nor appropriate as they are not within the remit of the Health Insurance Authority which is given a fundamentally regulatory role in this Bill. The authority will investigate, research and develop health insurance policy for the political system. There are other ways of meeting the requirements of the amendment.

Ms McManus

It is a little rich on the part of the Minister for Health and Children to seek detailed costings from me, given that I recently received an apologetic letter from the Department of Finance. I sought information needed to draw up costings of the Labour Party's proposal, which we are working on as best we can. The Department of Finance apologised in the letter for not being able to give me the essential information I needed as the Department of Health and Children would not provide it. I can give the Minister, Deputy Martin, a copy of the letter if he wishes, but for him to come to the House to complain that I cannot provide detailed costings is a bit rich. One of the reasons it is not possible for me to provide the information is that his Department will not supply the details I need. The Minister needs to be aware of the facts as I am tired of his feeble response to proposals aimed at providing a quality system. The proposals were presented to the Minister to engage him in debate, but he has refused consistently to deal with them or put forward his own ideas for dealing with inequality. It is not right to say there are no policy differences on this issue.

Mr. Martin

I did not say that.

Ms McManus

The Minister said there are no essential differences between our ideas.

Mr. Martin

I was speaking in the past tense, about the past.

Ms McManus

He said there are no great differences across the House on social justice matters. The Minister has never stated what his Government intends to do about inequality. We cannot have a debate on this because the Minister is refusing to face up to the issue.

Mr. Martin

I reject Deputy McManus's comments as I do not accept her protestations that the Labour Party was incapable of providing a detailed policy position. The descriptions of the party's documents differ as sometimes they are called discussion documents and sometimes policies. I have provided the Deputy with figures in relation to the cost of free GP care and medical cards. Given the Labour Party's experience in Government during the last 15 years, when it has had responsibility for my Department, and given the fact that the party has travelled all over Europe to look at other insurance systems, I find it difficult to comprehend that the party has not provided a more detailed policy exposition.

Ms McManus

There is more detail on this issue in the proposals of my party's discussion document than has been set out by the Minister for Health and Children. Detailed and costed or otherwise, he has never explained what the Government believes is the way forward in dealing with this central issue. Miriam Wiley of the ESRI is not a known radical but she has pointed out that this is the central issue we face.

An Leas-Cheann Comhairle

I would appreciate it if the Deputy's comments were related to the amendment before the House. While I accept that an amendment may be general, I would like if comments related to the amendment.

Ms McManus

I accept fully the guidance of the Chair and I am quite happy to follow the advice. In light of the failure to set out any position, good, bad or otherwise, detailed or not, I propose that the Minister indicates he has some commitment to this issue other than rhetoric and asking questions.

Mr. Martin

To which issue?

Ms McManus

I refer to the issue of delivering equality and a new dispensation within the health service. The Minister should seek the views of the Health Insurance Authority, which will have a pool of ready made expertise. As time goes by, the authority will amass considerable experience of the benefits, downsides and drawbacks of the health insurance system we have or potentially could have. It is clear to everyone other than the Minister that the authority is a valuable resource that can be used to look at the issue. It is particularly apparent that the resources within his Department are pretty limited when the only response I receive is that the Labour Party has not costed its proposals. I presume the Minister has the resources to shoot down my argument should he wish, but that does not appear to be the case as he constantly kicks to touch.

A new resource is provided by the regulatory authority as it will have a pool of people who are highly experienced in the insurance area. They have no political axe to grind, are not necessarily radical reformers and may not even be committed to providing equality within the health system. They are well placed, however, to carry out an assessment of the implications. I presume the Government will have to come up with some ideas before the general election and it should determine that this issue is a key one, as we have money and the resources to deliver a quality service for the first time ever. There is no point in looking back, even though demands for equality in the health care system have been made from all sides of the political spectrum. Economically, we are in a position to reach high and ensure that equality is delivered. All I seek is that we ask the Health Insurance Authority to deliver an assessment of the potential of this mechanism to provide quality care on an equal basis. It is a great pity that the Minister for Health and Children is unable to take a small step in the right direction.

Amendment put and declared lost.

Mr. G. Mitchell

I move amendment No. 2:

In page 3, line 20, after "services," to insert "out-patient services or general medical practitioner services,".

The argument in favour of this amendment was made on Committee Stage.

Mr. Martin

I consider this amendment to have been addressed by an amendment of mine on Committee Stage which brought a definition of relevant health services into the published Bill. As relevant health services are defined as including out-patient services and general medical practitioner services, the content of the amendment under discussion has been allowed for.

Amendment, by leave, withdrawn.

Mr. G. Mitchell

I move amendment No. 3:

In page 3, lines 24 to 27, to delete all words from and including ", directly" in line 24 down to and including "arrangement," in line 27.

Amendment No. 4 is similar to this amendment and I think we should discuss them together. As I said to the Minister on Committee Stage, it seems that as a result of the Bill as worded, thousands of cash plan policy holders will be deprived of the direct payment facility they currently enjoy. This amendment, if accepted, will restore the direct payment facility.

The Minister said on Committee Stage that he would give some thought to this. Has he done so, and what are his views on these amendments? Is the House agreeable to dealing with amendments Nos. 3 and 4 together?

An Leas-Cheann Comhairle

Amendments Nos. 3 and 4 relate to two different questions which would have different effects on the Bill. They must, therefore, be dealt with separately.

Mr. Martin

Amendment No. 3 seeks the deletion from the Bill of terms which prohibit cash plans from paying benefits direct to health service providers. This requirement is intended to ensure that a clear distinction is maintained between cash products and indemnity products. In the interests of clarity for consumers, I want to minimise the possibility of the situation recurring, such as that dealt with by Deputy Noonan as Minister for Health, where a question could arise concerning the establishment of a lego effect between risk rated cash and community rated indemnity plans. The intention in the section as published is to keep clear blue water between these two different types of insurance.

Based on the evidence available to my actuarial advisers, it is certainly the case here and in the United Kingdom that benefits payable under cash plans are predominantly paid to the individuals rather than to service providers. An inquiry made by officials in my Department during the course of recent discussions with a major UK cash plan provider confirmed that as benefits are paid directly to the customer, a provision of the kind contained in the Bill was not a particular matter of concern or objection. We want to keep clear blue water between cash products and indemnity products. That is why I cannot accept the amendment.

Amendment, by leave, withdrawn.

Mr. G. Mitchell

I move amendment No. 4:

In page 3, line 30, after "disease" to insert "or the duration of the treatment of that sickness, injury or disease".

Mr. Martin

That has been met by an amendment I tabled on Committee Stage. The section now incorporates wording which exempts from the definition of a health insurance contract any insurance contract or insurance arrangement the sole purpose of which is to provide for the making of payments in respect of sickness, injury or disease, of amounts calculated by reference only to the duration of the treatment of the sickness, injury or disease. Therefore, the Deputy's point is met by the Committee Stage amendment.

Amendment, by leave, withdrawn.

Mr. G. Mitchell

I move amendment No. 5:

In page 5, between lines 17 and 18, to insert the following:

"(c) the substitution of the following definition for the definition of ‘health benefits undertaking':

‘"health benefits undertaking" means a person (including a body established under the laws of a place outside the State) carrying on health insurance business in the State;',".

I raised this matter on Committee Stage. The purpose of this amendment is to make it clear that the State is not seeking to extra-territorially impose control on health insurance business conducted from outside the State by a registered undertaking. There are many amendments to go through between now and 1.30 p.m. I will not, therefore, make a meal of these amendments, but I would like to know whether the Minister has considered this matter in the interval and what his views are.

Mr. Martin

We discussed this on Committee Stage. It is not considered necessary to include these words in the definition. Health insurance business is defined in the 1994 Act as meaning the business of effecting health insurance contracts. We must, therefore, look to the 1994 Act's definition of health insurance contract. Such contracts are defined as being contracts of insurance, or any other insurance arrangement, which would provide for the making of insurance or any other insurance arrangements which provide for the making of payments, especially for the discharge or reimbursement of charges in respect of the provision of hospital in-patient facilities or ancillary health services. The Act further specifies that hospital in-patient services and out-patient services have the meaning accorded to them in the Health Act, 1970, that is to say, services of such a kind to be provided within the functional area of a health board. Therefore, health insurance contracts relate to health services to be provided to persons within the State.

The provisions of this Bill cannot in any way impinge upon the right of insurers who are authorised to conduct the relevant class of business covering sickness insurance in another EU member state to engage in the provision of such services to Ireland on a service basis. Under the EU directive, an insurer is not obliged to establish an office or branch in another member state as a condition of engaging in business there.

We previously received legal opinion on other matters which touch materially on this subject. That legal opinion stated that the term "health insurance contract" does not cover the provision of hospital in-patient services or ancillary health services where those services are contracted to be provided to somebody who is outside the State and, save in limited circumstances, will be provided outside the State.

Amendment, by leave, withdrawn.

An Leas-Cheann Comhairle

We now come to amendment No. 6 in the names of Deputies Gay Mitchell, Neville and Ring. Amendments Nos. 13, 14, 18, 20, 23 and 24 are related and will be taken together, by agreement.

Mr. G. Mitchell

I move amendment No. 6:

In page 5, between lines 29 and 30, to insert the following:

"(e) the insertion of the following definition after the definition of ‘the Registrar':

"relevant risk" shall be construed in accordance with section 12(10)(a);',".

Amendment No. 6 proposes the insertion of a new subparagraph; amendments Nos. 13, 14, 18 and 24 propose substituting the word "relevant" for the word "insured"; and amendment No. 23 proposes in page 16, lines 4 to 6, to delete all words from and including "insured" in line 4, down to and including "the" in line 6 and substi tute "relevant risks is a reference to risks of such class or nature as may be prescribed which have been respectively insured by the registered".

I am advised that those technical amendments would ensure the comparison of the nature and distribution of risks among registered undertakings is carried out on the basis of comparable risks. That is the objective of the amendments. We had some discussion on this on Committee Stage, and the Minister was not particularly well disposed to the amendments. I raise them again in the hope that the Department officials have had an opportunity to consider them in the meantime. Will the Minister consider accepting the amendments? What are his views on the distribution of risks among registered undertakings? Would this provide a basis for comparable risks?

Mr. Martin

We had a very extensive discussion on these amendments on Committee Stage because they touch fundamentally on the whole area of risk equalisation and how it will operate. My view on the imperative of having risk equalisation to underpin our community rating system has not changed. It is important to appreciate that at all times, even going back to the introduction of the Principal Act, it has been indicated by successive Ministers that risk equalisation would be a central feature of our health insurance policy and regulatory framework. It is also important to bear in mind that risk equalisation measures are permitted under the EU's Third Non-Life Directive. We are in no doubt about that arising from our extensive contacts with the EU Commission's Services. Our private health insurance system operates on the principle that insurers must accept all comers, irrespective of their age or health status, and charge them a standard premium for a given level of cover. In other words, insurers cannot be selective about the risks they will cover or the price they will charge. This also means there is solidarity between the young, the old, the healthy and the sick. People do not have to buy health insurance, so clearly their trust and confidence in the long-term stability of the system is vital if this solidarity is to be maintained.

I went into considerable detail on the value and importance of risk equalisation to the entire system. It is important to realise, even for consumers of health insurance, that there is a serious danger that if the market were to be destabilised and significant variations in risk profiles emerged and some insurers ended up with a younger, healthier population, they would be able to charge a lower premium. The other side of the coin is that the premia will inevitably rise for those insurers who are left with a higher proportion of less healthy individuals.

On Committee Stage I drew attention to two real situations where the absence of risk equalisation caused difficulties in international health insurance markets. One of the situations was instability experienced in the Netherlands during the 1970s and 1980s where market equilibrium was unravelled by risk selection and premium dif ferentiation. The second is the case of a German sickness fund. The German insurer concerned, BKK Stadt Hamburg, has recently run into serious financial difficulties due to the high cost of health care in the Hamburg region and the fact that the fund has experienced a disimproving claims ratio due to a loss of younger, healthier clients for which it was not adequately compensated by the existing German risk equalisation system. The German Government commissioned an expert group to review the development of the risk equalisation system. The group reported in February and recommended that the existing risk equalisation system be strengthened.

With regard to the proposed amendment, the purpose and intended impact of introducing the term "relevant risks" is unclear. Furthermore, its intended replacement of the term "insured risks" throughout the Bill is unsatisfactory. The definition refers one to section 12(10)(a) of the Bill but when one gets there all one finds is that it involves a reference to risks of such a class or nature as may be prescribed. This does not take the Legislature very far in terms of knowing what it is providing for nor does it provide much to go on as regards the formulation of regulations pursuant to the Legislature's wishes.

The definition provides the basis for a number of other amendments which seek to remove a reference to the risks as represented by the entire insured population, who have traditionally contributed to and enjoyed the benefits of intergenerational solidarity through community rating, and replace it with a more selective but unspecified concept of relevant risks. There would have to be a full explanation of what this concept involves, whom it would benefit and how it would support the application of community rating across the insured community before it could be understood, let alone adopted as law.

If the intention is to permit segmentation of the market or in any way impede the flow of intergenerational transfers which underpin effective community rating, this would not be acceptable and does not appear to support the broad solidarity principle which has underpinned the country's community rating system of voluntary private health insurance for many years.

Amendment, by leave, withdrawn.

An Leas-Cheann Comhairle

Amendment No. 31 is related to amendment No. 7. Is it agreed that amendments Nos. 7 and 31 be discussed together? Agreed.

Mr. G. Mitchell

I move amendment No. 7:

In page 6, before line 1, to insert the following:

4.–Section 2 of the Voluntary Health Insurance (Amendment) Act, 1996, is hereby amended in subsection (1) by the insertion after ‘as it may think fit' of ‘and may provide such other services, including services to persons outside the State, as it may think fit'.".

We discussed this matter on Committee Stage. I asked the Minister to consider whether section 2 of the Voluntary Health Insurance (Amendment) Act, 1996, might be strengthened and improved by the proposal to include the words "and may provide such other services, including services to persons outside the State, as it may think fit". Is the Minister satisfied that section 2 of that Act is satisfactory or would he agree that this amendment would improve the health insurance industry and confer on health insurers a power that would be beneficial to them?

Mr. Martin

These amendments relate to or arise from the inclusion of an amendment to the Bill to extend the powers of the VHI in relation to the products and services it is empowered to provide. On Committee Stage the amendment I brought forward to address this issue was accepted. This now stands as section 12 of the Bill, so progress was made in extending the range of products and services the VHI can offer. Section 12 should be sufficient to meet the needs of the board, pending legislation to address the matter of its corporate status.

Amendment No. 7 would give the VHI undefined powers in the services it could provide and would represent a departure from the existing legislative structure, which requires the approval of the Minister of the day to propose schemes of health insurance. It would give the VHI the power to provide any services it saw fit to provide. However, on its existing status the VHI is not an authorised insurer for the purpose of carrying on either life or non-life insurance business in accordance with the prudential and other requirements of the Department of Enterprise, Trade and Employment. It is considered that the proposed amendment would conflict with the existing legislative framework which requires the approval of the Minister of the day to new schemes and the VHI's exemption from meeting the normal requirements for authorisation as an insurer. It is considered appropriate, therefore, that any new schemes should be subject to the approval of the Minister and, where necessary, any regulatory or other conditions he or she may deem appropriate.

The unspecified approach could give rise to competition issues with other insurers if the VHI were to engage in new forms of business without complying with the required general insurance regulatory provisions. In that context, I cannot accept amendment No. 31. Its acceptance could be construed as meaning that the VHI was authorised to offer health insurance outside the State. The VHI is not an authorised insurer under the general body of insurance legislation as administered by the Department of Enterprise, Trade and Employment and is not, therefore, in a position to offer health insurance in another jurisdiction.

The amendment we made on Committee Stage is sufficient at this stage of the process. The over all issue will have to await change in terms of the corporate status of the VHI and further measures that will be put in place in that regard.

Ms McManus

Could the Minister explain further the changes in the corporate status of the VHI, since he has raised the issue?

Mr. Martin

We appointed advisers, jointly with the Department of Finance, on that issue. They are conducting a review of that and will give us their advice.

Ms McManus

Has the Minister any idea when this advice might be forthcoming?

Mr. Martin

In a number of months. It is a serious undertaking with serious implications, and obviously it will not be done in a number of weeks. Nobody anticipated it would.

Ms McManus

I refer the Minister to the programme for Government which mentions a strategic partner for VHI. That programme was published over four years ago.

Mr. G. Mitchell

He is leaving it for the incoming Government.

Amendment, by leave, withdrawn.

An Leas-Cheann Comhairle

Amendment No. 8 is consequential on amendment No. 9 and amendment No. 10 is related. Is it agreed to discuss amendments Nos. 8, 9 and 10 together? Agreed.

Mr. Martin

I move amendment No. 8:

In page 6, line 3, to delete "Any" and substitute "Subject to subsections (2) and (3), any".

Amendment No. 9 provides that subsection (1) "does not apply to any arrangement entered into by an employer whereby he or she agrees to discharge the whole or part of an excess amount payable by an insured person or reimburse, in whole or in part, such a person in respect of the payment by the person of such an amount".

The amendments arise from a recent approach by Bupa to my Department. Bupa advised that the provisions of section 4 could impact on products it currently offers. This matter was not specifically raised by Bupa in previous discussions with the Department. Bupa drew attention to the excess provision contained in some of its existing products. These products provide that where an episode of private hospital care is required, the person named on the contract bears a liability, depending on the insurance plan involved, of between £50 and £100 of the costs that arise. Such amounts are stated in the policy and are generally referred to as deductibles. It advised that in some cases employers are paying these amounts on behalf of employees.

The proposed amendment provides that in such situations the payment of the excess amount by the employer will not be deemed to be a health insurance contract. The proposed amendment has been framed so that deductibles are permitted but liabilities, which arise due to the insured person availing of care in a higher level hospital than that provided by his or her insurance, are not.

While I have brought forward this amendment to avoid the possibility of impinging upon existing business practice, I emphasise that any significant expansion of self-insurance by employers would be a potential threat to the stability of community rating and it is not the intention to facilitate such developments as evidenced by the thrust of the section. I would not envisage, therefore, that the amount which may be prescribed would be increased significantly in the future and consider that any possible impact of the exemption on community rating will have to be kept under review. We have provided for a figure of £100 in the amendment.

Mr. G. Mitchell

The Minister's amendment states:

‘excess amount' means an amount (not being an amount that exceeds £100 or such other amount as may be prescribed or that is payable to the insurer) . . .

How would that amount be prescribed? Can the Minister change it to £200 by regulation or by order?

Mr. Martin

Yes.

Mr. G. Mitchell

I take it that is by order. Amendment No. 10, seeks to amend page 6, between lines 18 and 19, to insert a new subsection. The purpose of my amendment is that the principal Act of 1994 would make clear that employers are capable of carrying out certain acts. On Committee Stage I stated that section 4 inserted a new section 2A in the principal Act and the purpose of that was to ensure that employers would be prevented from self-insuring their work force. According to the view which has been expressed to me, this would also prevent employers from meeting any costs which an employee would have to pay because he or she was beyond the cover provided by his or her insurance, for example, in respect of a pre-existing condition excluded by the insurer. In my amendment, I am trying to make clear that such employers would not be required to register as health insurers. If the Minister can assure the House that this is not necessary and that what I am seeking can be done without this provision, I am happy to accept that, but one reading of this is that some employers may not be allowed to do what I am seeking because they would have to register as health insurers, if the legislation remains as it stands. I want the Minister to consider that point. We teased this out on Committee Stage. Is the Minister satisfied that the provisions are satisfactory?

Ms McManus

I accept the Minister's point on this. However, I am concerned about how his amendment is framed because there are potential dangers for community rating. The Minister's amendment states that the excess amount means "an amount (not being an amount that exceeds £100 or such other amount as may be prescribed" by regulation, as the Minister says, or that is payable to the insurer. I realise that now we will talk about regulations and the system of accountability to this House. If in the future a change was made, would the Minister be constrained by having to come back to the House or to lay regulations before the House, or if it is in order can he simply make an order to change this? There is a potential at least to create a certain amount of unfairness in the system. It may be a slight danger but I would like to be clear that when the Minister says he would make an order, is that something which he would make and which nobody need know about apart from those who would benefit?

Mr. Martin

We have a problem with Deputy Mitchell's amendment No. 10 in so far as it provides that an employer, who agrees to reimburse or discharge the fees or charges incurred by employees or any dependent of an employee in respect of hospital in-patient services, will be deemed to be carrying on a health insurance business and will be subject to the amended legislation. An opportunity for significant self-insurance of this kind on the part of employers would have the effect of damaging community rating by removing a predominantly young and healthy population from the general risk pool. Clearly such a development, which is common practice among large employers in the United States, would threaten the solidarity between generations which underpins community rating, and providing scope for the development of risk-rated gap insurance products by insurers would have a similar effect.

The amendment, if accepted, would provide an opportunity for insurers to segment the employer paid portion of the market by offering the minimal level of cover permitted under the regulatory system on a community-rated basis and cover for anything above that on a risk-rated basis. I do not see the opening of the door to such practices as enhancing the strength of community rating going forward.

I have brought forward an enabling amendment, which I just dealt with along with amendment No. 8, which bears on this area in the light of practice in the employer paid sector of the market which was very recently brought to the attention of the Department. That moves to cover existing products, but the Deputy's amendment would really open the door to employer self-insurance across the market and that would clearly undermine the community rating principle, which has been that of successive Governments.

On the regulations, there is an amendment to which we will come which relates specifically to the risk equalisation scheme and that would have to be brought back to the House for affirmation. However, in terms of this part of the Bill, the existing situation applies and, therefore, the Minister could introduce a regulation. That regulation could be annulled by the House. I take Deputy McManus's point, that in the future it is subject to the disposition of the Minister of the day. On the other hand it would be unusual to set in stone a fixed amount forever and that would require the introduction of primary legislation.

Mr. G. Mitchell

I do not quite understand the Minister's reasoning regarding my amendment No. 10.

It seems to me that this would prevent the employer, if things are left as they are, from meeting any costs which an employee would have to pay because he or she was beyond the cover provided by his or her insurance, for example, in respect of a pre-existing condition excluded by the insurer. If somebody had a pre-existing condition, which is excluded by the insurer, is the Minister telling the House that employers could meet this and that it would not be necessary for these employers to register as health insurers? Supposing a person has a pre-existing condition and, therefore, cannot get insurance cover for that condition. In such a case if the employer of that person has a scheme whereby the employer will pick up the insurance costs not covered because of the pre-existing condition, does that employer have to register?

Acting Chairman (Mr. O'Malley)

The Minister has spoken twice and he can only reply to his own amendment from now on. This is not Committee Stage and the section has not been recommitted.

Mr. G. Mitchell

Chairman, there are three amendments being discussed together.

Ms McManus

On the Minister's amendment, while he rejects the Fine Gael amendment because there is a danger of creating unfairness or difficulties with community rating, he has not convinced me that will not happen on foot of his amendment. While the limit is being set at £100 the door to extend it remains open – I may be wrong on this and I am willing to learn. One could imagine this becoming quite an issue, particularly if an insurer is keen to get around community rating, for many of the larger international companies operating here who offer to pay health insurance for their employees in order to hold on to them.

I have been very supportive of the general thrust of this Bill. Can the Minister assure me that the situation I have outlined will not arise as a result of the introduction of this amendment?

Mr. Martin

Deputy McManus has been very supportive of the principle of community rating and risk equalisation. One has to adopt a balanced approach on this issue. We are setting a very low limit of £100. I cannot guard against future Ministers introducing different regulations. I cannot offer any guarantees against what future Ministers could do in this area. Future Governments may have a different perspective on the risk equalisation issue and could bring forward changes to whatever regulatory scheme we introduce. I cannot offer the Deputy any guarantees on that front other than to point out that we have introduced a very low limit by way of seeking to cover products already in the market. This matter was brought to our attention by a particular insurer. It was never our intention to impinge on other products.

Amendment agreed to.

Mr. Martin

I move amendment No. 9:

In page 6, line 18, to delete "person.'." and substitute the following:

"person.

(3) Subsection (1) does not apply to any arrangement entered into by an employer whereby he or she agrees to discharge the whole or part of an excess amount payable by an insured person or reimburse, in whole or in part, such a person in respect of the payment by the person of such an amount.

(4) In subsection (3)–

‘excess amount' means an amount (not being an amount that exceeds £100 or such other amount as may be prescribed or that is payable to the insurer) payable in respect of the provision to the insured person, on a distinct occasion, of hospital in-patient services and which amount falls to be paid by the insured person by reason of the operation, and the operation alone, of an excess clause;

‘excess clause' means a provision of the contract referred to in the definition of 'insured person' in this subsection which provides that an amount of the kind referred to in the preceding definition shall not be payable by the insurer;

‘insured person' means an employee, or any dependant of an employee, of the employer, being an employee or dependant who is party to or named in a health insurance contract effected with an undertaking other than the employer;

‘insurer' means the undertaking which has effected the contract referred to in the preceding definition.'.".

Amendment agreed to.

Mr. G. Mitchell

I move amendment No. 10:

In page 6, between lines 18 and 19, to insert the following:

"(3) Subsection (1) does not apply to any arrangement entered into by an employer whereby the employer agrees to discharge the whole or part of any fees or charges which have been or may be incurred by an employee, or any dependant of the employee, who is a part to or named in a health insurance contract (effected with a health insurance business other than the employer) in respect of health services received by the employee, or his or her dependant, which are not payable by the insurer under that health insurance contract.'.".

Amendment put and declared lost.

Acting Chairman

Amendments Nos. 11 and 30 are related and may be taken together by agreement. Agreed.

Ms McManus

I move amendment No. 11:

In page 12, between lines 16 and 17, to insert the following:

"(2) Regulations prescribing a scheme under this section shall not be made unless a draft thereof has been approved by both Houses of the Oireachtas.".

I note the Minister has tabled an amendment to the same section. I am concerned about the regulations which will govern the risk equalisation scheme. On principle, I think all regulations should be debated by this House as part of overall legislation. The ombudsman was very critical of another area of health care where regulations were not open to scrutiny.

As regards the risk equalisation scheme, it is very important that a draft be approved by both Houses before the workings of the regulatory authority and its terms of reference are proceeded with. I would like to thank the Minister's officials for providing us with a briefing of this very technical area. Deputy Mitchell and I very much appreciate the fact that we are able to discuss this issue with them.

The Minister indicated on Committee Stage that he would be considering the risk equalisation scheme in the context of introducing a range to deal with an imbalance between insurers and that the trigger point would be set at between 2% and 10%. He also said this would be prescribed for in the regulations.

Mr. G. Mitchell

We are not dealing with that matter yet.

Ms McManus

It relates to the regulations. That seems to me to be very wide ranging in terms of its impact. Let us say the authority waited until the 10% limit had been reached before taking action. At 10%, one could be, unnecessarily, doing major, or even mortal, damage to one insurer simply because the authority has that range of judgment. That is not very prac tical. The 10% limit is very high in terms of the scheme actually working and delivering the protections and safeguards it is designed to deliver. The figure previously mentioned – I do not recall it in the Bill – may be included in the regulations.

I would express grave and serious objection if this range were prescribed in the regulations. We need to take another look at that issue. It is important that we take this opportunity to ensure the regulations are laid before and approved by both Houses of the Oireachtas. This is a very important part of the work of the authority, it is probably the central part of its work. It is also a very important issue in terms of ensuring stability in the health insurance market.

Mr. G. Mitchell

I also wish to thank the departmental officials for their detailed briefing on risk equalisation and the Minister for his courtesy in making them available to us.

It is my understanding that the characteristics of the arrangements relating to any commencement of risk equalisation are that it would be based on the exercise of a major discretion by the HIA as an independent authority and that it would commence only in certain circumstances where material distortion emerges in the risk profile of insurers. As Deputy McManus stated, material is being defined as between 2% and 10%. It would be open to the HIA to take account of all relevant considerations in the exercise of its discretion but they must have regard to the facilitation of competition and must be satisfied to recommend the commencement of risk equalisation in the overall best interests of health insurance consumers and notification to insurers of proposed action as regards the commencement – opportunity for insurers to make representations – must be taken into consideration before finally determining the action to be taken. They are the characteristics which surround the regulations.

I and other members of my party agree with the introduction of a range from 2% to 10%. The risk equalisation scheme will, according to the briefing we have received and the understanding we have of this Bill, require the approval of each House and the Minister will submit an annual report by the HIA to each House in the event of risk equalisation transfers having come into play. These regulations are of such significance that it would not be possible for us to agree to them simply being laid before the Houses or being placed in the Library. We will require a debate on them in this House. We will have to give some careful attention to the regulations because the devil could be in the detail. We need to make sure that we get it right. That is my main concern about the regulations. The undertakings given by the Department of Health and Children and the characteristics which the Department have set out are certainly an improvement on the situation as discussed on Committee Stage. I ask the Mini ster to give an undertaking to the House that the regulations when made will be brought before the House for debate and for detailed consideration because it is an area of concern to us.

Mr. Martin

My amendment No. 30 meets the requirements of both Deputies, and is to ensure that any risk equalisation scheme must come back to this House for affirmation and that a motion to that effect, a resolution approving of the draft, must be passed by each House. This was discussed on Committee Stage and I am happy to bring forward amendment No. 30, in line with the commitment I gave on Committee Stage, to give effect to that. Between now and draft resolution stage, we will be reflecting on what Deputies McManus and Gay Mitchell have said.

I suggest that the appropriate time for the discussion on the detail of the deregulatory scheme is when it comes back to the House in the form of a resolution to be approved by the House.

Amendment, by leave, withdrawn.

Acting Chairman

Amendment No. 12 is in the names of Deputies Gay Mitchell, Neville and Ring. Amendments Nos. 12, 19, 21 and 22 are related and are to be taken to together, by agreement. Agreed.

Mr. G. Mitchell

I move amendment No. 12:

In page 13, to delete lines 9 to 22 and substitute the following:

"(i) the making of payments by registered undertakings to the Authority of such amounts as may be determined by the Authority in such manner and by reference to such matters as may by regulations be prescribed,

(ii) the making of payments by the Authority of such amounts as may be determined by the Authority to such registered undertakings as may be so determined in such manner and by reference to such matters as may by regulations be prescribed,

in the event that such conditions as are specified in the scheme relating to the nature and distribution of insured risks among the undertakings and any of the conditions in paragraph (d) are fulfilled.”.

I hope when the Minister is drafting his regulations he will take into account some of the points I have raised in these amendments. Amendment No. 22 proposes amendments which would require the Minister and the Health Insurance Authority to consider whether risk equalisation is necessary by reference to three criteria, and I set out the criteria.

I will not press these amendments because it would be preferable to discuss this detail when the regulations are laid before the House. I ask the Minister to consider the points made in these amendments to see whether they can be accommodated in the regulations.

Amendment, by leave, withdrawn.

Amendments Nos. 13 and 14, not moved.

Ms McManus

I move amendment No. 15:

In page 13, line 22, after "undertakings" to insert "and the reduction of hospitalisation costs through prevention and disease management programmes and coverage of services in non-hospital settings".

This amendment is about the assessment of the performance of an insurer. I have expressed concerns about the difficulties and I can see that it is not possible to have a scientific formula to measure performance in terms of costs, but there is a very strong emphasis on age and gender which makes sense. However, it seems that there is still a risk that inefficiency can be rewarded within the risk equalisation scheme if the ways of measuring the costings are not as efficient as possible.

Good practice should be encouraged, and good practice would be the reduction of hospitalisation costs, preventative health care and promotion and care in non-hospital settings. We are all agreed that too many people end up in hospital and it is very costly. I raised this matter on Committee Stage and explained the thinking behind it which is that good practice should be rewarded and not penalised.

The Minister in his response was open to the principles in the amendment and he did say that we could return to the issue on Report Stage. We are now on Report Stage, and I do not think the Minister has come up with anything to address this issue.

I ask the Minister to respond because there is a serious intent in the amendment which must be addressed. It may require to be addressed in the bigger context of health reform but we should adapt and apply good principles even within a largely technical Bill such as this.

Mr. Martin

The principles behind the amendment are ones with which I would not quibble in terms of the emphasis on prevention and disease management programmes. The proposed risk equalisation framework deals with episodes of in-patient care. However, it does not prevent insurers focusing, in the first instance, on primary care. Under the proposed framework, risk equalisation will incorporate up to 50% of the claims experience of the insurer concerned and 50% of the market experience. As risk equalisation will not compensate in full for the differences in risk profiles of different insurers, and any transfers arising will be based on the costs of the insurer who will have to make the payment, insurers relying on necessary or inefficient in-patient treatment will be disadvantaged by the proposed scheme and would be better off avoiding hospital treatment if possible. Similar provision will be made in due course when the risk equalisation scheme is to incorporate diagnostic related groups as only the more serious procedures will form part of the risk equalisation pool. It is intended that, ultimately, risk equalisation will be case mix based, with a focus on equalising only more resource intensive types of in-patient discharges.

The proposed framework for risk equalisation focuses on hospital care as episodes of such care represent most of the overall health insurance claims costs and, in addition, the frequency, diversity and nature of primary care benefit structures make their inclusion in a risk pool particularly problematic and difficult to justify on a cost benefit basis.

Another practical difficulty in adopting the Deputy's amendment concerns the ability to quantify, cost and verify the reduction in hospitalisation costs which arise from prevention and disease management. The Department has looked at that but there is a question about how it could be done. Before an element such as this could be adopted into law, there would need to be a definitive method for quantifying everything and it would be extremely difficult if not impractical. The approach being taken, not to fully equalise insurers' experience as regards utilisation of hospital services, is considered to strike the necessary balance as regards the recognition of other non-hospital approaches to the treatment and management of illness and disease.

Ms. McManus

I look forward to the debate on the regulations.

Amendment, by leave, withdrawn.

Acting Chairman

The next amendment is amendment No. 16. Amendments Nos. 17 and 26 are related. It is proposed to take amendments Nos. 16, 17 and 26 together by agreement. Is that agreed? Agreed.

Mr. G. Mitchell

I move amendment No. 16:

In page 13, between lines 22 and 23, to insert the following:

"(b) It shall be the duty of the Minister and the Authority to ensure that where any provision is made for the making of payments of the kind referred to in paragraph (a), the need for such payments to be made is kept under review and reported on annually to the Oireachtas.”.

Amendment No. 16 would require any risk equalisation regulations to be kept under review and be reported on annually to the Oireachtas. Given that that is achieved by the Minister's amendment No. 26, I do not intend to press it to a vote. I am pleased the Minister has taken on board the objective of my amendment.

Amendment No. 17 "In page 13, line 27, after "paragraph (c)” to insert “and shall only have effect for so long as the Minister determines” would empower the Minister to provide for the duration of any payments under the risk equalisation scheme. I do not know whether the Minister intends to provide for a section of this kind in the regulations which he will bring forward. Perhaps he would address this matter when replying.

Will the Minister explain subsection (4) of amendment No. 26 before we decide on this amendment?

Mr. Martin

Amendment No. 26 meets the central requirement of amendment No. 16 which seeks to provide that the authority would report annually on risk equalisation payments. I indicated on Committee Stage that I would provide for that. It strengthens the role and independence of the authority while ensuring that the Oireachtas can have an appropriate oversight of developments in this key area of regulatory provision. I accept that risk equalisation is a necessary support to the effective operation of community rating and open enrolment. As a result of that the Oireachtas should be kept informed of developments on the issue.

In regard to amendment No. 17, it must be fully appreciated that risk equalisation is essentially a stability measure and as such should not be inconsistent in its application. I know of no other country where risk adjustment measures are organised on an intermittent basis. This approach of itself would promote uncertainty and instability in the regulatory process and it would certainly represent a less than effective counter to the incentive of insurers to engage in risk selection. It ignores the fact that risk equalisation only redistributes risk differences that exist and addresses the situation where one part of the insured population has to pay materially more for cover simply because the insurer is unfortunate enough to have a higher risk population. Where these differences cease to exist or where the risk profiles begin to converge the impact of risk equalisation diminishes proportionately. Given that it is an ongoing process we are not in a position to accept amendment No. 17.

Subsection (4) of amendment No. 26 states:

The reference in subsection (1) to health insurance consumers shall be construed in accordance with section 12(10) (a)(i).

In accordance with section 12(10) (a)(i) a health insurance consumer is a reference to a person other than the registered undertaking.

Amendment, by leave, withdrawn.

Amendment Nos. 17 to 24, inclusive, not moved.

Ms McManus

I move amendment No. 25:

In page 17, line 4, to delete "36" and substitute "18".

This matter was discussed on Committee Stage. It seems to us that 36 months is a long time when the White Paper proposed an 18 months time frame for exemption from the risk equalisation scheme for new insurers. The Minister said there was consultation on this issue following the publication of the White Paper. Is there an implication that those who produced the White Paper did not consult or that the Minister was more vulnerable to pressure. Certainly the risk equalisation is not a new notion but his predecessor put everything on hold. We now have a Bill which provides for an extended start up time. It is important to note this and indicate that the time frame provided for is being extended to a lengthy time frame. It is difficult to see how it can be justified.

Mr. G. Mitchell

The amendment in my name and that of Deputies Neville and Ring is precisely the same amendment as that tabled by Deputy McManus. I share her concerns. I raised these concerns on Second Stage and on Committee Stage. What is the reason for the 36 months time frame? At present VHI and Bupa are in the market. Do we take it from this that there is at least one other, and perhaps more, companies preparing to enter the market? Are insurers preparing to enter the market asked specifically for the 36 months time frame? If the House was to be told that one, two or three more companies were preparing to enter the market and compete I could understand the reason for it. Given that the White Paper made a proposal for 18 months, no reason has been given for it being 36 months, except that the Bill simply carried the amendment. Why do we need a derogation of 36 months in the case of new entrants to the market? I do not consider that the case has been made. There may be a case that we do not know. From where did it come? Are we about to enjoy further competition in the industry? Is it because an applicant or applicants are waiting to enter and have asked for a 36 months time frame? What is the background to it? What was wrong with the 18 months period?

Mr. Martin

The 18 month period has not produced additional competition in the form of new players into the market. It has been a broad objective of successive Governments to increase competition in the health insurance market. There are some indications that people would be interested in coming into the market place. This Bill in so far as it provides for a regulatory framework and the updating of it, is an important factor in anyone's decision to come into the market place.

Mr. G. Mitchell

Is there more than one?

Mr. Martin

I cannot say if there is more than one at this time but there are indications that people are looking seriously at the market. Some people suggest the 18 months start up is not a sufficient window for a new player to come into the market. A period of 36 months gives a greater opportunity for a company to successfully establish itself in the marketplace and then adhere to the risk equalisation regulatory framework. It is designed to facilitate additional competition in the health insurance market.

Mr. G. Mitchell

If the House consents to 36 rather than 18 months, and taking into account that he will be bringing statutory regulations before the House, will the Minister take the opportunity to address the case of entrants to the market that may be subsidiaries of a non-resident insurer? The accounts requirements on the VHI should be the same for Bupa and any new entrant so that they cannot avoid having to publish their full accounts by virtue of being a subsidiary of a non-resident insurer. If we are to have a level playing field and risk equalisation and if we are going to give new entrants up to 36 months, then the Minister and his Department should address the question of transparency in the published accounts of insurers operating here.

Ms McManus

There has been some doubt about risk equalisation. However, does the Minister agree that the major reason for not having any new entrants is that the Government does not have a position on the future of VHI and this would have a great bearing on an insurer considering entering this country?

Mr. Martin

That view was put to me by the VHI very recently. I do not necessarily accept that it is the main reason other players have not come into the market. There are a number of issues and the passing of this Bill will be important in letting insurers know what they are getting into. Many of them have been holding off until the Bill was passed. Deputy McManus is correct in saying that risk equalisation per se does not seem to be a barrier to entry. Issues that were believed to be barriers include the products that could be offered and the window issue. Everybody would accept that there is a start up period before marketing a product for the first time.

Any company setting up here would have to work within the Department of Enterprise, Trade and Employment's regulatory framework for all companies, particularly relating to publishing accounts. The Health Insurance Authority will have to have access to all the accounts, claims. etc., of all the players.

Mr. G. Mitchell

The Minister might check that.

Mr. Martin

I will check that out.

Amendment, by leave, withdrawn.

Mr. Martin

I move amendment No. 26:

In page 17, between lines 33 and 34, to insert the following:

"Annual report with respect to the operation of a scheme.

11.–The following section is inserted after section 33 of the Principal Act:

‘33A.–(1) The Authority shall, in each of the periods referred to in subsection (3), evaluate the operation of the provision of a scheme referred to in section 12(4)(a) (in this section referred to as 'the equalisation payment provision') with respect to its effects on the interests of health insurance consumers and make a report on such an evaluation to the Minister.

(2) The Minister shall, as soon as may be after the receipt by him or her of a report under subsection (1), cause copies of it to be laid before each House of the Oireachtas.

(3) The periods mentioned in subsection (1) are:

(a) the period of 12 months beginning on the day on which requirement to make a payment under the equalisation payment provision first arises, and

(b) each successive period of 12 months (other than a period of 12 months in which the equalisation payment provision is not in operation).

(4) The reference in subsection (1) to health insurance consumers shall be construed in accordance with section 12(10)(a)(i).'.".

Amendment agreed to.

Acting Chairman

Amendments Nos. 27 and 28 are related. It is proposed to take amendments Nos. 27 and 28 together by agreement. Is that agreed? Agreed.

Mr. Martin

I move amendment No. 27:

In page 17, between lines 33 and 34, to insert the following:

"Performance of functions under Principal Act – equality of treatment of undertakings.

12–The following section is inserted after section 33A (inserted by this Act) of the Principal Act:

‘33B.–Without prejudice to any specific provision of this Act, or regulations thereunder, in that behalf and save where the operation of the provision necessarily requires a difference in such treatment, the Minister and the Authority shall perform the functions conferred on them by or under this Act in such a manner as will result in registered undertakings being treated equally in similar circumstances.'.".

This amendment follows a discussion on Committee Stage. There is a requirement on anybody dealing with legislation, whether the Minister or a statutory body, to be fair to all parties concerned in relation to its application. Given the wishes expressed by Deputy Mitchell on Committee Stage, I am bringing forward this amendment that will explicitly require the Minister and the authority to treat undertakings equally in similar circumstances. The amendment is framed to show that where there are differences between undertakings and circumstances which require different treatment under the Act, for example, significant differences between the risk profiles of their respective memberships, then the Minister or the authority may discharge their respective responsibilities accordingly.

Quite apart from this provision, I have every confidence that the independent Health Insurance Authority will conduct its affairs in relation to the operation of a voluntary private health insurance system in a scrupulously fair manner. I am sure the Minister of the day will be no less diligent in that regard.

Mr. G. Mitchell

I thank the Minister for bringing forward this amendment. It certainly meets in part my concerns raised on Committee Stage and as set out in amendment No. 28. It deals in particular with 21A.(a), which reads "does not discriminate unfairly between registered undertakings". The Minister's amendment seems to meet that element of my amendment.

I am a little disappointed to note that he did not go the whole hog and take on the other proposals contained in my amendment which would require the Minister and the authority to carry out their functions and exercise the powers conferred on them in a manner which promotes competition in the provision of health insurance and protects the interests of consumers, having regard to the need to preserve community rating in the provision of health insurance for essential health care.

He has provided for the other part of my amendment so I suppose that half a loaf is better than no bread. I am anxious to ensure that the best interests of the consumers are protected, taking into account the need for competition and the need to have stability in the market. However, I am glad we have made some headway on this. It is an improvement in the legislation and so I will not be pressing my amendment.

Amendment agreed to.

Amendment No. 28 not moved.

Mr. G. Mitchell

I move amendment No. 29:

In page 17, between lines 33 and 34, to insert the following:

"11.–The following section is inserted after section 21 of the Principal Act:

‘Report to Houses of Oireachtas.

21B.–The Authority shall report annually to both Houses of the Oireachtas on the performance of its duties and activities.'.".

The Minister, through his officials, has given an undertaking that the objectives in amendment No. 29, that the authority shall report annually to both Houses of the Oireachtas on the performance of its duties and activities, will be met. I am glad to see that those concerns that were expressed on Committee Stage have also been taken into account. I ask the Minister to confirm that the concerns set out in the amendment will be fully met and the authority will report annually to both Houses.

In recent years non-commercial State-sponsored bodies have had their remit extended as recommended by a committee which I chaired to ensure that an accounting officer is appointed and that officer will appear before the Committee of Public Accounts. Can the Minister confirm that this will be the case for the Health Insurance Authority? This would ensure that from a financial accounting point of view there would be direct accountability to the House. The Health Insurance Authority should also be available to the Oireachtas Committee on Health and Children for examination, from time to time, in relation to the exercise of its duties.

Ms McManus

I support Deputy Mitchell's comments. That there is a safeguard of an annual report requirement in a Bill does not always mean it will be published within a reasonable period. Reports are sometimes so slow to appear that the issues are out of date by the time of publication. This greatly diminishes the value of annual reports. There is also a tendency for Departments to sit on reports. The report of the Inspector of Mental Hospitals is one such example. Every year, the effort to get this report out of the Department of Health and Children is just like pulling teeth. These reports are of public interest, they are paid for by the public, they do not belong to Departments and there is an onus to publish them to ensure the public interest is served.

Mr. Martin

In responding to the amendment, I refer the House to Section 33 of the principal Act, which requires the authority to submit an annual report to the Minister, who shall lay it before each House of the Oireachtas. That is already contained in the principal Act. This will ensure that both the Minister and the Oireachtas will be advised of the authority's activities in executing its functions under the legislation. Also, under Section 32 of the principal Act, which relates to Deputy Mitchell's point, the annual accounts must be submitted to the Comptroller and Auditor General for audit. The Act requires the Minister to lay before the Houses of the Oireachtas the said annual accounts, and the Comptroller and Auditor General's report thereon. That also opens the door for the Committee of Public Accounts, if it wishes, to pursue any relevant matter. The provisions of the principal Act require the authority to operate at a high level of accountability and transparency, as well as specifically ensuring that the Oireachtas is kept informed of its activities. This amendment effectively duplicates provisions in the 1994 Act.

On the point raised by Deputy McManus, the Taoiseach has emphasised that he wants up to date reports from a wide range of bodies. It is important that this new health authority should be in the mode of producing its annual report on time, soon after the end of the year, so that people can discuss it with some degree of relevance.

Amendment, by leave, withdrawn.

Mr. Martin

I move Amendment No. 30:

In page 17, between lines 36 and 37, to insert the following:

"(b) in section 3 by–

(i) the insertion in subsection (3) after ‘Every regulation under this Act' of ‘(other than a regulation referred to in subsection (4))', and

(ii) the addition of the following subsection:

‘(4) where regulations are proposed to be made under–

(a) this section for the purposes of section 7A, 7B, 8, 9, 10, 12, or 13 (“the listed sections”), or

(b) any of the listed sections,

a draft of the regulations shall be laid before each House of the Oireachtas and the regulations shall not be made until a resolution approving of the draft has been passed by each such House,'.".

Amendment agreed to.

Amendment No. 31 not moved.

Mr. G. Mitchell

I move amendment No. 32:

In page 18, between lines 11 and 12, to insert the following;

12.–The Health Insurance Authority, as provided for in the Health Insurance Act, 1994, shall be constituted only after the Minister's nominees to serve on the Authority have been ratified for appointment by an Oireachtas committee appointed by both Houses of the Oireachtas for such purpose.".

The Minister knows exactly what I have in mind in this amendment. In the spirit of the debate on Report Stage, I do not intend to introduce a note of controversy, but I would ask the Minister to recognise that, in the appointment of the Health Insurance Authority, there are very well qualified people throughout the country. They do not all have to happen to live in the Minister's bailiwick. I hope the board will be independent and will be seen to be broadly based from the beginning. I will not press the matter any further than that.

Mr. Martin

For the information of the House, we have actually appointed the Health Insurance Authority and there is nobody from Cork on it. I hope that information is reassuring to Deputy Mitchell.

Mr. Roche

It was an oversight.

Mr. G. Mitchell

There was nobody left in Cork.

Amendment, by leave, withdrawn.

Bill reported with amendments, received for final consideration and passed.