I appreciate the opportunity to speak on the Health Insurance (Amendment) Bill 2012. Generally, Fianna Fáil supports the Bill’s principles but there are several issues which will have to be dealt with on Committee Stage. What is extraordinary about this legislation is that it is to come into effect on 1 January 2013 but much of its critical detail is not yet before us. Many of the figures to see how this risk equalisation scheme will operate in practice will be provided on Committee Stage in the next week or two. With just a few sitting days to go before Christmas, we will be passing this legislation which we have not seen yet with a view to it coming into operation at the beginning of next year. This short timescale is unacceptable. It is a pity we do not have the full details of the legislation as published rather than waiting for them. Inevitably, only a handful of Members will attend Committee Stage and it is not fair on the broad membership which will probably be debating the budget, the Estimates or social welfare in the Chamber when Committee Stage is taken. Accordingly, this detailed legislation might not get sufficient attention.
A key element of this legislation deals with the Health Insurance Authority, the regulator in health insurance. I believe the authority should be closed. It is a stand-alone independent quango which should be merged with the Financial Regulator. There is a convincing case for such a move. I am calling on the Minister or Public Expenditure and Reform to put this authority on the list for amalgamation, if it is not already, as part of the rationalisation of State agencies. Its 2011 annual accounts, signed of in June, stated:
The health insurance market is the largest non-life insurance market in Ireland, followed by motor insurance. Premium income in 2011 was €2.0 billion, having risen from €1.9 billion in 2010. Of the total, €109 million was accounted for by restricted undertakings.
Health insurance should be under the Financial Regulator like all insurance products.
There is no reason to have an independent, stand-alone organisation to deal with one segment of the insurance market, albeit health insurance.
Four companies are currently operating under the new Health Insurance Authority. All of them do a good deal of non-health insurance business and are regulated by the Financial Regulator in that regard. Again, we are imposing extra bureaucracy on the companies which must deal with two regulators in the insurance industry. On the one hand, they have to deal with the Health Insurance Authority and, on the other, with the Financial Regulator. This makes no sense. At one stage every time there was a new idea, a stand-alone agency was set up. If this was being done today in the cool light of day, we would not be setting up a stand-alone agency.
I will list the four companies because people are utterly confused. I have seen advertisements on television for Laya Healthcare, but I had no concept of who owned it. I believe most people do not know who owns it. I now know it is owned by Swiss Re, a Swiss-owned company which took over the health insurance part of Quinn Insurance, the part not taken over by the mutual company we see advertised on the television during the "Late Late Show". Quinn Insurance, in turn, took over BUPA some time ago. Aviva is an international company operating in the market. GloHealth is also operating in the market, although I am unsure who owns it, and then there is VHI. I am a VHI customer and have a good policy with it. It is important to have private health insurance, of which I am a supporter. Those who choose to spend their hard-earned money on health insurance are entitled to do so and should be encouraged rather than be discouraged from doing so. I have a separate travel insurance policy with VHI. If people go on a foreign holiday, they can take out travel insurance from an insurance company. The annual VHI foreign travel insurance premium works out at €70 for my wife and me, which is modest. It is a good price. I hope VHI makes money out of it and imagine it will if people such as me do not make too many claims. I assume the travel insurance wing of VHI is regulated by the Financial Regulator, the organisation led by Mr. Matthew Elderfield. Even VHI must deal with two regulators. As there is no sense in this, I call for the matter to be examined.
Up to 4% of the total private health insurance market is held by the restricted membership scheme for prison officers, members of the Garda and ESB employees. They have their own arrangements, which is fine.
Will the Minister clarify the role of the Financial Services Ombudsman? There is a reference in the annual report to a fee of €15 for freedom of information requests. It must have received one during the year. There were several thousand consumer complaints about various issues referred to in the annual report. Why must the Health Insurance Authority deal with the matter if it relates to an insurance product? Is the Financial Services Ombudsman excluded from dealing with queries on health insurance, although it deals with every other aspect? It appears to be excluded for no good reason.
The Health Insurance Authority has a staff of 11. I know nothing about them, but I imagine they are excellent and do good work. I have no doubt that they are competent in engaging in their activities, but there is no case to be made for the HIA to be a stand-alone State organisation, commonly called a quango, when there are only 11 staff. I accept that times have changed. If the Minister was to come to the House today to state he wished to set up a new stand-alone State agency with nine staff, which number would eventually grow to 11, he would be laughed out of court and would not do it. It would not make sense to do so. That concept should not be followed anymore and there should not be a separate headquarters or administration centre for 11 staff. The Health Insurance Authority should be subsumed into or taken over by the Financial Regulator. I am not suggesting, however, any of the staff should lose his or her job. They have a role to play, but the cost of administration in having a separate organisation is unnecessary in this day and age. There are linked costs for the four insurance companies in the health insurance market. They must deal with the regulator for health insurance products as well as the regulator for non-health insurance business, which puts an unnecessary burden on them. I see no reason to have a separate organisation in this day and age.
I have the annual accounts of the Health Insurance Authority before me. They are germane to the Second Stage debate because the Health Insurance Authority is the regulatory authority for the insurance companies in question. I have never seen a set of financial statements like the Health Insurance Authority statements for 2011. I say as much not because they are so bad but because they are so outstandingly good. The public should know that it receives income each year by way of a levy of 0.12% on premiums. That rate was applied on 1 January last year. Income in 2011 was €2.4 million and a little more the previous year. Expenditure totalled €1.1 million and the profit on the figure of €2.4 million was €1,338,535. There was a net profit of 55%; the figure was 57% in the previous year. No organisation in Ireland or the rest of the world should have an operating surplus of 55% of total income. This has been happening every year since the authority was set up, although the levy was reduced from 0.14% to 0.12% on premiums recently. It is clear that the levy is double what it should be. It produces income of €2.4 million which is double what is required for the organisation to do its work. The authority is not using 55% of its income to carry out its functions.
Page 33 of the annual report is striking. Although these are hard-pressed times, on 31 December 2011 the Health Insurance Authority had €5.884 million in cash in the bank. It added to this figure during the year. At the end of 2011, it had €7,337,874 in the bank. I imagine that figure is now well in excess of €8 million. There is no reason the authority should have €8 million cash in the bank, while cuts are being made to front-line health services. This cannot be rationalised or accepted. This income comes from people who are for paying private health insurance, which represents their contribution to cost of care in public and private hospitals should they need to attend them. Many are cared for in public hospitals by arrangement with consultants and the beds are handsomely paid for. There is no reason for such a cash-rich organisation to have an income double what is required. The organisation has 11 staff. The four organisations it regulates must deal with the Financial Regulator in respect of other insurance business. The case is clear. The authority should be merged with the other organisation that deals with insurance products and the 11 staff could continue to carry on their good work. We will table an amendment to more than halve the levy charged because clearly the income received is double what it should be and the surpluses are increasing every year. Next year it will have €10 million in the bank while we are cutting home help packages. There is no rational explanation for it.
I have no argument with the five directors whose fees are modest and imagine they do good work. There is a chairman and four other board members. I am not here to nitpick with regard to the staff or directors' fees. I am simply suggesting we would not set up such a body in this day and age. Instead, it would be taken over. We all agree that we must regulate the insurance market in the interests of the common good and that we need intergenerational solidarity. In previous times this was present between old and young. Now, it extends to the healthy and the less healthy. There is also an allowance depending on whether males or females are making contributions. It is important to respect the age, sex and health status of individuals and not simply focus on age. This will strengthen the legislation and I am pleased with this aspect of it.
The Health Insurance Authority's annual report is informative on the health market in general.
I appreciate the document and it can continue to provide this type of information on health insurance as part of the overall organisation I mentioned. The difficulties are set out in it. For example, at the end of 2011, VHI Healthcare had 57% of customers in the country but, according to the schedule, 90% of customers over 80 years; Laya Healthcare, formally BUPA Ireland and Quinn Healthcare, had 21% of customers and only 5% of customers over 80 years; and Aviva Health had 18% of the insurance market but also only 5% of customers over 80 years. I have no information on GloHealth but perhaps it will come into the reckoning at a future year. Clearly, VHI Healthcare has correctly been a beneficiary of the risk equalisation fund in the past.
The Supreme Court, in the earlier decision, upheld the principle of risk equalisation. It was only the methodology that, on previous occasions, was not gone about satisfactorily by the then Minister and the Department, and I think it was rushed. I stress the importance of VHI Healthcare and the other private health insurance companies.
VHI Healthcare must be far more conscious of its costs, which are far too high. It is paying far too much to the hospitals, which should not be charging such amounts. I came across a classic example of this recently when a bill was presented to me in my office. A person saw the private consultant in his private office and went into their local hospital in Portlaoise in the midlands for surgery to get a little lump removed from the knuckle of a finger. The person registered as a daily outpatient in the office, went to the operating theatre at 9 a.m. and left the hospital with the few stitches on the knuckle and went home at 9.20 a.m., and the bill that VHI Healthcare paid to the hospital and the consultant amounted to almost €1,000. The hospital automatically bills VHI Healthcare for the full daily rate and VHI Healthcare automatically pays whatever bill issues. I am aware that customers have rung VHI Healthcare furious when they have seen that a couple of thousand euro are being paid in respect of the few hours they spent in hospital and VHI Healthcare promptly told them it is none of their business as it has a rate set with the hospital and it is its financial arrangement. VHI Healthcare does not have control on the costs or on what is happening in the hospitals and some of the hospital charges are excessive, and the matter needs to be examined. VHI Healthcare needs to be making unannounced site visits to see whether the bills are presented. I do not want to delay the process of the money being paid to the hospital, but VHI Healthcare should conduct a sample audit after the fact and check with its customers whether the fee seems reasonable for what they got. In most cases it may be but in many cases, VHI Healthcare has been paying bills which should neither have been charged nor paid where a fraction of the sums concerned would have been sufficient, and that adds to the cost of health insurance with VHI Healthcare, Laya Healthcare and Aviva Health which makes it difficult.
The biggest difficulty is we need to get more young people into the health insurance market. One might ask, "Why would I start paying private health insurance?" if one was a reasonably healthy person under 40 and knew one would go into this market containing the risk equalisation formula at a later date. The cost of private health insurance will prevent many younger persons, and those with mortgages, going down that road. We all will be aware that people are making cutbacks. Health insurance is not a cut people want to make, but it is one they are being forced to make because of the cost, and it would help if VHI Healthcare's cost control was a little better.
Returning to my original point about regulation, we all will be aware VHI Healthcare must be one of the biggest insurance companies, not only in Ireland but in Europe, that is not regulated by a financial regulator because of a unique statutory process. If the company were to regulated tomorrow, the regulator would probably close it down because it would not meet the various reserves criteria necessary for future claims. We are in a situation here where the main player is unregulated and competing with players whose other insurance business and health insurance business are regulated, and we have a stand-alone regulator which should be part of the main regulator. The Financial Services Ombudsman is the person who should be dealing with complaints about all insurance products and health insurance should not be excluded from that.
An attitude I do not like which is always an undercurrent in the debate is the tendency in some way to demonise the 1.5 million with private health insurance as if they are doing something wrong by providing money for their own health care. They could go off and spend it on holidays and cars or in the pubs, but they choose to spend it on health care in case the rainy day comes when they have a heart attack or stroke and must go into hospital for a fortnight or where, if they have cancer, they will get the costs of their chemotherapy, etc., covered. There is an undercurrent against those with private health insurance. People are entitled to spend their money on health insurance.
I would not entertain the concept where, if people go into accident and emergency, as happens in hospitals across Ireland, they would be asked for their VHI Healthcare number. It is none of the hospital's business. The accident and emergency departments are for public use and for every person in the country, especially taxpayers. Most VHI Healthcare customers have paid their tax and they are entitled to a public bed. Some have the idea that the hospital should charge the private insurer. Where two patients, one of whom does not have private insurance cover, go into accident and emergency with the same complaint and both are admitted to a bed, they should be treated equally. The patient without cover would be placed in a public bed and the other person, who is put in the next bed, has paid for the public bed through the payment of taxes but happens to have a private insurance policy as well. That should not have to be called upon because the person's taxes have paid for the public bed to start with. The idea that because one is a private patient, one's private insurer should pay for one in a public bed is nonsense. The public bed is one's right and entitlement and one has paid for it, and VHI Healthcare should not be paying for public beds. I agree that where one is put into a semi-private ward or private ward one should pay the full whack but if one is in a public bed paid for by one's taxes, private health insurance, if one happens to have it, should not be called into play. If one did not have health insurance, it could not be called into play. It should be to do with the treatment given and the category of the bed, the hospitals should cease the practice of asking for VHI Healthcare numbers at accident and emergency departments throughout the country, which are public facilities paid for by all taxpayers including those with private health insurance, and those facilities should be made available through the public health system to which people have contributed their taxes. My party will be proposing amendments on Committee Stage, but we agree with the principle of and the need for the Bill.