Health Insurance (Amendment) Bill 2012: Second Stage (Resumed)

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

I wish to share time with Deputies Coffey and Seán Kenny.

I am glad to have an opportunity to speak on this important piece of legislation. I agree with many of the sentiments expressed by the previous speaker. This issue has been affecting the people of this country for ten years.

The main object of the Bill is to ensure that in the interests of societal and inter-generational solidarity the burden of the costs of health services be shared by insured persons by providing for a subsidy between the more healthy and the less healthy, including between young and old.

We were told back in the mid-1990s, as the Leas-Cheann Comhairle will recall, that with the increased competition in the health insurance market there would be increased benefits by way of reduced premia, and, of course, that was not the case. In fact, this particular measure of competition worked in the opposite direction because one or other company robbed its competitors of a particularly lucrative segment of the market notwithstanding the risk equalisation legislation already in place or the community-based rating to which we had previously adhered.

We all know that medical inflation is the most voracious of all forms of inflation. It seems to take place overnight, to go on incessantly and to have no boundaries. The previous speaker gave instances of that and I wish to mention a particular case that came to my attention, although I am aware that such cases have come to the attention of every Member of this House. A person was admitted to a public hospital for a procedure and had an overnight stay there, for which he received a bill of almost €10,000. When queried, the hospital authorities apologised and said they thought he had been involved in a road traffic accident. Where does that leave us? I have spent a lot of time in recent years trying to get information on where health insurance moneys go, how the market is regulated and who is benefiting most from it, but I have found it difficult to get that information.

There are countless people all over this country who have opted out of private health insurance because they can no longer afford it. As the previous speaker said, that is not good for society because it means that more people are going to be thrust upon the public health service and the taxpayer will have to pay to a greater extent. I do not know why medical inflation is happening because in the current economic climate it is incumbent on everybody in the health sector to recognise that we cannot afford inflation of that order. It is not acceptable. Unless something is done we will eventually have no private health insurance at all because it will not be economically viable. I agree with the proposal before the House and I hope it works, but legislation is only as good as its efficacy when put into practice.

I am concerned about the warnings we hear on a regular basis of further increases in health insurance premiums. This is conditioning the public to expect large increases on an annual basis. Ultimately, it means that the unfortunate person who expects to pay a premium at a certain level decides that he or she cannot afford health insurance any longer. This decision might be based on the fact that he or she is in insecure employment or is unemployed. It is a pitiful situation to be in and I ask that the Minister, in his reply, address the questions of how inflation is hitting the insurance industry, where insurance premiums are going, to what extent they are divided between public and private health providers and to what extent taxpayers and insurers are getting value for money. It appears, for example, that extraordinarily large bills are issued for some medical procedures. There seems to be no limit on some charges and no scrutiny of whether they are merited.

The presumption is that those in a particular age group are the culprits, and I am in that particular age group. Before I alarm the House too much, I wish to point out-----

Is Deputy Durkan going to retire?

I do not intend to retire before Deputy McGrath, if that is all right with him.

There is a large cohort of people who have paid for private health insurance for many years but do not get any recognition for that. At least with motor insurance one can get a no-claims bonus if one has been insured for a number of years. It was understood that in the area of health insurance, the no-claims bonus would lie within risk equalisation and that the benefit would extend to all insured people. Unfortunately, that does not seem to be happening. Instead, insurance companies see the merit of attracting the younger cohort on the basis that this is the most lucrative area of the market, while squeezing the other group of people out of the market all together. What is happening now, however, is the reverse of what was expected, as younger people, who were hit to the greatest extent by the recent downturn in the economy, have been squeezed out of the market altogether. They have large mortgages obtained at the peak of the boom and they simply cannot afford health insurance. Indeed, many cannot afford their mortgages or to continue paying for mortgage protection policies. The whole thing has turned into a woeful vicious circle, which is squeezing a lot of people to an extent that is worrying.

Considering all of the regulation we have talked about and the fact that it has been in existence for some time, I cannot understand how it has not been possible to conduct a thorough assessment of the health insurance industry. Such an assessment would probably conclude that there has been a huge rake-off for somebody's benefit, but not for the benefit of those who are paying insurance premiums or the taxpayer. Ultimately, the taxpayer may have to carry the can for the entire health service at some point in the future.

Certain actions must follow in the wake of the passing of this legislation. If that does not happen and we do not have the degree of supervision that is required, we will be back here in a few years' time saying the self-same thing all over again. That is not good for the country, the taxpayer or the insurance industry.

Certain procedures are carried out in both public and private hospitals and there must be some equalisation of the cost somewhere along the line. It challenges credulity that costs can vary to the extent that they do, given that the procedures are identical. The cost differential between public and private hospitals is unbelievable.

I hope this intervention works because what happened previously did not work. Despite what we were told, extra competition in the marketplace did not work. Community rating was not accepted and the market defeated it. That is why we are in the current difficult situation.

I welcome the opportunity to contribute to the debate on this Bill, which is important. The Bill will provide permanent risk equalisation within the health insurance sector. The objective is to ensure that access to health insurance cover is available to everybody regardless of age, gender or health status, and that is to be welcomed.

I wish to put on record my concerns for the people of my generation, many of whom are trying to raise families in a very different Ireland and who simply cannot afford to pay health insurance at the current rates. This is clear from the drop-off in the number of people who are contributing to private health insurance. If we are to sustain health insurance and health services, we must reform how we deliver those services. In that context, I welcome the objective of the Government to introduce universal health insurance, as set out in the programme for Government. This has the potential to eliminate the two-tier health system that currently operates here. That system is unfair and discriminatory for those who cannot afford to pay health insurance. There is no reason citizens should not have equal access to health services regardless of where they live. Why should the people of the south-east region, for example, not have the same access to cardiac and emergency services as everyone else? Such questions must be posed because, as we speak, people in that region do not have 24-7 access to cardiology services. The Government must address this.

It is welcome that the Government is reforming the governance structure of the hospital network. There is grave concern in the south-east region that we may fragment the existing network of hospitals in Waterford, Kilkenny, Wexford and south Tipperary which already offers an integrated system of acute services. In a letter to The Irish Times of yesterday, the Royal College of Surgeons in Ireland stated:

RCSI wishes to strongly support the proposal to formalise the existing relationship of the hospitals in the south east to form a hospital group. This proposal outlines bringing together Waterford Regional Hospital (WRH), Wexford General Hospital, Kilcreene Regional Orthopaedic Hospital, South Tipperary General Hospital and St Luke’s Hospital Kilkenny under a new single management and governance structure. We would caution not to dismantle the current hospital group in the south east as it might adversely impact on the delivery of national clinical care programmes.

I agree with the previous speaker on the need for accountability and to achieve value for money. When considerable sums of money are being invested in health insurance products by citizens who are contributing through their taxes as well as paying into private insurance schemes, we must provide for value for money and the services they deserve. This requires us to reform the current system.

I have been accused of having a vested interest in trying to protect Waterford Regional Hospital, but I fully support reform and reconfiguration, provided they are properly evaluated.

I support the Deputy.

As a regional representative, the Deputy agrees with me. We cannot allocate all of our resources to Dublin and Cork, while forgetting about areas on the periphery. Citizens in the regions are contributing taxes and deserve the same level of service and access to health care. I welcome the Bill because it opens up access to private health insurance and paves the way for a more equal system of health service delivery. The Government needs to continue working towards that objective.

The Health Insurance (Amendment) Bill 2012 provides for a permanent risk equalisation scheme for private health insurance which will replace the current interim scheme that expires on 31 December. The programme for Government commits to introducing a system of risk equalisation in the current insurance market. It also commits to introducing a system of universal health insurance by 2016 and states Exchequer funding for hospital care will be put into a hospital insurance fund to subsidise or pay insurance premiums for those who qualify for subsidies. The programme states the hospital insurance fund will oversee a strong and reformed system of community rating and risk equalisation.

Currently insurers are compensated for differences in costs due to the age profile of their customers. Among other measures, the Bill provides that the risk equalisation system will take account of gender, level of cover and rate of hospital utilisation. A previous speaker used the analogy of car insurance and the no claims bonus, but I would have to disagree on the applicability of the principle of the no claims bonus to a person’s health care needs.

The Bill provides for a permanent risk equalisation scheme to replace the interim scheme of age related tax credits and associated community rating levy provided for in the Health Insurance Acts. Risk equalisation is essentially a method for compensating insurers which carry heavy risk burdens by means of payments from other insurers which carry lighter ones. Its role is to protect the current system of community rating in private health insurance schemes. The interim scheme is a system of tax credits which provides for a cost subsidy from younger age groups to older groups. On current estimates, the scheme will have transferred a net €275 million in 2011 and an estimated €360 million in 2012. VHI has been a net beneficiary of the scheme owing to the age profile of its client base. The scheme is funded through a community rating levy charged to insurers, which amounted to €197 million in 2009, €318 million in 2010 and €343 million in 2011.

The permanent scheme provided for in the Bill differs from the interim scheme in a number of respects. Under the permanent scheme, risk equalisation will be extended to subsidies from the healthy and the less healthy. The Bill provides that, in addition to age, the risk equalisation system will also take account of gender, the level of cover provided by a health insurance policy and the level of hospital utilisation. Risk equalisation credits will replace the tax credits under the interim scheme. The Bill also aims to support the revised risk equalisation scheme and discourage market segmentation by strengthening product change restrictions. Health insurers are required to notify the Health Insurance Authority of new types of insurance contracts and changes to existing ones. The Bill extends the notification period required for these changes. In addition, the authority has considerable additional powers under the legislation, including the power to enter premises and secure documentation for inspection, as well as to require the production of books or records.

There is a long legislative and legal history to the issue of risk equalisation, with a key issue being the impact on market competition. Issues raised by stakeholders include the impact on competition and market entry, health insurance affordability, the effect of the health status measures and the regulation and role of VHI.

The Bill states the principal objective of the Minister and the authority is to ensure access to health insurance cover is available to consumers of health services, with no differentiation. This objective will be given effect by risk equalisation credits, stamp duty or other measures, or any combination of these measures. The Bill now includes the desirability of ensuring the less healthy, including the old, have access to health insurance cover by means of risk equalisation credits. This is done in the interests of social and intergenerational solidarity and regardless of the health risk status, age, gender or frequency of provision of health services for any particular generation.

I welcome the opportunity to speak to the Health Insurance (Amendment) Bill 2012. The programme for Government commits to providing a system of universal health insurance. I recognise that the Government has to get through a full list of legislation, but I am concerned that we are down to the wire on health insurance, given that the current interim scheme expires on 31 December. Rushed legislation is often bad legislation. Clearly, there is a huge crisis for the private health insurance market and it is deepening by the day, if not the hour. I first started thinking about health insurance when I got married in 1984 and then started my family and established a business. When the health insurance products first came on the market, I welcomed them with open arms. I do not dismiss those who cannot afford private health insurance, but there is some comfort to be gained from having it. However, the issue has been abused and hijacked during the years.

A situation existed across the insurance industry where spurious claims were made. I remember RTE had very good advertisements on this describing how when John had an accident and decided to claim he was putting his hand in our pockets. Many people have their hands in pockets with regard to costs, not in a sly way but in an up-front way. I remember being in Shanakiel hospital about 15 years ago for a number of days. I was quite sick, but believed I was covered by VHI. However, on the morning I was leaving, having recovered and lived to tell the tale, the sister came in and slipped a white envelope under my plate. I thank all the medics who were involved in my care, who were tremendous people. I am aware medical professionals are bound by the Hippocratic oath and I sympathise with the medical staff in the hospital in Galway involved in the recent very sad case, but I obviously await the outcome of the independent investigation that will take place. In the main, 99.999% of people in the medical area, doctors, nurses and so on, are in health care because it is their vocation and passion and they want to do good. However, mistakes will happen.

When I opened the envelope, I was quite taken aback to find a bill for £600. The reason I got the bill was that I had to go to Cork University Hospital for a special test. I could have walked over, because the distance was only from here to Grafton Street. The walk would have been good for me and would have helped reduce my blood pressure before going for the test. However, a private ambulance was hired to take me over. I could not have walked back because I was comatose, after an anaesthetic. However, the bill for that came to £600, absolute daylight robbery. Some £100 would have been a big sum at that time.

The problem is we use and abuse the scheme and there are no checks on it. I do not blame the current Minister for this or the Minister of State present. When the scheme was set up first we were all delighted with it. It seemed like progress and many good causes were championed. However, people get used to a scheme and it gets hijacked. Far too many people get on its back and start pulling and drawing off it, but nobody watches what is happening or sets up checks on it. There is a chronology to this, since the establishment of health insurance and the VHI in 1957. A liberalised market was promised in 1992 when the third life directive, thankfully, forced competition in the area of private health insurance. We blame Europe for many things, but some of its directives have been good. However, things can go wrong depending on how we implement them, fail to implement them or use them to suit ourselves and different vested interests.

The Health Insurance Act 1994 made provision for the establishment of the Health Insurance Authority, HIA, but the body was not brought into existence until 1 February 2001, a long time later. Why did it take this long? The 1994 Act was amended by the Health Insurance (Amendment) Act 2001, providing for, among other things, an enhanced role for the HIA, with more responsibility than envisaged under the 1994 Act. I welcomed that. The HIA is funded by a levy imposed on private medical insurers, but obviously this, like everything, is passed down to the punters. Premiums were to be independent of the State. The role of the HIA includes acting as a registrar of medical insurers and undertakings and vetting new market entrants. It is also involved in consumer protection and provision of information and also provides advice on matters of medical insurance to the Minister for Health. The HIA receives returns from medical insurers every six months and on that basis makes recommendations to the Minister regarding risk equalisation.

One would wonder, considering the massive increases that have applied over the past 18 to 20 months, whether the HIA has been disbanded. Does it still exist or is it one of these quangos that is just there to rubber stamp things? What has gone wrong? Where is it and why is it not acting on behalf of the hard pressed people of Ireland, ordinary people who got mortgages and jobs and started families and decided to pay for health insurance? Now these people find themselves without jobs, unable to pay their mortgages and unable to pay ever higher premiums. In some cases premiums have increased by 100%. It is daylight robbery.

I do not understand why insurers cannot see that these increases are creating an even bigger mess. The drop-out rate from health insurance is enormous. I do not have the figures to hand, but I know the drop-out rate is significant. I know what is happening from seeing what is happening with my own health insurance. I am a parent of eight children and naturally I expect my insurance to be expensive. I moved from VHI to Aviva, but have found that the goalposts keep changing. Now, we find if we go for a procedure we are covered for very little. We are covered to get in the door. The health insurance industry could be compared to the people on Grafton Street with billboards, coaxing customers into their premises. However, once customers go in, they are fleeced.

We do not have the health care we should have. I will not use the words I would like to use to describe the situation, but it is disgraceful. It is not fair, equitable or sustainable. What is happening is that pressure is being piled on our already overcrowded public hospitals because people cannot afford health insurance they could afford previously. They get a huge shock then when they have to wait on the public system where there is huge pressure and the Minister is fighting a battle to ensure services are maintained. When in opposition, he promised that if Minister he would eliminate the need for people to wait on trolleys, but that cannot be done. Situations occur every day in hospitals which give rise to the need for the use of trolleys. However, the Minister claimed he would be the messiah in this regard and would rid all hospitals of the need for trolleys. However, while wards are being closed in hospitals because of the financial situation and the cutbacks, we are bound to have trolleys. A trolley free hospital is not achievable.

When Barry Desmond was a Minister 25 or 30 years ago, before I was ever in politics, he was fighting this battle. I look at the situation this way. If a farmer wants a vet at 2 a.m., 3 a.m. or 5 a.m, he can get a vet within half an hour. However, despite the CareDoc system and everything else, it is very hard to get access to a medical practitioner at those times. One could get three vets if one wanted in the middle of the night. They are there. They work hard and provide their own laboratories and everything else. Any child over four or five can tell a doctor what is wrong or where he or she has a pain, but an animal cannot speak. Therefore, vets must be better at making a diagnosis. They have no help.

The point I am making here concerns consultants. I met some consultants here last week when they were fighting the cause of the south-east regional hospital and I support the work they do. However, I believe they should have their own facilities to treat private patients. It is a no-brainer. They are able to charge enormous fees. They do great work, but why should the public be disenfranchised and have to wait. If consultants want to carry out private work, let them go to the Beacon or other clinics. That is the choice they should have to make. That is business and the way things are done. Why should the State carry them? Why should the State provide those services? Why should the State provide for them to have a public clinic for just a few hours and then allow them use the facilities for a private clinic? That is not right. I recognised what Barry Desmond was trying to do and supported him. He is a long time gone from this House, but his party should continue in that vein. The party to which I belonged did not and the Minister with whom I had to deal in the previous Government, Mary Harney, did not. She was all for privatisation, the more the better. He who pays the piper calls the tune. However, let them do it in private hospitals.

I am very concerned by this Bill. The deadline is too short and we seem to be rushing into this. Why are those drafting the legislation and advisers not dealing with this situation? We can blame the Minister, but he can only do so much. However, there are layers of bureaucrats involved. Why are they not dealing with this? Why does all legislation have to go on and on? The previous Government failed to grapple with and deal with these issues on several occasions. I admit this happened when I was a member of the Government party. However, I argued constantly with the Minister at the time, Mary Harney, about her ideals with regard to private health care. I wrote to the then Taoiseach when the Progressive Democrats disbanded, asking him to remove Mary Harney from the Department of Health, because of the lack of accountability. She had no party to answer to. She came to our party rooms to answer questions a few times, but we got no answers.

I am not saying I have all the right on my side. However, the situation must be dealt with. We can discuss risk equalisation and age etc., but Deputy Durkan was right.

I know other Deputies who spoke after him said he was wrong. They did not agree that one should be able to build up and use a no claims bonus. That is fine, but I think people should get some recognition for paying their premiums regardless of what they are charged. When these companies increase their prices, their customers have no say in the matter. They have to pay when they receive their bills. Some people have to take out loans to do so. It is gone over the top. Many people cannot pay. If the economy had stayed going the way it was - we all knew it could not - people would find it hard to pay these increased charges. Do the insurance companies and the people who are billing the insurance companies think that people will keep paying as they continue to increase these immoral charges, percentage point by percentage point?

It is not rocket science to suggest that this approach, like the austerity approach, is not working. We saw all the trouble all over Europe yesterday. I do not advocate any kind of activity like that. Thankfully, we did not have any in this country. This is austerity in the other way. There is another word for it, but it is not coming to me at the moment. As far as I am concerned, it is a question of milking the system. We cannot continue to pay it. As I have said, the pressure is going back on the public hospital system.

I spoke about the need for fairness in the system when Deputy Ó Caoláin and I raised a matter on Topical Issues in the House last week. I understand that Deputies from the Waterford area raised a similar matter this week. The Minister of State, Deputy Kathleen Lynch, who had many backers when she came into office, has been trying to regionalise services and put services out into the community. I was opposed to it, but I have to say it seems to be working fairly well so far. I will never say that I have all the answers, or that I am not open to change. I am open to change.

The people of my local area, led by consultants at South Tipperary General Hospital including Dr. Peter Murchan, Dr. Paud O'Regan and my late brother, Dr. Eddie McGrath, bought into the mantra that was being trotted out, which was that cancer services should be provided at eight regional centres of excellence throughout the country. Even though it is not possible to get to Waterford from many parts of my constituency within the golden hour, we accepted the new approach and put our shoulders to the wheel. As politicians, my colleagues on all sides and I had to sell this change to the people. As Deputy Coffey said, everything was working well and certain services were being returned to the smaller hospitals, for some reason. I compliment the Deputy, who mentioned the hospitals in the south east - Waterford Regional Hospital, which we knew as Ardkeen; South Tipperary General Hospital, which we knew as St. Joseph's; Wexford General Hospital; St. Luke’s Hospital in Kilkenny and Kilcreene Hospital.

Everyone in the region has been working together on this package. We have the magical figure that is required for a centre of excellence. We have the population of 500,000 that is needed to ensure there is enough throughput to make such a centre viable. When HIQA was created - it is a bit of a monster as far as I am concerned - it watched us to make sure we had what was needed. Something funny is going on now. I do not like it. I suspect it was going on during the term in office of the last Government. Certain authorities in Kilkenny, who have the ear of the Minister and of certain consultants, have decided they want to go to Dublin. One can travel between the two cities in an hour on the new motorway because it is a good road. The approach that is being taken is depleting the cohesion that existed in the south east when all medics and consultants were buying into it. We need to maintain that cohesion.

We do not know what will happen next. We might be told we will have to go to Cork. We are waiting to see the report of Professor Higgins. There is nothing worse than a report that is being leaked when we do not have it in front of us. I have no axe to grind with Professor Higgins. I do not know the man at all. I am just saying that we are undermining ourselves. Certain people in Kilkenny have gone off and done a solo run. I suspect that my friend, big Phil - the Minister, Deputy Hogan - is not far away from the shenanigans that are going on. Those involved are undermining the credibility and sustainability of the ideology we bought into and on the basis of which substantial investment was made. While I suspect that the Minister is involved, he can answer for himself. I heard that his answers were not too helpful when he was interviewed on local radio yesterday. I am concerned that certain interests are diminishing the cohesion that has existed before now.

When I spoke on Topical Issues last week, I mentioned that there is a population of 1.2 million in Dublin. I do not know exactly how many major hospitals there are in Dublin - I have not gone around to count them - but I have been told there are nine or ten. There is a population of 500,000 in the south-east region, which covers counties Carlow, Kilkenny, Waterford, south Tipperary and Wexford. We have found out that loads of patients from the Thurles area, who used to be catered for in Limerick, have been moved into the south-east region because the Mid-Western Regional Hospital cannot cope. The leak is coming in. People from parts of east Cork who are just 20 minutes from Cork University Hospital are also going to Waterford Regional Hospital to be treated and looked after. Something is very wrong if that is happening. Something is rotten in the state of Denmark.

I have observed what has been done with the system in various parts of the country, including the Monaghan-Cavan area - my wife is from County Monaghan - and Sligo. There were some terribly heated debates and protests etc. We cannot buy into the system if the goalposts keep moving. As I said, the Bill before the House is moving them further. I accept that it is an attempt to straighten the goalposts and keep them visible. However, it will not affect the mighty fat cats who took a Supreme Court challenge when the then Government acted in a similar manner in 2004. These people have the power, money and resources and the little people of Ireland do not matter anymore.

It is time we started to listen to ordinary people again. We heard what they told us last Saturday. Every other Deputy in the House and most of the people in the system were saying "Yes", but the people sent a message telling them they did not trust them. I did not go out canvassing or knocking on doors. I did not intend to do any public engagements on the matter. I took a family decision. The people out there are watching us. They are not happy with us. Governance seems to have become the preserve of the elite. The ordinary people who want these services are as entitled as anyone else under the Constitution to receive them. If we cannot ensure every citizen enjoys a meaningful modicum of respect, what did Connolly and Pearse - I do not need to mention the rest of them - die for? We need to deal with everyone equally and fairly.

We have to listen to what the Royal College of Surgeons, which is an eminent body, has to say in this present case. Who else would we listen to? Those involved in the college are the experts in the field. They have expressed their support for the situation in Ardkeen and throughout the south-east region. We must be left alone. We cannot have Ministers or anybody else doing solo runs and undermining the credibility, sustainability and good work of these consultants. Some of them will throw away the tools of the trade and retire because they will not be willing to put up with what is being done. They have families and lives of their own. They have to know what the future holds for them. Above all, they have to serve a population of 500,000 so they have the proper throughput that is demanded by HIQA and every other body.

Ministers can make statements and take actions, but the mighty HIQA often follows them like a hoover. Everybody shivers when this powerful body gets involved. When it decides to visit a small community hospital that is trying to keep going, it sends out a bill of €3,500 for its services. I am all for the standards that are needed in health care, but it is not all about badges, tags, folders, proper entrances and exits and everything else. Health care must be the most important thing. Where are the representatives of HIQA between 2 a.m. and 4 a.m., when 20 or 30 patients are to be found on trolleys? They are not resting because one could not rest on narrow and small trolleys. It is indecent, immoral and wrong. We have to go back to the drawing board. We have to be cognisant of the people we are supposed to serve in here. We should not be serving ourselves. We have to be honest with ourselves.

I conclude by wishing the Minister and the Minister of State well with this legislation. We have to examine the dots and commas. We will need to be strong and careful. We should make haste slowly. We should not allow ourselves to be boxed into a corner just because this is expiring in 2012. There is a limited number of days left in 2012. When one is pushed into a corner and forced to make rushed decisions, it is a bad business.

I would like to share time with Deputy Twomey.

Is that agreed? Agreed.

I welcome this legislation and congratulate the Minister, Deputy Reilly, and the Department of Health on its introduction. This Bill is another step on the road to the delivery of a health service that is supported by universal health insurance and in which access will be based on need rather than ability to pay. In other words, we will have a single-tier health system at the end of this process. This legislation will ensure we maintain a sustainable and competitive health insurance market as we move to universal health insurance. It is part of a range of actions being taken to that end, including the ongoing development of primary care services. A number of primary care centres have been opened around the country and more of them are in the pipeline. They are working very well to deliver effective health care at local level, close to the patients, and ultimately at a lower cost than that which applies when these services are delivered by the bigger institutions. As they can provide a better quality of service, they are protecting patients' quality of life. The development of primary care services is another arm of this approach.

The roll-out of special delivery units, which is part of the same process, has been a great success. Objective statistics compiled by the Irish Nurses and Midwives Organisation demonstrate that special delivery units have considerably reduced waiting times.

In the context of overall reform, I salute the Minister's achievement of a €125 million transfer from insurers to publicly funded hospitals in 2012. This will assist in dealing with the overrun in the health budget but it is also a correct transfer from private to public when public wards are used. Where private patients use public beds, there has to be a reallocation of resources to match that.

Another aspect of the reform and ongoing development of the health services must be the reduction of costs to the consumer of private health insurance. Greater steps and greater transparency in this sector are necessary. We cannot have arbitrary, almost annual or biannual, increases in the cost of health insurance without very active scrutiny and without rigorous control by the Minister and his Department.

For example, there should be a breakdown of invoices in the private health sector. When somebody has a procedure where a private health insurer is covering the cost, there should be a breakdown of all aspects of the costs so it is a very transparent process. This would put an onus on the health providers to provide the insurance company with a proper breakdown which would have to be clear and allocate the costs. There is an inherent saving to be made in this regard and, in any case, proper practice would dictate it should happen. I ask the Minister and the Minister of State, Deputy Kathleen Lynch, who is present, to ensure as a matter of urgency that proper invoicing, with a detailed breakdown, as applies in every other sector, is available within the private health insurance area.

I have also come across sustained anecdotal evidence from people who come to our advice centres and others that, when patients have a procedure carried out, it is performed by a junior doctor, who is in the pay of the HSE - in other words, in the pay of the State. However, the consultant who is in overall charge then invoices the VHI, Aviva or another private health insurer of the patient for the procedure, so there is a double payment for the one procedure. A bill goes to the private health insurer, which is upping the cost of premia, and a bill goes to the State for the fact a junior doctor in the pay of the State performed the procedure. This is outrageous. There is sufficient anecdotal evidence to merit an investigation. I call on the Minister of State, Deputy Lynch, to take this back to the Department and to have the matter investigated as a priority.

There is also anecdotal evidence from people who have told me they have gone for a private procedure and are then brought back for an over-the-top number of check-ups, whether annual, biannual, three-monthly or otherwise. I am not convinced that all of these check-ups are necessary and, as there is certainly not parallel activity in the public sector, one wonders if it is a bit of an industry.

What I am effectively saying is that there is a real onus on Department officials and the relevant Minister and Ministers of State to take a vigorous, investigative, proactive approach to the cost of health insurance for the sake of the consumer and the health service. If we are to move to a single tier health system and universal health insurance, this would be a prerequisite. However, we could not go there without getting competitive, properly priced insurance and evidence-based bills, and without ensuring that only necessary procedures are carried out. I am well aware there is a change in the demographic and in the costs that go with older patients - I am aware of all of those phenomena. However, there is still sufficient evidence to suggest the malpractices that have been identified merit investigation and, at a minimum, merit a response from the Minister on the conclusion of Second Stage. I would appreciate that.

Risk equalisation will provide for the extra cost that goes with certain older people who have certain sets of illnesses, so there will not be a discriminatory factor and the money will be refunded to the insurer where there is extra cost involved. It is really community rating in terms of providing assurance in the long term and it is replacing the interim legislation. It will be implemented from January 2013 and, as a result, many packages have recently been offered to younger people and there has been a breakdown of the market into different segments by the insurers. It is important equalisation is in place and that it is written into the legislation that a person's contract cannot be broken. It is important that a person who is insured will remain insured by the same insurer right throughout the process and that anyone under the age of 65 who seeks to join a private health insurance scheme cannot be precluded from joining it on the basis of risk. It is important that the older cohort of people, who will cost more, benefit from equalisation and that money will come by way of a charge from the less risky younger sector of the population. Ultimately, everyone gets to benefit from this, it ensures the viability of the insurance companies and it ensures reasonable costs for the person accessing the services.

In conclusion, I welcome the legislation and the interim measures being put on a permanent footing. I welcome the safeguards that are built into the Bill. I appeal to the Minister to examine the cost of health insurance, the prospect of detailed invoicing, the use of junior doctors while the charging is done by consultants, the possible over-use of check-ups and the duplication of activities. We need to be rigorous in analysing any attempt to increase insurance costs.

I concur with many of the remarks made by Deputy Joe O'Reilly on this issue. It is vital the Minister would take on board what is happening and deal with this issue, which has been raised time and again in regard to audit and governance. The bills issued to and by the VHI and other health insurance companies would essentially be considered meaningless in private business as there is no breakdown of costs or of why patients are paying so much. To be honest, such practices are unacceptable. We have known about this for years and it has been discussed time and again, both in our clinics and in public fora, including in this Chamber. Patients are paying for a service they did not receive and they have no idea why certain costs were incurred. If one puts in a request to the insurance companies, they simply stonewall. During the era of the Celtic tiger, it was perhaps felt this was not an issue worth tackling but that has changed dramatically.

Risk equalisation is vital for community rating and solidarity between the generations is extremely important, but there are dark clouds around the private health insurance market at this time. The pool of people paying is getting smaller and we now have historic deficits that are being carried over to the next generation of people, who will have to pay. The VHI apparently needs €80 million to €90 million in order to meet its EU requirements into the future. These are deficits that were built up when there were 100,000 to 150,000 more people paying for private health insurance in this country but they are no longer doing so.

A smaller pool of patients who are less able to pay private health insurance are now being landed with this burden. In order to continue intergenerational solidarity and to encourage younger people to accept that they will have to pay a little more to provide private health insurance to older generations, they must have full confidence that we are doing everything in our power to keep costs down. What Deputy O’Reilly said is true and it must be considered and dealt with urgently by the Minister.

One of my concerns about the legislation is the addition of health status to the criteria for risk equalisation. Perhaps there is a reason for that connected with the ruling or it might be in order to get around European Union regulations but, whatever the reason, it must be fully explained to the House because it could complicate the issue in the future unless a clear protocol is set out for how one defines ill-health. If the definition is based on the number of nights one stays in hospital, we are running the risk of a return to the problems experienced in the private health insurance market in the past, when private patients were kept in hospital for longer than was necessary because hospitals and consultants were paid per bed night. There is a need to examine how we will deal with this issue.

Simplicity should be the order of the day when it comes to private health insurance in terms of how we monitor costs and premiums and how we sell the concept of intergenerational solidarity and community rating. It is surprising in some respects that 40% of the population feel compelled to have private health insurance. It is an indictment of the health care system. When the VHI was set up in the 1950s it was because people with a certain income had to pay for all of their health care needs as there was no universal free health care service. Currently, the private health system is different. Essentially, everyone is entitled to access to public hospitals. Although there may be a charge, one would not be driven to bankruptcy if one ended up in hospital, whereas 50 years ago one had to pay for every single hospital procedure or operation at significant cost, which did break people in the past. We must also drive forward reform and efficiencies in the public service. We must reduce waiting times and ensure procedures are carried out at an appropriate time because the only reason the vast majority of people pay for private health insurance is to get access to health services.

We must also examine the type of company the VHI is. The judgment from the European Union states that the VHI and other such companies must have reserves of 40%. Other companies do but the VHI does not. We must examine the position seriously. Health insurance is not like house insurance, which is affected by factors such as storm damage and must plan for an unpredictable future. For instance, costs increase dramatically for an insurance company following a major storm, but in the case of health insurance the VHI could calculate to within a couple of million euro the health insurance costs for the next two to three years. We could factor in a 6% to 7% increase in health costs. The VHI will more or less be aware of the procedures involved. A 40% reserve is probably too much. If the VHI were involved only in health insurance the reserve could be much lower. I wonder whether the possibility has been explored by the Minister at European level because it would reduce the considerable amount the VHI is expected to keep in reserve. It is the patients of today and tomorrow who will have to pay higher premiums to fund the reserve. There is an opportunity to do things differently in order to continue to make private health insurance more affordable for patients.

I was involved in the discussion about risk equalisation. BUPA originally took the court case to Europe in which risk equalisation was struck out and, as a result, there has been much confusion in the private health insurance market in recent years. That is one of the reasons I wish to ensure that when we introduce legislation on the issue we aim for simplicity so that the legislation is not open to future challenge. I am a strong believer in community rating and risk equalisation. The other system of private health care is a risk-rated one, whereby as one gets older one pays a bigger premium. That is completely unacceptable because as people get older their incomes decrease, their premiums go through the roof and they cannot continue to pay for private health insurance. The risk-rated model of private health care is a complete rip-off and does nothing for patients. We must work hard to ensure that the model of private health insurance we have is affordable and accessible to as many people as possible.

Because of their financial situations, young people are leaving it as long as possible to take out private health insurance. The longer they leave it, the greater the proportion of older people in the market, which will put more pressure on the community rating model we have in place. It is vitally important that the Minister consider the need to examine the cost base. We talk a great deal about the cost of premiums, but insurance companies take the cost and add a little on top of it to obtain the premium. There is great scope for us to examine the cost base of private health insurance by focusing not just on consultants and how hospitals bill private insurance companies but on how hospitals calculate bills. In this way we can dramatically reduce the cost of premiums to patients. Otherwise, I predict a serious crisis in the health insurance market in the near future because premiums simply will not be affordable for young people and older people will be left without cover. There is a role for the private health insurance market in this country. We could not afford to deal with all of the patients who are treated in private hospitals currently in the public system. It would crash the system. The public system is already under huge pressure. We must acknowledge the good work that is done in private hospitals.

Deputy Mattie McGrath was all over the place in referring to the elite in one breath and then saying in the next that those in the Royal College of Surgeons in Ireland are a fine bunch of lads and that they are not the elite at all. One wonders what point he is making. He criticised HIQA. We set up HIQA because we did not like what was happening in the health service, with cases such as the Susie Long case, the abuse of elderly people in nursing homes and the regrettable incident in Galway in recent days. I do not wish to comment too much on the latter case until we have the full facts of what happened in Galway. The purpose of HIQA is to give confidence to people that the health service is safe and that it exists to work for them. We must be supportive of such organisations rather than undermining them. We might not always be happy with how they operate but they are there to look after patients, which is our number one concern. I hope that what we say about the cost base of private health insurance is taken on board and that something is done about it.

I wish to share time with Deputy English.

I welcome the opportunity to discuss the Bill. Difficulties in the area of risk equalisation have arisen since 2005. I was a member of the Joint Committee on Health and Children during that period and it was extremely frustrating that progress could not be made.

I raise another issue that was mentioned, namely, that private beds in public hospitals should be paid for 100% by patients. There is an argument for that because the beds are private, but I offer another argument. Those of us who use public services pay for this through our tax. We know how much the public health service requires from the taxpayer in order to ensure provision of proper health and hospital services. However, private patients who seek private accommodation and treatment in public hospitals also pay tax for the running of hospitals. There might be an argument that they should pay a certain premium in insurance but it should be recognised that private patients who have private insurance or who opt for private treatment are contributing to those beds through their taxes as well as through the fees charged.

The Minister for Health has consistently raised the issue of cost with health insurers and has stated his intention to address costs in the sector in the interest of consumers. In discussing this matter, we use terms so lightly they roll off us. I offer the example of community rating, which is not fully understood by the public. We should be careful when we use language in public discourse so that people can understand what we are saying. Community rating is a system whereby a person's age does not determine the level of premium he or she pays. There are some exceptions to the rule under which people pay the same premium regardless of age, one of these being children, whose premiums must be no more than 50% that of an adult. This applies also to full-time dependent students under the age of 23, whose premiums may be reduced, although not below 50%. All of us are members of group schemes which offer a 10% reduction. In addition, pensioners or those who have restricted membership with an insurance scheme may have their premiums reduced.

Health insurance claim costs indeed increase with age, as the previous contributor noted. The average claim cost for people aged 70 to 79 in 2011 was €4,442, compared to €224 for those aged 18 to 29, which equates to less than 10% of the pay-out for the former group. VHI Healthcare has a much higher proportion of older lives than the other two organisations, Aviva Healthcare and Laya Healthcare. For example, in December 2011, the VHI had a 56% market share in the nought to 49 age group and a 90% market share of the over 80 age group. This means that the VHI has a higher average claim cost per member than Aviva or Laya. Risk equalisation is a process that aims to neutralise in an equitable way differences in insurance costs that arise from variations such as age and insurer profile. It involves the transfer of payments among health insurers in order to spread some of the claim costs of the high-risk older members among all private health insurers in the market in proportion to their market shares. In the absence of an effective risk equalisation scheme, there is a threat to the existence of a community-rated market when significant differences in risk profile exist between competing insurers. Risk equalisation is a common mechanism in countries that have community-rated health insurance systems. Although private insurers do not actively market towards younger persons, there are ways of encouraging a younger membership. It is important that there is a system of comparison between products of different insurance companies. For many who might consider moving from one provider to another, the differences in benefits offered by the various products are often unclear.

In 2005, the Health Insurance Authority recommended commencement of risk equalisation, and in December of that year the Minister for Health and Children decided that risk equalisation payments would commence on 1 January 2006. A court-imposed stay was made on payments until there was a ruling on constitutional challenges to the risk equalisation scheme. In July 2008 the Supreme Court ruled that the scheme was unconstitutional. In November 2008, the Government announced an initiative of an interim age-related tax credit and health insurance levy to support the cost of health insurance for older people. The interim system was designed to last for three years and to be Exchequer-neutral. In May 2010 the Government announced a comprehensive strategy and set of actions for the health insurance market. These included the development of a full and robust new risk equalisation scheme that would start in 2013, and the implementation of a new transitional arrangement from 2012 that closely approximated the effect of the full risk equalisation scheme. The Health Insurance Authority published a consultation paper on risk equalisation on 21 June 2010 which was submitted to the Minister in December of the same year. That is the background to the presentation of the Bill today.

The State supports the private insurance market through tax relief at source of 20% of health insurance premiums. It also supports the community-rated market by providing age-related tax credits in respect of those aged over 60 in order to help meet their higher claims costs. This is the commitment by the State. Everybody accepts that community-based health insurance should be protected.

The Government's policy on private health insurance states that private health insurance can also play an expanding role in providing cover for primary care. The Minister has stated that expanding primary care with health insurance minimum benefits can dovetail with reform of public health eligibility legislation. Primary care can thus play a more pertinent role in the health care of the entire population. At the same time, the Government has left open the option of introducing compulsory private health insurance. Public health insurance does not offer satisfactory protection for poor people at high risk or for high-risk individuals.

Little research has been carried out with regard to the real effects of mandatory public health insurance on quality, care and efficiency.

The Deputy has used ten minutes of the time available.

I will leave it at that so in order to allow Deputy English to make his contribution.

I thank Deputy Neville for sharing time. I welcome the opportunity to contribute to the debate on the Health Insurance (Amendment) Bill 2012, which is an important item of legislation and which I am happy to support. The Bill forms part of the bigger picture. Health insurance is still very expensive for some people, while others cannot afford it at all. However, at least the Bill will be of assistance in ensuring that the system will be somewhat fairer. It will also ensure that people who have been affected by ill health over the years or with whom age is catching up will not be hit with massive increases in their bills. The term "intergenerational solidarity" is very nice, particularly as in this instance it means that the costs involved will be shared by everyone. However, we must remember to ensure that it is used when we are debating legislation relating to other Departments. We do not always witness intergenerational solidarity. We may, however, remember to use the term more often in the future as a result of our debate on this Bill.

The Minister indicated that the legislation before the House is part of the reform agenda which is detailed in the programme for Government and which was also outlined in Fine Gael's and Labour's manifestos for the most recent general election. Prior to that election, both parties indicated that they wanted to reform the health service and introduce a fairer and more equitable system within which people's access to care would be based on need rather than on their ability to pay. Health care was not provided in this way in the past and the Bill is part of the process that is aimed at ensuring it will be in the future. There is a great deal more work to be done in this regard and we must ensure that we remain focused on that fact.

We are concerned here with creating a level playing field. I accept that Opposition parties are of the view that there are different ways to achieve the same result. Having carried out a great deal of research and done much work in respect of this matter while in opposition, Fine Gael and Labour are both of the view that what is outlined in the Bill represents the way to go in the context of introducing a level playing field and thereby ensuring that people's access to services will be based on their needs. Regardless of whether one has money, the waiting lists, etc., relating to children are generally dealt with on a fairly even basis and access to care is based on need. This ethos must be spread to every other part of the health service.

I accept that some people have been placed at a disadvantage in certain instances, particularly where other individuals had private insurance. We are trying to balance it out but it is not possible to do this in six months, a year or two years. The Minister for Health and his Ministers of State have been very careful to state that the reform agenda will take some time to implement. It was clearly flagged before the election that it would probably take seven years to fix the problem. The programme for Government is very ambitious in aiming to have much of the reform carried out during this Administration's five-year term of office. I get somewhat fed up when other Members of this House, those in the media and people in the street state that we have been in power for nearly two years and we have not yet fixed the health service. It would never have been possible to fix it in such a short period.

For once, politicians were honest in their election manifestos and stated that it would take a number of years to reform the health service. It is not often that politicians are willing to state that it might take two terms in government to achieve something. In the area of politics, there is often a demand for immediate results. As a result, everyone should recognise that in this instance it was clearly stated that reform will take some time to deliver. That reform will happen but it will take a number of years to achieve. I have no difficulty with people being critical in respect of particular matters. However, everyone should accept that it would not be possible to fix the health service - not to mention the economy - six months, a year or two years. All good projects take a number of years to complete. That is the case in this regard. I hope that three to four years from now our health services will be close to being fully reformed and that people will have access to health care when they require it and that this will be based on their needs and not just on their ability to pay.

Progress has been made in the context of the reform agenda. I have seen evidence of this in the area in which I live. We must take the opportunity thank all of the staff involved in bringing about the reform to which I refer. The Croke Park agreement is often sneered at and people sometimes criticise it. However, I have witnessed major reforms in the area of health which are due to the efforts of all of those in government with responsibility in the area and also those of the staff involved who are willing to accept changes. As a result of the Croke Park agreement and their own common sense, those to whom I refer know that these changes were the right ones to make. The concept of the money following the patient has worked very effectively in the orthopaedic unit at Navan Hospital. The work done by the special delivery unit is yielding great results throughout the country. This has not been the case everywhere but that is because it takes time to implement reform. We are getting there. In the majority of cases, the number of people on trolleys in hospitals throughout the country has been greatly reduced. The figures in this regard are independently assessed. I accept, however, that we have more work to do.

Hospital waiting lists have been dramatically reduced. It is not good enough that people are still being obliged to wait nine or 12 months for procedures but these periods have been reduced. The Minister has put in place a plan to ensure that the amount of time people are obliged to wait will be reduced even further next year. The outpatient waiting list was previously way out of control. When we entered Government, there were 250,000 people on it. However, the Minister and his colleagues have set a target in respect of reducing the numbers on this list next year. When we were in opposition, I always stated that in order to fix something one must first admit that a problem exists. It was not possible to fix the problem when the figures were being hidden. When a Government initially releases figures such as those to which I refer and admits that there is a massive waiting list, it is given a great deal of slack. When the problem is fixed, the Government involved should also be given credit. One must count the numbers involved before one can fix the problem and I hope we will do this.

Much of the discussion on the Bill has related to the cost of health insurance. This is a matter which must be addressed. The effect of the cost of health insurance on the cost structure and governance of health care delivery is of major concern to many of us. Just over 4.5 million people live in this country and we spend over €14 billion on health. In addition, more than 2 million people have health insurance. They are obliged to pay massive amounts for such insurance and it is amazing that they can meet the cost involved. Most people believe, rightly or wrongly, that they need private health insurance in order to ensure that they can obtain access to health care. We must, therefore, change the system. Universal health insurance will eventually become compulsory and this will hopefully lead to a decrease in costs. What it will certainly do is bring down the overall cost. Both the public and private spend and health service reform should bring down this cost and people should be in a position to enjoy the benefit of this.

The Minister indicated that part of his work will be to reduce costs where possible. An example in this regard would be the VHI. The Minister expects the latter to undergo many changes in order that its costs will be brought down. In the event that anyone is of the view that such changes should not be made, I wish to read into the record a letter sent to me by a concerned constituent a number of months ago regarding the VHI and the issue of costs. The letter states:

Dear Deputy English,

I have expressed concern on several occasions regarding value for money in relation to VHI charges incurred by me. I wish to do so again, relating it to the example case below. Should you wish to use the actual case cited please feel free to do so. [I will forward a copy of this letter to the Minister].

As you know, following completion of treatment VHI provides each member with a detailed statement of the benefits it has processed in respect of a claim. They ask that if I have any concerns with the cost of care that I should contact them. So I did.

I rang the VHI to give them my experience of the cost of Healthcare I received.

My Treatment involved an injection (to the right eye), the charge being Euro 200.00 with which I have no problem. I also do not have a problem with the medical staff although there were a lot of them around and they obviously have to be paid. Where I do have a problem is the charge for a "side room and theatre and equipment etc." as explained by the VHI person I spoke to. The problem is that I was not in a side room - I commenced in a waiting room with c. 8-10 people present - I was then prepared in a corridor and in a smaller waiting room and eventually moved to a low tech "theatre" with a no bells and whistles table on which I had the injection administered, apparently by a hand held instrument. I then had a welcome but unnecessary cup of tea and toast prior to leaving.

The cost of this experience was Euro. 1,465.93.

My attempt to have this cost explained failed miserably and I was met with the mantra that this was the cost negotiated between the Mater Private Hospital and the VHI, full stop, end of story, pleasantly explained, just about.

My [bill] is for three of these treatments (at the time of writing one more to come) with a likely total cost of c. Euro 4,400, excluding the surgeon's fees. Obviously I am very happy to have benefited from it, however, if the VHI fees continue to increase even less dramatically than currently predicted I will have no option than to join the public patients' queues at a time of my life when I had hoped for better fortune.

I raise this matter as a specific, micro, example of where better accountability and value for money could probably be achieved. My three quick fix eye injections will exceed the previous cost of my hip replacement.

As a point of interest in discussion [with the hospital] on the day of my initial diagnosis, when costs were being discussed, it was mentioned by a person qualified to comment that in the USA such treatments were normally carried out in a GP's surgery.

I am of the view that this letter summarises the concerns which exist. In fairness, the Minister and others have long been critical of the way the VHI and other companies administer their affairs. I refer to the fact that they do not follow up on matters of this nature in order to discover why patients are charged so much for hospital procedures. In other words, they do not ask the questions. There is a need for people's hospital bills to be audited and also for health insurers to seek reforms in order to drive down costs. Having a procedure should not cost that much. The Government plans to have procedures carried out elsewhere in order to bring down the cost of health care in Ireland.

The combining of public and private moneys will result in a saving to the Exchequer and a better and more cost-effective system. We are not getting value for money for a range of reasons and this is the reason the system must be reformed. However, the many stakeholders will all need to be involved in the reform process, including VHI and the other health insurers. They will have to work with us to drive down costs. It is to be hoped the concepts of the money following the patient and universal health insurance will contribute to a changing of the health system.

There are significant plans for the reform of the health service. Some of the changes will involve a mixture of good and bad news for hospitals around the country. The range of services currently available in all hospitals will not continue to be available in all of them. The Minister will publish in the coming months a framework document on small hospitals which will set out the plans for many small hospitals. Many of us will disagree with the proposals to be mde and we will fight for the retention of hospitals or certain services in our individual areas. The Minister has given a commitment that we will all be consulted on the proposals to be made in the document when published. The medical experts on both sides of the argument will have an opportunity to air their concerns. Any reform of the health service must be accepted by the people, as well as by the professional staff. The people will have to believe the reform will benefit them as patients. I know this will be the case, but we need to inform and convince people. It is a case of building trust. People have lost trust in a range of organisations, including politics and the decision-making process. Any change which could affect the accident and emergency services in many hospitals will need to have the support of the people. This will take some time to achieve. We need to convince people that the change is good, that it is the right option for them and their families. That is the work that lies ahead of us. If we do not succeed in convincing them that it is the right thing to do, perhaps we are wrong and should review the proposed changes. However, any proposed change to any service needs to be teased out with all those involved in delivering the service. There will be a need for honesty in the debate, rather than just political argument and point-scoring. It will be difficult for some of us to accept some of the proposed changes because politically they will be difficult. However, if they are right for the health and well-being of the people, we will support them, even if it will be tough. It will mean that honest contributions will be required in the debate. When the framework document is published, I expect general practitioners, consultants and hospital staff who tell us one thing behind closed doors to tell us the same in public in order that we can tease out the arguments. As we might not be right in everything, it is important to listen to those who may be opposed to what we want to do. We will need to arrive at solutions acceptable to everyone. The reform agenda is not for the benefit of politicians or the Minister's trophy table; rather, it is for individuals and their families who want and deserve a better health service because of the amount of money expended on it.

The Bill is part of a compendium of initiatives for reform. We should all join the Minister and the Government in their efforts to have a single tier health system and a universal health insurance system. It will take some time to implement these reforms. It takes longer than 18 months to become a concert pianist or an inter-county hurler. Therefore, this reform may take some time to achieve, but it will happen. Commentators on health issues should move away from commenting on personalities and instead examine the substantive work involved. The programme for the reform of the health service is essential and will be delivered. As Deputy Damien English and the Minister said, it will take at least one or two terms to achieve. Deputy Twomey referred to the dark clouds in the private health insurance sector which people in droves. They are voting with the money in their pockets, which is having an impact on the delivery of public health services. I appeal to the private health insurers not to look on the private health insurance market solely in profit terms but to make an effort to persuade younger people to sign up to take out private health insurance, the cost of which has escalated. As the Minister said yesterday, the challenge is to make the market viable and relevant.

I suggest the Minister and his Ministers of State should use the consultative forum as the vehicle to drive and advocate change to ensure the ultimate goal of having a universal health insurance system is attained. I refer to the American presidential election which was dominated by the issue of Obama health care. A universal health insurance system must provide a health care model that is fair, equitable and accessible to all citizens. That is what we must aim to achieve. The three principles are community rating, open enrolment and lifetime cover. They form the basis of regulation of the health insurance market and ensure a person's age or state of health is not a determinant factor in the level of premium charged. The insurer cannot calculate for risk status, age or gender when deciding on a person's insurance premium.

I am not clear on section 3 of the Bill which amends section 2 of the principal Act of 1994. Is discrimination on the basis of sexual orientation allowed? I ask the Minister of State to clarify the matter for me. Irrespective of age, risk status or previous history, all consumers and customers of private health insurance companies must have the right to review their policies. The time has come when we need to take control of the management of operations in the health insurance sector in order that we can reform it for the betterment of the consumer - the patient. In the absence of regulation, there will be cherry-picking of customers. Young people will be targeted because they are a profitable segment of the market as they are low risk. Older customers will be charged higher rates because they suffer more health problems. We must regulate and review the operations of health insurers.

The opening up of the health insurance market has caused its segmentation. Insurers now offer cheaper and tailored packages to young people which have been designed to be unattractive to older people. However, more young people are falling off the private health insurance ladder. Despite the safeguards, there are concerns about the operation of the market. VHI has stated the levy and age-related tax relief system is only 55% effective.

I accept that addressing these issues requires a delicate and difficult balancing act but we must maintain competition and avoid exploitation of the markets for excessive profit. We must ensure insurance is available at a fair and reasonable price. I say this as a long-time customer of VHI. It is essential to have fair and reasonable prices. Constituents in all our clinics are talking about this.

The decline in the number of people with health insurance cover since 2008 is in the order of 170,000. In the three months to August 2012, 16,000 people cancelled or did not renew their health insurance policies. This is an extraordinary number. The HIA figures show some very interesting characteristics in the market. VHI remains the dominant player, with a 57% market share. Laya Healthcare has a market share of 20.9% and Aviva Health Insurance Ireland has a share of 17.7%.

Distortion based on age is very noticeable. Laya Healthcare and Aviva Health Insurance Ireland combined currently insure 44% of customers between zero and 49 years but only 10% of those over 80 years. This is in contrast with the figure for VHI, which insures 83% of those over the age of 70 years who are insured with an open insurer, increasing to 90% of those over 80 years.

For a small country, we have a number of insurers but a large number of policy options. There are approximately 200 price plans available. At the last committee meeting on this topic, Deputies who asked about this, particularly Deputy Mary Mitchell O'Connor, were told to shop around. My problem is that, when shopping around, people do not necessarily understand the small print. It behoves the HIA and the insurers to make it clear to customers what they are actually signing up for.

Instead of announcing across-the-board price increases, insurance companies have been announcing smaller price increases regarding particular plans. The HIA website shows that, over the past two months, there have been ten announcements of price increases by insurance companies. These increases in the prices of individual policies have been compounded by the general price increases across the board. In the past 18 months, each of the major insurers has announced at least three across-the-board price increases, and we are told there may be more in the new year. I will not refer to companies individually; suffice it to say that every one of them has announced price increases. This is a source of worry for everybody.

The prices make it difficult for families to continue to be insured. They must make a choice, in some cases to opt out of paying for health insurance. Opting out has an impact on the public health system. It is incumbent on us to make it easier for people to retain health insurance cover. It is easy to understand why people are struggling to make payments. At a time of inordinate and unacceptable salaries and pensions for bankers, what is happening is morally wrong. We are forcing people to make a choice between paying for health insurance cover and opting out. If the Government does nothing else, it should recognise that people deserve to be able to choose health insurance at a reasonable and fair price. This is why, at the committee meeting some weeks ago, we had a very strong debate with the HIA and health insurance companies on the market and pricing. In the new year, we will move towards universal health insurance.

At the meeting with the health insurers, they said they wanted to be able to offer cheaper premiums to those with healthier lifestyles, while also rewarding people for taking out health insurance at an earlier stage in their lives. In saying this, they were referring to lifetime equalisation. The companies claim such moves could stop large numbers of young people leaving private health care or entice them to return. I hope we can achieve this as part of our move, in the medium to short-term, to attract more young people back.

At the meeting, the HIA encouraged customers to shop around. It stated openly that there were significant differences in prices and better value for many if they shopped around. In this regard, I refer to Mary Harney's adage, "We must shop around." This is fine but if people are to have the potential to save thousands of euro, they must be able to understand what is being offered and how to avail of offers. Sometimes what is said on the tin is not what is offered.

Even with the underlying principles of community rating, open enrolment and lifetime cover, it remains very profitable for individual insurance companies to attract younger, healthier consumers and avoid older and less-healthy people. We must consider this.

The Bill proposes to implement a permanent risk equalisation scheme to replace the current interim scheme. The current system works to ensure the young and old pay the same sum for insurance, and it works using a combination of a levy and tax credits. I very much welcome that the aim of the Bill is to ensure that access to health insurance will be available without differentiation reflecting the cost of health services based on risk, age, gender or utilisation.

It is hoped the Bill will reduce market segmentation by making it more difficult for companies to implement new policies and to change prices. When implemented, an insurer will have to give the HIA 90 days’ notice of new contracts. Insurers will also have to give notice of changes to existing policies. Where price changes are concerned, the notification required will increase from 31 to 90 days, an increase of 200%. I hope this will go some way towards preventing the practice of imposing small price increases on individual policies.

I thank the Minister of state, Deputy Alex White, for his indulgence.

There are many challenges facing the health insurance market and the consumer. As the price increases, more consumers relinquish their policies and, in turn, the cost to the insurer increases. Thus, the spiral of price increases continues, with a profound impact on the public health system. For private health insurance to meet its social objectives, we must make it attractive for people to retain it or to purchase it for the first time. We must not allow a continuation of the circumstances in which customers are forced out of the market because of the price.

I hope the Bill and subsequent amendments tabled by the Minister on cost subsidisation and the discouragement of market segmentation will help to achieve the desired outcome of having a sustainable market characterised by fair and open competition. Is it not extraordinary that, although we are dealing with one of the most important Bills on the health market, the Opposition is absent yet again, thereby demonstrating its commitment to universal health insurance?

On behalf of the Minister, I express my gratitude for the wide-ranging support from all sides of the House for this Bill, which clearly acknowledges the necessity for the introduction of a permanent risk equalisation scheme.

Let me address Deputy Jerry Buttimer's specific point on section 3 of the Bill and his concerns regarding paragraph (iv), which proposes an amendment to the principal Act. I reassure him that the intent is the opposite to what might be suggested on first reading. The legislation lists a number of circumstances that are to be identified as a basis upon which one cannot discriminate, rather than a basis on which one can do so. It refers to:

(a) the present use of, or likely future use of, hospital services by the person,

(b) the sexual orientation of the person, and

(c) the suffering or prospective suffering of the person from a chronic illness …

I noted the contributions of a number of Deputies on universal health insurance, hospital charges and health care costs, and I will address some of these in the course of my contribution.

The main objective of the Bill is to provide for a permanent, robust system of risk equalisation. Its purpose is to ensure the burden of the cost of health services will be shared by all insured persons by providing for a cost subsidy between the more healthy and less healthy and between the young and old. This reflects the principle of social solidarity.

The Bill seeks to strengthen and maintain stability in the private health insurance market and the new risk equalisation scheme, RES, will allow for a greater number of risk factors than the existing interim scheme, including a measure of health status. One criticism of the interim scheme, which has been in place since 2009 and will finish on 31 December next, was that younger people taking out products that provided benefits below the standard level were potentially cross-subsidising standard level benefits taken out by older people.

The new scheme, RES 2013, will provide for differentiated levels of stamp duty and health credits between higher level or advanced cover, and lower level or non-advanced cover, with a view to addressing this point. The improved clarity arising from this development has been broadly supported by insurers.

The aim of reforming the health area across the board is to deliver a single tier health service which will ensure equal access to care based on a person's need and not on their income. That is at the heart of the commitments this Government has given and that are reflected in the programme for Government. This permanent risk equalisation scheme for the private health insurance market is an essential element or critical stepping stone to achieving the programme for Government commitment to universal health insurance.

The Government is embarking on a major reform programme for the health service, the aim of which is to deliver a single-tier health system supported by universal health insurance. The system will be based on a multi-payer model and will be underpinned by the principles of social solidarity with access based on need and not on ability to pay. Under universal health insurance, everyone will be insured for a standard package of curative services. A new insurance fund will subsidise or pay insurance premia for those who qualify for a subsidy.

The risk equalisation scheme now proposed by the Minister is in keeping with the Government's commitment to move to a system of universal health insurance, particularly in the context of its approach to payments and disbursements. In designing the UHI model, there is a need to ensure it meets the needs of Irish citizens and that it achieves the best outcomes for patients in a manner that is cost efficient and financially sustainable. To inform policy development in this regard, the Department of Health is looking at other countries that have developed health insurance-based funding models, including the Netherlands and Germany, and examining international best practice. Ultimately, the Government is committed to introducing an Irish model of universal health insurance that best fits the Irish system.

An important document concerning the reform programme for the health service entitled, Future Health: A Strategic Framework for Reform of the Health Service 2012 - 2015, is being published by the Minister this afternoon. It sets out the main health care reforms that will be introduced in the coming years, as key building blocks for the introduction of universal health insurance.

Under the current legal framework, private inpatients who occupy public beds in public hospitals are not levied the daily maintenance charge, which ranges from €586 to €1,046 in most public hospitals. The Comptroller and Auditor General reported in 2010 that 45% of inpatients treated privately by their consultants were not charged for their maintenance costs because they were not occupying designated private beds in public hospitals.

As part of budget 2012, the Minister announced his intention to bring forward legislation to provide for the charging of all private patients in public hospitals, irrespective of whether they occupied a public or a private bed. However, conscious of the significant potential cost implications for private health insurers, the Minister indicated that he would be prepared to postpone implementation of the legislation until 2013 provided that the funds targeted in budget 2012 for the current year could be raised through a system of improved cash flow. Such a system has been agreed in principle, with the legal agreements being finalised with health insurers at present.

With regard to progressing the legislation in 2013, the Minister is considering a number of policy issues and implications in advance of bringing the matter to Government. Legislative proposals will be developed on foot of a Government decision at that stage.

The question of charges is a budgetary matter on which no decisions have been taken yet. With regard to an assertion made previously during the debate that charging the full economic cost is akin to an overdraft, it is worth noting that an equitable regime of charges based on the cost of services delivered will be required in the context of introducing Money Follows the Patient and, ultimately, moving to universal health insurance. The Minister shares Deputies' concerns about rising public health care costs, as I do, and would like to assure the House of the way reform of hospital funding will help to address that. The following items will be of interest to the House.

The programme for Government commits to introducing a prospective based money follows the patient, MFTP, funding system whereby each patient would be funded on an individual basis. Under the MFTP system, hospitals will be paid for the actual care they deliver rather than being in receipt of a historical block grant. A number of initiatives are already in place in the acute hospital system in preparation for a prospective MFTP model. These include a patient level costing project in the Health Service Executive which tracks resources actually used by individual patients from the time of admission to hospital until time of discharge. In addition, the HSE has implemented a prospective funding pilot project for certain elective orthopaedic procedures at selected sites.

A hospital financing subgroup, established under the auspices of the UHI implementation group, has prepared draft policy and implementation proposals, and these are currently being considered by the UHI implementation group. These proposals represent an important first step in the process to transform the health care funding system. Therefore, it is truly patient-centred, value-focused and thus supportive of wider health care objectives.

Without a robust risk equalisation scheme there are potentially serious consequences for the stability of the market and the sustainability of registered undertakings. Registered undertakings with the worst risk profiles either charge higher premiums or incur heavy losses. The problem can then be exacerbated as younger customers switch to other registered undertakings where they may find more attractive plans.

An outcome of this imbalance would be that an insurer with a significantly riskier portfolio becomes unsustainable. This is likely to result in the destabilisation of the market, challenging the long-term sustainability of all registered undertakings with serious potential consequences for consumers as the next insurer with the disadvantageous risk profile then becomes vulnerable. The introduction of a permanent RES will, therefore, assist in maintaining a stable and sustainable health insurance market.

Developments in the private health insurance market will continue to be kept under review by the Department of Health. In addition, the Health Insurance Authority monitors the health insurance market and advises the Minister, either at his direct request or on its own initiative, on matters relating to health insurance.

I am very aware, as is the Minister, that health insurance is becoming harder to afford, in particular for older people, as insurers increasingly tailor their insurance plans towards younger, healthier customers. That point was made repeatedly in the course of the debate. However, the Government is committed to keeping down the cost of health insurance so that it is affordable for as many people as possible.

The issue of addressing costs has been raised with insurers at a number of levels. The Minister raised the issue with health insurers individually. The Department continues to focus on the need for VHI, for example, to address its costs both in terms of the underlying cost of procedures and treatments for which it pays and also in terms of volume. VHI has commissioned consultants Milliman to carry out an external review of its claims. The review is nearing completion and will look at the opportunities and costs involved in possible reductions in utilisation that can be achieved by implementing appropriate utilisation management approaches.

The Minister has no role to play in the day to day activities of VHI. As he told the House last evening, he has raised the issue of costs with all insurers on a number of occasions and is very focused on maintaining pressure on the system to drive down costs wherever possible. A number of initiatives have been taken in that regard. VHI, for example, is focused on cost management as a priority for the organisation and is engaged in many cost management initiatives including hospital audits, utilisation reviews and its special investigations unit.

VHI has recently agreed new contracts with private hospitals which provide for savings in specific areas, with a particular emphasis on productivity. Its new contract with consultants, which commenced on 1 July and will run for two years, aims to increase the speed of patients through hospitals and ultimately to reduce length of stay by paying a declining rate of reimbursement for delays in consultations. The target set by VHI is an average two days reduction in length of stay for medical patients. In addition, VHI will adopt the new reporting arrangements on radiology and pathology to be applied in the public system currently being developed by the national quality assurance programme.

Deputy Jerry Buttimer made the point that it is appropriate and correct that people should be advised to, as it were, shop around and do the best they can to get the best value they can achieve for the health insurance plan that best suits their end but it is not always as straightforward as that simple statement might suggest. I agree with the Deputy in that regard, but it should be recalled that consumers have a legal right to switch between or within insurers to get better value and to reduce their premium costs.

The Health Insurance Authority is the statutory regulator of the private health insurance market and it provides information to consumers regarding their rights and also on health insurance plans and benefits. The HIA plays an important role for customers, both in ensuring that they have accurate information and in enforcing the implementation of the law protecting consumers in regard to health insurance. The HIA's website has a useful plan comparison tool which assists in finding suitable and competitive health insurance plans.

A number of Deputies, Deputy Sean Fleming in particular, raised issues regarding the Health Insurance Authority. It was established on 1 February 2001 under the Health Insurance Act 1994. It is a statutory independent regulator of the private health insurance market in Ireland and also provides information for consumers on health insurance plans and benefits and on their rights, as I have indicated. The authority's role within the health insurance market has changed considerably in recent years, with an increased workload since its establishment due to the changing nature of the private health insurance market.

It has been suggested in the past that the Health Insurance Authority, HIA, should be absorbed by the Financial Regulator and the Central Bank. More recently, under the Government's agency rationalisation programme, the future of the authority is being considered in the context of the proposed move to a system of universal health care. The future regulatory environment in that regard will be extremely important. Under the programme for Government, it is proposed to establish a hospital insurance fund which will, among other functions, oversee a strong and reformed system of community rating and risk equalisation. As these functions are fulfilled by the HIA, it appears the fund would absorb them. Based on the programme for Government, it would seem logical for the HIA to be subsumed into a future health insurance fund, given its valuable experience of risk equalisation and community rating. This will be considered as part of the implementation of a universal health insurance system.

A query was raised by Deputy Twomey on the rationale for a hospital bed utilisation charge. This risk equalisation scheme will increase the factors to be risk adjusted to include a measure of health status. Where available, pharmaceutical or diagnostic cost groups are used internationally as an indicator of chronic illness and attract risk equalisation payments accordingly. While these data are not currently available in Ireland to the level of detail required, the Minister is committed to developing proposals to risk adjust based on a measure of chronic illness when the necessary data are to hand. This is an area in which it is considered that the market operators can be of particular assistance. Once the required data are gathered, it is intended to progress work on developing a usable risk adjustment measure for health status. In the meantime, the Bill provides for resource usage to be used as a proxy for health status as a risk factor. Resource usage data are readily available and easy to verify and used in other countries to risk adjust.

An amendment will be brought forward on Committee Stage which will provide that, in respect of policies effected from 31 March 2013, a hospital bed utilisation credit will be payable from the risk equalisation fund in respect of each overnight stay in a hospital bed in private hospital accommodation by an insured person where the health insurance cover of his or her contract covers that hospital stay. The rate which will be proposed on Committee Stage will be set at a level so as not to encourage inefficiencies in any way.

I thank Deputies who contributed to the debate. This important legislation deals with the specific issue of the requirement to have a permanent risk equalisation scheme effective from 1 January 2013 to replace the existing interim scheme. It is essential, in the interests of both the common good and societal and intergenerational solidarity, that the permanent scheme is fully operational and functioning soundly from 1 January next. Without a robust risk equalisation scheme, there are clear negative implications for older or less healthy consumers. In addition, there are potentially serious consequences for the stability of the market and the sustainability of insurers. The Government is fully satisfied of the requirement to provide for a permanent risk equalisation scheme along the proposed lines. The introduction of the Bill fulfils the commitment made in the programme for Government to introduce a system of risk equalisation for the private health insurance market, as we move to develop a new system of universal health insurance.

Question put and agreed to.