For the information of Members, amendments Nos. 4 and 5 have been ruled out of order.
Health Insurance (Amendment) Bill 2013: Report Stage
I move amendment No. 1:
In page 4, between lines 2 and 3, to insert the following:
"(3) Paragraphs (b) and (c) of subsection (1) shall, cease to be in operation on and from 1 January 2015, unless a resolution has been passed by each House of the Oireachtas resolving that that section should continue in operation.".
The objective of this amendment is to provide that the hospital bed utilisation credit shall be subject to a sunset clause. The credit was introduced 12 months ago partly as a means of distributing the risk equalisation fund. That accounted for a small proportion of it, but a proportion of it nonetheless. The intention here is to use it as an indicative measure of the actual level of compensation that will be provided to insurance companies. This is not being introduced out of the sky. The objective is that, down the road, it will provide a mechanism for evaluating health status. I do not think it is a good measurement of health status. The Minister agreed with me 12 months ago that this not a good mechanism for health status. I proposed a sunset clause at that time.
The Minister felt there was no need for that because we were moving to a far more elaborate system of evaluating health status.
The objective behind the amendment is to be able to differentiate among people who have private health insurance between those who are sick and those who are not putting the same demands on their health insurance policy, rather than the current age-related system. Age-related distribution of the fund is not a very effective way to do it because there may be younger people with chronic diseases who place a far greater burden on the health system than a 79 or 80 year old person who has been active all his or her life and is fit and healthy. Yet this is how it is being distributed at the moment.
We need a system that evaluates health status based on the physical health or mental well-being of that individual. It needs to have an inbuilt incentive to keep people out of hospital. All in this House agree that whatever incentives we have in our health system should exist to try to treat people as close as possible to their homes and to treat them outside the acute hospital setting in so far as possible. The Bill sets in statute the exact opposite. It recognises people who are treated within the acute hospital system. As we know, increasingly those people are being treated in regional centres of excellence rather than in their local hospitals. On Committee Stage the Minister pointed out that this calculation will not include day procedures. As we know, the increased throughput in many of our small hospitals is down to day procedures.
I am sure the brief before the Minister of State on this matter states that this has a negligible impact on the overall cost of health insurance and is only being used as an indicative measure. However, if we could move to a proper system of health status and move away from the age-related credit we have at the moment, we could have a far more effective and hopefully balanced system of community rating without the continual upward pressure on insurance premia we have at the moment. In January those who typically are on VHI plan B will face an extra €259 per person on their policies. That is a significant increase in the cost of health insurance for an elderly couple on a fixed income, particularly for those who have paid into their health insurance over 40 or 50 years and may have had a very healthy lifestyle over that period. They are now being priced out of the health insurance market. The introduction of health status as a weighting mechanism makes far more sense.
There is no sense of urgency in the Department of Health to introduce a realistic mechanism for health status. I understand it cannot be introduced overnight, which is why I made the argument 12 months ago for introducing a sunset clause to the hospital bed utilisation credit that would kick in 12 months later. I again make that proposal. The responses I got from the Minister on Committee Stage did not indicate there had been any progress in developing clear criteria to evaluate health status. Perhaps the Minister of State, Deputy Kathleen Lynch, can enlighten me when she responds as to whether progress is being made on that. If that is the case, I cannot understand why she could not support the amendment. Let us put in the clause, as it would give an incentive to the Department to ensure this system is put in place. The health insurers advise me that they could in conjunction with the hospitals put such a system in place within 12 months.
In the past our health system has suffered - I hope it will not suffer in the future - from decisions being made too quickly and not based on evidence or clear criteria.
The hospital bed utilisation credit, provided for in the Health Insurance (Amendment) Act 2012, was payable in respect of each overnight stay in a hospital bed in private hospital accommodation by an insured person where the health insurance cover of their contract covers that hospital stay. The Bill provides that this credit will also be payable from 1 January 2014 where a private patient occupies a public bed and there is a charge payable under section 55 of the Health Act 1970 for such stay. The definition of "relevant amount" is amended to provide that the amount payable in respect of hospital bed utilisation credit covers each overnight stay in a hospital bed where a charge is payable under section 55 of the Health Act in respect of a private patient in a public hospital bed.
The Deputy's proposed amendment would have the effect of ceasing the payment of the hospital bed utilisation credit in respect of private patients occupying a public bed from 1 January 2015 while the payment would continue in respect of a private patient occupying a private bed. The resulting inequality is not desirable and while I expect that is not what the Deputy had in mind, I will not in any event be accepting the amendment.
The hospital bed utilisation credit was introduced as a proxy indicator of health status, pending the introduction of a more refined health status measure. The Deputy is quite right in that; it is exactly what it is. Unlike the age-related credit which is payable in respect of all members aged 60 years and over, the hospital bed utilisation credit is payable in respect of all qualifying insured persons who have an overnight stay in a hospital bed so all insurers benefit. However, the Minister is committed to introducing a more refined measure of health status, for example, through the use of diagnostic related groups, as is the case in many other countries. I am aware that the consultative forum on health insurance, comprising representatives from the industry, the regulator and the Department is committed to working together to overcome the obstacles that existing information deficits present to the development of a robust measure of health status. I am sure the Deputy knows - as would anybody with an interest in the health area - that our information gathering has not been the best and we need to refine and enhance it.
The Deputy sought to introduce a sunset clause for hospital bed utilisation credit last year. Each year the rates contained in Schedule 3 and Schedule 4 are amended by primary legislation when, in line with Deputy Naughten's desire, the Houses of the Oireachtas have an opportunity to debate it. When a policy decision is made to discontinue the hospital bed utilisation credit, the rate will be amended to read "nil". This is a more appropriate method of dealing with the issue in legislative terms rather than what the Deputy may have sought to achieve.
However, I agree with the Deputy that we need to move to a more refined indicator of health. He is equally right in terms of people's health status given that it is possible to have a chronically ill 20 year old and an extraordinarily healthy 80 year old. While more refined indicators are needed, this is just a mechanism to ensure we have some balance in risk equalisation and who pays.
I would have loved to have tabled the amendment the Minister of State has suggested. However, the rules of this House do not allow me to do that and, like Deputy Ó Caoláin, my amendments would be ruled out of order. I am glad the Minister of State at least accepts what the intention of my amendment is, which is not to differentiate between public and private beds, but to get rid of what I believe is an ineffective system.
It writes into law something with which every Member of this House fundamentally disagrees, the use of a hospital bed to distribute funds for risk equalisation. There should not be any incentive whatsoever. The Minister of State will argue that this small sum of money is not an incentive but we are writing it into statute law and it is wrong. I have had no indication from the Minister of State or the Minister that any progress has been made on this issue in the past 12 months.
The Minister of State is right that the public hospital system cannot collate that information but it is available to the health insurers. The frustrating aspect of this is that in January and February older people will be left to ask whether they can continue to keep their health insurance. Will they have to reduce their level of cover because there is no effective system to distribute the risk equalisation fund? If we had a more effective distribution system the sickest people would get those additional resources but healthy people would not. That would reduce the overall cost of insurance across the board and put more downward pressure on its cost rather than pricing it out of the market for people who have paid in for years, who are healthy and yet are being forced out of the system because we have not come up with the data systems and ways of capturing that data in our health system.
To a great extent the Deputy and I are agreed on the central issue, how to introduce a more refined health indicator when we do not have the information with which to do that. Where I disagree with him, however, is that while this is a stand-alone Bill, as introduced, there is a combination of issues that need to come together in respect of how we treat people who need treatment, whether in the acute hospitals, or in community-based services. We are desperately trying to provide community-based services, whether in primary care, which is progressing, although it is difficult to see that unless it pops up next door to one, or in the review of the fair deal scheme or home-based services. We will make significant progress on this next year. The insurers are beginning to do the same, as the Deputy rightly says. The type of service they are starting to deliver at home is incredible. It is a combination of issues. Health services have always suffered from the quick fix, knee-jerk reaction to what is in fact very delicate. One needs to stand back and consider it in a more nuanced and protracted way. This is a stand-alone Bill. It is on the way to what we need to do. We are dealing with a complicated system of many strands and are working our way through it.
I thank the Minister of State for her response. The difficulty is that 12 months down the road I have not been given any indication that we are anywhere closer to bringing in any evaluation of health status. That is very disappointing. If we are to commit to universal health insurance we need a system like this in place and I do not see any progress in that regard.
The Minister of State is right that primary care is the way we need to go but we are introducing a system, in a Bill that we will deal with later, in which under-fives will have GP access. There are huge waiting lists of children trying to avail of physiotherapy, occupational therapy and psychology services and it would be far better in the short term to clear those backlogs, to ensure that children, when they are diagnosed, can get the treatment they require. I am disappointed that we are not seeing any progress in this area. I will continue to table these amendments. I will table this one again in 12 months’ time and hope at that stage I will get a more substantive response from the Department of Health on its progress in respect of health status.
Amendment put and declared lost.
I move amendment No. 2:
In page 4, between lines 2 and 3, to insert the following:
“4. Section 7A of the Principal Act is amended—
(a) in subsection (6), by deleting “may by regulation” and substituting “shall introduce by 1 January 2015 regulations which shall”, and
(b) in subsection (7), by deleting “Regulations under subsection (6) may” and substituting “Regulations under subsection (6) shall, inter alia,”.”.
The purpose of this amendment is to introduce a measure that this House passed in 2001, lifetime community rating. Its objective is to act as an incentive to encourage people to take out health insurance earlier in life. While many young families are leaving the health insurance system, there is bizarrely a 7% increase in over-50s in the system. A significant number of young people, particularly young families have dropped out of the system. They are the ones under huge financial pressure. It disguises the scale of the problem within the health insurance system.
I am scared because the Minister for Finance has defended the changes he introduced in respect of tax credits on the basis that only 7.5% of people have cancelled their health insurance. This is a complete underestimation of the situation because people over 50 are joining for the first time. It is not right that someone who is 65 years of age, who has paid into their health insurance system for 40 years now faces significant increases in the cost of health insurance on 1 January while someone who is joining for the first time pays the exact same rate for that policy. Every one of the four health insurers, including the Health Insurance Authority has given evidence at Oireachtas committees and has stated categorically that the one single step that could make a direct impact on the cost of health insurance would be the enactment of that 2001 provision for lifetime community rating.
If we fail to introduce lifetime community rating, there will be a significant problem in the new year in respect of health insurance. People will leave the system but on top of that we are seeing a very dangerous trend, which started earlier this year when Laya and Aviva introduced a measure whereby they excluded several public hospitals from health insurance cover. Six of these plans were launched earlier this year. From January, that number will be more than doubled. People will not only have to consider the level of cover they are purchasing, but to see whether the cover includes their local hospital. Geographic discrimination should not be built in to our health insurance system but that is happening. From the beginning of the year, approximately 20 health insurance plans will have built-in geographic discrimination and people will not be able to get treatment in their local hospital. That is a worrying trend.
The reduction in tax relief will cost people who have private health insurance an extra €170 million per annum. In addition, €130 million will have to be paid for public hospital beds following the introduction of legislation this year. Is it fair that people in their 60s taking out insurance for the first time pay the same rate as those who have been in the system for 40 years?
That is a key question. Changing that provision would encourage younger people to take out health insurance for the first time. The argument that will be made by the Minister of State is that if we are going to introduce universal health insurance in a couple of years, then there is no incentive to do this.
The difficulty is that we now have a sizeable cohort of people, which is getting bigger by the day, who do not have private health insurance and are not eligible for a medical card. This happens for two reasons, first, because the price of health insurance has increased significantly but also, at the other end, the number of those entitled to medical cards is decreasing annually due to the thresholds. Moreover, I am not just talking about the over 70s medical card because, as we know, there has been a significant reduction in recent years in regard to the thresholds for the standard medical card as it has not been linked to increases in social welfare. This means someone who has an income which is €1 over the social welfare level is not entitled under the income thresholds to a medical card. Therefore, at both ends of the system, we are taking people out of cover.
This leaves a greater cohort of people, some 7% of the population at present, who do not have any cover, whether by way of medical card or private health insurance, and this figure will probably go over the 10% mark next year. This makes the introduction of universal health insurance far more difficult. The Dutch system, on which ours is being modelled, was based on near universal coverage before universal health insurance was introduced, so Dutch people had some form of private health insurance up to that point. Not only are we undermining the current private health insurance system and putting additional pressure on the public hospital system, we are also undermining the objective of Government to introduce universal health insurance.
I have no doubt that, unless something drastic is done quickly, we will see private hospitals in particular locations, not just in Dublin, close next year. This will remove options for people and remove services from particular regions, which will put hardship not only on people who have private health insurance but also on those who rely on the services of the private hospitals but who are within the public system.
I urge the Minister to State to look again at this provision. I have put down a fair amendment in that I am seeking a period of 12 months to have this up and running, and I am not looking for it to be changed overnight. I ask the Minister of State to seriously consider the amendment.
I support the general points made by Deputy Naughten. We have been debating this issue both in this House on Committee Stage and in general health debates for some time. The bottom line is that while the Department of Health puts its head in the sand, thinking the health insurance market will improve, the opposite is the case. We have had more alarming figures today with regard to the number of people falling out of health insurance. The most surprised man in this House during the budget was the Minister for Health himself when the Minister for Finance announced a cap on tax relief for private health insurance.
I was accused of being alarmist when I said this drives a coach and four through the Government's policy on universal health insurance, but it certainly does. The theory and principle behind universal health insurance is that there would be a vibrant, sustainable health insurance market that could underpin the funding of health services. It is not a complex system in terms of the principle but the Government is making it exceptionally difficult. Deputy Naughten is right that if the Government continues to not incentivise young people to take out private health insurance, the burden will fall on fewer shoulders over a period and, as we said, the death spiral will take rapid effect and dismantle private health insurance in this country.
While we talk about profit and loss, and private health insurance companies making all of this money, the fact is they do not make a lot of money. Private health providers have been laying off staff in recent days and hospitals will be on the verge of closing in the coming months. The private health insurance market is under stress and the private health providers are under stress and duress. At the same time, the Department of Health seems to be in a state of denial, along with the Minister himself, with regard to the crisis.
I take the historical lecture week in, week out from the Minister, Deputy Reilly, on the downturn in the economy, and we take that as a given. However, the Government has compounded this by having the Minister for Finance limit the tax relief on what are not gold-plated policies. There is an acceptance that these involve ordinary families whereas we were initially told it was only for gold-plated private health insurance policies. There is no such thing as gold-plated private health insurance when a family is put to the pin of its collar trying to retain private health insurance.
Private health insurance lightens the burden on the State in terms of providing care for those who take it out, and they are already entitled to care by the very fact they are citizens and taxpayers of this country. What are we doing, however? We are deciding to destroy and dismantle any chance of there being a vibrant private health insurance market. Competition is being downgraded and we now see health insurers coming forward with downgraded policies. For example, elderly people must have ophthalmology, orthopaedics, oncology and cardiology in their cover and they must also have inpatient cover. However, because of the bungling of health policy, there is an issue with regard to advanced and non-advanced policies. Clearly, therefore, while the Government looks at universal health insurance as the model, it is putting obstacles in the way of getting to the nirvana of universal health insurance as outlined in the programme for Government.
Community rating is an integral part of this. My belief is that the Government will not introduce this because it would be admitting failure in terms of the rollout of universal health insurance. The Minister of State will tell us that universal health insurance will be in place in a matter of years. However, I doubt very much that we will have a sustainable health insurance market that will be able to underpin universal health insurance. We talk of young healthy people in the context of "cross-subsidisation", "community rating" and "intergenerational solidarity". These are meaningful words; they are not just policy written on a piece of paper. They actually mean something and they underpin a very important principle in this society, namely, that young healthy people will cross-subsidise those who need it most, which is the principle behind intergenerational solidarity and community rating. While we talk about this a lot, the policies are the exact opposite.
I urge the Minister of State, as a rational person, to talk to the senior Minister and try to get him to understand that private health insurance is in crisis, and to get the senior officials and the HIA to sit down and acknowledge they can no longer continue in this vein of absolute denial. If universal health insurance is to come in at some stage in the future, the Government should in the meantime incentivise lifetime community rating and incentivise young people. What is happening is that young people are not taking up health insurance. They are deciding that as there will be universal health insurance down the road, the State will either provide for them or they will be compelled to take out insurance, depending on their means and income. However, we will still have the difficulty that if universal health insurance struggles to be introduced in the coming years, people aged 60 to 65 will then take out health insurance without having made any contribution during their earlier life, and further draw on the system. That is the problem. While we talk about universal health insurance, in the meantime, young people are dropping out because they can see that, at some stage, they will be provided for or they will have to provide for themselves under legislation on universal health insurance. However, if it never happens, they can always rejoin without any penalty.
There is already a model in Australia, which should be looked at. I believe most people dealing with the private health insurance market do not understand it, and I am no expert in the area. However, we have had bungling in the answers from the Minister and people appearing at committees who seem to pretend that everything is fine.
The daily statistics show that we are haemorrhaging the very people we want in private health insurance to underpin a principle dear to everybody, that of intergenerational solidarity where those who are young and healthy subsidise those who need health services more. For all those reasons, we must look at that principle and try to embrace it in the legislation. Otherwise, if universal health insurance drifts, it will continue to drift and, in the meantime, another cohort of young people who should be cross-subsidising and supporting older people will be making no contribution. We will then be asking older people to fund themselves and the spiral will continue.
An elderly couple over 70 can pay up to €4,000 next March for their private health insurance. This is not gold plated. It does not involve a person going up to the Shelbourne Hotel and having somebody look after them for three or four days in a nice room. This is very basic health insurance. This does not involve going into exclusive private areas of clinics. It is about basic private health insurance and people who have made the sacrifice and contribution and who at the very least deserve to be supported when it is their turn to draw from the system when they need it most. We are saying we will not, which is quite shameful.
Before I get back to dealing with the Bill, because that clearly had nothing to do with it, I wish to say we are trying to change a system that was permitted to become embedded in this country. It was a two-tier health system where if a person had private health insurance, he or she had greater access to health services and if he or she did not have such insurance, regardless of medical need, he or she had to wait. In respect of Deputy Kelleher's remark about people taking advantage, it always astonishes me that people have such foresight on certain issues when they clearly had none on others a few years ago.
Neither did the Minister of State. She never rang me to say things were going to fall off a cliff.
People aged 60 and over cannot simply join private health insurance schemes. There is a mechanism whereby they must wait to have pre-existing conditions dealt with, and this waiting period is sometimes between five and ten years. People should keep that in mind. I will get back to the Bill.
The proposed amendment inserts an explicit provision in the existing health insurance legislation that regulations to provide for lifetime community rating will be introduced, and it includes a commitment that such regulations will be in place by 1 January 2015. I was amazed to hear the Deputy say he does not want me to do it overnight. In terms of the Government and the Department of Health, that is overnight.
Single rate community rating applies where age at entry to health insurance does not determine the premium paid. Everyone is charged the same premium for a particular health insurance plan irrespective of age, gender and current or likely future state of their health. Under lifetime community rating, the premium paid by a person increases with the age at which they enter the private health insurance market. I am sure this is what the Deputy wanted. The introduction of lifetime community rating is one of a number of options being considered by the Minister to help address the decreasing membership of persons holding private health insurance. There are a number of technical issues which must be considered before any possible introduction of lifetime community rating, such as the age at which premium loading should commence and the rate at which loading should apply. In addition, prior to the introduction of lifetime community rating, it would be necessary to consult commercial insurers to keep the industry informed of any changes taking place and to consult consumers to provide as much advance notification to the public as possible of impending changes to allow them an appropriate grace period to purchase cover before any additional loading or premium prices would take effect.
The Minister has recently instructed officials to commence work immediately on assessing the full implications of introducing such a measure to the health insurance market to ensure that if subsequently pursued, it can be introduced in an appropriate and balanced manner. This and other regulatory issues will be examined further by the Department in the coming months to ascertain their merits and potential benefits to the private health insurance market. The existing health insurance legislation provides for the Minister to introduce regulations allowing for late entry loading should he decide to do so. This is a key pillar in lifetime community rating. In view of this and the steps under way as outlined, it is not necessary to insert an amendment to the Bill. I am not accepting the amendment.
I thank the Minister of State for her response. I acknowledge that there seems to be at least some movement within the Department on this. The difficulty is that the Minister told us 12 months ago that it was a good idea to look at this so it has taken 12 months for him to direct his officials to look at it and come forward with proposals.
I do not agree with the Minister of State's assertion that there are technical issues involved. This legislation was passed 12 years ago. If there were technical issues, we had 12 years in which to resolve them instead of looking at them now. The reason we are so frustrated in this respect is because when older people get their renewal notices next January, February and March, they will have to make a decision as to whether they will need a knee replacement or ophthalmology services. It is a case of whether my sight is more important than my walk and which one I will prioritise in respect of the level of cover I take out because I cannot afford to continue to pay my current level of cover. That is the decision those older people must make when they get their renewal notices. The frustrating thing about it is that actually getting their grandchildren to take out insurance cover helps spread the burden across the board, but we are providing no incentive to the parents of those children to take out that cover. The bizarre thing was that there was an incentive built into the amendment that was brought forward on budget night, and last week the Minister for Finance shoved through an amendment to it. The difficulty is that if any young person asked the reason they should take out health insurance cover, there is no answer for them and this forces older people to have to make decisions as to whether their eyes or knees are more important. Sadly, those are the kind of decisions that will be forced on those people next year because the Minister did not look at this 12 months ago.
Is the Deputy pressing the amendment?
Amendment put and declared lost.
Bill recommitted in respect of amendment No. 3.
I move amendment No. 3:
In page 6, between lines 37 and 38, to insert the following:
"(3) Schedule 3 to the Principal Act, as amended by subsection (1), only applies in the case of a health insurance contract entered into or renewed on or after 1 March 2014 (and, accordingly, that Schedule, as in force immediately before that date, shall continue to apply in the case of a health insurance contract entered into or renewed before that date).".
This is simply a technical amendment to insert the date at which the charges kick in. It specifies that the revised date for the hospital bed utilisation credit of €60 applies only to contracts renewed or entered into on or after 1 March 2014 and confirms that the specified date for the hospital bed utilisation credit for contracts entered into after 31 March 2013 remains at the higher rate of €75.
The new charges kick in from 1 January. My understanding is that this is why we were providing the cover in respect of the public hospital beds. Why is it kicking in from March if we are talking about the charges kicking in from January?
The question of private patients in public beds is different. This amendment relates to private patients in private beds. The date will be 1 March.
This amendment only covers private patients in private beds.
Amendment put and declared carried.
Bill reported with amendment.
Amendments Nos. 4 and 5 not moved.
Bill, as amended, received for final consideration.