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Dáil Éireann debate -
Thursday, 6 Dec 2018

Vol. 976 No. 3

Health Insurance (Amendment) Bill 2018 [Seanad]: Second Stage

I move: "That the Bill be now read a Second Time."

I am pleased to have this opportunity to address the House on Second Stage of the Health Insurance (Amendment) Bill 2018. The Bill was published on 14 November and, as Deputies will be aware, concluded its passage through the Seanad last week. I welcome the support received in that House for the core principle of community rating, which is long-established and well-supported Government policy for the health insurance market.

This is a short and technical Bill comprising eight sections, all focused on the specific issue of health insurance. The amendments outlined in the Bill will ensure the ongoing sustainability of the private health insurance market and seek to keep health insurance policies at an affordable price for all citizens, whether young or old, sick or healthy.

Health insurance in Ireland is provided according to four principles, namely, open enrolment, lifetime cover, minimum benefit and community rating. Open enrolment means that insurers in Ireland cannot refuse to provide cover to someone who might be a risky customer, and there are maximum waiting periods for pre-existing conditions. Lifetime cover means that once a person has health insurance, the insurer cannot stop cover or refuse to renew the person's insurance, except in limited circumstances such as fraud. Minimum benefit means that all insurance contracts must abide by regulations to make sure that everyone who holds health insurance has a minimum level of cover. Perhaps the most important principle of health insurance in Ireland, and the principle that is the central focus of the Bill each year, is community rating. This has the greatest effect on affordability of health insurance for those who are most likely to need health insurance coverage. Community rating means that health insurers cannot alter their prices based on an individual's current or potential health status. Instead, insurers set the price for each product according to their overall expected claims costs. This helps to keep health insurance affordable for older and sicker people who might otherwise be priced out of the market. Community rating is supported by providing cross-subsidies between insurers with different risk profiles. It is essentially a financial transfer mechanism whereby money flows from insurers with healthier members to insurers with sicker members. This is called risk equalisation and without it an insurer with older and sicker members would be required to charge far higher premiums than competitors to cover claims costs. Risk equalisation seeks to level the playing field and encourage insurers to compete on what services they can provide to their customers rather than simply trying to attract younger people who are less likely to make health insurance claims.

The risk equalisation scheme was introduced in Ireland in 2013. Under the scheme, credits are paid to all insurers for their older and sicker members. These credits are funded directly by stamp duty levies on all health insurance contracts written. In effect, the scheme redistributes funds between insurers to meet some of the additional costs of insuring older and sicker members. None of the stamp duties on each health insurance contract goes to the Exchequer. Instead, they are all redistributed to compensate for the additional cost of insuring older and less healthy people.

In 2017, the risk equalisation fund redistributed approximately €650 million of premiums out of a total of €2.5 billion in premiums paid. The scheme is carefully monitored to ensure that none of the insurers is overcompensated, a scenario that would contravene the scheme's approval under European Union state aid regulations. In this way, the cost of insurance is shared between all insured people and we can ensure that sicker and older people retain access to affordable private health insurance.

Legislation is needed each year to update the amounts of credits paid to insurers under the scheme and the amounts of stamp duty levied on health insurance contracts to fund the credits. As part of the process, the independent market regulator, the Health Insurance Authority, carries out an annual evaluation of the market focused on the claims costs that every insurer has paid over the year. Based on that analysis, the authority recommends the level of credits that should apply the next year. The rates for next year recommended by the authority have been considered and accepted by my colleague, the Minister for Health, Deputy Harris.

This year's Bill will provide for a general decrease in the credits across genders and age groups and there will be no change in the stamp duty levy on contracts. Maintaining the stamp duty levies at existing levels should ensure that health insurers do not increase premiums and that contracts remain at an affordable price for all our citizens.

In addition to the technical amendments, this year's Bill provides for several amendments to the Acts governing the Health Insurance Authority and the VHI. In short, it is proposed to expand the membership of the Health Insurance Authority board; broaden the composition of the VHI board; and enable the VHI to sell international healthcare plans directly. I will outline each of these proposed changes in turn.

The Health Insurance Authority was established in 2001 with provision for five board members to be appointed. Since then the health insurance market has become more complex with insurers adopting innovative marketing and product propositions to expand their client base and improve their risk profile. Further significant changes can be expected as the Sláintecare programme is implemented. The role of private health insurance in our health system could change significantly and the regulator must be able to react to this changing role and advise the Minister for Health appropriately. Public sector governance obligations have also become more prescriptive. The 2016 code of practice for the governance of State bodies placed far greater emphasis on the accountability of State boards. For the objective and effective discharge of its functions, it is desirable that the authority includes a broad mix of skills and experience. Expanding the membership of the board will ensure it can deliver on strategy and address any challenges.

The Bill also contains two amendments to the Voluntary Health Insurance Acts, which provide the governing legislation for the VHI.

The first VHI-related amendment deals with board composition. Currently, the VHI board is restricted to having only two persons who are health service providers on the board. The amendment will remove this restriction. It includes a new provision to the effect that the Minister will give due consideration to the mix of skills present on the VHI board when making appointments, thus ensuring the highest standards of governance.

The second amendment to the Voluntary Health Insurance Acts deals with one specific area of VHI's business activities. This amendment will permit VHI to sell international healthcare plans directly, not only as an agent, as it is allowed to do currently. Moreover, the amendment will remove the requirement for the VHI to seek ministerial approval before selling these plans. This development is consistent with VHI's current status as an insurer authorised by the Central Bank. VHI is competing in a highly competitive and regulated marketplace and this amendment will remove the impediment to VHI's ability to compete with its competitors and thereby allow the company to avail of potentially significant business opportunities.

I will now outline the specific sections of the Bill. Section 1 defines the principal Act as the Health Insurance Act 1994. Section 2 amends section 11C of the principal Act to provide for 1 April 2019 as the effective date for revised credits payable from the risk equalisation fund. Section 3 amends Schedule 1 to the principal Act to provide for the expansion of the membership of the board of the Health Insurance Authority from five to seven and to provide for an increase in the quorum from three to four. Section 4 replaces table 2 in Schedule 4 to the principal Act with effect from 1 April 2019 such that the applicable risk equalisation credits payable from the risk equalisation fund in respect of certain classes of insured persons are revised. Section 5 amends section 4 of the Voluntary Health Insurance (Amendment) Act 1996 to provide for a change in the composition of the VHI board. This amendment will remove the existing restriction on the number of healthcare providers on the VHI board. It includes a new provision to the effect that the Minister will give due consideration to the mix of skills present on the VHI board when making appointments, thus ensuring the highest standards of governance.

Section 6 amends section 1 of the Voluntary Health Insurance (Amendment) Act 1998 to amend the VHI’s current function as solely an agent for the provision of international healthcare plans and to permit it to sell international plans directly without using an intermediary. The amendment will also remove the requirement for the VHI to seek ministerial approval before selling these plans.

Section 7 amends section 125A of the Stamp Duties Consolidation Act 1999 to specify the applicable stamp duty for rates from 1 April 2018 to 31 March 2019 and from 1 April 2019 onwards.

Section 8 provides for the Short Title, commencement, collective citation and construction of the Bill.

This Bill allows us to maintain our support for the core principle of community rating, which is a long established and well supported Government policy for the health insurance market. The amendments to the legislation governing the Health Insurance Authority and the VHI will allow these organisations to plan for future developments in this ever-changing and complex environment.

I commend this Bill to the House.

We are here again for what is effectively an annual debate. It is a reminder of one of the things that are wrong with our health system.

The political differences across the House are most acute when we debate issues such as private healthcare and private health insurance. The political differences between this Government and me are most visible when it comes to healthcare provision, particularly in the context of private versus public healthcare. When this Bill came across my desk, I was reminded of the body of work progressive politicians have ahead of them to address the imbalance in healthcare and the importance of removing private healthcare from our public hospitals and our public healthcare system. As stated last year, the question of health insurance is very fraught. On the one hand, it facilitates the skipping of queues and the bypassing of waiting lists created by this Government. On the other hand, it represents a large number of people who go without other things in order to have health insurance because they are afraid that, without it, they will end up waiting 24 months for a colonoscopy or some other procedure.

I fundamentally oppose the need for a private health insurance market. We should be addressing that issue today. Why is there a need for a private health insurance market? The industry exists within the crevices and the cracks of our broken public health system. I do not blame the health insurance industry for how it operates. As is the case in other countries, it is exploiting a failed system. If health insurance companies want to provide access to private care in private hospitals, I wish them well. That is their prerogative.

My anger is reserved for those who have broken our health system and allowed private medicine to exist within it. It is clear that the system did not break because of those working within it. The system was deliberately broken. The process in that regard began with the Fianna Fáil-Progressive Democrats Government. Why did this happen? The system was broken to allow private medicine to make a profit from people's ills while convincing them that this was a good thing, and possibly even good for their health. The health insurance market exists because the Government champions it and because people are afraid of having to enter the public system, where they will have to wait for months or years for treatment. We are where we are because successive Governments have driven, as a matter of policy, the privatisation of aspects of the health service and the commodification of health itself. We have to ask whether this is the best way to run a health service. Is the manner of health insurance in this country fair, particularly in view of the fact that much of cover on offer is driven by fear? It constitutes an extra burden to be carried by taxpayers who already contribute a large amount to the health budget. Is this a case of citizens carrying the can for the failure of the Government to enforce and police the 12.5% corporation tax rate and other non-income based taxes?

The Oireachtas deals with a Bill such as this every year. It seeks to take the risk away from insurance companies and equalise the risk for certain policyholders. It would be great if the Government was as quick to intervene in the market in other areas. While we will allow the passage of the Bill to ensure that older persons and others are protected, we do so with serious reservations about a health service that is buckling under the weight of demand. In addition, we must point out that fear and a health service crippled by mismanagement and ineptitude are driving people to take out private health insurance. The CSO data on health spending for last year shows that the healthcare system is funded primarily through general taxation, which accounts for 69%, with out-of-pocket payments making up 15.4%. Private health insurance only contributes 12.7% to the healthcare system, but over 40% of the population has private health insurance. This is the case because successive Governments have failed to provide universal healthcare which is free at the point of delivery and which is based on need and not on ability to pay. Insurance companies trade fear for profit in the health market. There are those in this House who continue to act as their cheerleaders.

While there are a number of technical amendments to this year's Bill, there are also a number of amendments to the existing Acts which underpin and govern the Health Insurance Authority and the VHI. I would like the Minister of State to expand further on the expansion of the membership of the board. I understand provision will be made to broaden the composition of the board of the VHI and also to enable the company to sell international healthcare plans directly. I would appreciate it if the Minister of State could respond orally or in writing. I understand that the role private health insurance plays in our health system could change significantly into the future. The regulator must be able to react to its changing role and advise the Minister for Health if there is an increase in risk or other related matters. Is this the core reason for the change or are there broader reasons? There is a target of having a broad mix of skill and experience within the expanded membership in line with public sector governance obligations. How will this be achieved? One of the amendments seeks to remove the restriction whereby the number of board members representing health service providers is limited to two and to allow for a broader composition. This would give the Minister oversight to assess the skills mix when making appointments. While that seems fine in theory, will there be oversight for the Oireachtas in terms of these appointments, perhaps via committees, in light of the increased powers this move will give the Government?

Some amendments allow the VHI to sell international healthcare plans directly rather than via an agent. Such amendments will remove the need to seek ministerial approval before selling these plans. Insurance plans are regulated by the Central Bank. I am not insinuating that there is anything untoward here. However, is ministerial approval really that much of a burden? Does it really have to be removed? Can we get some further details on this matter?

Looking at the categories and grades of risk equalisation in the Bill, it is clear that a disparity exists between the health of men and women. This should not be ignored. The risk equalisation for men compared with women shows that there is a higher risk rate for females. This must be considered from a health perspective, not from the point of view of risk equalisation in the insurance market.

The commodification of healthcare has been one of the most damning elements of the neoliberal privatisation agenda. The push to turn people's health and well-being into a revenue stream is morally wrong. I repeat what I stated last year - where a public system sees illness and patients in need, the private sector sees money and opportunity.

Sinn Féin will allow the Bill to pass, but we must have a more robust debate around the issue of private health insurance and private healthcare in our public system. I look forward to the day when we can provide a health service which delivers for the people based on need rather than ability to pay, and where private health insurance is no longer needed because of the quality of such a universal health service.

Relative to other countries, health insurance is held by a large proportion of people in Ireland. It is important to take the opportunity to discuss this Bill and the positive effect that community ratings and other aspects of health insurance regulation have on people's daily lives. As stated earlier, Sláintecare will introduce change in how people access health services and may mean that the role of private health insurance in our health service will also change. The Bill supports the role that private health insurance currently plays in our health service as a means of supporting people's access to affordable healthcare. The main purpose of the Bill is to specify the revised risk equalisation credits and corresponding stamp duty levies to apply on health insurance policies from April 2019.

The voluntary health insurance system operates on the basis of community ratings, which means that everyone pays the same amount for the same product. This is supported by the scheme that aims to ensure that health insurance is more affordable for older and less healthy citizens. In other health insurance systems internationally and other insurance markets in Ireland, the level of risk presented by an individual directly affects the premium paid.

Under this scheme, all of the money raised from the insurers in levies is paid into a fund for the sole purpose of supporting the market in the form of credits payable. The credits and levy rates for next year strike a fair balance between the need to sustain community ratings by keeping health insurance affordable for older and less healthy consumers and maintaining the sustainability of the market by keeping younger and healthier consumers in it.

Of course there are important aspects to this debate, as the Deputy rightly says, concerning Sláintecare, public healthcare and public hospitals. Arising from the recommendation in Sláintecare, the Minister has established the independent review group, IRG, to examine the removal of private practice from public acute hospitals. The IRG has been tasked with making recommendations on practical approaches that can be taken to remove private practice from public hospitals, the impacts of this removal will have, what timeframe might apply and how to phase these changes in over time. In particular, the group will identify any adverse unintended consequences that may arise for the public system in the separation. The IRG also conducted a public consultation seeking views about the current arrangements governing private practice in public acute hospitals, the future direction that such arrangements should take and suggestions for transitional arrangements to give effect to the future direction.

In particular this group was asked to seek views on the following important issues: eligibility, access and equity; current and future funding arrangements; legislative and legal issues; operational matters, including specialist services; recruitment and retention of personnel; and practical approaches to the removal of private practice from public hospitals, including timeframe and phasing. That issue is being examined in the IRG. This group has met many stakeholders with a view to increasing its understanding of the issue. It is also considering private care provided in public hospitals which is currently funded by private insurance.

The Bill will increase the number of Health Insurance Authority board members from five to seven. This provision will ensure strong oversight and regulation of the health insurance market. The Bill will also see some changes introduced with regards to VHI. The first change is in the composition of the VHI board. The proposed amendment would remove the existing restrictions allowing only two persons who are health service providers on the board. The amendment will also allow for due consideration of the mix of skills present on the board.

The second change is to permit VHI to sell international healthcare plans directly, without an intermediary. The Bill also allows us to maintain our support for the core principle of community rating, which is long-established and well supported Government policy for the health insurance market. The Bill will ensure that we can continue to provide the support necessary to ensure that the costs of health insurance are shared across the insured population. I agree with the Deputy that we need to have a broader debate and examine the issues raised by the independent review group, particularly with regard to the removal of private practice from our public acute hospitals.

Question put and agreed to.