Health Insurance (Amendment) Bill 2019: 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 Bill. This is a short and technical Bill comprising six 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 and equal price for all citizens, young or old, sick or healthy.

Health insurance in Ireland is provided according to four principles: open enrolment, lifetime cover, minimum benefit and community rating. Open enrolment means insurers in Ireland cannot refuse to provide cover to someone who might be a risky customer for them, and there are maximum waiting periods for pre-existing conditions. Lifetime cover means that once a person has health insurance, an insurer cannot stop cover or refuse to renew his or her insurance, except in limited circumstances, such as fraud. Minimum benefit means all insurance contracts must abide by regulations issued by the Minister for Health to make sure that everyone who holds health insurance has a minimum level of cover. Community rating means that health insurers cannot alter their prices based on an individual's current or potential health status.

Perhaps the most important principle of health insurance and the principle that is the central focus of this legislation 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. Instead of risk-rating consumers, 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. Without it an insurer with older and sicker members would be required to charge much higher premiums than its competitors to cover its claims costs. The risk equalisation scheme seeks to level the playing field for consumers, affording them a greater choice of insurer. Risk equalisation also aims to encourage insurers to compete on what services they can provide to their customers rather than simply trying to attract younger and healthier people who are less likely to make health insurance claims.

The risk equalisation scheme was first introduced 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, with all moneys held in the Risk Equalisation Fund, REF. 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 health insurance contracts goes to the Exchequer. They are all redistributed from the fund to compensate for the additional cost of insuring older and less healthy people. The REF managed by the Health Insurance Authority, HIA, the independent regulator of the health insurance market.

In 2018 the fund redistributed approximately €732 million in premiums, out of a total of €2.85 billion in premiums paid. In 2017, the fund redistributed approximately €670 million of premiums, out of a total of about €2.5 billion in premiums paid. This reflects an increase in the number holding private health insurance from 2.17 million people in 2017 to 2.22 million people in 2018.

Legislation is needed each year to update the number 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 HIA 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 Ministers for Health and Finance have considered and accepted the recent recommendations made by the authority for the stamp duties and credits next year.

This year's Bill seeks to amend the Health Insurance Acts to provide for a general decrease in the risk equalisation credits payable in respect of those aged over 65; a decrease in the stamp duties on non-advanced contracts and a slight increase on advanced contracts; and an increase in the level of hospital utilisation credit for day-case admissions. This credit is a proxy for health status and provides support in respect of less healthy people.

These changes are in line with the policy objective of the scheme to support community rating in the health insurance market in order that older and less healthy people can access health insurance at the same price as younger and healthier people.

Advanced contracts are held by more than 90% of the insured population and provide for greater coverage than those who have non-advanced policies. This Bill seeks to increase the stamp duty payable on advanced contracts by up to €5, representing a 1% increase in stamp duty, and comes after two years of no change. This is necessary to support more affordable policies for older and less healthy people. It is important to note that these stamp duties fund credits. The levies do not increase costs across the market. The scheme is Exchequer neutral in that it is neither a cost nor a benefit to the State. The stamp duty and credits make our community-rated health insurance system work because risk is shared across all the community of insured people and it ensures that older people and people with illnesses can access affordable health insurance just as younger, healthier people can.

I will outline the specific sections of the legislation. 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 2020 as the effective date for revised credits payable from the REF.

Section 3 amends Schedule 3 of the principal Act with effect from 1 April 2020, whereby the applicable hospital utilisation credits payable from the REF in respect of insured persons are revised.

Section 4 replaces table 2 in Schedule 4 to the principal Act with effect from 1 April 2020, whereby the applicable risk equalisation credits payable from the REF in respect of certain classes of insured persons are revised.

Section 5 amends section 125A of the Stamp Duties Consolidation Act 1999 to specify the applicable stamp duty rates for 1 January 2020 to 31 March 2020, and for 1 April 2020 onwards.

Section 6 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. I commend the Bill to the House.

Fianna Fáil will support this Bill, which is somewhat akin to the finance Bill or the social welfare Bill, as it arrives in November every year. The measures within it are designed to support risk equalisation and to sustain community rating in the health insurance market so that older citizens and people with illnesses can afford health insurance and are not discriminated against in favour of younger healthier people. We have always supported risk equalisation and community rating. There will be a small increase in the levy for advanced cover with reductions for non-advanced cover. The average annual health insurance premium increased from €935 in 2011 to €1,197 in 2018. The levy for advanced cover increased from €205 to €444 in that time. We welcome the reduction on the non-advanced levy. That is only reasonable as these plans are meant for entry level and provide less coverage. However just 9% of insured people had non-advanced plans in 2018. The levy for advanced cover for adults will increase from €444 to €449 and for under 18s it will go from €148 to €150. Levies for non-advanced cover will reduce from €59 to €52 for under 18s and from €177 to €157 for over 18s. The increase in the advanced levy, while not large does highlight one of the difficulties with the levy. Currently, the cheapest advanced plan is just over €700 and the most expensive advanced plan is more than €7,000 and they are both expected to pay a levy of €449. Both these members could be aged over 70 yet the burden on one plan far exceeds the burden on the much more expensive plan.

Yet again, the report of the HIA, which always precedes the Bill, has not been published so we do not know whether the Minister followed its recommendation. Does this not leave the Oireachtas in the dark as to why the levies are as they are? This has been a recurring theme for years. The Minister receives the report of the authority in September or October and there is ample time to produce a redacted version that can be published with the Bill. Of course, a Fine Gael Minister is for the ninth year running legislating for something the party opposed in the past. The Sunday Independent once reported: "Fine Gael leader Enda Kenny has said he is opposed to the introduction of 'risk equalisation', the Government scheme that would see BUPA hand over €161 m[illion] in the next three years to its competitors, the State-owned health insurance company, VHI." In 2009, Fine Gael again expressed fears that a levy of €160 would "make private health insurance unaffordable". The party also claimed that a €160 levy was "anti-competitive and it is a means to prop up the State dominant player. VHI remains super dominant in the health insurance market".

The 2009 Bill introduced a €160 levy. In 2019, the Government is providing for a levy of €449. The levy was effectively doubled by a former Minister for Health, Senator James Reilly. During his tenure as Minister there were consistent declines in the number of under 60s with health insurance while the number of over 60s increased. However, between mid-2017 and mid-2019 the market increased by more than 100,000 and now stands at more than 2 million. The proportion of the market that is aged over 60 continues to edge upwards. Although it fell slightly after lifetime community rating was introduced, it was 22.1% in June 2019 while in December 2010 it was less than 17%.

Since last year's Health Insurance (Amendment) Act, we have been presented with a document that could have a significant impact on the health insurance industry, especially given the demographics of the market. The recent Dr. Donal de Buitléir report on removing private practice from public hospitals stated that it is difficult to predict with a high degree of certainty or accuracy what the full range of consequences for health insurance in Ireland might be if private practice is removed from public hospitals. Dr. de Buitléir anticipates that the number buying health insurance will decrease. For a start, the 10% of total health insurance policies that are currently classified as non-advanced plans could become defunct. These are less expensive plans that mainly provide a lower level of benefit in public hospitals. He also anticipates that it is very likely that if the health insurance market shrinks because of the removal of private practice from public hospitals, the market will also age. It can be anticipated that those more concerned about their health and their healthcare, namely, older people and less healthy people, will be more likely to retain their insurance cover, compared to younger or healthier people. He points out that a change in the demographic balance in the market would have implications both for the cost of premiums and for the stamp duty rate to sustain a community-rated market. Indeed, more broadly, and not connected with the removal of private care from public hospitals, in the coming decade, health insurance in line with healthcare overall may well experience significant increases in cost due to our ageing population and predicted claims inflation.

The risk of a shock to the health insurance market with the removal of private practice from public hospitals should be mitigated by the progressive and phased approach recommended for the removal of private practice. This approach lets demand for health insurance decline naturally in response to improvements in public care. Perhaps the Minister of State will outline in his reply what discussions he has undertaken with insurers on how an orderly transition can be managed alongside the implementation of the de Buitléir report.

We will support this Bill because we are firm in our view that the principle of solidarity should apply in private health insurance, as well as in public health services. More than 2 million people in the country have private health insurance cover and almost 471,624 are aged 60 and over. Many have been paying for health insurance all their adult lives. They have an entirely fair expectation that we act to ensure fair play and risk equalisation for them in the health insurance market. That is the reason we will support the Bill.

When it comes to the political differences between the Minister and l, they are probably most acute when it comes to private healthcare. We see legislation of this sort every year and with each year we are reminded of the body of work that progressive parties have ahead of them to address the imbalance in healthcare and remove private healthcare from public hospitals.

The question of health insurance is fraught. On the one hand, it facilitates the skipping of queues and the bypassing of waiting lists while, on the other, it represents a large number of people who go without other things because they are afraid that without it they will end up waiting two years for a colonoscopy or some other procedure. The health insurance market exists because the Government champions it and because people are afraid of having to enter the public system and being left to wait for months or years for treatment.

The de Buitléir report stated that insurers said one of the main reasons people choose to buy private health insurance is to access healthcare services quicker. We find ourselves where we are because successive Governments have driven as a matter of policy the privatisation and commodification of the health service. When I speak to those involved in healthcare, I am told that diagnostics is the hard part of healthcare and that is left to the public sector and the easy part, namely, the treatment, when one has discovered what is wrong, is where the private sector steps in and does the part which is somewhat easier to cost. The taxpayer is paying for the more difficult end while the private end is taken up with the part where it can quickly make a profit. We must ask whether that is the best way to run the health service; I think it is not. We must also ask whether health insurance in this country is fair, given that much of the cover is driven by fear and it constitutes an additional burden to be carried by citizens, and given how much is contributed to the health budget by taxpayers. Private healthcare preys on the fears of people about the prospect of being ill and needing care and the inability of the public health system, for which they pay through their taxes, to provide them with that care.

Then, the saviour to that is the private side of it coming in. There is something to be looked at and a close examination needed as to where vested interests play a part. Certain vested interests make a lot of money from the private side of it. They are the same people who are in charge of providing the public side of it and who are ensuring, many would say, that it does not operate as efficiently and effectively as it should in order that they can step in on the other side of it.

One group of people who must take out insurance and have no choice in the matter are international students. Recently, the Health Insurance Authority, HIA, made a decision that non-EEA students studying here on courses of more than one academic year are considered not ordinarily resident in the State for the purposes of the Health Insurance Acts. Because the Irish Naturalisation and Immigration Service requires these students to hold medical insurance, if either the HIA decision stands or the relevant legislation is not amended, then these students will be compelled to purchase community rated insurance which may not fit their needs. I wish to ask the Minister if he has any intention to keep the availability of non-community rated student medical insurance for international students studying in this State and if he will bring forward amendments to that end on Committee Stage.

The Oireachtas deals with this Bill every year. It is about taking away the risk from insurance companies to equalise risk for certain policyholders. If only the Government was as quick to intervene in the market in other areas, we would have a much better country. While we will allow the passage of the Bill in order for older people and others to be protected, we do so with serious reservations about a health service that buckles under the weight of demand and we point out that fear is what drives many people to take out health insurance across the State.

The purpose of the Bill is to specify the amount of risk equalisation credits to be paid from the Risk Equalisation Fund in respect of age, gender and level of cover from 1 April 2020 and to make consequential amendments to the Stamp Duties Consolidation Act 1999 and to revise the community rating stamp duty levies required to fund the risk equalisation credits.

As I understand it this means that the Government is increasing the stamp duty paid by insurance firms on health insurance policies, which is the first increase in three years. As reported, the Government has said that the 1% increase of €5 in the stamp duty for policyholders with advanced contracts is not only necessary to support more affordable policies for older and less healthy people but also extremely modest, as the first increase in three years.

Why is this the first increase? Why is the increase that is being imposed on firms so modest? I am sorry I missed the Minister of State's opening speech but he might reply when he is finishing. We have seen the cost of insurance working group report on motor insurance that was supposed to provide greater clarity, certainty and transparency in respect of that sector. That has not happened by and large, as the evidence presented to the Committee of Public Accounts last week by insurance industry representatives made all too clear. Perhaps we need to think about developing a working group on health insurance.

I remember when the health insurance started with the VHI and so on. People were so glad to get it and so fearful. We can understand now, especially with the public hospitals and the queues out the door and the shocking figures. There was a new record again today in Limerick, which serves north Tipperary. It is shocking. Everyone is shocked except the Ministers. I am referring to the senior Minister, Deputy Harris, not the Minister of State, Deputy Daly. Another new record today for failure and absurdity and the amount of trauma and stress on patients. We are not really in the winter at all yet. Consequently, the Government will throw €25 million at a winter programme. The whole thing is archaic. That is why people are so frightened and why they keep paying the private companies and are afraid to even shop around.

The Money Guide Ireland website notes the average cost of a private health insurance policy in Ireland, according to a 2017 survey by the Health Insurance Authority, was €1,858 a year. Over 35%, more than a third, were paying more than €2,000 a year. These could be policies for a whole family but it is savage money. Some 38% said they had never made a claim on their health insurance policies. The insurance companies cannot say the premiums are going up because of the claims.

The Health Insurance Authority has a price comparison facility for private health insurance in Ireland. A search on the HIA comparison site in October 2019 for cover providing a private room in a private hospital showed up dozens of different health insurance price plans available for a single adult. Why is that? Visitors coming to our capital city are being charged extortionate rates for hotel rooms but this is a different matter. As I said, the HIA comparison for October 2019 for cover providing a private room in a private hospital showed up dozens of different health insurance price plans available for a single adult. Who would want to bring the family in there? For a single room, for a single adult, prices ranged from the cheapest at €910 per adult per year to the most expensive at €4,866 per adult. It is shocking money. The number of different plans and variations in levels of cover provided is mind-boggling. It must be easy for people to get confused by all the options available. One keeps getting options until one is out of options.

It is so sad, especially for elderly people who are not be able to go on the web or to google and check out the best value. It is unbelievable that they are charged that kind of money. The amount of different plans, variations and levels of cover provided is mind-boggling. I reiterate it must be easy for people to get confused.

The lowest-priced plan shown was €910 for the Control 600 Connect from Laya Healthcare. This Laya policy has a €600 excess on each inpatient claim. Outpatient consultant visits get €40 each, GP visits get €20 each and accident and emergency department cover excess is €20. One is paying the insurance where one must pay up "hello" money as well. The best option, if people can do it here, is not to get sick or go anywhere, because one is fleeced. The loyalty policy has a €600 excess on each payment claim. If one considers contributions to outpatient consultant visits and GP visits of €40 and €20 each, respectively, this compares to some GPs, who only charge a fee of €40 in any event. This is crazy.

There are also ongoing issues for the kind of insurance that medical practitioners require. There is a chronology to this since the establishment of health insurance and the VHI in 1957. A liberalised market was promised when the third life assurance directive was transposed into Irish law on 29 November 1994. It was supposed to force competition and reduce prices in the area of private health insurance. Like everything else, it is supposed to drive competition and better value but it does not happen. Why in this country do we celebrate Comóradh Céad Bliain na Chéad Dála, when everything is such a rip-off? We are promised all of this but do not get it. Do they take people for complete patsies and fools? There is no public service out there. I should not be knocking everything as there is a service, when one gets into the hospital, but trying to get into the accident and emergency departments is abysmal. It is a horrible, desperate experience. A new record was announced in University Hospital Limerick today, which serves half of my county. There is not a mental health bed in the whole of County Tipperary. The Minister of State is aware of this as he has tried his best but is unable to change it. That it is a sad reflection, but not on the Minister of State himself.

It is a reflection on those with their hands on the handlebars of power, the senior officials and the HSE. One would need a hammer and chisel to get it off them. They, the permanent government, are in charge and they do not care. Instead of serving the public, many of them are self-serving and are driving to ensure that they get promotion and positions for themselves. The Minister of State, saw that for himself in Clonmel, when he was with me last week, where we saw a hospital full of offices and another hospital that is closed but is full of offices. Of the 300 beds I mentioned that day, some 900 beds have been lost in Tipperary in the last 15 years. These facilities are all full of officials. The beds are gone, having been taken over and upgraded to a high standard, and still we do not have a single mental health bed. There is something rotten in the state of the HSE in this State in that regard. It is disgraceful.

A liberalised market was promised when the third life assurance directive was passed in 1994. The Health Insurance Act 1994 made provision for the establishment of the Health Insurance Authority but the body was not brought into existence until a long time later, in February 2001. Why did it take so long? Why are the people being treated like this by this Legislature? We were promised this authority in 1994 but the body was not brought into existence until 1 February 2001, a long time later. Who was in charge? The Minister of State was not here, nor was I. What is going on? I believe this to be deliberate policy, not of the legislators, current or past, many of whom were just passing through at the whim of the public, who elect us. Thankfully, they have elected me. I have to ask why it took this length of time for this body to be appointed when it was promised with the legislation?

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 welcome that. The HIA is funded by a levy imposed on private medical insurers but this, like everything else, is passed down to the punters. He who pays the piper calls the tune. That is the way it should be but it is not what happens, it is just passed on.

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 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, which is what the Bill before us deals with and which I hope this Bill will do. 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. Why would it not be? All is not well and I appeal to the Minister of State to do what he can to sort it out.

I am happy to have the opportunity to speak on this Bill this evening. I have spoken many times in this Chamber on the issue of health, health insurance and the two-tier system that we have in this country. I have raised over and over the situation of people who are experiencing long delays in the health system. There has been an unprecedented increase in healthcare funding but I have to ask why people are waiting longer than ever to see doctors, to get treatment and to get diagnostics.

To date, Deputy Danny Healy-Rae and I have taken 47 buses to Belfast to enable people to avail of medical procedures such as simple cataracts, hip and knee operations through the cross-border healthcare directive. These people have been left to fend for themselves and find alternatives to the public healthcare system where they must travel long distances for simple procedures which, with adequate funding could have taken place in Bantry General Hospital or Cork University Hospital. There are numerous people in my constituency who have been waiting for years for a hip replacement on the HSE public waiting list but who, due to the enormous levels of pain they are experiencing, are forced to pay up to €15,000 or more to get the operation done privately. This is €15,000 people do not have to spare.

In 2017 an RTÉ "Prime Time Investigates" programme showed how one poor lady was forced to sell her life supply of jewellery to get her procedure done under private health insurance. I am sure there are many more cases in which people have had to beg and borrow to raise the funds. This is ludicrous and the biggest reason for the two-tier system is because of the incompetence within the HSE. The two- tier system enables those who can afford it to access alternative paths to what is seen as being a more comprehensive, better quality and faster service. This is hard to justify on grounds of equality.

I recently spoke with a lady from Bantry who had an appointment in a Cork hospital. She had to take time off work and go through the public health system because she cannot afford the high premiums of health insurance. This lady had an appointment at 1 p.m. She had to fast for six hours before the appointment. She was not seen for hours after her scheduled appointment and was not out of the hospital until 6 p.m. This poor woman was unable to have something to eat from the moment she woke in the morning and then was left waiting for hours after the scheduled time. This is a crazy practice. If a person is having to fast for the day, they should at least be seen at the scheduled time.

I welcome stricter regulations around private health insurance. Insurers in this industry are happy to put "extras" on to the bill for the simplest of reasons. They can totally exploit their customers and take advantage of their urgent and poor health conditions. This is not good enough. Like the motor insurance industry, I am in favour of legislation coming before the House to put stricter limits on the private health insurance sector in order that nobody can be left without care and that nobody be put in such a situation where their standard of living is diminished for long periods of time.

It is very important too that we take adequate measures to support ill or older people from paying huge premiums to health insurers. In line with this, I urge the Government to introduce free medical cards to all adults diagnosed with cancer. The Minister of State must make this a priority. Over the past few years, I have come across numerous constituents who have been diagnosed with cancer and who are struggling greatly to pay for their medical bills, many of them being just over the income threshold. At a time when they are at their weakest and trying to fight this awful disease, they are burdened with trying to fill out paperwork and prove their eligibility for a medical card. This causes extreme stress and undoubtedly interferes with their recovery.

I welcome the opportunity to contribute to the debate on this Bill. To recap, the main purpose of this Bill is to specify the revised credits and corresponding stamp duty levies to apply on health insurance policies from April 2020.

Deputy Murphy O'Mahony asked how the removal of private healthcare from public facilities would impact on the private health insurance market. Deloitte produced a report on that. It is difficult to ascertain what impact it would have because much of it would entail confidence-building measures and whether people would have more confidence in the public health system if it operated more efficiently without private practice. Some policies are very limited and only add basic enhancements to public service and public hospitals. It is difficult to ascertain but Deloitte's report is available on the Department of Health's website if the Deputy wants to look at that.

I thank the Minister of State.

Deputy Martin Kenny mentioned the issue of students. The High Court upheld the decision by the Health Insurance Authority that students may purchase community rated products from the three open market insurers.

Deputy Mattie McGrath made a few comments about stamp duty and so on. He also asked about policies. I remind people, as the Deputy referred to, that the Health Insurance Authority offers comprehensive information on its website for people who are trying to choose an appropriate policy.

The Bill allows us to maintain our support for the core principles of community rating, which is a long-established and well-supported Government policy for the health insurance market. The Bill will ensure that we can continue to provide the necessary support to ensure that the costs of health insurance are shared across the insured population.

Question put and agreed to.