Seanad Éireann debate -
Wednesday, 22 Jun 1994

Vol. 140 No. 16

Health Insurance Bill, 1994: Second Stage.

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

Minister for Health (Mr. Howlin)

The Third Directive on Non-Life Insurance comes into effect on 1 July 1994 throughout the European Union. This directive is part of the process, known generally as the Single Market, of opening up the markets of the member states of the EU to competition. We are obliged to enact legislation to introduce into Irish law the provisions of the directive which enable us to regulate the future market in health insurance in the interests of the common good while complying with the intent of the directive.

Within the competitive environment which the Single Market promotes we have to ensure that what is done is in the general good. There is an overriding requirement to protect that general good, to maintain social solidarity and, where health insurance is concerned, to strive to ensure that it will remain available and affordable for those who need it most, including the elderly, the chronically ill and those struck down by serious illness.

This is the first of two insurance Bills which I hope to have enacted this year. In the next term I intend to introduce legislation which will amend the 1957 Act and provide the framework for the Voluntary Health Insurance Board to compete effectively. In the development of these Bills, the report of the Joint Committee on Commercial State-sponsored Bodies, chaired by Deputy Liam Kavanagh, on the VHI has been of considerable assistance. I thank Deputy Kavanagh and the Members of the committee for the care and attention to detail which they showed in completing a very useful report. Senator Frank Fahey, Senator Michael Finneran, Senator Shane Ross and Senator Jack Wall were Members of the committee and I extend my gratitude to them also. In both content and timing the report was a very good example of the work of the committee system in the Houses of the Oireachtas.

In this country, health insurance has played a major role since 1957 in the development of the health services. Its success can be seen in the numbers covered, which now approximate to 1.3 million persons or over 35 per cent of the total population. Such a high level of coverage demonstrates that health insurance is accepted as offering value for money to consumers and its continuing strength, despite periods of adverse conditions for the economy generally, is a testament to the value that the insured population place on their membership of the various schemes. Despite consistent and sustained improvements in public health services and the broadening of eligibility criteria, health insurance continues to be an attractive product.

I will now outline some of the fundamental thinking which informs the provisions incorporated in the Bill.

Any regulatory system for health insurance in this country must be placed in the wider context of the general community. The Long Title for this Bill speaks of the legislation being necessary "in the interests of the common good" and it is this aspect of the new system which lies at the heart of the proposals. The common good requires that we be concerned with society as a whole. The strong should help the weak, the young should help the old. The principles of community rating, open enrolment and lifetime membership spring from this view of how we should behave as a society.

Competition and profit making must take place within this framework thereby encouraging innovation, efficiency and keen awareness of market opportunities. The alternative is to allow risk related insurance, attractive to the young and healthy, potentially unavailable to the old and sick. The inevitable result would be that many people would leave health insurance and, through no fault of their own, be put in a position where they had no choices about health care despite being contributors to health insurance for many years.

This Bill also implicitly recognises, as a second principle underlying these purposes, the significant role of insurance over the years within the broader public health services. Our hospital system is second to none in terms of quality of service and the public hospitals have benefited enormously from the presence of private care on their sites. In this year alone a total of over £60 million will be earned by public hospitals from private care and this is an invaluable support for the maintenance of high standards of care for all patients. The £60 million goes directly into the income of the public hospitals and their standards are enhanced by the availability of such income.

It is vital that public hospitals continue to have a mix of private and public practice on site. If this mix did not exist the result would be a fragmented hospital system where one group of hospitals treated private patients only and public hospitals treated exclusively public patients. Quite apart from the loss of £60 million income, there could also be a reduction in the quality of medical supervision and involvement at the highest level in patient care in public hospitals. I do not believe that the private hospitals would gain from the divided and divisive system I have described.

The competitive spirit which should be generated by the Single Market will have a major impact on the range and type of products available to consumers. Insurers must look at what they are offering now and see if those policies are truly matching the needs of the market and if there are any gaps in that market they can usefully fill. Responsiveness to customers' requirements will become ever more important and the development of niche marketing will more readily identify those critical gaps.

For example, companies which wish to specialise in non-hospital products will be able to sell plans which are related to the particular area of expertise of that company and will not have to become involved in the marketing of a hospital plan. An insurer who wishes to sell dental care benefits can do so without having to sell hospital policies. From experience elsewhere it is clear the availability of these ancillary products is critical in maintaining the attractiveness of health insurance. A healthy rivalry in the marketplace based on genuine consumer need will be of benefit to all.

I have circulated to Senators an information document on the main features of this Bill. That is not the usual practice but the Bill is quite complex. I felt it would be of assistance to Senators in preparing for this debate if an information document was circulated in advance. The proposals outlined in that document as to the fine points of the future regulation of health insurance will be the subject of detailed consultations with interested parties between now and the end of the year.

The principles involved are important, the first of them being community rating, which is the system of pricing by which members of an insurance plan are charged the same premium by a company for a range of benefits. No discrimination is made by the insurer in regard to the age, health status or sex of the individual member.

The rationale which underlies this concept is that high risk groups, mainly the elderly, should not have to pay more in premia at a stage in their lives when they may most need to use the benefits of an insurance policy. Furthermore, the low risk groups, such as the young, healthy, insured population will benefit from community rating when they age and come to need services.

The Bill as passed by the Dáil seeks to ensure that while a number of specific and appropriate exceptions are allowed, the principle of community rating will apply to all health insurance contracts, whether they cover adults or those under 18 years of age. I have, however, accepted that health insurance packages covering long term care are unlikely to be made available unless they can be sold at a risk rated basis. The Bill provides for this.

Community rating is not anti-competitive. It does not prevent companies from competing. There is ample scope for commercial rivalry to gain greater market share by concentrating on price, product and quality of service. It is a matter for each insurance undertaking to determine how it competes on price with its market rivals, provided it does not discriminate within its own plans against vulnerable groups within society.

There is nothing in community rating or in any of the proposed regulatory arrangements which will prevent the development of innovative products for the consumer. I am anxious to see new thinking on product lines in health insurance and I anticipate that should competition occur there will be a notable increase in marketing and related activities.

The second principle is open enrolment which, like community rating, is a concept of particular value to vulnerable people who can be assured they will have access to insurance when they choose to purchase it. Of course it is important that people take out health insurance at an early age if inter-generational solidarity is to continue and community rating to prosper. A decline in the number of young people with insurance would have serious consequencess for the system as there would be insufficient low risk members to balance out the high risk groups.

However, open entry cannot be absolute as no insurance company can be expected immediately to give full coverage to any individual who wished to join. Such an arrangement could have a significant adverse effect on the insurer in a short period. A waiting period for cover must be applied if the insurance system is not to be undermined.

The third principle enshrined in the ground rules for the operation of health insurance is that of lifetime cover, which is linked to open enrolment and community rating in its protection of the highly vulnerable. Continuing cover is critically important because health insurance would have little attraction if we were likely to be denied cover at the point in our lives when we are most likely to need it. I am therefore providing for the concept of lifetime cover to be an intergral part of the new regulatory arrangements but there will be some qualifications.

There are a number of important points arising from the interpretations which are set out in section 2 of the Bill to which I would now like to draw the attention of the House. The term "ancillary health services" is defined in the Bill. The term "ancillary" is used in the context of the Bill in a specific way to distinguish a range of services from those which are likely to be included in the schedule of minimum benefits to which I will refer to later. The term does not in any way denote that these are less important services. The intention is to distinguish these services so that, for example, they can be marketed either on a separate basis or as a top up in a package which includes minimum benefits.

The definition of "health insurance contract", which is a fundamental part of the Bill, defines health insurance as applying to payments which are made for or on behalf of insured persons for the specific reimbursement of fees or charges. In other words, there must be an element of indemnity before a policy can be described as health insurance. Policies which are merely cash payments and can be paid irrespective of the actual costs incurred in treatment are not, under this definition, health insurance. They do not constitute an indemnity policy as such and present no real threat to health insurance at present. However, my Department will be keeping the matter under review.

Section 7 of the Bill prohibits insurers from offering non-community rated policies. It also defines community rating. However, there are a number of aspects of community rating on which I would like to make further comments. It will be noted that section 7 (2) (a) uses the phrase "suffering or prospective suffering of a person from a chronic disease". My intention in using the word "prospective" is to prevent the application of current and anticipated diagnostic techniques, such as genetic testing, as a means of providing information on which a decision could be made to increase an individual's premium or to deny insurance cover to a client.

The House will also note from section 7 (3) of the Bill that, as I have already mentioned, I am not requiring health insurance policies covering long term care to be marketed on a community rated basis. I hope that insurers will develop products which can cover the costs of long term care. The demographics of this country and, indeed, other developed nations, would suggest that such products can be directed at a sizeable market which would justify their development.

I am making a number of exceptions in section 7 (4) (a) and (b) to the principle of community rating. These exceptions reflect current practice by insurers here, whether by the Voluntary Health Insurance or the friendly societies, and do not, therefore, dilute to any significant extent the principle of community rating. The concessions on group discounts are important and are necessary if insurers are to continue to attract the type of risk that can be set off against higher risks. Considerable care has been taken to give insurers flexibility in determining how they will charge for children. For example, in larger families it will be possible for insurers to waive charges for children in excess of a particular number. However, all policies must comply with the basic principles of community rating, open enrolment and lifetime cover.

Section 8 of the Bill sets out, with certain qualifications, the requirement on insurers not to refuse a contract to a person under 65 years of age. An insurer is not obliged to accept for membership a person who is 65 years or more, except where that person's insurance company has ceased to trade. In this situation the insured person will be allowed to enrol with another undertaking and may not be prevented from doing so. Section 8 (4) (a) of the Bill provides for all those, irrespective of age, who have had a health insurance contract with an undertaking to transfer to another company. This provision is a reasonable one, given that a person over 65 years would probably have been paying into a scheme for many years and is, therefore, entitled to continue to receive benefit.

I will be prescribing in regulations waiting periods which are generally similar to those operated at present by the Voluntary Health Insurance Board. However, there are a number of areas which require further examination and to which I have referred in paragraph 3.1 of my information document. My aim is to ensure that the regulations will provide a balance between necessary controls by insurers on entry while at the same time adhering to the principle of open enrolment. I should add that restricted membership undertakings will be allowed to limit their membership to the relevant occupational group but may not refuse to accept a qualified person under 65 years.

Section 9 of the Bill explicitly prohibits a company from refusing to renew or terminating cover without the insured person's consent, except in circumstances to be prescribed in regulations. It is likely that these circumstances will allow for cover not to be renewed or to be terminated if it can be established that there was fraud on the part of the insured person or non-disclosure by him or her of significant relevant information to the company.

Section 10 of the Bill provides that an insurance contract which covers hospital services must provide for a minimum level of benefit to be offered to a potential subscriber. An insurance company which is offering benefits which do not include any element of hospital costs but relate only to ancillary services, such as dental care, will not be subject to this requirement.

The level of statutory minimum benefits will be clearly defined in regulations which will be publicised in the autumn after detailed consultations with interested parties. However, these benefits will only be paid in respect of what are regarded as medically necessary procedures. The main elements which would be included in minimum benefit are hospital in-patient treatment, including day care, hospital outpatient treatment, consultants fees, maternity benefits on a grant-in-aid basis, convalescence, psychiatric treatment, and substance abuse. The minimum level of accommodation which will require to be covered is semiprivate in a public hospital. My general approach is to ensure that the regulatory framework gives a guarantee of minimum benefit to consumers. If individuals want to top up and purchase more cover they will be able to do so.

The components to be included in the minimum benefits package will be kept under regular review. It would obviously be attractive to have all insured people covered for services such as general practitioner services and dental care. However, the reality is that this would tend to increase significantly the cost of the package and probably lead to a significant reduction in the number of people with health insurance. There is the further complication that general practitioner services are not an attractive or easy to manage proposition for an insurer's viewpoint.

It is important that all those purchasing health insurance should be given full information in a clear and comprehensive manner. It is also necessary to ensure that any advertising or promotion of health insurance is accurate and truthful and does not mislead the public. Section 13 gives the power to the Minister to make regulations for the control of advertising and promotion by insurers. It is a permissive provision and will not be invoked unless it is clear that it is necessary to protect the consumer. Developments in other countries clearly suggest that such a power is necessary, particularly in a competitive market, offering a wide range of marginally differentiated products.

One further issue which is of continuing concern to me is the problem of balance billing by consultants where patients may be billed at a level which is not reimbursed by the insurer. This is a particularly difficult issue which will require careful consideration. An excessive amount of balance billing must be avoided if health insurance is to maintain its standing as good value for money. However, any insurance company could be put under great strain if it were to meet the demands for increases in private fees, introduced from time to time by medical consultants independent of any statutory control or review process. My Department will be reviewing this matter further while the regulations on minimum benefit are being drafted.

Community rating can be undermined by some insurers deliberately selecting low risk groups or individuals. A number of marketing techniques can be employed by companies to make certain that their risk profiles are lower than the average. Those techniques could include having a direct mailing system to particular groups, or targeting occupational schemes with a relatively low average age, or designing policies in such a way that they appeal only to those who present the least risk. The inevitable result of selection of low risk members is considerable instability in the market as other insurance companies, with a higher than average risk profile, would find their financial position rapidly deteriorating.

There are different methods of risk equalisation. The method which I am considering is based primarily on profiling each company's membership by sex and age bands. I am opposed to any system which would pool all risks or costs in the insured population as this would be a disincentive to competition and would reimburse the inefficient insurance companies and service providers. The type of scheme I am considering for risk equalisation would cover costs up to semiprivate accommodation in most private hospitals. This and other aspects of risk equalisation will be examined in more detail by my Department over the coming months while the regulations are being drafted; there will be consultation with all relevant interest groups while the regulations are made. The EU Third Directive provides that member states may introduce risk equalisations schemes if considered appropriate. The proposals in the Bill are in accordance with the intent of the directive and are seen by the European Commission as a necessary part of the regulatory framework to maintain community rating, open enrolment and lifetime cover.

A health insurance authority has been provided for in Part IV of the Bill. It will not be necessary to establish the Authority immediately as the regulatory functions in regard to health insurance will, from July 1994, lie with the Minister for Enterprise and Employment, where prudential issues such as minimum solvency margins are concerned. These matters have been the responsibility of that Minister as part of his functions under the insurance sector generally. My regulatory responsibilities, as Minister for Health, will involve the maintenance of a register of health insurers as provided for in Part II of the Bill. My Department will also monitor policies to ensure they comply with community rating, open enrolment, lifetime cover and minimum benefits.

I will also make arrangements with an independent body under section 12 to advise me on whether equalisation should come into being, in line with a formula set out in regulations. The body appointed to undertake this task will not provide me with any commercially sensitive information on individual companies. The body will receive information from the first quarter of 1995 from health insurers, which will provide it with the data to assess whether or not a risk equalisation scheme should be introduced. I stress that such information would be entirely confidential to that body; its task would be to alert my Department to the possibility that the equalisation process, involving actual compensatory transfers between companies, may have to be introduced. My Department will inform insurers over the next few weeks of the proposed arrangement in regard to the detailed operation of risk equalisation, including the data to be supplied from the first quarter of next year.

The Health Insurance Authority will be established if risk equalisation is introduced or if in the interim period there are changes in the market which would justify it being established. If risk equalisation were to be introduced, it would require some body which is independent of the Department of Health to administer the system, particularly in a situation where financial transactions were being made. It would be inappropriate for a Government Department to involve itself in any such arrangement. It will on its establishment assume all the regulatory functions to be carried out from July by the Ministers for Enterprise and Employment and Health. I do not believe the arrangements to be put in place next month would of themselves justify the creation of another semi-State agency and I am satisfied that arrangements as outlined in the Bill will work satisfactorily.

I have described the main elements of the Bill and the remaining sections deal with standard provisions in regard to the maintenance of a register and the work of the authority, including matters relating to staffing. In addition, under sections 10 and 12 I will appoint an assessor who will advise me from time on the appropriate level of minimum benefit and the level of costs that should be subject to risk equalisation. It is likely that he or she will review annually minimum benefits to see whether they should be changed and, again perhaps on an annual basis, consider what changes might be made to those costs which must be risk equalised.

The regulatory system must be kept under review and should in any event be the subject of a comprehensive examination not later than five years after its introduction. Nobody can say with certainty how the market will respond to the new environment. It may be that there are areas which will need to be changed so the principles enshrined in the Bill will not be undermined. The advice to be tendered by the Authority, if established, and the evaluations conducted on an ongoing basis by my Department should together form a good foundation on which to conduct a full scale review.

All parties involved in health insurance and private care have an interest in understanding the wider arena in which they operate. No one interest can stand aside and demand that its needs be met, even if it means that others are adversely affected. Service providers who would insist that their demands be put at the top of the agenda, no matter what the impact may be on the affordability and the attractiveness of health insurance, would be behaving in a short sighted way. If the price of health insurance escalates because of excessive demands by service providers, the losers will not be confined to any one insurer or provider. We have seen elsewhere that increases over 30 per cent in one year can be applied by insurers and this has had a serious impact on members covered by insurance.

I do not wish to see an adversarial relationship develop between insurers, service providers and consumers. In order to create a better understanding between the different interests involved in private health insurance and private care, I proposed in the document Shaping a Healthier Future that a monitoring and consultative mechanism be established which would be representative of these interests. The forum to be established would include the Department of Health, the public health services and the institutional providers of private care.

As the strategy document made clear, as Minister for Health I do not have any function in relation to the regulation, coordination or assessment of the services provided by private hospitals; the exceptions are maternity and psychiatric services. My overall objective is to do what I can to ensure that the highest standards of care are delivered to the entire population. The consultative arrangements set out in Shaping a Healthier Future will give me the opportunity to assess what needs to be done to develop the correct relationship between private and public sectors.

The proposals incorporated in the Bill are designed to protect those features of our system which have worked so well and to allow the market place to operate and provide a wider range of choice to the consumer. The proposals have been structured in the interests of the common good and with no other objective whatsoever in mind. I believe this Bill and the related Bill which I will introduce later this year will set a solid foundation for health insurance for this decade and beyond. I hope it will be as successful as the VHI Act, 1957, in laying the basis for affordable and attractive health insurance. I commend this Bill to the House.

Mr. Doyle

Before I commence my contribution, I would like to thank the Minister for circulating the briefing document in relation to this Bill to Members of the Oireachtas. Most Members do not have research facilities and a document of this kind can be most helpful. I hope the Minister's example will be followed by other Ministers when introducing legislation to the Oireachtas.

The purpose of the Health Insurance Bill, 1994, is to allow for competition and to regulate the Irish private insurance market on foot of the Third Directive on non life insurance. Until now the VHI had a monopoly on health insurance. VHI subscriptions are based on the community rating principle, that is, everyone pays the same insurance premium irrespective of their risk of making a claim. These risks rise progressively with age so that community rating involves a transfer from the young to the old. This transfer is justifiable on social grounds because the old are judged to be more vulnerable economically than the young.

The opposite to community rating is risk rating whereby premiums are calculated in relation to their probability that a class of subscriber will make a claim. In a competitive environment it is believed that new entrants to health insurance, either domestic or foreign, would offer lower risk related schemes which would mean lower rates for young people. The Oireachtas Joint Committee on Commercial State-Sponsored Bodies in its first report on the Voluntary Health Insurance Board — the Minister said it was an excellent report — indicated that it was its view that community rating is a principle worth defending. It was of the view that a fully risk related scheme, which would rate subscribers according to age group, would not be acceptable. I am also of the view that the elderly, who were net contributors to the VHI in their younger days, have a moral, if not a legal entitlement, to be net beneficiaries in their old age.

In October 1990, the European Union Commission presented its proposals for the completion of the Internal Market in direct insurance. The Irish Government was successful in its submission to the Commission. As a result the Commission, in recognition of the social importance of private health insurance and in the interests of the general good, allowed member states to provide for community rating, open enrolment, lifetime cover and related matters. The directive was accordingly amended.

The community rating principle will now apply under the new EU regulations. Under this system, foreign competitors will not be able to cherry pick from the most lucrative end of the market by offering cheap insurance while refusing to entertain high risk categories. Instead, they will have to tender for all age groups and offer prices which are reflected in the overall health costs.

The cost of claims to insurers tends to rise when members pass the age of 50. The British health insurers will not be able to challenge the VHI's monopoly on the terms which operate in the domestic market. Their premiums escalate as members get older and as a result the young pay little while the elderly pay a lot. This approach has been ruled out here because of the Government supported amendment to the European Union's insurance directive. As a result the only way that foreign companies will be able to gain a sufficient hold in the Irish market is through cutting their administrative costs, paying less to consultants, doctors and hospitals or charging below-cost premiums. In case any foreign competitor would try to circumvent the system of community rating, the Minister has taken powers under section 12 of the Bill to introduce a risk equalisation scheme designed to compensate companies who are carrying a disproportionate number of high risks. New companies with better than average risk profiles would then have to foot the bill.

The Minister said that since its introduction in 1957 the Voluntary Health Insurance scheme has been a great success, attracting almost 1.2 million members and providing voluntary health care for one-third of our population. In anticipation of competition the VHI has confronted running costs and overheads aggressively. This, in turn, has generated a running battle between the VHI and the hospital consultants over the level of professional fees. Patients who attend some consultants — the Minister referred to this — find that they are under-insured and as a result receive an extra bill from the consultant. This practice is known as balance billing.

Recently a motion was passed by the Eastern Health Board, of which I am a member, requesting the VHI to supply a list of all consultants serving the Eastern Health Board area and that those consultants who do not engage in balance billing be identified on the list by means of an asterisk. Doctor Bernadette Carr replying on behalf of the chief executive stated:

With respect to the request contained therein, I am pleased to inform you that our directory of consultants is complete and we shall be happy to forward you a copy. However, I must emphasise that our directory is produced for circulation to general practitioners and may not be publicly displayed.

This information should be available to every member of the public who subscribes to a voluntary health scheme.

The Bill before the House today opens the insurance market to European competition. In their report, the Joint Committee on Commercial State-sponsored Bodies recommended that an ombudsman be appointed to take account of all the necessary information, including information about consultants' fees and the incomes of comparable professions and to make recommendations about fee scales. I suggest that an ombudsman would be the appropriate person to make recommendations as to whether information about consultants' fees and those engaged in balance billing should be made available to the public. The only people who have published that list of consultants is the Joint Committee on Commercial State-sponsored Bodies. In the appendix they have listed those consultants who are not involved in balance billing.

I note that a number of foreign insurance companies have shown an interest in the Irish market. This will lead to better competition which should be to the benefit of the subscriber. Competition must not be at the expense of quality. I wish the Bill a speedy passage through the House.

Mrs. McGennis

I thank the Minister for making the explanatory information document available to us. It is extremely helpful and simplifies what is a technical Bill. I urge other Ministers to follow this example.

It would have been very easy to have done very little work and to produce legislation in a short time which would have seen us in a lot of trouble. This Minister has once again shown that this is not the way he approaches legislation or challenges. Deregulation in all areas, open competition and the breaking down of monopolies has produced its own problems and this legislation, from what I can glean from the information document, from the Minister's speech and from the work the Minister has put into it, attempts to anticipate what might have happened if legislative action had not been taken. The Minister seems to have succeeded.

The further legislation which he will be bringing in later this year will copperfasten the VHI's excellent position as service providers; it has been one of the few private insurance service providers in this country. That needs to be acknowledged and the Minister has done so. Above all else the Minister has said clearly again and again that the thrust of this legislation, and of his entire Ministry, is that he wants to ensure that whatever is done is for the general good, and I commend him for that.

I was taken with the descriptions of how the insurance would work. On a first reading I did not understand as I had never heard such terms as "community rating" and "risk equalisation". I presume the Minister had experience of them but if one had not, it would be very easy to embark on legislation which would allow competition from all sides. As Senator Doyle said, only the fittest would survive.

A new phrase for me is "inter-generational solidarity". That is a lovely phrase and is one that should apply across the board. The sentiment in the speech and to which Senator Doyle referred, of the younger people helping the older, is something which should apply not only to health insurance cover. If it applied across the board we would have a completely different and maybe a better society.

It is vital that any health insurers or health insurance providers must know before they enter the market that they will not be allowed to come in and offer to a niche in the market which is low risk and high pay. Any insurance operator coming in will have to offer cover to people regardless of age, sex or health status. I welcome that. Similarly the Minister stated that the principle of lifetime cover will apply, although I am not sure how he will ensure that a company offers lifetime cover. If a company goes down the tubes does that mean another company will have to take on its responsibilities? Nothing is permanent and pensionable any longer.

Risk equalisation is very important for three reasons — the community rating, open enrolment and lifetime cover, but the Minister said he will be looking to see if this is necessary. I thought it was implicit that the cover would have to be across the board and that if one insurer found it was carrying a high risk category and another was not, then automatically there would be some mechanism by which the risk would be shared. Those are the principles in this legislation.

In his speech the Minister referred to the section of the legislation which prohibits insurers from discriminating against people because of prospective suffering or because a person may be suffering from a chronic disease. I commend him for his foresight because hugely improved diagnostic techniques and genetic counselling will become more evident during the Minister's term of office. If this is being laid down in law now does it mean that it did not apply before? There is a perception at least that certain categories of people cannot get health insurance; specifically, HIV sufferers or those with genetically inherited diseases who find it difficult to get medical insurance. Would the Minister tell us if health insurers who are refusing cover — not life insurance cover — to HIV sufferers are acting outside of the law or if this is a new provision?

The Minister mentioned that people over 65 years of age must be allowed access to another health scheme if their insurers find themselves in difficulty, and that is to be welcomed. I do not have great experience of the VHI as my insurance comes from my husband's employment. The Minister referred to ancillary services. My husband's health insurance scheme allows for dental care and GP visits quite successfully. This should be considered in the context of new insurance schemes. Such treatments are increasingly routine for families. I have a bill of £1,800 currently for orthodontic treatment which is not refundable. However, such charges are ordinary and if one is in the older age category or if one has children one finds that one has regular £20 charges for GP visits. Such charges put an additional burden on families and cannot, I understand, be recouped through the VHI. They should be incorporated into the new schemes under consideration.

The Minister mentioned psychiatric treatment and minimum benefits etc. I had reason recently to come across the case of a young man who is suffering manic depression and is in a private insurance scheme. It would appear that there is an unwritten decision — of which I am sure the Minister would not approve — by insurers not to cover people for psychiatric hospitals. In the case I mentioned the GP urgently referred the man to a psychiatric hospital but the health insurers said that they would not pay the cost. As a result the patient ended up in a very serious state within three days and the insurers agreed to the cover. Is the Minister aware of such cases? Is it permissible that an administrator who does not have a medical background can decide that they will not cover the members of a scheme for St. John of God's Hospital or St. Patrick's Hospital? I understand that there was a history of people "booking themselves in", as it was termed, in times of stress; but I am talking about cases where a GP or a consultant decides that a patient needs and should have psychiatric treatment. The Minister should address this issue.

I am taken by the Minister's intent to watch advertising and promotion by insurers. There should be a health warning on all advertising. It would be great if the Minister had some power to clamp down on advertising as a whole, because it is damaging to one's health. It would be for the good of the nation's health if the Minister could extend his powers to advertising generally.

I do not know who decides fee levels or what power the Minister has in that regard——

Mr. Howlin

None.

Mrs. McGennis

——but they vary from place to place. It is a question of the marketplace dictating. There is little cross party disagreement on this Bill. Can alternative medicine be considered in this measure? Under the VHI and other voluntary schemes alternative medicine is not covered in any form. There is a greater recognition nowadays that it is more cost effective and seems to be quite successful. The old view of its being dismissed as the preserve of quacks is long gone. The Minister might consider for the future that recognised and accredited alternative practitioners would come within the scope of such schemes.

Dr. Henry

I welcome the Minister to the House and I welcome the Bill. The general philosophy of the Bill appeals to me most because what comes over is the stress on the interests of the common good and this, after all, is the most important aspect of health care.

If we look at how important health care is in any country we should look at the United States. The President of the US feels that his presidency will hinge on whether he can or cannot get affordable available health care for everyone in what is the richest country in the world. The US spends 15 per cent of its GNP on health care while in western Europe, where 7 to 8 per cent of GNP is spent on health care, we have a better level of health care for all our citizens. We may be lacking some of the incredible institutions in the US but, as a practitioner, I would have to say that one could get a better standard of health care for all here than in that rich country. Firing money at the health service will not necessarily make any difference; it is important to put thought and effort into it and that is what the Minister is doing.

We have what most people consider a good mix of public and private health care. About 30 to 35 per cent of the population have been constantly opting for private health care insurance over the last 40 years. This figure has fluctuated little, so there must be a satisfactory level of health care as people do not leave the private system to go into the public system. At the same time I can say with my hand on my heart that while I recognise the deficiencies in the public health care system, I do not think that people are in serious ill health because of the divide between the public and private health care system.

In this Bill the Minister has put an important stress on the mix of public and private health care. It is not just important from the point of view of the public hospitals because of the amount of money they get from private health care insurance, it is also extremely important from the private patient's point of view. In some circumstances in health care nobody but the State can afford what is happening. Institutions which buy expensive new technology have grave difficulties in keeping up to date with the latest technology. Rather than firing out CAT scanners all at the same time to various hospitals, it is better to introduce such technology on a phased basis so that the newest model will constantly be coming in.

In these fields better techniques and machines are arriving all the time and one does not want to be in the situation of having to get value out of a machine before it can be replaced. Machinery makes no money while it is idle, and this is an important consideration for those buying it simply for private health care. Most of the machinery in the public hospitals is well utilised. The machines bought for the private part of a public hospital are being utilised for public patients as well. This crossover and mix of patient care has been well thought out and I commend the Minister for it.

One should look carefully at why one should want private health care in the first place. A great deal of the money one has to pay for private health care is for accommodation. One may want the better accommodation, a single room with a telephone, television and so on. The hotel aspect of private health care must not be under-estimated. It costs a substantial amount. This, of course, is one of the aspects people like and for which they are prepared to pay. They are also prepared to pay for other facilities that would also be desirable for those in public health care, such as a choice of doctor. It is difficult to get this option if one is in public health care. Patients are mainly sent to the doctor with the shortest waiting list. I commend the Minister for giving another £10 million to shorten these waiting lists. Giving £20 million this year and a further £10 million next year may seem an odd way to shorten these lists, but it is probably as good a way as any other. There will always be waiting lists.

A member of one of the medical journals asked me to comment on the amount of money the Minister had given to cover operations for varicose veins. I said I had discovered there are approximately 1,100 people waiting for such operations, but the Minister has given enough money to cover 850 of them. Some people are on several lists, waiting to see on which list they will get to the top first. It is like having an egg in every basket watching to see which one hatches first. The Minister may have made great inroads there. Giving a certain sum every year is as good a method as any, especially to those hospitals that are proving to be efficient in getting through waiting lists. It is making a great difference to those on the waiting lists for plastic surgery, for example, which had recently got out of hand. Not having to wait long for treatment is a good reason for opting for private health care, they can also schedule a suitable time for patients to go to hospital and this means they can plan ahead. This is hard to do if one is on a public waiting list. Operations may be cancelled month after month and a patient may be called and expected to go into hospital at a moment's notice. However, the Minister is trying to deal with that.

Community rating is essential, and I am glad the Minister has stressed this. Like Senator McGennis, I like this notion of generational solidarity; as Senator McGennis said, it would be good if it spilled over into more than the health service. One aspect of the Bill made me anxious, and I will go into it in greater detail on Committee Stage. What if one changes from one insurance company to another? Could a gap develop? The Minister rightly said that while enrolment has to be open to all, there must be some sort of a waiting time. Could there be a waiting time of six weeks when one has finished with one company and goes to another? This can happen with car insurance. If one has not transferred car insurance from one company to another on the right day, one might not be insured for a certain period. It happened to me once. Mercifully, nothing happened to me in that time, but I thought I was insured. I would not like to see gaps like that emerging in the health insurance area. Hopefully, the Minister will cover this by way of regulation.

Lifetime cover is also important. If people develop a chronic disease, they should not be excluded from the service. Open enrolment is also important. While a person can declare the illnesses he knows he has, what about unknown illnesses? Now that genetic screening is becoming more prevalent and common, insurance companies should not be able to discard people because they are likely to have cardiac problems, say, in their forties. It is important to have open enrolment and community rating covered in our legislation.

The Minister has been wise in saying that the minimum cover of semi-private level for public hospitals is acceptable. I would agree with that. To force companies to have it at a higher level would increase the cost of health care. A great deal of these costs cover hotel type accommodation. Some people may want to be in private health care because they may want to choose their hospital, they do not want to go on waiting lists and they have a choice of consultant. If I have to go to hospital — I have had to too often — I always go to a public ward of a public hospital where one has the advantage of being closely examined every day by many doctors, not only by one. The intern does not want anything to go wrong, so she tells the senior house officer, who tells the intern, the registrar and so on. It gives one a great sense of security, even if one only has a minor aliment. The Minister has hit the right level there.

Senator McGennis raised other aspects, such as ancillary services that are not included in this Bill but are also important. The Minister said insurance companies can bring in these services, but they should be made to look at them more seriously. Dental care is now a major expense, often much more than medical expenses. It was all right to exclude dental health care when it was considered acceptable to be given a pair of false teeth on one's 25th birthday but more emphasis should be put on this matter and the Minister could look at this area. He has already done work in the areas of orthodontics and dental care. There is now a totally different attitude to dental care, and I am delighted to see it. The Minister and his Department are stressing primary health care. We want to see how general practice fees will be covered. One wants to prevent referring on if at all possible and cover at primary level is important.

Senator McGennis mentioned alternative medicine, attitudes are changing towards this branch of medicine and it should be examined for the future. It was heavily covered by the German health care service but due to high costs, especially in physical medicine, they had to cut back on it. One must be careful here because while one may cut back on visits to health spas or chiropractors, one may be spending more on drugs and it is an arguable point where the savings are made and which option is better for the patient, who is our primary concern.

In his health care strategy, the Minister has rightly stressed the importance of preventative medicine. I especially wish to refer to those people outside the public service — they will be on too high an income level to avail of it — whom we should encourage to look after their health. I particularly have in mind the Minister's health programme for women, to be introduced in the autumn, particularly things like cover for cervical smears and mammography for women between 50 and 64 years of age — a time when it is useful in the early diagnosis of carcinoma of the breast. There is a type of cover but I want to ensure health insurers examine this as well.

Convalescence is also important because it can get people out of expensive hospital care. If home circumstances are suitable, especially for the elderly, one could almost send them home. This is not appreciated enough by the public. A great deal can be done in hospital, but it could also be done at home. Our better socio-economic conditions enable many patients to be discharged sooner. There is nothing magical about the new removal of the gall bladder; the change has come about because people live in better conditions than they did 20 to 30 years ago. The Minister should get insurers to consider convalescence from the point of view that it would save them money in terms of cost transfers from an expensive hospital bed to less expensive care.

On the issue of balanced billing, the reason the VHI did not advise those who were not on balanced billing of the system was because it would have been considered to be a form of advertising. However, it must be pointed out to members of the public that when they make inquiries they are entitled to ask about balanced billing and if the amount provided by the VHI is in respect of the entire fee.

However, there are problems with this because, for example, a person requiring hospital treatment may find that the surgeon is not involved in balanced billing, the anaesthetist is, the pathologist is not, but the radiologist is and so on. It is therefore a complicated system if the patient is not dealing with one person. In addition, in some specialities there are enormous expenses within the practise which have to be covered by the entire fee charged by the surgeon for any given operation.

Regarding the idea of a health ombudsman, as a member of the medical profession I hope that such an institution is not necessary. I would hate to think that the profession was in a position where complaints about it were so serious that it was felt desirable to appoint an ombudsman. The profession has always policed itself in the past under the aegis of The Medical Council. The new president of the council has advised that there will be greater transparency and openness by the council regarding complaints and dissatisfaction by patients, and hopefully this will continue.

This issue is important, not only from the patient's point of view but also from that of the doctor. The first ethical duty of a medical practitioner is to the patient. To allow a situation to develop where this was not to be the doctor's greatest priority would be very serious. In this respect it would be unthinkable that as members of the profession we could ever hide behind the fact that complaints about us should be made to somebody else. Complaints about us should be made to ourselves.

I look forward to the new council being more open regarding complaints made to it and I hope that it could be seen that we in the profession can police ourselves and that the public do not feel obliged to have somebody speak on its behalf to us.

Mr. Maloney

This is probably another piece of legislation forced on us arising from our membership of the EU. However, if it opens up the market and allows for greater competitiveness which will help the people who have ultimately to pay, it is to be welcomed.

I commend the Minister for allocating a further £10 million to the alleviation of the waiting lists. This is to welcomed by all, including my own health board which has received approximately £800,000, some two thirds of which has been allocated to my own town of Letterkenny. I am delighted with this development as, no doubt, is my colleague, Senator McGowan.

This development is in line with the other positive measures the Minister has undertaken since entering office. I welcome these, especially the measures taken in respect of the area of the mentally handicapped services. The Minister advised that £25 million would be provided to this area and his subsequent allocation of this amount is most welcome. In addition, the extension of dental care to school going children from 12 to 16 years of age is an excellent measure which I appreciate and welcome.

I welcome the Bill. The VHI has operated a monopoly hitherto, and in this respect the allowing of competitiveness is a good idea. The VHI has served the country well, but as in other areas the monopoly situation under which it has operated will not last indefinitely. The coming changes will be for the common good ultimately, as they will enable people to shop around for health cover. If a better deal can be provided, people will take it and in this respect the new situation will be similar to the car insurance market.

People work for their wages so they are entitled to decide how they may be spent and it is an important development if the measures provided by the Bill offer a better health service for wage earners and their families. In terms of priority, payment for a mortgage is first, but this would be followed by payment for a health service. In this respect I am pleased to note that the VHI is gearing itself for the impending competition. The company may have been condemned for its premium increases over the years, but it has prepared for this development and hopefully it will survive in the new market.

The Minister has advised that approximately 35 per cent of the country's population is covered by health insurance. My main concern is in respect of the 65 per cent of the population who, to some extent, are unable to pay for such insurance. While a significant proportion of these people are covered by medical cards, there are many — for example a significant number of PAYE workers — who do not qualify for medical cards and who cannot afford health insurance. Such people look at those who can afford such cover and at those on medical cards and ask themselves for what purpose are they working. Hopefully measures will be taken in the future to make life easier for them.

When I worked in the psychiatric service many years ago there were special salary protection schemes for those working in the health services. Such schemes are different to the matter under consideration today, but a noticeable feature of these schemes was that they were very attractive, providing full cover from day one. They appeared to be cheap, the average premium at the time for male nurses being £16 per month. However, when a situation arose where, for example, five or six people left the scheme through sickness or retirement, the premiums exploded, increasing by 60 per cent or so. This often compelled those who had contributed to the scheme to leave it, having paid premiums for ten or more years.

The same history often unfolded with female insurance schemes, where cover was more difficult to obtain due to an apparently higher risk factor. It transpired in one instance, in respect of a group of people whom I represented, that the cost of their insurance had increased by some 120 per cent. Despite the opposition to such increases, the insurance companies had themselves covered by the small print of their policies. Matters such as this must be considered when creating a competitive market.

Another important feature of the new situation is to ensure that insurance is affordable to the elderly, chronically ill and those who have serious illnesses. For those who have reached the age of 65 years and have worked all their lives, health insurance is important. The Minister provides, under section 8 of the Bill, for insurers not to refuse a contract to a person under 65 years of age. In this respect I note that the means of placing and selecting business is to be given further consideration.

Regarding those requiring psychiatric services, this is another area which should be monitored to ensure that such people are given the care and protection they are entitled to.

Doubtless the Minister will ensure that people will obtain benefit and value for their money in this area. The Bill is therefore to be welcomed and commended.

Mr. McGowan

I welcome this legislation as it updates the area of health insurance which is an important aspect of our lives. I compliment the Minister, and as a member of the North Western Health Board I am aware of the Minister's value and concern. I compliment him on his approach and availability. While he is a Labour Party Minister and I am a Fianna Fáil Party Senator, I have had no difficulty with the Minister, but rather the best of receptiveness and response on all occasions. I am grateful to the Minister for his readiness to discuss health problems with any elected public representative, which is as it should be.

No parliamentary draftsman or Minister for Health could ever claim to have covered completely the field of health insurance because one is dealing with changing situations every day of the week. The more service you provide the more recognition is needed for other sections like the dental service. I would encourage those who can afford it to join the VHI. I have been a Member of this House for 25 years and I have had occasion to call pretty heavily on the VHI. If I were depending on the contributions that I made during those years to get medical treatment I would be lying in a box somewhere up in Donegal and would not be here at all.

The aspect that has not been focused on very much is that vast section of the community who continually pay into a service that they never benefit from. Some people continue to snipe at the VHI but from personal experience I can refute that criticism. The VHI has provided a marvellous service for the country. Before we encourage others to compete it is the Minister's job to see that anybody coming in, wherever they come from, will compete with the VHI on equal terms. I am sure that the Minister will discharge that obligation. Others coming in to compete should know the conditions and there should be no opt out clause, however well written or legally phrased it may be. Only the clearest language should be used to let it be understood beyond doubt by those who benefit from the health service that they will not have to employ a solicitor to interpret the quality of the offer they are getting from outsiders. The Minister should force competitors coming into this country to have simple language to describe their packages. I do not know of a single case where the VHI has tried to opt out on legal grounds because of flaws in the agreement or a badly written contract. That fact should be valued. I have no difficulty in saying that and I say it as somebody who has benefited substantially from VHI membership.

I know the Minister is constantly reviewing this vast area which is necessary. If VHI members go to a doctor some are admissible and some are not. There has to be simplification and doctors' fees must be regulated on an ongoing basis. The doctor must receive a fee that covers the service he provides. The Minister must supervise the functioning of the VHI or any other voluntary insurance company in operation. The regulations have to be simple and clearly understood. I welcome the introduction of the revised regulations in the Bill and I want to thank the Minister for his obvious concern in updating the legislation.

I was at a meeting in Sligo to discuss the report Developing the West Together, where a young, energetic university graduate spoke about how bad the services were in the west,. He spoke about transport, potholes and cuts in the health service. He had good elocution and was getting his message through to his audience. When he had finished I asked how much of a cut had been made in the health service. He said he did not know. I informed him that the health bill for the north west region is £150 million and is increasing by 10 to 15 per cent a year. I told him that I did not know of a single year in which there had been a cut. I cautioned him and suggested that he should get his facts together. It is the easiest thing to get a slogan going about health cuts, which to some extent has been successful. Yet there have been no health cuts at all in this country. There are increased demands for health services, which is slightly different. It is our job to highlight these and I am satisfied that the present Minister for Health is actively responding to all cases in a positive way.

Mr. Norris

It is interesting that the Minister has received such a warm welcome from the senior coalition party in the form of Senator McGowan. It is a particularly deserved tribute. I had not intended to speak in this debate. I actually came in because I wanted to speak on the Report Stage of the Landlord and Tenant (Amendment) Bill but I had no idea that it was going to get such an easy passage through the House. This may explain why my speech will be uncharacteristically short. I welcome, however, the opportunity to pay tribute to the Minister and to raise a couple of points about this Bill. I have also taken the opportunity to put down an amendment. I hope that that will be all right and will not cause any great problems. The amendment I have sought to put down is the simple addition of the words "sexual orientation" in page 7 of the Bill where it says:

...without prejudice to the generalities of subsection (1), premiums payable under health insurance contracts should not be made by reference to (a) the age or sex...

I put in "sex or sexual orientation" because, as the Minister knows, this House has established a tradition of adding the phrase sexual orientation into Government legislation almost as a matter of course. This is a good principle, particularly with regard to health insurance.

Some four or five years ago I was asked to be the keynote speaker at the Insurance Industry Federation. It was a big gathering of 700 or 800 people in Jurys Hotel in Ballsbridge. I was briefed by workers inside the insurance industry as well as by people who were concerned on this matter. As I understand it, the principle of the Minister's interest as outlined in his speech and also in the explanatory memorandum is that people should not be disadvantaged by belonging to particular groups, age categories, sex and so on. One of the things that worried me — and people inside the insurance industry who contacted me because they felt they could make their point clear through me rather than by making it themselves — was that, particularly with regards to Aids, application forms for life insurance were being circulated which made it clear that insurance companies were either rejecting out of hand people who were placed in risk categories or applying considerably higher premiums to them. This was the case even if, and I should say particularly if, they were responsible in their behaviour and took the precaution of ascertaining through blood tests whether they had been exposed to the HIV infection.

It seems to me that this is a bad principle. If people are responsible, if they monitor their health and take a blood test to establish what their HIV status is and it is negative, they should certainly not be penalised by an additional premium in that situation. This was what was happening at that point. I raised it with the Minister who then had responsibility for insurance, Deputy Seamus Brennan. He called in the insurance people and there was some degree of discussion. I understand that the situation did change a little bit, but not to the entire satisfaction of people who contacted me and claimed that they were being required to go for tests if they said they were part of a risk category. For example, if they said they were homosexual they were compelled to take a test and were then given an extra loading. For that reason it might be useful if the Minister would consider the addition of "sexual orientation" at this point.

I was in New York ten days ago; alas, I missed the World Cup. I was very studious; as I had to mark examination papers I spent my whole time in a hotel room. For relaxation I watched a television channel which broadcast nothing but American Senate committees. I watched with great interest as Senator Edward Kennedy, who chairs a committee which deals with a similar area to that which we are discussing, was probing the question of health insurance. He argued for the inclusion of sexual orientation. I was surprised that the Republican vice-chariman of the committee, whom I had anticipated to be antagonistic to this, accepted it completely, although she was more delicate about accepting other proposals Mr. Kennedy was advocating at the time. I hope, particularly with regard to the question of AIDS, that the Minister might feel able to look at this.

I am not entirely versed in the issue of competition. Although I am a three piece suited socialist, and am not ashamed of this, I think one can tolerate——

Mr. Doyle

What is a two piece suited socialist?

Mr. Norris

Today I am a two piece suited socialist in deference to the weather. I shed garments as the summer advances, so perhaps it is just as well that the Seanad will be going into recess in the next few weeks.

Acting Chairman (Mr. Belton)

We know what Senator Norris does with his old suits, he gives them to the socialists.

Mr. Norris

The principles enunciated by the Minister are very good: the requirement to protect the general good, to maintain social solidarity where health insurance is concerned and strive to ensure it will remain available and affordable to those who most need it — the elderly, the chronically sick and those struck down by serious illness. I detect under the wording of certain sections of the Bill a sensitivity to people who are chronically ill or HIV positive. These people are vulnerable and need special protection. It is important, in an era when we are allowing the introduction of a degree of competition, that these principles should be stated. The insurance world is a simple mathematical one. It is involved in the calculation of risks and this is how it sets premiums. Being sensitive to people who may become chronically ill or are HIV positive may involve an expense and I welcome the enunciation of this principle by the Minister.

We are a people who, in general terms, take an interest in health. This is demonstrated by the figures the Minister placed on the record. Some 1.3 million persons, 35 per cent of the total population, are already involved in these schemes as I also am. The VHI is an extremely good, socially beneficial operation. I have been a member of its Trinity College group scheme for many years. I regret that I never had the opportunity to collect any money from it because I suffer from notoriously good health but at least there is the reassurance of having that safety net there. This is particularly the case if one is single and cannot necessarily call on the extended family to nurse one through illness. The fact that one can with a calm conscience have whatever hospital and medical treatment is necessary without the additional strain of economic worry is an important factor in living a civilised life.

I want to pay tribute to the medical profession. We have extremely high standards of caring, qualification and expertise not just among doctors, whom I regard highly, but among nurses, medical technicians and laboratory staff. Even though I have never been seriously ill, I occasionally have to go for tests of various kinds when I get bugs of one sort or another and the degree of human concern — I suppose one could call it public relations — and the bedside manner are different in quality in this country from that which obtains in most other European countries. This is why Irish doctors and nurses are in such high demand all over the world. It is not inappropriate to make some reference to this during this debate.

I welcome that the Minister has committed himself to a mix of private and public hospitals. I would hate to see the day when ill health became a resource which could be industrially exploited. We should never tolerate this. The misfortune of ill health is something for which all of us should bear some degree of responsibility and I am glad this principle is also accepted by the Minister.

It is important that the Minister should regulate the insurance industry. He stated that a further Bill will be introduced later in the year. It is important that the State keeps a watching brief on behalf of citizens in this area because we have seen the collapse of travel companies. At present people are stranded in Orlando; at least they have good weather and they can watch the soccer on television. However, It would be far worse if people accepted the blandishments of an alien insurance network trying to penetrate the Irish market and then found they were not sufficiently underwritten and were exposed to risk at a time when their health was vulnerable. I know there is a legal phrase, caveat emptor, let the buyer beware, but in this case it is appropriate that the State should hold a watching brief and ensure that defective products are not widely marketed in this jurisdiction and that people are not vulnerable to them. Senator Henry told me it is important that people know what they are getting when they purchase an insurance policy. The Minister has shown a degree of concern in this area which is heartening.

I commend the Bill and am glad the Minister has further enhanced his reputation by taking these steps. I hope it may be possible for him, in the light of what I have said, to introduce the phrase "sexual orientation" and accept the amendment. Even before the recent decriminalisation, a previous Minister for Finance, Mr. Ray MacSharry introduced a degree of protection in employment in the public service on the basis of HIV status, full blown AIDS status and sexual orientation. It is not a madly adventurous step but one which could be considered by the Minister.

Mr. Quinn

I also welcome the Bill. Unlike Senator Norris, I do not claim to be a socialist. I was delighted to see references in the Minister's speech to responses to customers' requirements, value for money to consumers, encouraging innovation, awareness of market opportunities and the dangers of niche marketing. I congratulate him on the thought that has gone into the Bill and the effort to get the balance right between a market driven health insurance and one protected by the State.

I have no quarrel with the general purpose of the Bill but I have a major problem with the provision of a health insurance authority. I am amazed at the number of State bodies which have been established during the short time I have been a Member, which is about 18 months. It seems that setting up a new body has become almost a knee jerk response to every administrative need. It is time somebody shouted stop, and this is what I am doing now.

I see no reason the functions envisaged in this Bill cannot be carried out with perfect efficiency by the two relevant Departments, the Department of Health and the Department of Enterprise and Employment. The latter is at present responsible for the regulation of the entire insurance industry. This arrangement seems to work perfectly well and without any separate authority. The notion of setting up a separate arms length authority to regulate a small part of the overall insurance business does not make sense to me. Every time a State body is set up there are pluses and minuses. The main plus is that it gives a necessary degree of flexibility to a commercial operation which cannot be provided by a Department because of the restrictions of the Ministers and Secretaries Act, etc. Another advantage is that it allows bringing a wide range of outside expertise on to the board. Neither of these factors applies here.

The downside of setting up a State body is that it reduces accountability, it becomes more difficult for the Oireachtas to scrutinise its activities and, just as importantly, it creates expense. Every State body, no matter how tiny, becomes a little empire in itself. It has to have a board, a chief executive, an administrative set up of its own, its own premises, logo and lavish annual report. All those items are fine if they are needed. However, they are a total waste of time and taxpayers' money if the work could just as efficiently be done within the existing public service framework.

In this case it may be argued that the health insurance authority is not being brought into existence now. The Minister did a great job of explaining that it will be only introduced if risk equalisation is introduced. It is, therefore, being put on the shelf as a contingency but it could be summoned up at any time in the future if the Minister of the day thinks there is a need for it. In my opinion, that actually makes the situation much worse. It is one thing to come to the House and say we need a new State body now and give the reasons. However, it is a totally different matter to come to the House and say there is a State body which we might need at some time in the future so we are putting it in place now on the off chance that we will need it when risk equalisation comes in.

A Government should not be in the business of setting up shelf companies, as I suggest this is. It should only set up bodies when it needs them. If at some stage in the future there is a genuine need for a health insurance authority, then the Government of the day should bring that need to this and the other House and the legislation should be put in place then. One of the many problems about doing it in this way is that as long as this authority is just a remote possibility the provision setting it up will not get the same scrutiny as they would if it was a reality which would come into place in the following week or month.

There is a major question mark over whether we need a health insurance authority at all; there is an even bigger question mark over whether we should be setting it up on the off chance that we might need it at some time in the future. I appeal to the Minister to give serious consideration to striking out Part IV of this Bill in its entirety.

Mr. Enright

The VHI is one of the most important bodies in this country in that it provides cover for people when they are ill and require hospitalisation or medical treatment. People regard any discussion on matters relating to health in an emotive manner. Some people question the increases in fees. Many people believe that the service they are receiving is not as good as it should be. As I said, it is a very emotive subject about which people feel very aggrieved on many occasions. The VHI has made a valuable contribution to private care in hospitals. I understand the VHI pay about £60 million each year on behalf of people who receive hospital treatment.

Since the VHI was set up in 1957 by the then Minister for Health, Mr. Tom O'Higgins, it has been of enormous importance. When one looks at the VHI report and accounts for 1993, one appreciates just how important it is. As the Minister said, each year about 1.3 million people require cover from the VHI, a vast number. Some years ago the VHI was in considerable disarray. There were problems about reserves and its level of debt. In the year ended 28 February 1993 the VHI showed a surplus of £5.8 million; the previous year it had a surplus of £8.4 million.

I am still concerned about the level of reserves in the VHI, which stands at about £36.9 million. The organisation is going to face major competition from Britain — perhaps we will have some competition from Europe but the main competition will be from the British insurance companies — and we have to be particularly careful here.

The VHI does not have too many flaws. I have a high regard for that body. I am apprehensive that in the future many younger people and those who move from one company to another will be attracted to some of the companies which will be brought to their attention by very good advertising and PR campaigns. We must ensure that people are not attracted away from the VHI into other companies where at a later stage elderly people or long stay patients find that they are not able to obtain the cover they require.

It is important that people have the same VHI cover available in their later as well as their younger years. That is the one worry people have. Even at present I am not entirely happy that sufficient numbers of people have cover. I believe there is a cut off point where people are not cared for after a specific period. When somebody becomes ill they should be cared for as long as they have health problems. This is something we should examine. If we do not attend to our duty here and try to ensure that there are substantial reserves in the VHI, we could be leaving the VHI vulnerable when it has to face competition from British medical insurance boards which have vast resources at their disposal.

One of the areas about which I feel very strongly is dental care. We should examine how we can provide dental care under the VHI. Sufficient time or attention has not been given to this and I ask the Minister to see how this can be done because it is of the utmost importance.

I am not going to discuss the details of the Bill as it can be dealt with on Committee Stage. However, I am a little concerned about section 9 of the Bill which deals with the prohibition of, termination of or refusal to renew the health insurance contract. This will be prescribed by regulations but I am nervous that bodies would be able to refuse cover. The Minister mentioned this in his speech and referred to people submitting an application for health insurance cover. He also mentioned that fraud is one exception.

The Minister also referred to situations where errors are made on application forms. I do not have the exact quotation but I think he referred to mistakes or serious errors in the completion of forms. I would caution the Minister here. Some irregularities may be accidental as people may not have been aware of the problems they had at particular stages in their lives. I ask him to be very careful. I am certain he will be deligent in drafting any regulations and I would hate to see people penalised because of errors in the completion of application forms.

During the debate on the Finance Bill I raised a matter in relation to the VHI; the Minister was not present on that occasion. I was speaking about the former chief executive officer, Mr. Ryan, whose employment has since terminated. I was reading the annual report of the VHI which was signed by the chairman Mr. Noel Hanlon. The chairman referred to the staff and stated:

It is my pleasant duty to thank the chief executive Mr. T.R. Ryan and his management team and all of the board's staff for their commitment and energy during the past year. A considerable amount of change and reorganisation has taken place and this has been embraced with enthusiasm by all concerned.

When this was signed on 10 June 1993 apparently the chairman was quite happy with the work of the chief executive. On the last occasion I said that the chairman had a car valued at £100,000. I understand that is incorrect and that the value is considerably less than £50,000. I would like to place on record that I accept that fact. The chairman has written to me to that effect and I am certain that it is correct.

The VHI is facing considerable competition. I am unhappy about the difficulties that arose and I am concerned about them. I believe the manner of the departure of the chief executive is a matter of public concern. It is something on which I would like the Minister to comment this afternoon. We are facing major competition from British firms. It worries me that a chairman, supported by the board, had the position of chief executive officer terminated. I understand that he received a sum of money——

Acting Chairman

Is that relevant to the Bill?

Mr. Enright

It is relevant. We are discussing the Voluntary Health Insurance and the setting up of an authority. Senator Quinn mentioned that there is no accountability. If I am not allowed to discuss the working of the VHI when we are discussing the setting up of this new authority, then I believe it is useless to bother having any discussion. Why am I not allowed? Of course I am entitled to discuss it.

Mr. McGowan

On a point of order, is it right to use the House to defame the character of a person who is not here to defend himself? That is what the Senator is doing. It is totally out of order and the Chairman should not allow it.

Acting Chairman

In fairness the Senator took the opportunity to clear up a matter to which he had referred on another occasion. That is how I see it. I am now pointing out to the Senator that it is not in accordance with the procedure of this House to name people who do not have the opportunity to reply because they are not Members of this House.

Mr. O'Toole

On a point of order, I want to be careful about this——

Acting Chairman

I am not finished. The Senator got an opportunity to refer to the VHI. There was no statement to the effect that he was debarred from doing so. I want to make that clear. I simply pointed out to the Senator that his contribution should stay as near as possible to this Bill and should not refer to people who do not have the opportunity to speak for themselves. That has been the procedure of this House up to now; it is not my procedure.

Mr. O'Toole

I agree with the Chair's ruling; I fully agree that the House should not be used to attack people but, in fairness to the Senator, he was being very sensitive. I listened carefully and he did not attack anybody. He did talk about somebody leaving——

Acting Chairman

I have already said that.

Mr. O'Toole

Perhaps he has reached the limit.

Acting Chairman

What is your point of order?

Mr. O'Toole

In fairness to the Senator, he has been sensitive.

Acting Chairman

I did not get your point of order.

Mr. O'Toole

My point of order was to reiterate the point you made, Chairman.

Acting Chairman

Thank you. I did not think that was a point of order.

Mr. O'Toole

In hindsight you are right.

Mr. Enright

With the greatest respect to you, Sir, and to Senator McGowan, I wish to put on record that we are discussing the future of the Voluntary Health Insurance Board which is of fundamental importance to 1.3 million people who have made regular payments. This is not a personal attack on anybody.

A dedicated person who had contributed an enormous amount to the Voluntary Health Insurance Board, who had given a lifetime's work to this board, found himself without the support of the board. I feel very aggrieved about this. I have a high regard for the Minister but I am disappointed that on this occasion he did not pay sufficient attention to what was happening. He had a duty to ensure that normal policy was adhered to. The day to day running of the board is a matter for the chief executive officer; policy matters are dealt with by the board. In this instance I was very concerned about it. We do not want politics brought into a board of that nature. It certainly has to be at arm's length and that is very important——

Mr. Howlin

That is a most serious allegation to make.

Mr. Enright

There is no serious allegation. I want to ensure it applies in all respects——

Mr. Howlin

It is a serious allegation.

Mr. Enright

I want to ensure that this particular board in which so many people have confidence——

Mr. Howlin

That is outrageous.

Mr. Enright

——is looked into and looked after. As I have stated, we are facing competition. That is the point I wish to make.

Acting Chairman

You have made it.

Mr. Enright

I would like to afford the Minister an opportunity to reply when he wishes.

Mr. McGowan

On a point of order, the Chair must clarify the position. The Senator has clearly mentioned the name of a former employee of the VHI. He has talked about his £100,000 car and has continued in that vein. It is wrong to make wild statements which cannot be substantiated. The Senator is using the House and that is unfair.

Acting Chairman

Allegations have been made against me. I already made those points and Senator McGowan heard me. Senator McGowan is stirring things up. I ask Senator Enright to speak to the Bill.

Mr. Howlin

Criticising the board is grossly inflammatory.

Mr. Enright

The daily running of the organisation is the responsibility of the chief executive. Policy is decided by the chairman and board. It is important that both functions be separate and the Minister would agree with me in that regard. We must ensure that the organisation is run in that fashion.

Senator Quinn was correct in his point about the bodies, authorities and boards we establish. There is no means of having a proper discussion on these in the Houses of the Oireachtas. Some matters can be discussed in the Committee of Public Accounts and other fora. However, it is essential that public representatives have a right and an opportunity to discuss and comment on the establishment of boards and authorities in the Houses of the Oireachtas.

I support most of the content of this Bill. It is important and welcome. I look forward to the introduction of the other Bill to which the Minister referred. The information document furnished by the Minister was of considerable benefit. It discussed matters such as age of enrolment, waiting periods, the factors involved in risk equalisation and so forth. It was helpful and informative.

Mr. O'Toole

This is progressive and caring legislation which should be widely welcomed. This Minister, during his one and a half years in office, has made a greater impact on the health sector than any previous Minister in the history of the State has made in the equivalent time. I have been critical of the Minister on particular issues during the last year and I will continue to be critical as required. However, the commitment he has shown and the progress he has made are reflected in this legislation.

The Bill is a good example of how taking a political philosophy and softening and broadening it in response to the common good can culminate in legislation which protects people. This legislation is a source of reassurance to many people in this country. Many people have been asking questions about the effect of the Single Market on them. They worried about companies which, in another context, only want to insure safe 45 year old drivers and how that would affect people with difficulties and problems. I could not give a greater welcome to the crucial points of this Bill, although I may disagree with aspects of it. There are many measures of democracy, including access to health, education and the law. We are discussing health today although this Bill does not deal with free access to health. However, we are discussing the creation of the so-called level playing pitch in many respects.

The Bill permits the opening up of the market. It is noteworthy that a Labour Party Minister has introduced this Bill which allows market forces to play their part, in a controlled fashion. That is how the system must work in the future. We cannot ignore the fact that market forces will determine and have determined many aspects of our lives. Those with an ostrich like policy in that regard are the people who do not make progress and who go out of business. We must be competitive and we must ensure that everybody is providing an equal service.

I am pleased about the community rating. Only two years ago people were wondering what would happen. There was a big debate about whether we should opt for community rating or throw it open and let the strong survive and the weak get sicker and sicker until eventually we would be unable to pay for them. We have seen that happen in other supposedly wealthy countries. It is now impossible to pay for treatment when one is in America and we certainly do not want to take that road.

Open enrolment with a safety net built into it means that a person cannot simply join. I know the relevance of that provision from my experience of organising a teachers' health scheme. Many insurers, as a marketing ploy, will open the market now and again to increase membership. That is a risk on their part. They measure the risk and pay for it and they pay for it for a long time. It is important that there is a time lapse in order to have a fair approach. Something similar could be done about car insurance. Perhaps there could be a type of community rating in that sector. People could pay for their accidents; there should be a more open and honest way of approaching it.

Mr. Doyle

More people would pay more money.

Mr. O'Toole

We would pay a little more and we would be more careful about congratulating people who claim above the odds for insignificant accidents. If it was our own money we might be more responsible in showing disapproval of people who play the system. However, that is a peripheral point.

It is important that group discounts are continued. I confess to a personal interest in this regard because I deal with the largest group in the VHI at present. Group discounts are a useful encouragement to people within a group of workers to buy health insurance. I had an interest in the larger families policy although I am past the stage where it makes a great deal of difference to me. Insurance can be expensive when multiplied by five plus two adults. I am, for that reason, pleased about the risk equalisation.

I will risk the wrath of the Chair by recounting my experience of the efficiency of the VHI on a personal basis. It was less than satisfactory. I have experienced some of the problems people have outlined. On one occasion my child had a reasonably serious accident on holiday in France. The child required an operation on our return. It was an emergency so we went through the outpatients' department of Temple Street Hospital. As we were registering I was asked if we were members of VHI and I answered in the affirmative. The child was operated on successfully. However, I was left with a serious problem. I received a bill from the consultant, the person who operated and the anaesthetist. I examined the policy and saw that because the child had only gone to outpatients I should not have to claim.

At that stage I wrote to the medical team and told them I was not claiming under VHI because it was covered under the scheme. I received a long letter in reply to the effect that if I did not claim from the VHI the medical team would lose money. I do not know who operated on my child; there was a team of doctors but there was no question of a choice of doctors.

I had just been elected to this House and I sent the file to the VHI. I received a reply from a senior source in the body whose name I will not mention who told me I was right but the easiest thing to do was to claim because there was no cost, as I knew already. I never did anything on the matter — the file is still extant — but it annoyed me, as does overclaiming for car insurance. Although there was no cost involved to me, I was not prepared to claim and be refunded. It was some years later that this became public and people are now well aware of this problem.

I use this to illustrate my point. I do not fully understand the section about risk equalisation but I fully approve of its philosophy. I also agree we should not support or give safety nets to people who cannot make their operation efficient and effective by lumping all risks in the insured and insuring population together.

The Bill is a good day's work. There may be aspects of the legislation which cause difficulties but I approve the underlying philosophy, the attempt to create a realistic level playing pitch, the openness with which this has been approached, the way it has addressed difficult issues and answered the questions of many old, insecure people who are looking to a future when they may not be able to afford health insurance. They will certainly be fully re-assured by this legislation.

This may not be a function of the VHI, but a user's group or council could be highly effective. This would not be a forum for whingers but it would look at the operation of the scheme to ensure people were getting good value for their insurance premia. The council could raise the questions Senator Enright has put to the appropriate people. It would also be a clear voice for people. Perhaps it could be done through the concept of a health ombudsman but there is a need for linkage in this area so that people have a voice in the system that will raise questions and deal with matters. The idea of a user's council or a health ombudsman should be given further consideration.

This is important and welcome legislation which will make many people involved in the health insurance industry in Ireland and abroad consider their future. Then insured people will get a reasonable level of coverage for a fair price.

Minister for Health (Mr. Howlin)

I thank all Senators who contributed to a fine debate. It was more extensive and prolonged in this House than the other House, because of the pressure of time there. It again proves the value of this Chamber as a House of review, because important issues have arisen here.

Senator Doyle welcomed the Bill and, like every other speaker, he strongly supported its basic principles of community rating, open enrolment and lifetime cover, which amount to social solidarity and are the basic building blocks of the legislation. He mentioned the thorny question of balanced billing and in my contribution I said I was concerned about this on a number of fronts. The primary one is public information, because people have a consumer right to know what they are buying. Before they have any procedure performed they should know if there will be an additional cost. I am anxious to assist any mechanism which gives consumers that basic information. Some professionals have argued that to give that basic information amounts to advertising, but I believe that must be questioned. I support access to the information.

Senator McGennis made important points in a long contribution. She spoke about the effect of open competition. I am not convinced that such competition in health insurance would be to the advantage of the consumer. We have a comparatively small health market in Ireland and there is no vast array of key professionals competing against each other in a range of specialties. I am not sure a number of competing insurance companies seeking to buy the skills of a limited pool of people would not in itself be inflationary, rather than depress the price of health procedures. At least currently one insurance provider can talk to health providers and keep a cap on inflation pressures. If there are competitors in the market the reverse may be true. However, we have to live within the diktats of the EU and I have to accept open competition.

Over the last year many issues have taken up an inordinate amount of time in my Department, some of which have come before this House, ranging from anti-D to child care to the Kilkenny incest case. This insurance issue has been ongoing since I became Minister 18 months ago. It is not normal to do so, but I pay tribute to the officials in my Department, whom I am not allowed to name but are sitting in this House, who have put tremendous work into the drafting of this legislation.

This Bill is unique; there is no similar provision elsewhere. They have checked in other countries to find comparable systems. On foot of the last year's work, the principle of community rating is now becoming a desirable objective in the EU, whereas we were almost alone in advocating it at the start of this process. Other European countries are considering enshrining community rating in their basic legislation. There has been a tremendous amount of good assessment, good work and positive thought put into the preparation of this Bill.

Senator McGennis was unclear about lifetime cover. It means people do not have their cover terminated by an insurance company when they enter the risk age category. There is an ancillary to that in that should a company cease to trade, it will give the right to an insurer who has paid premia over a number of years to have automatic access to another insurance company extant in the market. Then someone will not be left high and dry at a vulnerable age, perhaps having paid contributions for 30 years without ever drawing upon them, as Senator Norris said.

Many Senators have asked how risk equalisation will work. We have looked at various mechanisms and the one envisaged under the Bill is complex. It requires independent assessment of the risks in the various portfolios held by insurance operators in Ireland and a direct transfer of resources from one to another. If there is a distortion so that one insurance company is left with a more vulnerable or aging group, this must be compensated for. We have carefully looked at the Australian mechanism, which has a large number of insurance operators, approximately 40, who operate the principle of community rating. It is a complex situation for them. It is a fluid situation, as Senators have said, which will require careful monitoring and adjustment because we must ensure that we preserve people's rights to affordable private health insurance in this country. As other Senators have said, health insurance and affordable health care is an important international question which is on the agendas of every Government in the world at present. It is a crucial issue and it is important we get it right. We have got a lot right in our health services, therefore we can be proud of them.

I want to stress that the role of the Health Insurance Authority will not be brought into operation unless there is sufficient competition in the market, sufficient pressures to bring in risk equalisation and a monitoring system to carry this out. That will be the function of the Health Insurance Authority.

Several Senators mentioned ancillary services, particularly dental services. In the Bill we have defined a basic package which must be on offer as a basic minimum. This means that useless insurance cover cannot be sold to someone, that people cannot be lulled into a false sense of security by believing they are covered, only to find that the insurance cover is useless when they need it. We have defined the basic minimum package, which includes "hospital inpatient treatment, including day care; hospital outpatient treatment; consultants fees; maternity benefits on a grant-in-aid basis; convalescence; psychiatric treatment; and substance abuse treatment".

We could have included other things. For example, we had a long debate about including general practice. As Senators will know, particularly those who have read the strategy document, Shaping a Healthier Future, I have a strong desire to develop general practice in this country. I am loath to exclude that from a core package of services, although it has been excluded from the basic insurance schemes of many other European countries. However, if we include general practice, do we include dental care? We have defined the basic affordable package, but we hope people will buy more developed packages, which will include dental care and general practice.

I do not want to put too many legislative impediments in the way of competition. If we want to embrace competition, we should do so in a controlled way which will benefit the consumer. We need as much consumer choice as possible in the prescribed framework. If someone is able to add a package which includes general practice for a competitive premium, people will accept it if a number of insurance companies are operating it. Senator McGennis mentioned psychiatric cover; this will be covered.

We have considered advertising for some time and controls have been included in the Bill to allow me to interfere where advertising is misleading. That is a direct response to experiences we discovered abroad, where people were lulled into a false sense of security and were sold a pup by some insurance companies around the world. I am determined not to allow that to happen here. It is always dangerous to say it will not happen here, but we will do our best and adopt the powers to address that issue.

The VHI is the main insurance operator here and alternative medicine packages are, as Senators are aware, specifically excluded in its exclusion clause. However, it is open to any insurance company to offer them as an addition, particularly if people want them and they can be competitive, because that is what competition is supposed to mean.

Senator Henry made some positive comments about the Irish health system and the fact that it bears up fairly well to international comparison. I agree with that comment. The more I see other health systems, the more impressed I am by our own. We can be proud of the health services in this country, but we cannot be complacent because of the enormous pressure of new developments. However, we cover more people to a greater extent than any comparable system I have seen.

I agree with Senator Henry's view that there is a good public and private mix. As regards the juxtaposition of public and private care in this country, I have said to my officials that I want private facilities, as far as is practicable, in the public system so that they will achieve two things. They will generate income for the public system, which is welcome, and they will also mean that the best consultants will be available on a common campus to public and private patients, rather than having a structural division between the two. This is in everyone's interest.

I thank Senator Henry for her comment about the waiting lists. Last year people took a jaundiced view when I said we could do that amount of work for £20 million. We did a remarkable amount of work on a contract basis with each health agency and health provider. We did 18,000 plus additional procedures for that amount of money and it has had a remarkable impact on the waiting lists. It has reduced the long stay waiting lists, which have been increasing over the last five to ten years, by 57 per cent in one year. For the first time we have not only halted the increase, but we have substantially reduced it and we intend, under the new round, to do an additional 12,500 procedures this year. This is in addition to the increased base line activities we have negotiated with the health agencies in the first part of the year. We will achieve my first objective of not having a child on a waiting list for longer than six months for any elective procedure by the end of this year and not having an adult on an elective waiting list for longer than 12 months by the end of this year. Those are my short term objectives.

Senator Henry supported the three basic principles and she talked about a number of issues, including balanced billing and preventive medicine. I share her views on those issues.

I thank Senator Maloney for his kind comments. I mentioned my view on competition. He also mentioned the fact that 35 per cent of the population are covered by voluntary health insurance and he asked what type of cover the remainder had. Almost 40 per cent are covered by medical cards and have comprehensive access to all medical services free of charge. Every citizen in Ireland has free access to public medicine, regardless of income. Anyone who has a medical condition and who chooses not to go private has a right to a public bed in a public hospital and to be treated by a consultant.

I thank Senator McGowan for his kind comments. I agree with his point that health systems are constantly changing. It reminds me of a comment I heard that constant change is here to stay. It is a fluid situation. Grappling with health problems is like wrestling with a balloon in that when one suppresses one end, something else springs up. There is always a different and exciting challenge and I have had an interesting 18 months in the job. I have taken careful note of Senator McGowan's comments about his personal experience in the VHI.

Senator Norris accepts and supports the basic principles of the Bill. I am interested in the fact that he spent time in the United States watching C-SPAN, where one can not only see the US Congress but also the Canadian Parliament. I was a member of the working group on televising the Dáil and the Seanad and we had opportunities to see C-SPAN. We hoped there would be a channel in Ireland so that people could focus on the workings of these Houses. Perhaps that will happen in the future. I am not sure how many people will adopt Senator Norris' approach, but there may be a sufficient number to justify it.

Senator Norris also mentioned open competition. He talked about his own amendment. I am disposed to the principles he has outlined in his contribution. It is important and it is already covered in the Bill. I will discuss the specific amendments at a later stage.

Senator Quinn welcomed the thought behind the Bill. It is clear to those who read it that officials thought deeply about it. Senator Quinn was a little disingenuous when he spoke about a kneejerk reaction. This was a "slow-jerk" reaction because we spent 18 months looking at this and we thought of all the options. There are two options which I could follow. I could follow Senator Quinn's proposition and let things happen and then respond to events, or I could to the best of my ability control events before they happen.

I am not one to fly on a wing and a prayer, I prefer to control my destiny and the destiny of things under my control. I am not prepared and my Department advised that we should not be prepared to let competition reign and then further down stream draft legislation for a competitions authority or a health insurance authority should the need arise. If health insurance was being destroyed by an unbridled market I would then not want to cobble together a response to that. I would not be thanked by anyone for not mapping out exactly what I wanted to do in advance.

The Health Insurance Authority will come into place if there is a necessity in the market place to make adjustments and bring in risk equalisation. That is the intent of the Bill. It would not be appropriate for the Minister for Enterprise and Employment or I, as Senator Quinn suggested, to retain the power to do that. I am not establishing a quango for the sake of it. I, on behalf of the State, own all the shares of the VHI, the largest insurance operator in the country and, therefore, the Competitions Directorate of the EU would look askance if the beneficial owner of the largest operator in the market decided how much money was to be transferred from one insurance company to another. It would not be tolerated and would not be seen as competition. It must be done at arm's length and not by me or a ministerial colleague who, obviously as a collective under the Constitution, would share ownership of the VHI for the common good on behalf of the people. Transparency is necessary, but it must be at arm's length. The only way to do that is to establish an authority. It was necessary to do that even in Australia where there is a significant number of players.

I agree with Senator Quinn that we are trying to predict the future. It is a unique Bill in that no other has probably come before the House which has tried to work out what will happen in the future and address a situation which has not yet arisen. Perhaps nobody will come into the market and things will continue as they are. In that case there would be no need for a Health Insurance Authority or for risk equalisation. However, we cannot depend on that happening. I cannot be seen to create an environment which protects unduly one particular player, even if it is State owned. I must create an environment which is fair to any potential player or I will run foul of the EU Competitions Directorate.

Senator Enright stressed the importance of the VHI, a point I agree with. He also referred to the level of reserves. Under the Third Directive on Non Life Insurance, there is a requirement for reserves and it is an issue which has been carefully addressed by the VHI board. The VHI will comment on that in its report, which is due to be published in the next couple of weeks. Senator Enright mentioned dental care, which should be part of add-on plans which are available. He also referred to section 9 regarding the termination of a contract. Although section 9 prohibits the termination of a contract, obviously there are circumstances where a company should be allowed to terminate a contract — in cases of deceit, fraud or where people made a false declaration to get insurance cover which they would otherwise not be entitled to.

Senator Enright also made some comments on the former chief executive and the board of the VHI. I do not propose to comment other than to say that some of his comments were unhelpful. The board of the VHI has my confidence and support.

Mr. Enright

The comments I made were not meant to be unhelpful.

Mr. Howlin

I understand that. I know Senator Enright long enough to understand his goodwill in this regard. I do not attribute anything to him but the best of motives and intent. Having dealt with Senator Enright for a long time, I know he is a man of the highest calibre and integrity and I say that readily.

Senator O'Toole made some welcome comments, which I am grateful for, on the Bill and improvements in the health service in the past 18 months. He outlined his own experience in dealing with the health services. As a prominent trade unionist, he will be aware that the trade union movement under the Programme for Economic and Social Progress negotiated the complete separation and transparency of public and private care so there would be no artificial subsidy of private medicine. That has given us a great deal of information as to the extent of private and public care in the health system.

Senator O'Toole supports the key principle of the Bill. He also mentioned the issue of a user's council, something which could be considered. Senator O'Toole and other Senators also raised the issue of a health Ombudsman. I have not closed my mind to that issue. However, we have advanced the issue of charters for patients and a number of others will come on stream in the next few years, including one for psychiatric patients and the mentally ill, which I hope will be paralleled by the White Paper on Mental Health to be published before the end of the year. I thank Senators for their contributions and I welcome the broad support for this important legislation.

Question put and agreed to.