Seanad Éireann debate -
Wednesday, 2 Dec 1998

Vol. 157 No. 10

Voluntary Health Insurance (Amendment) Bill, 1998: Second Stage.

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

Minister of State at the Department of Health and Children (Dr. Moffatt)

The purpose of the Bill is to enable the Voluntary Health Insurance board to act as agent in the making available of health insurance to persons who will be resident outside the State for temporary periods.

The VHI board advised the Minister, Deputy Cowen, that it must be able to offer an international health care plan to corporate and individual clients as soon as possible if it is not to be vulnerable to competitive challenge. This legislation, which will facilitate the board's wishes, entails a limited amendment of the VHI Acts to give the board an additional power to act as agent in specified circumstances, which relate to the making available of health insurance cover to persons while abroad.

The VHI was established in 1957 as a not for profit body to provide health insurance cover. At that time 15 per cent of the population did not have an entitlement to public hospital services. In the early days VHI's role was, primarily, as a provider of cover for those who did not have an entitlement to hospital services, and, as time passed, as a provider of health insurance to all those who wish to avail of private health insurance irrespective of their eligibility for health services. Its role, and importance, in relation to our health care system has expanded considerably since its foundation. The environment in which it operates has become more demanding and sophisticated over the years, particularly as regards the expectations of its members in terms of quality of product and service. It has provided a solid and valuable service to members of the public over many decades.

Currently membership of VHI is at an all time high of 1.45 million people, representing 40 per cent of the population. More than 1,000 members join every week and it operates 6,700 group schemes throughout the country. In the half year to August 1998 a total of 33,882 new members joined VHI — an increase of 12 per cent on the same period in 1997.

The evolving competitive market has elicited an enthusiastic and vigorous response from the board, management and staff of VHI. Membership continues to grow and, where it previously had five main plans on offer, it now offers the consumer the choice of ten plans, following the introduction of its new options plans at the beginning of the year.

Typically, VHI returns in excess of 95 per cent of its premium income to members in meeting claims costs. For the financial year ended February 1998, VHI's premium income amounted to £304 million while £294 million was returned to members in the payment of benefits arising from claims incurred. Between March and August this year, VHI paid out more than £156 million on 170,920 claims. Its reserves stood at £76 million at the end of February and the Minister is aware of the board's commitment to strengthening them further.

In common with other sectors, the health insurance market was opened to competition pursuant to EU directives. Prior to the introduction of the Health Insurance Act, 1994, VHI operated as a statutory monopoly. That Act, and the associated regulations, provided a framework for a competitive private health insurance market, while maintaining the key principles of private health insurance in Ireland — open enrolment, lifetime cover and community rating.

Following the establishment of this framework, the British United Provident Association — BUPA — the largest private health insurer in the UK market, decided it would enter the Irish private health insurance market. The Government is glad that a significant international player has entered our market and hopes that more players will enter and further enhance the competitive environment. There is a considerable challenge involved in securing this desirable objective while maintaining, in an effective way, the core principles of community rating, open enrolment and lifetime cover which have traditionally characterised and sustained our socially beneficial system. No one can seriously argue that insurers do not have a strong financial incentive to engage in preferred risk selection or cherry picking. In fostering competition we must exercise great care and skill not to engineer a market which could lend itself to practices that would undermine our core principles and the ethos of inter-generational solidarity.

The broader environment has also undergone dramatic change since VHI was founded. Ireland as an open economy has embraced global change, international trade and foreign investment. Central to this process is the ability of people to move from Ireland to other countries in a free manner. In the modern economic global village an increasing number of Irish people employed by export companies, multinational companies and State agencies will live abroad for significant periods during their working lives.

Up until now VHI members who have spent time living abroad as part of their job, have relied on the public health system in the foreign country or have arranged private health care insurance overseas — something that may prove awkward or inconvenient to arrange. Market research by VHI identified a demand among its members for a health insurance product that would provide those who reside temporarily outside the State with comprehensive cover for their health care costs. The Bill enables VHI to meet that demand by acting as agent for the sale of an international health care plan.

At present VHI provides a worldwide emergency service for members who travel, known as VHI Assist. This offer limits cover for VHI members going abroad in respect of treatment arising from unexpected illness or accident, but does not aim to cover longer stays.

The provisions in the Bill are comparatively brief. They are essentially concerned with enabling the board to provide its members with access to an additional product which takes account of expressed customer need. Arrangements to be put in place by VHI on foot of the proposed legislation will put an additional service at the disposal of members to form a seamless continuation of their VHI membership on their return from residing temporarily abroad.

The Bill is by no means the main piece of legislative work to be done in relation to VHI. There is the fundamental consideration of the optimum future corporate status of VHI to be addressed. The position is that the broader issue of the appropriate corporate status of VHI going forward is being actively considered in the context of the preparations relating to the proposed White Paper on private health insurance.

Section 1 provides for the VHI board to have the power to act as an agent for an insurer in the sale of an international health care plan. The section provides that the board will simply require the Minister's consent to exercise its power to act as agent in the terms specified in the Bill.

Section 1 contains a definition empowering the VHI to hold an appointment as agent for an insurer. The section also sets a reasonable limitation on the type of undertaking in respect of which the VHI may act as agent. It defines an "insurer" as the holder of an authorisation within the meaning of the European Communities (Non-Life Insurance) Framework Regulations, 1994. This means the insurer concerned will have been duly notified to our central competent authority for insurance business, having already satisfied the competent insurance authority in the member state of establishment of its capacity to conduct the class of insurance business concerned.

Section 1 defines an international health care plan in terms of providing for the making of payments in relation to costs incurred in the provision of medical, surgical or related services. It further defines such a plan as being applicable to persons who will reside outside the State for such periods as the board may specify therein.

Since the Bill's initiation, the definition of an international health care plan has been broadened. It can now accommodate more diverse benefits which the insurer may deem attractive to the consumer. This is considered to be a positive move from both the business and consumer standpoint.

Section 2 provides that the board, for the purposes of the powers granted under the Bill, will be subject to Part IV of the Insurance Act, 1989. The VHI Act, 1957, provided that the board was not to be subject to the provisions of the insurance Acts. However, as the Bill proposes to assign to the board the power to act as agent for an insurer, it was considered, and is provided for under section 2, that it must comply with the provisions of Part IV of the Insurance Act, 1989, which provides for the regulation of insurance intermediaries. The board has advised that it does not envisage any difficulty in complying with this provision.

Sections 3 and 4 contain standard provisions relating to expenses and citation, respectively.

As I already stated, the purpose of the Bill is to enable the Voluntary Health Insurance board to act as agent in the making available of health insurance to persons who will be resident outside the State for temporary periods. The Bill is being introduced because it is necessary to amend the Voluntary Health Insurance Acts, 1957 and 1996, to empower the board to act as agent for the making available of an international health care plan. An international health care plan, made available pursuant to the legislation, would be based on an agreement between the board and a major international insurer. Under the plan, responsibilities and liabilities involved in providing the benefits covered would fall exclusively to the international insurer. The premia applicable under the plan would be primarily a matter for the international insurer.

The proposed plan would be available to people who intend to live and work outside the jurisdiction for periods of typically more than six months and up to five years. The plan's main features will be medical insurance cover, evacuation and repatriation services and medical assistance services. As the plan's principal purpose will be insurance against the cost of health care delivered outside the State, it will not be subject to the provisions of the Health Insurance Act, 1994.

People currently insured with the VHI will be able to transfer to the international health care plan without waiting periods or pre-existing illness restrictions, providing they have served out the restrictions applicable under their existing cover. They will be transferred back to their former VHI plans on the same terms when they return to Ireland. The VHI will market the international health care plan through its existing group scheme network and it will be available to both group and individual members. The provision of easy mobility for people between VHI membership and cover under the plan would be a particularly customer friendly arrangement for people who must reside outside the State from time to time in connection with their employment.

The board's wish to offer an international health care plan is the only issue being addressed in this Bill. Its provisions represent a full response to a specific request made to the Minister, Deputy Cowen, by the board in relation to what it regards as a potentially significant disadvantage in the conduct of its business.

In accordance with commitments contained in the Government's action programme, the White Paper on private health insurance will address the options open in relation to the VHI's future, including the question of a strategic alliance. The Minister, Deputy Cowen, has made it known, on a number of occasions, that all options are being considered in relation to the most appropriate status and corporate structure for the VHI into the future. This matter has been the subject of extensive consultation between officials of the Department and senior management of the VHI. Consultation with outside interests which was undertaken to facilitate the preparation of the White Paper has now been completed. It is hoped that the drafting of the White Paper will be completed by the end of the year and that, subject to Government approval, it will be published early next year.

The VHI cannot undertake the role as insurer in relation to the plan because it is not authorised pursuant to the relevant non-life insurance regulations. The VHI Act, 1957, provides that the board is not subject to the Insurance Acts. The EU non-life insurance directives include the VHI among a number of undertakings across Europe to which the directives provisions shall not apply. The converse of this situation is that the VHI, in its present form, has a limited scope of operational capacity. The arrangements set down under this Bill, therefore, represent a practical way forward in the matter.

In the competitive environment in which it now operates, the VHI must be empowered to compete effectively. As well as meeting specific customer demands, the capacity to make available an international health care plan will ensure that the VHI is equipped to consolidate its existing business in the corporate sector by putting it on the same footing as other insurers which can offer plans of the kind involved.

As I stated at the outset, this is short, but important, legislation. It provides the VHI Board with a specific power it requires at this time to enhance its competitive position. It is indicative of a private health insurance market that is growing in complexity and sophistication. This reflects how the needs of our people are changing in tandem with the social and economic development of our country. The arrangements to be put in place by the VHI on foot of the legislation will serve the expressed needs of the modern consumer.

Mrs. Taylor-Quinn

I welcome the Minister of State and I support the Bill. This straightforward Bill is indicative of the powers the Minister for Health and Children and the Department have over the VHI. It is ridiculous that a Minister must come to this House to give a very basic additional power to the VHI to enable it to act in a particular way. It is a clear indication of the great need to overhaul the health insurance system. The Minister and the Department must look seriously at the operation of that system and possibly consider securing a strategic partner for the VHI and loosening the Minister's ownership of it.

It is invidious for the regulator of the health services, who is the Minister for Health and Children, to be also the main shareholder in the VHI. That is a fundamental conflict of interest which is contrary to a variety of European laws and directives, particularly those relating to competition law. I hope the Minister and the White Paper will address this issue very clearly because the current situation, where the Minister has a combination of conflicting powers, does not enhance health insurance or health care facilities but leads to problems.

The Minister decides the cost of private beds in all public hospitals. He recently increased that cost and a few months later the VHI announced an increase in insurance costs. Such matters should be decided by an independent body. It has been recommended in a variety of reports that this matter should be adjudicated upon by the Minister for Public Enterprise. The Department of Public Enterprise adjudicates for all other insurance companies — why should health care insurance be any different? It would be in the best interests of consumers, practitioners and the health service for this matter to be moved from the Department of Health and Children to the Department of Public Enterprise.

The Minister for Health and Children has made many announcements recently and has a great deal to say for himself. However, the reality is that the health care service has dramatically disimproved since he took office. Waiting lists have increased substantially by up to 17 or 18 per cent, which is unsatisfactory. Endless advisory committees and groups have been set up to report to the Minister but we have heard no specific recommendations from any of them. We have heard selective mention by the Minister of particular recommendations on occasion, as he saw fit, but we have not seen any complete and final reports from any group.

The advisory group on the risk equalisation scheme made very strong recommendations, particularly in regard to the conflicting functions performed by the Minister. Have the Department or the Minister addressed these issues and do they intend to follow any particular line of action in that regard? That group also recommended that an independent health insurance authority be established as a matter of urgency. These are fundamental issues on which no action seems to be taken. That authority is vitally important as it would have specific responsibility for the financial monitoring of the health insurance system and for licensing. The Minister would be better off providing a health service and leaving insurance to the outside group under the Department of Public Enterprise. This would considerably reduce the conflict of interest which arises.

Has the Minister or the Department at any time seriously considered a strategic partner, given the opening up of the market and the free competition legislation? BUPA is providing services in Ireland and we can only hope other insurance companies will enter the market and provide insurance services. Over 40 per cent of the population is insured. The real problem for many of these consumers is that they do not understand the fine details relating to the variety of insurances provided under the various plans and the differences in what is provided by the insurance companies.

There is need for greater clarification and simplification of the health insurance scheme and the Minister should ensure there is a very straightforward, simplistic and easy form provided to consumers so they do not suddenly get a bill after a period in hospital for services for which they thought they were insured. It is necessary that this issue be addressed.

The health service is increasingly diverse with a greater number of professionals involved in it. Psychiatrists are covered by VHI as are all consultants, but psychologists are not covered by VHI despite the fact that they provide real health service to the public. It is fine for those who can afford to privately pay for a psychologist, but there is a dearth of psychologists in the public health service, an issue which must be addressed. VHI insurance does not cover those who pay psychologists in a private capacity. Health insurance should cover the professional fees of psychologists as, to a certain degree, they and psychiatrists work hand in hand. I ask the Minister to investigate this matter. Dental care is also not covered by health insurance; perhaps the Minister will also examine this matter. These issues must be dealt with. We hear nothing about how this will be done or what the future holds for these areas.

We have a problem regarding the position of the Minister and his supervisory role. I ask the Minister to seriously examine the issue. Over 40 per cent of people are insured for private health care. Why is this high proportion of the population insured? I understand that all research and studies which have been carried out establish that many people insure themselves in the belief that they can advance through the waiting lists much quicker through private health insurance in comparison to public waiting lists. This matter has been discussed in great detail in the other House. It is sad that people, who are entitled to the public health service, feel compelled to take out private insurance to get a speedier and more effective health service, although perhaps the term "more effective" is not correct as the service provided to both private and public patients in hospitals is similar. However, the reality is that 40 per cent of the population have private insurance. If the economic trend changes dramatically in three of four years time, which it could and as it has in other parts of the world, people may not be in a financial position to continue to subscribe to private health insurance and we will be faced with greater pressures being put on the public health insurance system. This is something the Department and the Minister must seriously examine. The reason there is not huge demand and pressure on the public health service is that 40 per cent of the population is privately insured. These are fundamental issues which must be very seriously addressed. If the Celtic tiger changes and the economic boom comes to an end there could be a very serious crisis in the health service. The Minister and the Department must be ready and alert to this issue. To put it mildly, the Minister would want to take out an insurance policy.

Luckily we are currently experiencing a huge return of people who emigrated. Immigrants are coming in also. This increase in population will put further pressure on the private and public health service. This matter must also be addressed. One must acknowledge that health practitioners are providing a very fine health service in circumstances which are restricted for many. This is particularly true of hospital staff who in many hospitals are stretched and working under very difficult conditions. This especially applies to those in casualty who work very hard and extremely long hours. Young house doctors do extraordinary work for very low pay. All these matters must be taken into account.

Nurses work extremely hard and I hope the Government and the Minister will take a very sympathetic approach given that issues concerning nurses are up for discussion. For many years nurses were left very much in the background and were almost taken for granted by the powers that be. I often wonder whether this was partly because the overwhelming majority of nurses were female and that males in more senior positions, such as consultants, were in a much stronger bargaining position — I see Senator Fitzpatrick has a smile on his face. I am delighted the nurses are putting their foot down — and not before time. Over the years I have encouraged many of them to be a little more assertive, regardless of which party was in Government, because they work very hard. Nurses work in hospital wards and provide real service on the ground and I do not think they have received adequate recognition over the years from the powers that be. If all nurses were male I believe everything would be different and we would get a different response from the Department of Health and Children and various Governments. I wish the nurses well and I hope the Minister responds in a positive way and recognises the professional service they provide. They have done good work and it is time they got proper monetary recognition for it.

I ask the Minister to take some of the matters I have raised on board and to recognise that there is a real need to change health insurance and to remove from the Department of Health and Children the conflict of interest that arises in relation to the powers of the Minister in providing health insurance.

Dr. Fitzpatrick

I welcome the Bill which could be described as technical, allowing the VHI to provide services to its members overseas. I was not laughing because I was amused by Senator Taylor-Quinn's references to nurses.

Mrs. Taylor-Quinn

I realise that.

Dr. Fitzpatrick

I was more amused by the latitude given to a Second Stage speech. The only thing we missed was the hospital facilities in Clare, and I am sure we will hear about those on Report Stage.

I agree with what Senator Taylor-Quinn said about nurses. It would be remiss of Members to fail to recognise their sterling worth and hard work. In my time nurses were mainly female, as were the ward sisters. They made up middle management in hospitals in my day, and woe betide any junior doctor who crossed the sister of a ward or a senior nurse.

Mrs. Taylor-Quinn

That was no harm.

Dr. Fitzpatrick

Life could be difficult to say the least. I remember a sister in a ward during my callow youth who could use the word "doctor" as if it was a reflection on one's personality.

I welcome the Bill. We all know that the VHI and private health provision operate in a rapidly changing milieu. When the VHI was started the emphasis was on providing services at a very low price to people who were outside the public health services. That has changed over the years. Senator Taylor-Quinn referred to the insurance aspect of the provision of health care in the private sector. Private health insurance companies are reducing the emphasis on the community rating more and more, and I congratulate the previous Minister, Deputy Noonan, on insisting that the community rating be kept. If that was not kept we could not have allowed all competitors a level playing field.

We should refer to private sickness insurers. They do not provide health services; they provide sickness services to people who need them urgently. They do not have an interest in healthy lifestyles, as that is not within their remit. That is a matter for the Department of Health and Children. They do not provide long-term illness cover either, and they do not wish to provide it. They shy away from areas like mental handicap and psychology. They deal with the short, sharp fix, where one gets the patient in, treated and out. Governments and politicians cannot work like that, but there is a place for the voluntary health insurers.

I look forward to the White Paper promised by the Minister for Health and Children which will deal with the place of private health insurers within the entire health care sector. When that comes out there will be much in it to exercise politicians' minds. Politicians must have a different point of view from doctors, nurses or insurers. Our business is to look after the common good, and community rating is part of that. If we remove community rating, we might find the taxpayer subsidising private health companies — VHI and BUPA — to an even greater extent. That would allow them to pick the type of illness and patient to treat. We cannot allow that. It would hold the general public to ransom.

Senator Taylor-Quinn looked for clarity of product description, and I could not agree more. Because of the range of health insurance products choosing one is like choosing a mobile phone. There is a plethora of programmes on offer, and it would require a barrister to explain clearly what one gets from them. The White Paper will mean that the small print in VHI and BUPA insurance policies will have to be clear, descriptive and unambiguous.

I cannot understand why VHI and BUPA cannot include dental care in their plans. The most difficult and competitive private health care market in the world is in the United States, where competition between different voluntary health insurance providers is cut-throat, yet each offers a dental health care package. I hope the White Paper addresses the issue of dental care, in addition to psychology, mental handicap and other matters.

I welcome the Bill. It is not contentious. It is a technical Bill that should be passed.

Mr. Ross

I am not sure I agree that this is not a contentious Bill; that is a matter of opinion. Anything to do with the VHI can be contentious. It is indicative of the difficulties that the VHI finds itself in that, when it wants to sell a new product or to enter a new field it has to come before this House. Legislation must be produced and debated, and that is part of an indication that this body is under the stranglehold of the State. It should be released from that stranglehold; it is absurd and archaic that if the VHI wants to give insurance to people who have temporarily moved abroad, a single Bill, taking up time and money, must go through both Houses of the Oireachtas.

I do not think anybody could reasonably oppose this Bill. Obviously the VHI must be given the freedom envisaged by it, but we should ask some questions about why the Bill is coming before us and why it is taking so long to do something about the acute problems the VHI now faces. Some of those problems are of its own making and some are not. I should declare an interest, or the opposite, in that in another capacity I am in a position of disagreement with the VHI on a matter that will probably go further. It would only be honest to say that, though it does not inhibit me in any way from having a political opinion on what is happening to the VHI. However, I have an ongoing dispute with the VHI which has not been resolved, and it is only fair to say so to the House.

My problem is that the VHI is a body under political control and that, as a result, it is not commercially viable. I do not know if that is recognised by the House but it has had particular difficulties because of that political control. It seems to have been a vehicle for all parties to make appointments that are not made on the basis of people's knowledge of health or insurance. The board of the VHI is a body that is very obviously identifiable by political allegiances. That is not something rare in this State; it is very common, but it is a pity. It is difficult to identify in many cases the knowledge that members of the board have of either health or insurance, qualities I would have thought absolutely paramount in a body of this sort. It is very easy to say that some people have particular allegiances to Fianna Fáil and that some have particular allegiances to Fine Gael. I am being restrained here because of the difficulties I face. In that particular sphere, it makes one doubt their ability to take decisions on the basis of commercial viability and a great deal of insight or knowledge into the business which they direct. That is a problem which all parties will have to face in all areas. I have had a difficulty with this for a long time because membership of State boards is not awarded on the basis of merit but more on the basis of political allegiance. This appears to be a rampant problem in the VHI. That is because the entire board, as is stated so coyly in its annual report, is non-executive. It actually means that it is appointed by a Minister and is a political appointment. These political appointees have a double allegiance to the VHI and the Minister who appointed them. They cannot be blamed for that.

The result is that many semi-State bodies are not run along exclusively commercial lines. The VHI is one of the worst cases because it was a State-run monopoly for many years and as a result the consumer did not get a look in. The consumer was told what he was charged every year. He paid and that was the end of the story, otherwise, he could not get health insurance. That has ended but similar to all monopolies of this kind it will take a very long time for its grip to be broken. It has not been broken yet and one can see from the latest accounts that the VHI is still increasing its membership superficially. However, that is part of our culture. Those who want health insurance automatically go for the brand name with which they are familiar and which is ingrained in their minds — VHI.

The accounts speak for themselves. The chairman said that the situation in terms of commercial solvency ratios is inadequate. Nobody seems to address that. It appears that the return on premiums is only 1 per cent, which is absolutely deplorable. The VHI is not a healthy commercial organisation and is facing a crisis. It is amazing that it has taken so damn long for anybody to accept that. It is more amazing that BUPA, which has entered the field, has not made more inroads. The VHI is very lucky that the psyche in Ireland is so attuned to going automatically to the State's insurance company rather than the private enterprise one, which has not had a good run or received good press.

The Minister of State said that this is a specific Bill. What is the Government's thinking on the future of VHI? It is all very well to say the Government has an open mind about it but that is a cop-out. There should be an early discussion, pre-White Paper, because it is an urgent matter. To say that the Government is looking at all options, such as a strategic partner or privatisation, is not enough. It would be more interesting to know what is the Government's thinking on this matter. The annual report states that the company needs £60 million more in capital. That is very little money. The Minister could give the company £60 million in capital today and resolve the problem but it is much more long term than that.

The problem is that the VHI is entering a competitive market for which it is not properly equipped, and resolving the solvency ratio problem will not equip it. I ask the Minister to outline the Government's thinking in this regard. Does it want to privatise the VHI, find a strategic partner, which is part-privatisation, or inject capital, or will it not make a decision until the last minute when competitive factors force it to, which is probably what will happen?

In the intervening period there should be a great deal more transparency from the VHI about its operations and particularly how its board functions. It is in this area that I am in conflict with the company. Apparently, a mystery surrounds semi-State boards. The interesting aspect about semi-State bodies is how they are run and what their directors do, if anything. There is a requirement on public companies that they publish not only the names of board members but also their role. I am open to correction on this but there is such a code, it is not a legal requirement. This is very important because the VHI is a significant company.

The VHI may be unique in the semi-State sector in that it publishes blandly just the names of the board. Who are these people? It does not tell us anything about them — they could have been picked out of the air. I suspect the reason for that is if one were told a great deal about them it would have to be revealed that a large number of them are prominent mostly for the fact that they have political affiliations. It is easier to publish their names and leave them as a mystery. If one of them is a doctor, publish that fact. It is a nice title and adds a certain amount of status and respectability. There is nothing controversial about being a doctor. However, there is no information about these people. I am sure there is nothing wrong with any of them but information about them is absolutely paramount.

The VHI is a public company which requires transparency. The ESB publishes information about its directors, as do most companies, but for some reason the VHI does not. I suspect it is because it is the most politicised body in the semi-State sector. I do not know but I guess so. I have had experience of asking board members questions in another sphere and they were very defensive. They are not willing to produce a great deal of information about how they operate.

I made inquiries recently about the appointment of an acting chief executive. Nobody would tell me who was on the interview board that selected him, which is a legitimate question from a member of the public. Nobody would tell me what was the package and how much was being paid. That involves public money but it is a secret. All that information was kept secret. Perhaps the Minister will tell us those facts. How much is paid to the acting chief executive, who has been appointed? How were the interviews processed? That is a legitimate matter of public concern. It is not as though one has an agenda.

These are not secret organisations. It is similar to asking RTE such questions. If one asks RTE about the attendance of board members, it shuts up like a clam. It will not tell the public, while other semi-State bodies, such as ABT, publish such lists. However, RTE, the guardian of transparency in Ireland, will not give that information, but it will ask the Minister of State or myself how many times we have attended this House. We cannot say that we are not telling the public, but RTE will say it is none of our business if it is asked the same question. We keep that secret. The VHI reminds me of that as well. It is very protective of information which should be in the public arena and which I suspect under the Freedom of Information Act could at some stage be revealed.

I also asked — and the Minister might reply as it is a legitimate public concern — about the number of cars given to executives at the top of the VHI as I had heard it was rather large. It had been put to me that it was excessive so I questioned them about the number and models of cars being used by executives in the VHI. Perhaps the Minister of State could answer this. I do not know the answer. I do not have a clue. How much does it cost the taxpayer? This is a legitimate question. The answer I received was absolute mumbo jumbo. It answered a question I did not ask. It told me who did not have cars. Only two people did not and neither was an executive.

I am pleading for openness and transparency. Let us be up front about what the money is being spent on. When semi-State bodies refuse to answer questions, one becomes more suspicious and I am sure that is unjustified. This is possibly the worst offender. As the VHI enters the competitive market and presents itself as a commercial organisation in the future, the least we can demand are two things. First, it should be taken out of the political arena and political appointees should be made on the basis of merit and not have such obvious political affiliations. Second, a semi-State body of this sort should give the transparency we are entitled to demand.

Mr. Glynn

The purpose of this Bill is to enable the VHI to act as an agent for an authorised insurer in the sale of an international health care plan. This legislation is being introduced on foot of representations received from the VHI Board and entails a limited amendment of the VHI Acts to give the board a specific additional power.

The Government also received advice from the Attorney General pertaining to this. This is the reason the Minister for Health and Children, Deputy Cowen, and the Minister of State, Deputy Moffat, and others are bringing this Bill before the House.

The Bill does not deal with the appropriate corporate status of the VHI. This is being actively and comprehensively addressed in the context of the Department of Health and Children's preparations relating to the proposed White Paper on private health insurance. This legislation concerns the effective conduct of the VHI's business in the immediate term. The board considers it imperative that the proposed amendment be enacted as quickly as possible to enable the VHI to compete more effectively.

The VHI was founded in 1957 as a not for profit body. The success the VHI Board has made of fulfilling its role within the health care system has been widely acknowledged. Its role and importance in our health care system has expanded considerably since its foundation. The environment in which it operates has become demanding and sophisticated over the years, particularly as regards the expectations of its members in terms of quality of product and service. Today, membership of the VHI is at an all time high of 1.45 million people which represents 40 per cent of our population. It has more than 1,000 members joining every week and operates 6,700 schemes throughout the country.

As a not for profit organisation, the VHI aims to return to its members the greatest possible proportion of its income while maintaining a sufficient reserve. In the five year period to the end of February 1998, there was a payout of 99 per cent of subscription income on members' claims.

Pursuant to EU directives, the health insurance market was opened to competition. Prior to the Health Insurance Act, 1994, the VHI operated as a statutory monopoly. It is important and gratifying to have an insurer of the vast experience of BUPA providing competition to the VHI. It is imperative that this competition exists, especially when we consider the consumer. The Government feel it is important that other players enter the field and thereby increase the competition.

Until now, VHI members who have spent time living abroad as part of their job, have either relied upon the public heath system in the foreign country or have arranged private health care insurance overseas, something that has proven and may continue to prove awkward if the Government had not taken this action.

As an open economy, Ireland has become part of the global village. International trade and foreign investment are a major part of everyday business life. Central to this process is the ability of people to move from Ireland to other countries and back. Market research by the VHI identified a demand among its members for a health insurance product that will provide those who reside temporarily outside the State with comprehensive cover for their health care costs.

This short Bill is essentially concerned with enabling the board to offer an additional product to its members, which takes account of expressed customer needs. Arrangements to be put in place by VHI on foot of the legislation puts an additional service at the disposal of members in order to form a seamless continuation of their VHI membership on their return from residing temporarily abroad.

It is necessary to amend the Voluntary Health Insurance Acts, 1957 and 1996, to empower the board to act as agent to make available an international health care plan. The VHI Board made strong representations that it must be able to offer an international health care plan to corporate and individual clients as soon as possible, if it is not to be vulnerable to competitive challenge. I congratulate the Minister for Health and Children, Deputy Cowen, on the alacrity with which he has responded to this need.

I wish to briefly refer to comments made by my colleague Senator Fitzpatrick pertaining to dental services. It is high time the VHI provided dental cover to its members. It has been a bone of contention with me for many years.

Senator Fitzpatrick also commented that one can talk about almost everything on Second Stage of a Bill. A reference was made to nurses. I would like to endorse the sentiments expressed by Senators Taylor-Quinn and Fitzpatrick. I support the just demands nurses have made, but I would also like to point out that, since the advent of the Employment Equality Act, 1977, the situation has changed dramatically for male nurses, especially those in psychiatric services. Under the old promotional system, many people did not get promoted. We are not only talking about downtrodden females. We should also spare a thought for males because in certain circumstances they have not got a fair crack of the whip.

I have worked with both male and female nurses and I have the highest regard for them. It is a great pity that when Senator Taylor-Quinn's party was in Government she or the Minister did not respond to the manner in which those who have built up the service, that is retired nurses, were refused parity of pension, enabled by the then Minister for Finance, Deputy Quinn. I am pleased to say that we put our money where our mouth is. Deputy McCreevy, as Minister for Finance, ensured, arising from a promise we made before coming into Government, that we would honour parity, as we always have done. I am glad this has taken place.

I again welcome the Minister to the House and I again state that this is a brief but very important Bill. I ask the Minister of State to take account of the comments Senator Fitzpatrick and I have made. Perhaps he would liaise with the VHI Board to include dental benefit as part of its cover. Míle buíochas.

Dr. Henry

I congratulate the Minister on bringing the Bill before the House. However, it is really absurd that the VHI has to come before the House in this manner to introduce an international travel plan, which I understand it identified as being necessary several years ago. This is not the Minister's fault, it is part of the legislation under which the VHI was established and there is a great deal of sense in modifying it totally. Incredibly, the chief executive officer is paid a high salary on a consultancy basis because the rules on payment to semi-State chief executive officers do not allow such payments to a person in a permanent position. Much needs to be done to the legislation governing VHI.

This is precisely what people need when working abroad. As Senator Glynn said, the world is much more of a global village. People work abroad at times during their careers and it is difficult for them to get health insurance in other countries. This is frequently the case for people who have been in America — I constantly receive the most complicated forms for patients seeking health insurance in the USA, and they will be grateful that they can continue their health insurance there.

The VHI has been a successful organisation but I take Senator Ross's criticisms of its current financial position. Medical inflation in the past 15 years has been extraordinary, as the Minister knows all too well — it is up to four times greater than general inflation — and it is difficult for health insurance to keep up. The increase in charges for private beds in public hospitals will add to the VHI's expenses. It is interesting that BUPA has not made more inroads into the sale of health insurance in Ireland. Given the VHI's success, could we not sell some of its expertise abroad, perhaps to eastern European countries which will surely be setting up their own private health insurance companies? Aer Rianta has done well in helping establish duty free shops and this is another area where our expertise could be of benefit.

The newspapers have reported lack of co-operation from Departments in the setting up of North-South bodies but in the health area co-operation is forging ahead. Perhaps in his reply the Minister will indicate whether patients resident here will be covered by the VHI if they opt for health care in Northern Ireland rather than in the Republic. This is important because co-operation between the North-Eastern and North-Western Health Boards and Northern Irish health boards is, quite rightly, progressing at a great pace and consultants are being shared — dermatology and ENT appointments have been made on a North-South basis. It is nice to see such good co-operation in this area. The Institute of Public Health, which was opened last month, is headed by a Northern woman.

Community rating is extremely important for the success of the VHI. Everyone pays the same rate so that younger subscribers are, in a way, subsidising older subscribers because the latter are far more expensive for an insurance scheme. The amount spent on health care in the last two years of a person's life is roughly equivalent to the total spent in the rest of his or her life. Community rating must continue, otherwise we would have risk rating, as operated by some UK health companies, under which older people must pay much more than the young, at a time when they have less income. We should remember that we all get older and will benefit from the younger subscribers. Risk equalisation is supposed to apply when BUPA obtains a certain percentage of the market and I presume this is being carefully examined. BUPA is more likely to have a majority of younger subscribers at present but when it obtains 2.5 per cent of the market I presume older people will be in a position to subscribe.

When we discussed waiting lists there was a heated debate about consultants' private lists being much shorter than their public lists. I have checked this and while they are shorter, some of them are not that much shorter — waiting lists for orthopaedics, dermatology and ENT are nearly as long on the private lists as on the public lists. Perhaps the Minister will take this back to the Department. It is sometimes thought that consultants in public hospitals are not fulfilling their duties but a survey some years ago discovered that only 2 per cent could be described as not giving adequate service to their public patients. In any field of employment one will find 2 per cent of staff who are not satisfactory.

There is a serious shortage of consultants in Ireland; to bring us up to the levels of many European countries we would have to immediately appoint between 700 and 900 consultants. Even Northern Ireland has a much higher level of consultants than we do. Our health service is consultant-led and there is a great deal of sense in a "consultant provided" service. It might be more economical to allow the public to see a consultant at every appointment rather than being referred by an experienced general practitioner to see a junior hospital doctor in training, and to have to make several visits before seeing a consultant.

The Tierney report should be studied again and a determined effort made to put in place a "consultant provided" service. Sub-consultants are not the answer — it was tried in Great Britain and the results were poor. One can appoint enthusiastic, clever people at age 33, but by the time they reach 38 they will not be so enthusiastic, if still clever. They will see themselves becoming professorial acolytes for the rest of their lives and dissatisfaction will set in. Last week I attended a conference in London on the NHS, and one of the most important points made was that there was great dissatisfaction when sub-consultants were appointed rather than increasing the number of consultants in an area to provide adequate cover.

The Commissioner, Mr. Pádraig Flynn, was right to take the initiative on a 48 hour week and to apply it to junior hospital doctors. This is essential for the health and welfare not just of those doctors but of patients. The Minister and Senator Fitzpatrick may remember a horrific case in England in which a young anaesthetist was charged with manslaughter when he mixed up the gases and a patient died on an operating table. It was discovered the anaesthetist had been on duty for three and a half days without a break. A truck driver would not be allowed to work for that long without a break, yet someone working under those conditions was allowed give anaesthetic. I congratulate the Commissioner on this move. Training periods may have to be longer but the area where there will definitely be trouble is the amount of work done by non-consultant hospital doctors. Rather than greatly increasing their numbers, we should seize the opportunity to increase the number of permanent consultant posts. The lack of non-EU doctors, especially outside Dublin, is causing trouble already.

Consultants do not seem to be popular with the Department. Figures in a recent survey on the length of time consultants drew their pensions have stuck in my mind. It must be a stressful job because those who retired at the age of 62 drew pensions for seven years but those who retired at aged 65 drew pensions for 18 months.

Mr. Farrell

I welcome the Bill and I congratulate the VHI on its work. It is interesting to note that the VHI started in 1957 when the health services were run by county councils. At that time there were no waiting lists. There were never queues in the surgeries of dispensary doctors. What has gone wrong in the intervening years?

Mrs. Taylor-Quinn

Good question.

Mr. Ryan

They all emigrated.

Mr. Farrell

Millions of pounds have been spent on health services so something must be radically wrong. Are people being encouraged to be ill? Is that the name of the game rather than the prevention of illness?

The Minister said that up to 40 per cent of the population are members of the VHI. When this figure is added to the number of people who are members of other schemes such as BUPA, up to 70 per cent of the population must have private health insurance. If only 30 per cent of the population is in public care, where is all the money in the public service being spent? In view of the money put into it, our public health service should be the best in the world.

Senator Ross mentioned accountability and said people should know the names of members of boards and what they are receiving. This is necessary. The issue of accountability should be considered. We should know the cost of every procedure and how many are necessary. The amount of money being spent in this area worries me. In this age of transparency and clarity, politicians are always questioned about what they receive. They must be up front with the details. Much public money is spent on many areas by different organisations, but there is no accountability. We do not know what people are receiving or the percentage of money given to organisations that is spent on the relevant areas. We do not know on what the money allocated in the budget for public health services is spent. We do not know the exact cost of items.

The VHI should be commended for staying in business. The Minister said that almost 171,000 claims cost the VHI more than £156 million. This is a huge cost for 171,000 claims. What were the people involved charged? How much was the cost to each person? How much did it cost each person?

Mr. Ryan

Thousands.

Mr. Farrell

I was a member of a health board for 20 years and it has always been a riddle to me that the more money spent on health services, the longer the waiting lists became. Every Government over the past 20 years has said that it will solve the problem of waiting lists with extra money. However, the more money that is allocated to dealing with waiting lists, the longer the lists become. Where are the millions of pounds allocated to health services being spent? Why were there fewer problems in the health services before the health boards were established in the 1960s?

I was listening to the radio today and the biggest complaint was that, while general practitioners give a great service, people are bored with long waiting lists in their surgeries. How has society become so sick? Why is there so much bad health given the amount of education, good food, good living, better jobs and the money spent on creating a better environment for workers in recent years? This problem is like Frankenstein; it has got out of hand and gone mad. I do not know where it will end.

The VHI is doing a very good job. I am glad that it is able to stay in business given the competition from private companies. We were told before BUPA came to Ireland that the VHI was charging too much and cover could be much cheaper. However, BUPA is now in Ireland but people are not running to it. I compared figures with people and they decided to stay with the VHI rather than go to the unknown because there was not a big difference.

Years ago, the cost of car insurance was supposedly very high so PMPA was established. Ownership was to be in the hands of the people and the cost of car insurance was to be low. PMPA has changed hands but car insurance has become increasingly expensive. The many things done over the years to provide services to people appear to have fuelled the flames. There has been no improvement.

I took exception to the comments of Senator Ross. I have great respect for the Senator and I read his impressive newspaper articles. However, the Senator implied that people associated with politics should not be members of boards. Is he suggesting that he should not be on boards? The Senator is a good businessman but he is also in politics. There are many great people in politics and the Senator's remarks should not have been made. If many of us had not entered politics, we would be much richer now. Ireland is now a wealthy country. When things were bad and businesses failed, politicians were blamed. The country is flying now and there is an abundance of everything, but people say this would have happened anyway and it was nothing to do with politicians. This negative attitude is encouraged and inspired by men of the calibre of Senator Ross. He should desist because it is wrong. The Senator is accusing himself of not being capable of being a politician.

The Bill is technical. Its purpose is to allow the VHI to join with another company in the future if it wishes. Long ago the words "rationalisation", "amalgamation" and "conglomeration" were flavour of the month. Now, the terms "mergers" and "joint ventures" are flavour of the day. The VHI must be in a position to become involved in that regard if necessary. However, the health services must be considered in-depth.

Some time ago a person who is now an MEP was a member of our health board. A discussion was ongoing at a particular meeting about the money spent on tablets. He said they were so plentiful that they were being fed to hens in parts of the country. If that person was a member of the health board now, he would wonder to what they are now being fed. The bill for drugs is another of my hobby horses. Professional and dispensed drugs were the forerunner to the illegal drug business in Ireland today. We were carried away by the availability of drugs.

I attended a seminar some time ago where a lady said Ireland should be careful. She said she had returned from abroad where the focus was on the new health service in Ireland. She said she was working for a large pharmaceutical company and all such companies saw Ireland as virgin territory where big bucks could be made. Pharmaceutical companies have made huge money in Ireland. It was always said that more Colman's mustard was left on the plate than was used; pharmaceutical companies are making more money from drugs which are thrown on shelves and never used than from drugs which are used.

Mr. Gallagher

I support the Bill although its terms are limited. In light of the more competitive environment in which the VHI operates and given that people are being offered more and more private health care options, I wonder why the Bill is so limited in its scope. If the VHI wishes to provide another product next year, which does not come under the terms of its original legislation or this amending legislation, will we have to draft further legislation to give it the freedom it requires to operate in a more commercial and competitive environment? I would have preferred to see enabling legislation which would give the Minister and the VHI greater freedom to respond to the emerging challenges in the health insurance market without giving them carte blanche. Such legislation would allow the Minister and the Government to respond, by way of resolution or regulation, to requests from the VHI initiated by demands from the public.

In the future, health insurance companies, in order to address many of the issues of cost which have been referred to, will start to consider actions and interventions to promote healthy living. They should be free to make the broadest possible response to enable prevention. I would prefer if the VHI were enabled to do that through broad legislation rather than through the narrow focus of this amending legislation.

I welcome the Minister's comments on the White Paper on private health insurance. He has given a commitment that the White Paper will be drafted before the end of the year and, subject to Government approval, will be published early in the new year. I look forward to debating that important matter at an early stage following its publication.

In light of this debate and the Private Members' motion tabled by the Labour Party last week, it would be timely for the Government to consider drafting a White Paper on the health services generally. I am aware that the national health strategy, which was formulated by the Department, has been in place for a number of years. The Government should consider preparing a White Paper on the health services as it would clarify the Government's long-term intentions in regard to health services. Is it the Government's intention to continue to spend more and more money with questionable increased effect on public health services and at the same time preside over a situation where more and more people feel they must, in spite of their public entitlement, purchase private health insurance? Is it the Government's intention to continue with a two tier public-private health service and, if so, how will those tiers be managed and made accountable to the public? How will they be clear about the health care roles provided?

On the one hand, we have a fast track system, funded through private health insurance, where one can get the consultant one requires in the hospital of one's choice when one wants him or her. On the other hand, we have a slow track system where, in spite of paying for health services through taxes, PRSI and health levies, a patient has to wait up to two or three years in some cases to be seen. Having been seen, one then goes on a long waiting list to await treatment and when one eventually gets into hospital, one is dealt with by registrars and house officers rather than the consultant nominally in charge of one's case. People cannot understand how their contributions to health care funding provide only a second class service. In the eyes of the public, the scheme provides entitlement only if one can afford to wait for a number of years and if one's health problem is not urgent.

I do not regard it as evidence of any great achievement or development to learn that membership of the VHI is at an all-time high. Neither do I regard it as a mark of achievement to see more and more people being driven into the arms of BUPA. A total of 40 per cent of the population is covered by VHI and the percentage covered by BUPA is increasing all the time. We are rapidly approaching a situation where 50 per cent of the population feels the need to purchase private health insurance in order to be assured they and their families will get the treatment they require. A fundamental review of the health services is necessary. This is not simply a question of funding. It is a question of how additional money is spent, managed and accounted for.

I am concerned about the whole issue of costs and subsidisation. Last week, the Minister increased charges for private beds in public hospitals. I support that principle. However, a report earlier this year pointed to a contradiction in the Minister's role. The Minister is the owner or figurehead of the public health service; he provides finance to the health services to help them meet their obligations on an annual basis. The Minister also determines costs within the health services and is owner of the VHI. There is a clear case for independent regulation of costs, particularly in regard to private health insurance, and for greater transparency of costs in the health services.

We should not await publication of a White Paper to appoint a regulator. I would like to see legislation introduced to set up an office of regulator, which would be accountable to the Oireachtas for the implementation of policy set by these Houses. We witnessed a controversy earlier this year in regard to the telecommunications regulator and her accountability or lack of it to the Oireachtas. A regulator of costs in the health services, particularly in regard to private health insurance, should have clear legal accountability to these Houses. The Minister and the proposed regulator should not only look at the straight subsidisation of private beds by public hospitals but should also examine the issue of cross subsidisation within health care plans. Subscribers to plans A and B in the VHI and the equivalent options in BUPA are, in effect, subsidising those in higher plans.

The public have a right to know if that is the case. People are confused about whether they should buy private health insurance, which company they should go to and which plan they should purchase. Sales pitches are designed as much to confuse as to illuminate and there is clearly a role for the protection of consumer interests in this area. This is another reason the independent regulator needs to be set up with a close link into the work of the Office of the Director of Consumer Affairs.

The White Paper also needs to address the area of quality. As Senator Farrell said, it is difficult to believe that so much money is being spent for so little effect. A lot of attention has to be given to the question of patient management. Members have stated that the health service is consultant led. The health service is consultant dominated. Any waiting list will be nominally passed across the consultant's desk but if you are a public patient you will never meet the consultant.

The criteria for entry on to the waiting list, the contact between the general practitioner and the consultant that should take place to be seen in the first place, the question of assessment, the question of discharge following treatment and the follow-up treatment, are very much neglected in our health service. It is terrible that members of the public feel they have to approach public representatives and believe we might have some role to play in moving them up a few places on a health board waiting list. The standard reply I get when I contact the health board is that it is a matter for the general practitioner and the consultant. If the general practitioner thinks it is urgent enough to let them contact the consultant, they contact the consultant's office and the consultant is unaware of the patient because it has been dealt with in an administrative fashion within the hospital supposedly in the consultant's name but the case has never been dealt with by the actual consultant. Similarly, in respect of assessment, a patient is referred to a clinic but the patient never sees the consultant. Yet it is the first doctor who sees the patient who decides that one should see a consultant or that one can join the hospital waiting list.

I am concerned about the discharge of patients because I am dealing with a case which involves the Midland Health Board. In practice, there is little or no liaison, despite what is on paper, between consultants, nurses, other hospital staff and community care staff in determining whether a patient should be discharged and if services are in place at home to ensure that the treatment which they are supposed to have received in hospital to make them better is given effect by the back-up and support provided for them when they go home.

I hope the White Paper will not be used like a Trojan horse to dismantle the system of risk equalisation and community rating that was legislated for a few years ago prior to the entry of companies like BUPA into the market. It is a long established principle of private health insurance that risks should be borne equally, that the young should not get cheap insurance while the aged have to pay through the nose for it. This principle is accepted in our community despite the efforts of some prominent writers in the media to rubbish concepts such as community concern, responsibility and solidarity. It is a principle which the people have supported over the past 40 years and it should continue.

I support the limited measure that is before us today. It would have been more advisable to have more broadly based enabling legislation that would allow the VHI to respond in time, effectively and keenly to the competitive environment that exists. I hope we will have a debate early in the new year following the publication of the White Paper. The Government must address a far more fundamental question about what direction our health service will take over the next 20 years. To that end I urge it to engage in a consultative process with a view to publishing a White Paper so that we can decide what direction our health services will take as we enter the 21st century.

Mr. Ryan

Someone has to dispel the mist of nostalgia that Senator Farrell introduced about the glorious life of 1957. I suspect in those days of primitive dispensaries and health care for a large proportion of our population that the infant mortality rate was probably between 25 and 30 per 1,000. It is now about 6 per 1,000 which is a good measure of progress in our health care. To have achieved that at our relatively low level of economic performance until recently was one of our great achievements and one that is directly attributable to the quality of the public health care system, even with all its faults. It was also due to the quality of service provided by the medical staff available. I also suspect that in 1957 our life expectancy was ten years lower on average because infant mortality rates correlate with life expectancy.

Senator Farrell was concerned about the payment per claim. It is about £850 per patient. That is not an enormous amount of money.

It needs to be said that what we have done with the health system in the past 40 years has been good. We have been imaginative because we have tried to link together numerous aspects with various ways of provision. With all the limitations thereof, and all the inadequacies Senator Gallagher highlighted that need to be addressed, we have done a reasonable job of providing a level of health care which the average citizen in the United States, which is nominally about four times richer than us, would be delighted to have access to.

On the other hand, we do contradictory things which impose enormous bills on us. It is insane that the EU is still subsidising the tobacco industry on a grand scale. If we could eliminate the damage to human health caused by tobacco and the use of it, we would save the health care system a sum of money that would eliminate all of our funding crises for at least another 30 years. Similarly, in the US there are tax breaks for tobacco growers. We need to sort ourselves out. We are talking ourselves into situations which are caused by spiralling health care concerns while we subsidise the production of goods that cause those problems. We need to be realistic. Tobacco will kill 20 times more people in the EU this year than all the illegal substances put together. That is not to make any small issue of illegal substances.

I work in the Cork Institute of Technology which has a total workforce, including part-time staff, of well over 1,000 but we do not own one motor vehicle. The VHI employs 433 people and according to its balance statement it has spent £789,000 on motor vehicles. On the basis that each vehicle cost £30,000 the company owns 30 to 40 motor vehicles. While it is not a huge figure, for what does the company need them?

Premium income increased by 1.5 per cent in 1998 while the number of people at work in the VHI increased by 10 per cent. I do not object to public service employment, but we ought to know the reason for these increases. In this regard I agree with Senator Ross's views on transparency and accountability. It is not often I can read the Senator's mind, but he was not saying that those with political affiliation should not be appointed to bodies. He said people should be appointed to bodies not only because of political affiliation but because they have a contribution to make and have individual skills to offer. I agree with him. People should not be disqualified from taking part in anything because of political activity but neither should they be regarded as qualified simply because they were, in one case for instance, the general secretary of a major political party moving on to better things. I do not believe people join the board of the VHI for the £4,000 per annum they get as directors, but there is prestige and status involved and I question that.

The great thing about the VHI is its success. It has been successful because, so far, nobody has allowed ideology to get in the way of reality. As one of the long established members of the Left in this House, I have always said that the fundamental basis for all of my Left wing beliefs is that they work and that the basis for everything is pragmatism.

The belief that a competitive market will reduce the cost of health care is an ideologically driven position which is not based on reality. The US has perhaps the most competitive market in the area of health care. Yet, as a percentage of GNP, it spends twice as much as any country in the EU and still ends up with a worse infant mortality rate than any of the less developed countries of the EU — it is significantly worse than ours — and with a life expectancy which is not much better than the EU average and is probably below that of some of the countries that would have the least competitive marketplace, such as Scandinavia, especially Sweden.

Let us get real and not deal with health care as if it was a commodity that can be sold in the marketplace. There is an infinite demand for health care and if an untrammelled commercial marketplace is created where there is infinite demand people will pay more in the belief that they are getting something better. If people believe they must pay to stay alive they will pay more and more.

The promised White Paper will be published at a time when the EU is obsessed with competition as the remedy for everything. The same problem applies to the electricity market. The price paid by the average domestic consumer in this country is less than in any part of the UK after privatisation. In the telecommunications market we are now observing that mere mortals who have telephone bills of less than £100 can forget about any of the benefits: Telecom Éireann will be left to carry the can.

We must be careful about competition. It is good if there are two television dealers selling televisions in the same small town, but we should not carry this into areas where it does not apply. Health care is one of them.

I endorse Senator Gallagher's view on the need to ensure that there is no dilution of the principle of community rating nor of the other characteristics of our unique form of health care. If such things are introduced the VHI and the system we have will fall apart and we will get the system that operates in the US. A recent opinion poll showed that approximately 90 per cent of Canadians were happy with the quality of health care they had. A similar survey in the US produced a figure of below 50 per cent. That is not surprising, given that probably one-third of the population in the US does not have any health insurance and must, therefore, depend on a fairly primitive service. It is an astonishing experience for Europeans to watch American television programmes about hospitals and see people say they cannot get treatment for their cancer, etc., because they do not have insurance and they cannot afford to pay for treatment.

While there is much that is wrong with our health care system, nobody in the State is denied access to drugs, medicines, radiotherapy or chemotherapy because they do not have insurance and cannot afford to pay for them. We should stand back in astonishment and tell people it is a good system. It has a number of faults, it is under-funded and poorly managed, but it is still a better way to go.

Senator Henry is right to remark that the idea that we need legislation to allow the VHI to do an obvious thing like this measure suggests that the legislation is far too restrictive. The system has created anomalies and is unfair to some. However, it is less unequal and unjust and fits together into a network of health care provision which is much better than the model behind many of the demands that are now being made on us. Competitive markets will destroy any kind of decent health care as they have done in the US. I ask the Government not to allow itself to be moved an inch in that direction because it will not do anybody any good.

Minister of State at the Department of Health and Children (Dr. Moffatt)

I thank all the Senators who contributed to this debate. As usual, we have strayed away from the task before us. Nevertheless a good representative view on the health system and voluntary health insurance has been made.

I acknowledge the views of Senator Taylor-Quinn regarding the need for a comprehensive review of all our markets, processes and strategies. This is why the Minister for Health and Children initiated a broad ranging review in preparation for the White Paper, which will set out detailed views on the consultation process. It will also address the views put forward by the advisory group on the risk equalisation scheme in its report to the Minister earlier this year.

A number of Senators, especially Senator Taylor-Quinn and Senator Ross, raised the issue of strategic partnership. The Minister is looking at all options with regard to a strategic alliance and the matter is being fully considered at present.

Access to health is an important motivation for the purchaser of any private health insurance. It is, however, one of a number of considerations involved in choice with regard to hospital doctor, convenience, etc. Private health insurance gives access to a private hospital system as well as private accommodation in public hospitals. The Health (Amendment) Act, 1991, provides, through the bed designation arrangement, the means for the Minister to secure the position of the public patient. This is matter of which the Minister is mindful with regard to private/public mixes. The matter was also raised by Senator Gallagher.

The request that health insurers should be required to provide benefit in respect of treatment by psychologists gives rise to range of considerations involved in issues relating to commercial freedom, financial capacity, customer preference, competition and appropriate legislative intervention. There are, of course, significant and obvious implications to the State intervening in the decisions of private health insurance undertakings as regards what service they can and should cover in a competitive market. I am sure this will be looked at again in the White Paper.

I welcome Senator Fitzpatrick's comments on the importance of community rating. A number of other Senators raised this issue. I do not believe there is any risk to community rating at present, but there will always be those who say it should be different and that the young should not have to pay as much as the old. At present, however, we are pleased to restate our view on the issue and to keep it in place.

The comments made on clarity are important. What services are people getting? As Senator Fitzpatrick remarked, it is difficult at times to know what one gets for what one pays. I am sure that will be addressed in the White Paper.

Our health insurance system does not have a tradition with regard to dental care. This has been highlighted by Senator Fitzpatrick. It should be looked at again, but dental treatment can be very expensive. The Senator said it was available in the US and other countries. It will be dealt with in the White Paper.

Senator Ross made wide-ranging comments on the Bill. He was somewhat paranoid at times in some of the things he said. Under the Voluntary Health Insurance (Amendment) Act, 1996, the board was expanded from a membership of five people to 12 people, including the chairman. There is a wide representation of interests on the board. Many of those on the board have wide experience in various areas of health and other issues. There is nothing wrong with politicians sitting on the board provided they have the necessary background and ability.

Mrs. Taylor-Quinn

Provided they are independent.

Dr. Moffatt

The point has been made on a number of occasions in this House that politicians should not be involved in these areas but if they have the competence I see nothing wrong with it.

I cannot give Senator Ross specific answers on cars and other matters about which he asked but if he tables a specific question he will get the relevant answers. I agree there should be openness and transparency, although the Senator took a different line from other Senators when he said that competition is sine qua non. Other Senators would not agree that it leads to better insurance or health services per se. If we contrast our system with that in the USA, competition can be seen to be ineffective at times.

The VHI Board has appointed Mr. Oliver Tatton as acting chief executive for an initial period of 12 months, with effect from 1 December, on a consultancy contract. Senator Ross also mentioned that he is not happy with the presentation of the accounts and that the board members are simply listed while their backgrounds are not revealed. He is unhappy with the lack of transparency in the workings of VHI. VHI has done a good job. Its running costs are around 6 per cent, a figure which contrasts well with that of any group in the State.

Senator Henry is unhappy about some of the patient facilities. She mentioned that there is no great difference in the waiting times for private and public patients in certain areas. That is often apparent when a patient seeks an appointment but, on the whole, private patients are on the fast track, as Senator Gallagher said.

The Minister is examining the situation regarding waiting lists, not on an ad hoc basis; he is looking at this on an ongoing basis for the first time. If the problem is tackled in a particular fashion over a number of years it should be possible to deal with it but everyone must work together in the system. Money must be invested in a strategic fashion and I have no doubt that we can make improvements, particularly with the economy growing in a manner which allows us to invest more money in this area. I hope the budget will prove me right and that we will start an initiative which will see waiting lists cut.

Waiting time is more important than waiting lists because many people can be on waiting lists for elective procedures which are not urgent. That is the problem. Some people used to think that hospitals with large numbers on the waiting lists would get more money from the Government, but that day is gone. We will be looking strategically at the waiting lists and we will make progress on that.

Senator Henry mentioned Northern Ireland. At present VHI deals with two hospitals in the North, but this will have to be looked at in the White Paper. With the development of North-South bodies, much more will be heard about that and I am sure the White Paper will deal with it.

Senator Gallagher asked why the Bill is so limited in scope. The provisions of the Bill represent a full response to a specific request made to the Minister, Deputy Cowen, by the board about what is regarded as an existing significant disadvantage in the conduct of business. That is what we are dealing with today.

Senator Farrell compared what is happening in the health service now to the situation in 1957, when the local county councils dealt with health and there were no waiting lists. Senator Ryan answered his queries about that. He highlighted certain issues which are worth looking at — the overuse of drugs and placing more emphasis on prevention. He disagreed with Senator Ross about politicians being on boards and gave good examples to demonstrate the reason. He is unhappy about the drugs bill and pointed out that we should place emphasis on prevention. Senator Ryan's point about smoking was related to this. Where we can effect prevention we will do so. As Senator Gallagher said, there is a place for VHI in the preventative aspect of health rather than dealing with sickness alone, as it does at present.

Senator Gallagher asked for a White Paper on the health services in general. That is a good idea. The time has come for us to take an overall look at our health services because we are a changed society. The fast tracking system must be looked at. We should strive for the public and private patient to have the same access to health services. It will not be easy but that is what we should aspire to. If we get the waiting lists correct that will ensue. We must remember that people who pay for their health respect it in many ways. Cross-subsidisation should also be looked at and I agree with many of the Senator's comments on that. Patient management, from the consultants' and the GPs' points of view, should be examined. There must also be follow up of patient care.

I agree with the Senator regarding the tobacco issue. The average person spends £800 on VHI payments. I believe this is money well spent because the VHI provides a good service.

Transparency and accountability is nothing new and should be the policy of all semi-State bodies. Senator Fitzpatrick suggested a debate on semi-State bodies and how they operate in the modern context. This might also satisfy Senator Ross.

Mr. Ryan

One car for ten employees?

Dr. Moffatt

I am not aware of the precise number and whether this relates to benefit in kind. I will make inquiries in this regard. Senator Ross raised this matter and said he did not get a clear answer. I am sure there is good reason for providing a few cars. The Senator said that he is aware of a case where 1,000 people are employed and there is no car available. I am glad the Senator acknowledges that the VHI has been successful. The ideology of competition to which he referred does not always lead to the best services and structures.

The debate today has resulted in a valuable overview of the health service. I thank Senators for their contributions. I will bring the salient points raised regarding the improvement of the service to the attention of the Minister for Health and Children, Deputy Cowen. I hope this will lead to more clarity on some of the issues raised.

Question put and agreed to.

Committee Stage ordered for Tuesday 8 December 1998.

Sitting suspended at 1.5 p.m. and resumed at 2 p.m.