Health Insurance (Amendment) Bill 2012: Second Stage

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

I welcome the Minister for Health, Deputy James Reilly.

I am pleased to address the House on Second Stage of the Health Insurance (Amendment) Bill 2012. As Senators will be aware, the Bill passed through all Stages in the Dáil recently.

As Minister for Health, my objective is to reform the current health system and deliver a single-tier health service in which access to health care is based on need and not on ability to pay.

The programme for Government sets out the high-level principles for the introduction of universal health insurance, UHI, in Ireland, a system of compulsory insurance in which every individual will have a choice of health insurer and will have equal access to a comprehensive range of services. The Government is committed to the delivery of a single-tier health system, supported by universal health insurance. The system will be based on a multi-payer model and will be underpinned by the principles of social solidarity with access based on need, not on ability to pay, as I noted.

The introduction of UHI is a complex and major undertaking that requires careful planning and sequencing over a number of years. In order to assist the Department in this regard, I established an implementation group on universal health insurance. The group was established in February and met on six occasions over the course of 2012. Its role is to assist in developing detailed and costed implementation proposals for universal health insurance and in driving the implementation of various elements of the reform programme. The group will also support the Department of Health in preparing a White Paper on universal health insurance. The White Paper will outline details of the UHI model in addition to the estimated costs and financing mechanisms associated with the introduction of universal health insurance. Preparation of the White Paper is a complex process. It will involve significant financial modelling to support analysis of different design options and to help estimate the cost of UHI. As a precursor to the White Paper, the Department will produce a preliminary document, which will outline progress to date and scope out the major issues which stand to be addressed on the path to UHI.

The main object of the Health Insurance (Amendment) Bill 2012 is to provide for a robust system of risk equalisation. Its purpose is to ensure that the burden of the costs of health services are shared by all insured persons by providing for a cost subsidy between the healthy and the less healthy, as well as between the young and the old. The maintenance of a healthy and functioning private health insurance market is an essential step to facilitate the transition to a market-based universal health insurance system and the risk equalisation scheme provided in the Bill before the House today is a crucial element towards achieving this.

Before outlining further detail on the specific provisions of the Bill, it may be useful to reiterate some of the key principles underpinning the operation of the health insurance market, particularly the principles of the young supporting the old and the healthy supporting the less healthy. Community rating is a fundamental cornerstone of the Irish health insurance market. It means that the price of health insurance for all persons should reflect the principle of intergenerational solidarity, that is, that the entire community of privately insured persons should contribute towards the higher costs of claims for older people and less healthy people. Under community rating, everyone is charged the same premium for a particular health insurance plan, irrespective of age, gender and the current or likely future state of his or her health. The only exceptions to this rule relate to children of less than 18 years of age and students in full-time education. Community rating, therefore, means that the level of risk that a particular consumer poses to an insurer does not directly affect the premium paid. Other important principles in health insurance which apply are that health insurers must accept all applicants for health insurance, all consumers are guaranteed the right to renew their policies, regardless of their age or health status, and insurers must provide a minimum benefit level prescribed by legislation.

The pricing of risk across the community of insured persons clearly requires robust mechanisms to share costs when there are several insurance companies in the market. The standard transfer mechanism to support community rating is called risk equalisation. The aim of risk equalisation is to look at the market as a whole and distribute fairly some of the differences that arise in insurers' costs due to the differing health conditions of all their customers. Community-rated health insurance systems across the world use this as a means of providing the necessary support for the market. Members will note that the Bill limits participation in this risk equalisation scheme to those insurers operating in the open market. Several other undertakings exist that mainly provide health insurance for certain vocational groups and their families and restrict membership to those groups. As they do not operate in the open market and do not compete for the business of all customers, it would not be appropriate for them to participate in this scheme.

To better understand the requirement to provide for a transfer mechanism such as risk equalisation in the private health insurance market, it may be useful to provide some information on the current market position. The total premium income for the three insurers in the market in 2011 was €1.92 billion, an increase of €360 million or 23% more than the 2008 figure of €1.56 billion. As of the end of September 2012, approximately 2.1 million people or 46% of the population, held inpatient plans. In terms of market share, VHI has 57%, Laya Healthcare has 21.5%, Aviva Health has 17.3%, restricted membership undertakings have 4% and GloHealth, the most recent arrival, has 0.4%. Laya Healthcare and Aviva Health combined have a 48% market share in the 30 to 39 year age group but only 11% of those aged over 80 years. At the same time, VHI Healthcare continues to have a much greater proportion of members in the older age groups. In the first six months of 2012, it had six times the proportion of members in the over 80 year age group compared with Laya Healthcare and five times the proportion compared with Aviva Health.

It can be seen that there is a clear disparity in the membership profile and thus the associated costs being incurred across the various commercial insurers. A consequence of this is that insurers with the worst risk profiles either have to charge higher premiums or incur heavy losses. Therefore, the risk equalisation scheme is designed to compensate insurers which have older, less healthy customers and as a result, higher claims costs, compared with insurers which have younger, less costly customers. It does so by a system of credits, based on age, gender and the level of cover held by persons. The scheme is funded by a stamp duty payable by health insurers in respect of each health insurance policy written. Ultimately, the Bill seeks to strengthen and maintain stability in the private health insurance market. It is important to note that levels of compensation are set at a level so as not to encourage inefficiencies. Insurers should then compete for market share by providing better services rather than competing for younger healthier lives.

Without a robust risk equalisation scheme, there are potentially serious consequences for the stability of the market and the sustainability of registered undertakings. In designing the future UHI model, there also is a need to ensure it meets the needs of Irish citizens and achieves the best outcomes for patients in a manner that is cost-efficient and financially sustainable. An important additional challenge now, therefore, is to implement and oversee the necessary arrangements that will deliver increased efficiencies in the current private health insurance market in advance of the introduction of UHI. I continue to focus on a number of key areas in this regard. I have raised consistently the issue of costs with health insurers at a number of levels and am keen to explore all available measures to reduce the costs related to health insurance. My Department continues to focus on the need for VHI to address its costs, both in terms of the underlying cost of procedures and treatments for which it pays and in terms of volume. VHI has also been strongly focused on this aspect of its business. An external review of its claims costs is nearing completion and I look forward to its implementation. VHI reported recently that its cost containment programme has saved €200 million since 2009 by applying various cost containment measures including the reduction of consultants' fees by 15%, the reduction of the prices its pays for various procedures by between 13% and 53% and the introduction of a revised payment system for radiologists and pathologists. VHI is also focused on claims recovery through the work of its special investigation unit, which resulted in savings of approximately €7 million during 2011.

I am mindful that health insurance is becoming harder to afford, especially for older people, as insurers increasingly tailor their insurance plans towards younger, healthier customers. In order to address this issue in particular, I established a consultative forum on health insurance to bring forward ideas for achieving cost savings and for reducing the cost of health insurance overall. The forum was set up originally with a view to generating ideas to help address health insurance costs. Its core focus has been on identifying ways of addressing costs throughout the industry, while always respecting the requirements of competition law. The forum also has provided a vehicle for engagement and consideration of issues relating to the introduction and implementation of the Bill.

Current practices concerning payments for procedures carried out also need be examined, to identify improvements and efficiencies that can be made, in particular the practice of paying by the day rather than paying by procedure. Improved clinical audit of insurers will also be introduced, whereby a like-qualified clinician or surgeon may challenge the providing surgeon on why various procedures which may not be deemed necessary were carried out. Improved audit, in ensuring procedures claimed for were carried out, is also being considered. It is being more than considered; it is being actively pursued. Practices which are being introduced in public hospitals, whereby the focus is moving towards same-day admission and reduced re-admission rates, must be introduced in private hospitals. VHI has engaged with the clinical programmes in this regard. Not all innovation takes place in the private sector; much of it takes place in the public sector and it then transfers back to the private sector.

In summary, the Government remains committed to keeping down both the cost of health insurance in order that it is affordable for as many people as possible and the general cost of health care delivery, as part of measures to ensure the sustainability of the private health insurance market in the transition to a UHI system. An additional consideration regarding the cost of health care delivery concerns the charging for public bed occupancy. Under the current legal framework, private inpatients who occupy public beds in public hospitals are not levied the daily maintenance charge which ranges from €586 to €1,046 in most public hospitals. The Comptroller and Auditor General reported in 2010 that 45% of inpatients treated privately by consultants were not charged maintenance costs because they were not occupying designated private beds in public hospitals. I have previously announced my intention to bring forward legislation to provide for the charging of all private patients in public hospitals, irrespective of whether they occupied a public or private bed.

As part of budget 2013, I announced further detail on legislation to provide for the charging of all private patients in public hospitals. Primary legislation will be introduced during 2013 to provide for charging of private inpatients in public hospitals where they are not in a designated private bed. On that basis, budget 2013 has provided for additional patient income of €60 million in 2013. The implementation date will be announced during 2013 when the new legislation is in place. In the meantime, the maintenance charges for private inpatients in public hospitals remain unchanged. An additional €5 million in patient revenue during 2013 arises from increasing the daily inpatient charge by €5 from €75 to €80. The date of implementation will also be announced later in 2013. Those measures are designed to recoup some of the cost of treating private patients in public hospitals and to generate much needed income for the public hospital system.

I wish to return to the Health Insurance (Amendment) Bill 2012 and broadly outline some of its main provisions. The key measures in the Bill comprise, first, the provision of risk equalisation credits, payable from a new risk equalisation fund and administered by the Health Insurance Authority in respect of private health insurance premiums by insured persons aged 50 years and over, based on age, gender and type of insurance cover and each hospital stay involving an overnight stay in a hospital bed in private hospital accommodation. Second, the payments from the fund will be made by a stamp duty payable by open market insurers in respect of each insured life covered. The stamp duty will be collected by the Revenue Commissioners and transferred to the risk equalisation fund. There will be four rates of stamp duty, depending on whether the policy provides for advanced cover or non-advanced cover and whether the insured life is a child or an adult.

The scheme will take effect from 1 January 2013. The legislation provides for a range of credits to be payable to insurers on behalf of insured persons. In the case of policies taken out or renewed between 1 January and 30 March 2013, inclusive, the applicable rate is set at the same level as applied in 2012. That is intended to allow insurers time to plan and to "trade-in" to the new rates which will come into effect on 31 March 2013. The credits will depend on the age, gender and level of cover held by the customers of each insurer. There will be an additional hospital bed utilisation credit, HBUC, payable to insurers in respect of customers who stay overnight in designated private or semi-private accommodation in a hospital.

I recently announced the revised rates for 2013 which will, from 31 March onwards, increase the support levels in respect of older and less healthy customers, in order that health insurance will be made more affordable for them. Without this support, health insurers have a strong financial incentive to "segment" the market by offering policies targeted at younger, healthier people. The credit is provided at source, that is, the cost of the policy is reduced by the amount of the risk equalisation credit. The credit is in addition to the standard rate income tax credit on all health insurance policies. The measures are designed to result in no overall increase in premiums paid in the market and to spread the risk more evenly between the healthy and the less healthy, as well as the old and the young.

It is important to note that the scheme is designed to be Exchequer-neutral, in that the level of credits is covered by the stamp duty payable. It involves the distribution of the stamp duty collected from insurers in respect of healthier customers, back to insurers in respect of less healthy customers, in the form of age, gender and hospital bed utilisation credits. It is not intended to increase the overall costs in the market. The Minister for Finance has proposed that the current payment structure will be modified from a once annual payment in September to quarterly payments, as follows: levy for policies from 1 January to 30 March payable on 21 May; levy for policies from 31 March to 30 June payable on 21 August; levy for policies from 1 July to 30 September payable on 21 November; and levy for policies from 1 October to 31 December payable on 21 February 2014. The necessary changes to stamp duties legislation will be made by the Minister for Finance by way of the Finance Bill.

I wish to outline the specific provisions contained in the Bill. Section 1 defines the principal Act as the Health Insurance Act 1994. Section 2 amends section 1A of the principal Act. This amendment, first, broadens the scope for sharing the burden of the costs of health services between insured persons by extending the cost subsidy - currently between the young and the old - to include the more healthy and the less healthy. The more healthy are less frequent users of health services and the less healthy are more frequent users of health services. Second, the amendment adds a further criterion to be taken into account for the purpose of achieving the principal objective of the Health Insurance Acts, namely, the importance of discouraging registered undertakings from engaging in practices such as market segmentation which have the effect of favouring the coverage of the more healthy, including the young over the coverage of the less healthy, including the old.

Section 3 amends section 2 of the principal Act by defining certain words used in the Bill and inserting them into section 2 of the Act. The definition of "net premium" is amended in respect of health insurance contracts effected on or after 31 March 2013 so as to take account of the part, if any, of the premium to be paid from the risk equalisation fund in respect of age, sex and type of insurance cover. A definition of an "authorised officer" was included on Committee Stage in the Dáil.

Section 4 amends section 3 of the principal Act. This amendment provides powers for the Health Insurance Authority to make regulations to categorise products. As the new scheme, including rates for risk equalisation credits and stamp duty levies, are strengthened in future by being set in primary legislation, paragraphs (b) and (c) are no longer required. Therefore, the Bill removes the requirement for regulations to be approved in advance by the Houses of the Oireachtas.

Section 5 substitutes section 4 of the principal Act to provide for offences. It provides for conviction of persons and organisations who contravene the provisions of the Act.

Section 6 substitutes a new section for section 6A of the principal Act. It provides definitions and key terms relating to interpretation of Part II of the Bill and Schedules 3 and 4. Key definitions include "hospital bed utilisation credit", "relevant contract (advanced cover)", "relevant contract (non-advanced cover)", "risk equalisation credits" and "type of cover".

Section 7 amends section 7 of the principal Act. In subsection (1)(a) the amendment extends the period of time an insurer must maintain the price of a health insurance contract to 60 days from 31 days.

Section 8 amends section 7A of the principal Act. This is a technical amendment arising from the repeal of section 12 of the principal Act dealt with at section 20 of this Bill.

Section 9 provides for the submission of new and "changed existing" health insurance contracts to the authority. Clearly, my priority is the implementation of a robust risk equalisation scheme, RES, while minimising the impact on insurers' ability to carry on their business. My Department had very useful discussions with the private health insurers through the consultative forum. As a result of the discussions, I amended a number of the proposed restrictions on product notifications. These relate, first, to the impact of the product notification periods specified in section 7AB now reduced to 30 days for new and changed products, where the product classification does not change. Where a change to an existing product alters its product classification, such changes will take effect from 31 March 2013 and 1 January each year thereafter.

Second, the definition of products "not providing advanced cover" now provides for an objective delineation of the product categorisation, which in turn allows the Health Insurance Authority, HIA, to categorise products in a more timely manner than previously envisaged.

Section 10 amends section 7AC of the principal Act. This is a technical amendment to the Act.

Section 11 amends section 7C of the principal Act. This is a consequential technical amendment arising from new section 11C and relates to the gathering of certain information by insurers in respect of insured persons.

Section 12 amends section 7D of the principal Act. This amendment expands the breakdown of information returns which registered undertakings are required to submit to the Health Insurance Authority to include the gender profile and type of cover of each age group in respect of the relevant period.

Section 13 amends section 7E of the principal Act. The current legislation already provides for the evaluation and analysis of data provided by registered undertakings. This amendment provides for additions to the factors to which the authority must have regard in carrying out its evaluation and analysis of information returns.

In recommending the level of credits, the Health Insurance Authority will analyse information returns from insurers which will include historical data relating to numbers of lives insured by age and gender categories, hospital utilisation data and relevant claims data. The information will be provided by more detailed data available, including at product level. Having determined its recommended level of credits, the authority will also recommend a level of stamp duty which it believes is required for the scheme to be self-financing.

In setting the rates for risk equalisation credits I will also have regard to the principal objective. I will consider any reports furnished to me as well as: the aims of avoiding overcompensation of registered undertakings or former undertakings; maintaining the sustainability of the market; having fair and open competition in the health insurance market; and avoiding the fund having a surplus or deficit from year to year based on approved accounting standards.

The risk equalisation credits payable in respect of age, gender and level of cover are set out in Schedule 4. Table 1 provides the rates from 1 January 2013 to 30 March 2013 and Table 2 sets out the applicable rates from 31 March onwards. In setting these rates, following consultation with the Minister for Finance, I was conscious of the need to maintain the stability of the market while continuing to protect community rating and enhancing the risk equalisation measures. Having consulted the Minister for Finance, I will also make recommendations to the Minister on the applicable stamp duty rates required to support the risk equalisation credits.

Section 14 amends section 7F of the principal Act. These amendments refer to two linked elements of the risk equalisation scheme, namely, the calculation of risk equalisation credits and the carrying out of an over-compensation test to ensure no insurer is over-compensated under the scheme. Each year the Health Insurance Authority will conduct an assessment of the profitability of any insurer which has been a net beneficiary of the scheme, with a view to determining whether the insurer has been over-compensated.

Section 15 inserts new sections 11A to 11G after section 11 of the principal Act. Provisions for a risk equalisation scheme are set out, including to whom the scheme will apply, how it will operate and how an insurer can make a claim for risk equalisation credits. This section also gives the Health Insurance Authority powers to establish and operate the risk equalisation fund and make regulations specifying which products it is satisfied provides non-advanced cover and the form in which an application is to be made by insurers under the scheme. The section also provides that a hospital bed utilisation credit will be payable from the risk equalisation fund in respect cf each overnight stay in a hospital bed in private hospital accommodation on or after 31 March 2013 incurred by an insured person where the health insurance cover of his or her contract effected on or after 31 March 2013 covers the hospital overnight stay in question. The rate is set out in Schedule 3 and is set at €75 so as not to encourage inefficiencies in any way.

One criticism of the current interim scheme has been that younger people taking out products with benefits below the standard level were potentially cross-subsidising standard level benefits taken out by older people. The provision for differentiated levels of stamp duty and risk equalisation credits for the two types of cover - advanced and non-advanced cover - addresses this point. The Health Insurance Authority will be required to evaluate and analyse each type of contract and ascertain to its satisfaction whether a contract provides for advanced or non-advanced cover.

The lower risk equalisation credits and the stamp duty rate will apply to contracts with non-advanced cover. Insurance operators have been consulted on the Bill and I amended the definition of "contracts not providing advanced cover" on Committee Stage in the Dáil. This section also provides that the Minister will make regulations relating to the making and determining of claims under the scheme. These regulations are being drafted and will be in place shortly.

Section 16 amends section 17 of the principal Act. This is a technical amendment to subsection (4) following the repeal of section 12 of the principal Act at section 20.

Section 17 amends the principal Act by inserting new sections 18E, F and G to provide for the appointment of and powers of authorised officers of the Health Insurance Authority. It also allows such officers to secure the enforcement of the provisions of the Act. In addition, it provides for dealing with privileged legal material.

Section 18 amends section 21 of the principal Act. This amendment expands the functions of the Health Insurance Authority by requiring it to manage and administer the risk equalisation scheme. Section 19 amends section 32 of the principal Act and is a technical amendment. Section 20 repeals sections 12, 12A and 33A of the principal Act which refer to the risk equalisation scheme 2003.

Section 21 substitutes a new Schedule for Schedule 2 of the principal Act. The purpose of the framework is to spell out the conditions under which state aid can be found compatible with the Common Market pursuant to Article 86(2) of the EC treaty. An updated Schedule replaces the existing Framework 2005/C 297/04. The revised framework is entitled, Communication from the Commission - European Union Framework for State Aid in the form of a Public Service Compensation 2012/C8/03.

Section 22 provides the Title, collective citation and construction of the Bill. The Bill is critical to ensuring we continue with community rating, which benefits society as a whole. It is underpinned by the principle that the young subsidise the old and the healthy subsidise the less healthy. I commend it to the House.

I welcome the Minister to the House and I am pleased to have an opportunity to make a few points. The Fianna Fáil Party supports the Bill, albeit with some reservations. We support the principles of risk equalisation, having commenced the process in which the Minister is engaged in 2010, and community solidarity, under which those who have the misfortune of being unwell are supported by those who are well and the young support older people. Those of us who are young and healthy do not have any difficulty giving a little more to ensure that we will have the benefit of being looked after when we reach a certain age or become ill.

As the Minister will be aware, the Fianna Fáil Party, while in government with the Progressive Democrats, decided on a comprehensive set of actions to support older and sick people. We firmly support the position that the principle of solidarity should apply in private and public health insurance. The former has played an important role in funding and organising health care for the past 50 or 60 years. In 2010, for example, the private health insurance sector was responsible for health care claims totalling €1.7 billion.

The Fianna Fáil Party is gravely concerned about the number of people leaving the health insurance market and the spiralling cost of health insurance cover. VHI, Laya Healthcare, Aviva Health and GloHealth are lining up increases in premiums of between 10% and 15% from the start of next year. This will bring the average plan for a family with two children to €2,300, an increase of €300. Families with three children, which include my family, face a significantly greater increase in premiums. The latest hike follows increases in VHI premiums of 23% in January 2009, 8% in February 2010, between 15% and 45% in February 2011, 2% in November 2011 and between 6% and 12.5% seven months ago.

The rises are to cover an increase in health care claims, spiralling health inflation, the cost of new drugs and procedures and the expected rise in the cost of the levy on private health care of up to €200 per family. I am also concerned that we are not carrying out any analysis of people presenting in hospitals who had health insurance. Such an analysis would be of use to us. One expert is quoted as saying that the average family can expect rises in premiums of between 10% and 15% but it could be higher. We may be lucky to get away with 15%. All this means that the costs of health insurance have doubled over the past four years at a time when general inflation has been very low. Everyone will be aware that we even had deflation for a time.

People are either giving up or downgrading their coverage. I did an analysis of it for my family and would advise others to the same. It is getting to the stage where if there is one income in the house and a number of children, it is not affordable even for people on what would be considered generous salaries. People are deciding that they can do without health insurance and are taking the risk of not having any cover. This is very concerning and we need to do more about it. I accept that the Minister said in his speech that a number of measures are being taken but the pace at which these things are happening is not quick enough. I ask the Minister to continue to explore ways to hasten the reforms he proposes to implement in this area.

The Minister spoke about the universal health insurance model and the White Paper as envisaged in the programme for Government. Is there any indication when that might appear? The Minister said there are many complexities and an analysis of financial modelling that must be taken into account but it all sounds a bit on the never never. We all want solidarity, universal health insurance and a one-tier system and we want them yesterday, as the Minister will recall from his robust commentary on these issues while in opposition. The Minister should state whatever it is that he, the Department or the support network do not have to help bring this forward as quickly as possible. He should tell us what he needs to get over the line more quickly with regard to some of these issues and let us see as a nation whether it is possible to provide him with them.

The health insurance companies have a vested interest but they made a number of points with regard to this legislation. I am sure the Minister will have taken some of them into account. VHI believes it is good news for community rating but feels that the most important element in the Bill is the level at which stamp duty paid in respect of health insurance contracts effected to provide health insurance cover would be applied. GloHealth is worried in that it wonders whether the new Bill will add factors that may be taken into account when setting the levy related to health status but that there is no requirement to ensure affordability for all customers in the market. If the ambition as stated in the legislation is to equalise all age and health costs within the market, the inevitable consequence in its view will be higher premiums for all, which is concerning. Laya Healthcare claims that the ability of consumers to avail of new innovative benefits has been squashed by the new Bill as insurers will only be permitted to alter benefits across its most popular range of schemes once a year.

All of the health insurance companies have an issue with the time afforded to them to react to it. Aviva has been expecting this legislation for a few years, is in the market and supports the introduction of risk equalisation. It has a genuine desire to work with the Department of Health and Children on the issue but it needs see more of a constant and timely dialogue. I am sure the Minister might be able to take those issues on board. Insurers do have a vested interested but they make some worthwhile points.

We will support the Bill but I have a concern in respect of attracting younger people. We mentioned all the people who have left health insurance schemes earlier. I know that while in opposition, the Minister would have bemoaned the fact that so many people had left the health insurance system. The rate of people leaving has doubled since 2008 and 2009. I think the figure was 76,000 to March 2012. The Minister's view was that overall, this was a modest reduction. Those were the words he used, which are different from those he used while in opposition. It is difficult to identify measures here that will attract younger people into the market. We need young, healthy people to contribute and take part in this system if it is to be successful. We will support the Bill but the Minister might take some of those suggestions on board. As always, I thank him for taking the time to appear in person in the House.

I welcome the Minister to the House and thank him for bringing forward this legislation, which I welcome. We have been dealing with this issue through statutory regulations since 1994. There have been a number of regulations and pieces of legislation dealing with this issue. This is about formalising what now needs to put in place to deal with the matter into the future. It is important to remove any discrimination between younger and older people and between healthy and unhealthy people. The Bill does this in respect of health insurance and ensures there can be no discrimination because of age, sex or health status.

The Bill broadens the scope for sharing the costs of health insurance not only in respect of age but between the healthy and unhealthy. It also prevents insurers from engaging in market segmentation. This involves going after the area where there is less risk of claim. The Minister referred earlier to the proposal on universal health insurance. It is important for us to put the proper plans in place before that is fully introduced. The Bill is one of a number of further steps in this area. It is important that there is careful planning in respect of universal health care by the Department and the entire health care sector from those in general practice to public and private hospitals and their staff.

The delay in hospitals recovering moneys from health insurers is an important issue. A complaint raised recently with me related to people admitted to hospital who, while under the overall supervision of a consultant, would not have been seen by him or her because the required procedure was minor and dealt with by a senior or specialist registrar. The problem is that the claim being sent to the insurance company cannot be submitted by the hospital unless it is signed by the consultant even though he or she may never have seen the patient. Could this issue be looked at? Why is there a requirement for the consultant to sign a health claim form when he or she has not seen the patient? It is not that the consultant is avoiding seeing the patient, rather it is that the patient was adequately looked after by the senior or specialist registrar.

My complaint is that consultants are now being required to complete a huge amount of documentation unnecessarily and it is consuming a huge amount of time. The reason I raise this is with regard to the legislation that is planned regarding charging for public beds occupied by private patients. In that case will the consultants also have to sign the forms before the claims go forward? Can a procedure be put in place whereby the paperwork can be dealt with administratively, because much of it is administrative rather than medical? This issue is causing a great deal of concern, especially in smaller units across the country. In the bigger units, if people are on a one-in-five roster or a one-in-six roster, they have more time to deal with administrative issues, but if they are on a one-in-two roster, which is still in place in certain areas of medicine, or a one-in-three roster, they do not have the same amount of time to deal with what is purely administrative work. Perhaps that could be examined, because this issue will arise with the introduction of legislation providing for charges for private patients in public beds.

The Minister gave a comprehensive overview of each section of the legislation in his presentation. This is important legislation. As the deadline for the old procedure expires on 31 December next, it is important that this legislation be passed and in place for 1 January 2013 in order that proper procedures are followed by the health insurance providers and to ensure there is a balanced approach in the charges imposed on people who spend money on private health insurance. An issue we must examine in the long term is how we can ensure that the number who opt out of taking out health insurance is reduced. We must ensure that people continue, if possible, to remain in private health care. That is necessary to make sure there is adequate funding available from the point of view of both the insurance companies and also the health care providers. That is extremely important.

I welcome the Bill and look forward to working with the Minister on the other planned legislation that is due to be introduced in 2013.

As always, I welcome the Minister. As Senator MacSharry said, he is most assiduous in coming to the Seanad. I support the Minister's goals of abolishing the HSE - in fact, we tried to do it at a quicker pace when the Minister was last in the House - and establishing universal health insurance. However, I have serious misgivings about the Bill.

The Bill is based on a couple of fallacies. One of them, which we could debate and on which there is academic literature, is whether ageing is a major cause of increases in health expenditure. There is academic literature from both Oxford and Chicago to which I will refer on Committee Stage. The second and more serious fallacy is the way the Department, repeatedly and under several Ministers, scapegoats the competing insurance companies for the problems of VHI. The give-away line in the Minister's speech was when he referred to the need to stabilise the market. Competition does not stabilise the market. It is the dynamic of it. I am disappointed that the former Minister, Mary Harney, and other Ministers have fallen for the departmental line, which is to protect its in-house insurance company, VHI, from competition at all times.

I must strongly point out to the Minister that the competing companies never refused to recruit anybody on the grounds that they were old or sick or for any other reason. The Department failed to produce a single witness in all the court cases it has fought over this. Despite the accusations made, there are no victims and no witnesses. The Department concocted this model. In its view the only reason anybody left VHI was that the other companies cheated by not recruiting old people. It never addressed the alternatives.

Let us suppose that was the problem. How else could the Department have addressed it? It could have decided to close new membership of VHI to old and sick people, because VHI had its quota, and transferred them to these alleged cheating companies which had newly entered the market. It could have imposed a requirement that the new companies should recruit a proportion of their membership from the designated target groups. It could have devised measures to inform the old and sick customers that, as was shown in one of the reports at one time, there were savings of approximately one third. Why did it not tell the old people to move to the new companies where they would save one third of their money? It was because it was too busy protecting VHI.

That has always been the Department's goal, and the manner in which it has conducted itself is shameful. That is why it lost in the Supreme Court and in the European Court. It is why the Milliman report referred to the inefficiencies in VHI, its obsession with the age of its customers and its refusal to look at its own efficiency. The Minister referred to belated attempts in this regard, but we have been trying to do this since 1994. At every step the Government has intervened to protect its insurance company. That is shameful. It is a bad way for Ireland to represent itself abroad in respect of foreign investment. It is saying: "You can come to this country but do not compete with the State company because we will rig the rules, even if there is no validity for those rules." I am convinced there is none. The Minister has not shown us what private health insurance companies other than VHI refuse to recruit old and sick people. There are no witnesses. That is the basic fallacy underlining this Bill. If there was an ombudsman to deal with cases where health insurance companies denied cover, that ombudsman would have nothing to do because the Department has failed to produce a single case.

The Minister is increasing the powers of the Department. Given its losses in courts both here and in Europe and given what Milliman found in his report on the operation of VHI, the Department lacks all credibility on this issue. The Minister wishes to extend the powers of the Health Insurance Authority. It also lacks credibility on this issue. We never let the market work so we do not know what market failure is. Talking about stabilising the market is really about protecting VHI. There are substantial savings available, as the Milliman report shows. I will table amendments based on this. The report shows VHI to be an organisation that is obsessed with the age of its customers but not operating remotely near minimum cost.

The Bill is anti-consumer. If it is passed and we have compulsory health insurance, everybody will be subsidising VHI. At present, it is just those who left VHI and saved money, as I did, who subsidise VHI, but the entire population will be corralled into doing it. The McCarthy report reviewing State companies was published in April last year. It stated: "The VHI was excluded from the Review Group's terms of reference because the Government had already initiated a separate process that addresses both the sale of the VHI and the wider complexities involved in the private health insurance market". What has happened since? We were told by the European court in October last year to transfer the Health Insurance Authority to the Financial Regulator, but we have not done that. There is a €300 million gap in VHI's finances, as was reported in The Sunday Times two weeks ago, which has not been provided for in the Estimates for this year. Is this the back door method of trying to keep VHI going?

As the review group stated in 2007, VHI enjoys an implicit subsidy through its sponsorship by the State, that is, its protection by the Department, as compared with competitors who must set aside financial resources from the equity provided by investors. The value of this subsidy might reasonably be quantified at €25 million to €45 million per annum. We must stop protecting this company. I support the Minister's desire to bring it up to date. For example, the average length of stay for one treatment is 11.6 days whereas the best international practice has been cited as 3.7 days. Monopolies are bad and this one is defended relentlessly and ruthlessly in courts in Ireland and abroad with tame consultants used to support it. VHI does not stand up to the test. I am afraid that we will adopt the wrong kind of compulsory health insurance because of the protectionism repeatedly shown by the Department of Health towards its in-house health insurance company since 1994. It is invidious that the owner of an insurance company also regulates the market. It is impossible and will not work in the Bill.

I welcome the Minister to the House. I do not like the idea of private health insurance. It has given rise to the two-tier system. I was going to say "that we enjoy in this country", but we do not enjoy it at all. If we traced the evolution of the health insurance market in Ireland, we would see that it closely paralleled the rise of inequalities in our system. I have private health insurance. I might be called inconsistent, but I would fear for my life and the lives of my family members if I did not have it.

A serious argument can be made that the standards of care for private and public patients in public hospitals are not the same. Some claim that the value of having private health insurance is access to the system as opposed to the quality of care received therein.

I will draw the Minister's attention to a Medical Council hearing during the summer at which the person appearing before it, a surgeon, was subsequently adjudged to have been guilty of poor professional practice. He stated that, had he realised that the patient he was treating was a private patient, he would have treated the patient himself. It went unremarked by the Medical Council and the media at the time, but the possibility that this was the prevailing attitude in the system was drawn to my attention when the Bill appeared before us in recent days.

Recently I spoke to a woman whose young son needed to attend a private hospital for two nights and was charged €15,000 for accommodation. One would get a two-month holiday to Hawaii for a full family for that type of money. Anecdotally, it seems to be standard practice that private health insurers do not challenge the costs presented to them by the hospitals. Nor do the people paying the premia challenge them out of fear that they might lose their cover.

I must confine my comments to the Bill. In so far as we are pragmatists and it is politically expedient to support private health insurance, we will do just that. In providing a statutory basis for the health insurance market, we are protecting a core principle of the system. While that system is flawed, it is the one we have and insurers charge the same premia irrespective of people's ages and health status. According to Senator Barrett, there is literature to the effect that age is not an increasing risk. Intuitively, one would believe that to be wrong.

I do not want to keep prefacing everything I say when speaking in favour of this model, as it has served us well in terms of the intergenerational solidarity that this country enjoys, but I must point out that we are only referring to the sector of society that can afford private health insurance. Younger and healthier people generally use the health insurance system less than older people do. This is due to accumulating risks as people grow older. Everyone understands that younger people will benefit as they grow older and accumulate their own health risks. This is the basis of community rating and, in so far as it goes, it is equitable and desirable, if "equity" means anything in our society.

In affirming access to health insurance, the Bill is of some importance. The risk equalisation scheme eradicates in a fair manner the differences in health insurance costs that arise due to variations in health status among policyholders, where it is often the case that persons with accumulated health risks are sometimes over-represented in the schemes provided by certain insurers. The Minister stated that VHI still held 57% of the market. That is remarkable. With such a share, I wonder whether the other health insurers benchmark their costs and services against the major provider of health services.

The €1.92 billion in the schemes is an extraordinary sum of money. Do we have up-to-date figures for this or last year for the number of people withdrawing from schemes owing to the economic crisis and what impact that will have on costs for those who remain?

A few years ago one of the main providers withdrew from the Irish market and presented risk equalisation as a problem, notwithstanding the fact that it made plenty of money before it withdrew. Many concerns were loudly expressed, with some commentators stating that it made no economic sense for providers to subsidise competitors' policyholders. We are still hearing that argument in the House today, although it is dressed up in a different language. If we stripped away the veneer, we would see what was really being said. The argument has more to do with an ideology, and many of those making it might not care to recognise or admit that the idea of intergenerational solidarity finds infertile ground among those who would see health and health insurance as a commodity rather than an essential public service. The Bill seeks to ensure intergenerational solidarity, a principle that must be at the core of our consideration in framing this legislation.

Most of the changes proposed in the Bill are technical in nature and I look forward to discerning the Minister's intention in this regard on Committee Stage. Notwithstanding my mention of my dislike of private health insurance, I have a number of questions. How will the role of current health insurers evolve when we start moving towards the introduction of a universal health care scheme? I support that model, as it is has the potential to revolutionise how we deliver health care. The Labour Party proposed it prior to the 2007 election and mentioned it before the 2002 election, albeit in a less evolved manner.

A solid and sound legislative foundation is essential for the introduction of universal health care and the Bill will underpin the system's basis in that regard. I would welcome it if the Minister addressed the points and questions that I raised. Of course, we will support the Bill.

I welcome the Minister. I will broadly support the Bill while taking on board all of the reservations raised by Senator Barrett. The only hopeful way to consider this legislation is to view it strictly as an interim measure until the big bang of major reform into a universal, single-tier insurance-based health care system occurs. I hope it occurs yesterday. The Minister has committed to it being done in the next term of Government, but I again urge him to try to ensure it occurs as quickly as possible. The dysfunctions that are exemplified on a daily basis in our health system will continue until it is fixed.

There will be much opportunity cost for the time, effort and energy to be expended in trying to patch up this badly broken system until we usher in the new system.

If one wanted contemporary evidence of the level of dysfunction, one would open one's ears and eyes, read the newspaper today and listen to the proceedings of the Oireachtas health committee. In the Irish Examiner it was reported that a consultation process has begun between the HSE and HIQA, and what a critical mass of incompetence becomes involved when those organisations get together. It has resulted in a recommendation that doctors should refer fewer patients for surgery and we should effectively triage referrals to those which will have greatest impact. That is in response to the fact that waiting lists are getting out of control and issues of cost.

Among the procedures targeted are tonsillectomy, which has historically been a grossly overused procedure. The Minister knows that in modern medical practice, very few people are referred inappropriately for tonsillectomies, and those who are referred will seldom have the tonsillectomy. There has been a colossal decrease in the use of the procedure. Chillingly, in a country where the incidence of malignant melanoma and the mortality for malignant melanoma has doubled, there is also talk of curtailing people being referred for assessment and removal of skin lesions. In many cases a good GP can be certain that a lesion is not a melanoma and does not need to refer the patient, but in some cases a doctor may not be sure because he or she may not have the expertise to see the kind of subtle lesion that only a plastic surgeon or dermatologist could deal with. I am troubled by this. It would be different if we had a colossal problem in this country with gross overuse of surgical resources but we have the smallest number of surgeons per head of population of any country in the western world. This is not where the problem lies. The issue is that we do not have an appropriate system for matching the expenditure with the required level of activity.

A second contemporary example occurred at this morning's health committee meeting when we discussed the cystic fibrosis unit. As the Minister knows, over 2005 and 2006 forward planning was initiated for the provision of an appropriate cystic fibrosis unit following the recognition that the existing facilities in the national adult centre at St. Vincent's Hospital were inadequate. Based on international guidelines, this should be a 34-bed unit. There is a 20-bed unit, with a promise of 14 additional beds, and we asked for validation today of that promise and that the commitment is being honoured. Neither I nor Senators Zappone and van Turnhout - the instigators of the discussion this morning - were in any sense reassured that we had heard any degree of comfort that the 14 beds would be provided. The distinguished representative of the HSE and the chairman of administration at St. Vincent's Hospital told us there would be further crisis meetings on various evenings next week.

This is prolonging the politics of the last health care atrocity; it is crisis management. The unit has been planned for years and open for five months. The system, as it stands, is not geared to making appropriate forward planning and everything is done on a reactionary basis. The sooner this reform is introduced, the better. We will through gritted teeth support this Bill in order to keep VHI afloat until the big bang occurs.

Members should be aware of what we will sign up to when we get universal health insurance. It will be very different and everybody's relationship with the health system will be fundamentally different from what it is now. Some hospitals will thrive and some will fail. There will be no logic in having national consultant contracts and people will have different kinds of contracts depending on the people for which they work. The system will cost more but it will be much more efficient. It will be of higher quality and it will be fair. We must aim for that and we must get it going as quickly as we can, as until we do we will have repeated health care atrocities, scandals, wasted measures and interim measures in crisis management. I wish the Minister the best and hope he will complete this ambitious reform, which I know he has taken to heart, as quickly as possible.

I welcome the Minister to the House. My party will support the Bill but only because it brings some level of equity to the health care system and retains some equity in the delivery of health care in the State. The Bill continues a necessary system of community rating, which ensures that all consumers are charged the same premium for a particular plan, regardless of age, gender or health status, thus preventing price discrimination against those more likely to require medical treatment. It amends section 1A of the Health Insurance Act 1994 by making the provision for community rating more specific, extending the cost subsidy currently between the young and old to include the more healthy and less healthy. This is necessary and valuable, as equity and solidarity within the health care system are important. However, the necessity illustrates effectively to me and those who use the health care system that there is inequity in the system because of the existence of private health insurance companies. That is one of our problems but the Minister wants to open the future of the health care system to the private health insurance market. We are trying to regulate the system and work against the worst excesses of what happens because we allow our public health system and patients to rely on the private health care system. It is only a sticking plaster solution to the problems we have in the system. Without legislation, the unregulated market would discriminate against the old, the sick and any other group that individual insurance companies decide is at greater risk. The necessity for this legislation is evidence that the Government accepts this issue.

The Bill is part of a long-standing but complex system of risk equalisation to support the community rating principle, which compensates those who carry heavier risk burdens as against those with lighter risk burdens. It provides against a raw profit motive and protects our elderly, unwell people and the vulnerable. That is a positive step. The current position is farcical and we need the safeguards in this legislation to protect against the sharp practice of private insurance firms while at the same time subsidising heavily the private insurance industry. We would hardly have a private insurance industry - if it can be called as much - without State support. That is ironic. We subsidise the private, for-profit health system with private beds in public hospitals and fast track treatment for private patients. Meanwhile, the bottom is falling out of the market, with 60,000 people forced to drop their insurance in the past year. It would be laughable if it was not so serious; we are subsidising the private health care system with the public system, which is itself at breaking point.

Based on the figures from the Government, if we applied the full cost of private beds in public hospitals, it would save €432 million per year, and that money could be spent on dealing with the problems we have in our public system by reducing waiting times and ensuring genuine equity in the system. I want a world class public health care system to be funded through progressive taxation and based on need alone. There should be no charge at the gate when people receive treatment.

The reform strategy of the Fine Gael and Labour Party Government will be based on competing private health insurance companies and will represent the effective privatisation of health services. The strategy has no basis in rights as it contains no commitment that patients will be guaranteed in law by the State to receive basic and essential health care. The Minister is relying on a profit motive and hoping the edges will be softened with regulation. We must wait to see how that works out. I note with interest the concerns that IMPACT has tabled about the future of health care in Ireland and the Minister's plans for the health care system. The union believes this will lead to a more inequitable system and we will not get value for money, quality or universal access to health care.

I am not one of the two-faced politicians or public representatives in this state. I have the courage to say to the Minister's face what many in this room have been saying in the past few weeks. There have been many calls from Senators for the Minister to come before us and explain issues relating to site locations of primary health care centres. Many have said the Minister should resign as Minister for Health, and I am one of them.

I take the opportunity, while the Minister is in the Chamber, to call on him to resign.

That has nothing to do with the Bill.

I do not believe the Minister is fit to run the health service. The policies he has in place will not be good for the patients of the State.

The Senator is not entitled to raise this issue. It is not before the House.

I am talking about the policy of the Government in the context of the Bill. The Minister can speak for himself and will defend his own record. He does not need Senator Colm Burke to defend it.

I raise a point of order. Senator Cullinane is out of order in this regard. He is not respecting the Chair. Perhaps you could make an adjudication, a Chathaoirligh.

That is not for discussion. It is not part of the Bill.

I am sticking to the Bill, with respect. People should be less excited about what I say and give me a chance to finish what I am saying.

The Senator's time is up. What he has raised is not part of the Bill. He should, please. respect the Chair.

I am speaking to the Bill and about the future-----

We saw the disgraceful behaviour of Sinn Féin Members in the other House. I hope they are not about to transfer such behaviour to this House. When the Chair is standing, it is customary and conventional for Members to resume their seats.

The business of this House has nothing to do with the other House. Tá an t-am istigh. An chéad Seanadóir eile, Senator Bradford.

I have not finished my contribution. My time is not up, with respect.

Tá do chuid ama críochnaithe. The Senator has been been speaking for six minutes and 45 seconds, which is a minute and a half over his time.

I welcome the Minister and I am sure he is more than sufficiently robust to deal with the views of Senator Cullinane.

No topic comes up in the Seanad more frequently than the health service. It would be useful for both the Minister and the House, therefore, for him to come to the House early in the new year to discuss a broad range of health issues, when charges can be answered and the Minister can bring forward his own ideas and perspective.

We are speaking about the Health Insurance (Amendment) Bill. I have addressed the issues of risk equalisation and community rating on numerous occasions down the years. I will, of course, support the Bill, but probably with a heavy heart. Risk equalisation, while necessary in the short term, continues the system of health insurance we have had for many years but which is not sufficient to address the needs of the current generation. That is why I welcome the Minister's comments about plans for universal health insurance. A debate on that issue as soon as possible would be useful and worthwhile.

Universal health insurance sounds like good news. As the Minister and other speakers have said, however, some aspects of it will not be simple. They will be complex and very costly. Much of our thinking on universal health insurance is based on the Dutch model. In that country, it appears, the average premium is between €1,400 and €1,500, and increasing. The lesson we can learn from Holland or any country where universal health insurance is in place is that a top quality health service will cost money. There is no cheap option for solving the health crisis, but the quicker the Minister can come forward with proposals and debate them with members of the Oireachtas, the better. We need to move beyond the current chaos in health insurance.

Over a decade ago we saw difficulties with the first leading competitor to VHI, namely, BUPA. The automatic response was to prop up VHI, penalise BUPA and take whatever measures were necessary to save the skin of VHI. VHI has provided a top quality service to hundreds of thousands of people since it was set up by the late Tom O'Higgins when Minister for Health in the 1950s. It should have been more robust in dealing with the competition that arrived when BUPA and other companies came onto the market. The only response we got from VHI was, "Poor old us. We are looking after all the old people. The new firms are looking after all the younger healthier people and we must be protected". We have always responded to the requests of VHI, whether for an increase in premiums, community ratings or risk equalisation. We have always said "Yes" to VHI. It was necessary, politically, to do so but we must try to move on to new arrangements as soon as possible. It is with a heavy heart that I support this concept of risk equalisation, because it is a false concept. In economics, false concepts do not work in the long term. They have never worked anywhere and they do not work in this market either. Risk equalisation may be necessary in the very short term but we must try to move beyond the current system.

We must recognise, with deep concern, the huge numbers of people who can no longer afford private health insurance, putting further pressure on the public health service. The cost of health provision in Ireland is a fundamental question which we have not tackled, or hardly even answered.

I recognise that I have only one minute left, which is why we need a more substantial debate. Time after time, Government after Government and Minister after Minister, requests are made by the health insurance companies for an increase in fees because of the increase in costs. We must do significantly more to deal with costs. The Minister has been in office for only a number of months. He cannot be expected to perform miracles overnight. Nevertheless, the cost of health provision must be to the fore in this debate. No matter what kind of health insurance we have, whether universal or multi-whatever, if a product is expensive a big penalty must be paid by the consumer.

I have drifted somewhat from the Bill, but we need a substantial debate on the health service. We must recognise that there is no magic bullet. Universal health insurance, which we propose to introduce, will not be cheap. We must tackle the cost of health provision. It is something we have ignored for too long.

The Minister is very welcome to the House because he is one of the Ministers who comes on a regular basis and he gives us the opportunity to say what we have to say, even if some of us are very critical.

I welcome the objective of the Bill and what the Minister is trying to achieve. Having listened to Senator Barrett, however, we are going to have to change the system in some way or other. I cannot believe the costs we have in Ireland.

Singapore is a country the same size as Ireland. It has a population of 4.6 million, about the same as Ireland, but it has a health system that costs 3.8% of GDP, compared with ours which costs 8.2% of GDP. The health service in Singapore costs €1,000 per capita. Ours costs €2,800 per capita. Admittedly, Singapore has an 80% private and 20% Government system. What can we do to reduce our costs? We have not taken even the first step in that direction. I spent a night in hospital recently and I am covered by insurance. I could not believe the price the hospital charged the insurance company. There must be some better way of doing it.

Let me touch on the Singapore model. The Singapore Health Minister explained it as follows. Patients are expected to co-pay part of their medical expenses and to pay more when they demand a higher level of service. At the same time, Government subsidies help to keep basic health care affordable. The model works by mixing public and private health care. In the Singapore system the primary role of Government is to require people to save in order to meet medical expenses they do not expect. There are mandatory health saving accounts called medisave. Individuals pre-save for medical expenses through mandatory deductions from their pay cheques and employers' contributions. Approved categories of medical treatment can be paid for by deducting from one's medisave account for oneself, for grandparents, parents, spouses or children, and consultation with private practitioners for minor ailments must be paid for in cash.

There are clearly systems that work in a different way. One journalist wrote in regard to the Singapore system:

The reason the system works so well is that it puts decisions in the hands of patients and doctors rather than government bureaucrats and insurers. A key principle of Singapore's national health scheme is that no medical service is provided free of charge regardless of the level of subsidy even within the public health care system. This mechanism is intended to reduce the overutilisation of health care services.

This is something we experience here. This may be unpopular to say but it is a bugbear of many people that medical card holders use their cards unnecessarily for prescriptions and so on. In addition, many people do not want to take up employment out of fear of losing their medical cards. We need to examine this issue because people need to be disincentivised from abusing the system. If a patient has long-term back pain, why do GPs send them to accident and emergency departments? Is the Minister considering measures in this regard?

Picknpay. a supermarket company in South Africa, provides incentives to encourage staff to stay healthy. Discovery, an insurance company, provides health cover for the staff and they are on reduced premia if they stop smoking or reduce their weight or, for example, can prove they use a gymnasium. Safeway in the US does something similar and it has reduced heath care costs dramatically because staff have been encouraged to stay healthy. We can learn by looking at what is done around the world. We do not have to automatically continue with the system we have. I am particularly impressed by the contributions of Senators Crown and Barrett. I hope the Minister will take account of some of what they said, if not all of what they said. We must change the system. The Minister hopes to introduces universal health insurance by 2016 but that will not happen unless costs in our health care system are tackled.

I welcome the Minister. In view of the restricted budgets, difficulties in the Department and ever increasing population, I refer to the experience in other countries in the field of health economics and the notion of shared decision-making, which could benefit Ireland. It is a potential path to better health outcomes and lower costs. I am calling for trials in this regard in Ireland. Shared decision-making can reduce the demand by as much as 25% across a range of clinical conditions leading to massive savings, fewer complications and more satisfaction. Instead of inflicting indiscriminate cuts on the health system, shared decision-making is a way to work smarter. Patients involved in shared decision-making often choose a less intensive form of treatment leading to better health outcomes and lower costs. In Ireland, there has been much talk about reducing the dependence on hospital care but few practical tools have been given to patients to achieve this. This is an exciting solution and a wealth of international evidence demonstrates positive effects.

Shared decision-making informs patients on the risks and benefits of health care and it empowers individuals towards a more active partnership with their doctors. It is irrelevant when patient preferences should play a role in selecting the treatment strategy. For example, somebody may believe he or she needs a hip operation but when he or she is informed of the various options, that may not be the ideal solution. Other examples are patients with mild, stable heart disease who can choose between the best medical therapy and surgery as well as those who need cataract surgery or treatment for certain back injuries. A wealth of evidence demonstrates the benefits of this option in settings such as Canada, the US and Norway. The UK has invested much policy effort in this innovation. It is vital that Ireland should also examine this. The next step would be to consider how shared decision-making could be implemented on a pilot basis. It could potentially drive down costs while improving the appropriateness of health care and satisfaction. We urgently require trials to measure its effect in Ireland. If used appropriately, this could be an important factor in effectively managing our health budget and maximising the health of our citizens. Will the Minister comment on this? Has its use in other jurisdictions been examined? Has its implementation been considered?

I thank the Senators who contributed. We are discussing a health insurance Bill, not broader health issues. On that basis, I will stick to the issues relevant to the legislation but I take on board what Members have said. I utterly reject some of what was said but that is the nature of debate.

The Bill is intended to strengthen and maintain stability in the private health insurance market. Senator MacSharry wondered about the UHI paper and that will be with us before the end of the month. A White Paper will be published early next year. Senator Colm Burke has asked why consultants have to sign forms when junior doctors have done the work. They should not sign them if they have not done the work.

It is a requirement.

Only if they have done the work themselves.

The hospitals will not send back the forms without the---

The Minister to continue, without interruption, le do thoil.

Consultants who have not seen patients should not sign forms that say they have seen them. That is the law and if that is not the practice, there is a problem and it will be addressed. It is idiotic that consultants have to sign the forms and we will decouple this but, at the same time, we have to do so in a fashion that ensured proper probity around hospital claiming because we cannot have a scenario where a manager claims that a patient was in the hospital and he or she claims for many procedures that have not been verified as having been done but I agree with the Senator that the consultant should have to sign the forms. The current system needs to be changed and we are examining that. In the interim, we have a new mechanism for supporting consultants in making the claims on time in order that the forms are signed off.

I am afraid Senator Barrett has made a number of statements that do not stand up, one of which is that getting older does not impact on illness and claims. Everybody who has done credible work on this will provide evidence to the contrary. It is clear that as the population gets older, there is a higher incidence of cancer and chronic diseases. He has said that people are cheating but I reject that. Nobody is cheating. We are trying to ensure older and less well people are not targeted for higher fees. This is not an ordinary market similar to car insurance. This is health insurance and there is a Government policy in place, which supports community rating whereby those who are well support those who are unwell and those who are younger support those who are older, as previous generations did.

A key question is why there is such a low number of older people in the new insurer's clientele. If this was such a dreadful market and we are all so nasty and mean, how has it been possible to attract a new insurer this year in GloHealth? Of the three new insurers why are so few of their clientele over 65 years of age? The reason is obvious, the other insurers are targeting younger people, by creating products that are not attractive to older people. Now VHI has started to do it. One will find that very few of the standard policies available cover things which will be looked at by older people. How many people in their 40s consider they will need a hip replacement? How many people in their 70s consider they might need one, yet prosthesis are gone off the standard policies? How many think they will need a cataract procedure, an issue on which many older people will be focused? That is taken off the standard policy. Segmentation of the market is taking place and we have got to battle it. All the statistics argue against the Senator in that regard. I appreciate the Senator's comments about getting rid of the HSE as quickly as possible, in terms of what it stood for in the past. We are well advanced on that issue. This, as Senator John Crown has said, is an interregnum to get to universal health insurance. I will deal with that issue more comprehensively later.

Senator Gilroy mentioned the two-tier system. I could not agree more. This is why we are committed to universal health insurance in order that people are treated on the basis of medical need, not on ability to pay. He mentioned the consultant who said that, had he realised that the patient he was treating was a private patient, he would have treated the patient himself. That is something we are trying to end through the new contracts with consultants. How does it fit with universal health insurance? This is very much the preamble to introducing universal health insurance. While we have VHI with its not so dominant role in the market at 57% but its hugely dominant role at the paying out end of the market at 80%, we want to tackle these costs and we will tackle them.

Senator Bradford raised the issue of cost containment. A new cost containment committee is in place in VHI, from which I have asked for a much more robust audit and, for the first time ever, a clinical audit. It is astonishing there was no clinical audit up to now where a team of clinicians could challenge the treating clinician or surgeon as to why a particular procedure was done. If found to be unnecessary, the next time he or she does it, he or she will be fined. There is a whole issue around the procedures. Instead of paying per day, there should be a payment per procedure. In that way the hospitals that are efficient will thrive and those that are not efficient will not thrive. The issue of what we pay is being reviewed. In the past,15% was taken off the top of consultant fees. I want a more nuanced approach. There are certain procedures that used to take two hours but now take 20 minutes. Why pay the same amount for those procedures? There is a clear focus in VHI that it must tackle its costs.

Senator Crown also mentioned tonsillectomy. I wish I could share his confidence that is the case. As a general practitioner, I know that if I send a child with tonsillitis to a surgeon the odds are the child will have a tonsillectomy whereas if I send the child to a paediatrician, the odds are that there will not be a tonsillectomy. That speaks volumes. It is interesting to note that in the UK where it stopped paying for tonsillectomies, the incidence of-----

With respect, what is proposed today is to remove the right of the general practitioner to send the child. The Minister would not send the child to the surgeon inappropriately because------

As I was not at the committee I do not know what members were told. I can say this, as a Minister for Health and as one who practised medicine for 25 years, there is no way that I will remove clinical decision-making from the clinician. I will have counterbalances whereby other clinicians can challenge that decision-making but I certainly will not have somebody with a biro dictating what health care people get.

The Senator mentioned skin lesions and dermatology. In the drive towards primary care centres and more primary care teams, I see no reason these people would be referred away from primary care. They should have skin lesions removed in general practice - I did it myself. I identified three melanomas over a period of years. That should be encouraged rather than discouraged and should be done locally. If there is a lesion that proves to be of a serious nature clearly one has a valid reason for seeking an urgent appointment when one has got the histology back to prove the point.

In regard to matching of resources, the cystic fibrosis unit at St. Vincent's Hospital is not a matter for today's debate. I hear the concerns. There was an arrangement and I want to see it honoured. I want people who suffer from cystic fibrosis to have the same life expectancy as their cousins 40 miles up the road. A number of things have been done to address that issue, a key part of which is the unit at St. Vincent's Hospital. While the unit may attract clientele from other parts of the country because it is seen as a centre of excellence, nonetheless those beds must be available. I will certainly look into the issue to ensure that is happening. I had understood the matter had been resolved.

Senator Quinn mentioned the costs in the system. The costs are too high. I say it here and elsewhere that we are focused on cutting the cost of service, not cutting the service. Of course, that relates to rosters and how people work and the new LRC arrangement with consultants which is being enforced and put in place is critically important. We now have consultants available five days out of any seven, not just Monday to Friday, and at night. This will lead to much quicker decision-making and a faster throughput for patients. As leaders in the health service, it gives a lead to the others who work in the service that they too must change their ways. The Senator mentioned the system in Singapore which is very different. I am not sure if we looked into it we would find huge disparities there. I subscribe to prevention being better than cure and early intervention being better than late intervention.

Senator Healy Eames raised the matter of shared decision making. That issue is being looked at, particularly in relation to new drugs. Dr. Barry White who has stood down as clinical director, and has been replaced by an excellent lady, Dr. Áine Carroll, is a haematologist and encouraged the Irish Haemophilia Society to enjoin with him and the HSE in dealing with the pharmaceutical industry in respect of the provision of drugs and have saved several million euro in recent years. That is just as an example. I am for more patient empowerment, more patient involvement and more advocacy group involvement. That is why the patient safety authority is so important. I am moving away from the Bill itself.

The Bill is very much about regulating and stabilising the market to the advantage of the clients who use it most, those who are older and less well.

My last point is in response to Senator Cullinane. I want to tell him clearly that I have no intention of resigning. I am committed to this programme of reform and a huge amount of reform has taken place already. I am not going to take lectures from a party that engages in fantasy economics where everything can be solved by taking money off some imaginary group.

I have to rule the Minister's last comment out of order. It is not relevant to the Bill.

Very good. The Chair is consistent.

I take the Chair's correction.

Not at all. I thank the House for its attention and the issues raised.

I hope the House can allow the Bill pass to the next Stage.

Question put and agreed to.

When is it proposed to take Committee Stage?

Committee Stage ordered for Tuesday, 18 December 2012.
Sitting suspended at 1.30 p.m. and resumed at 1.45 p.m.