Amendments No. 1 is consequential on amendment No. 2. Is it agreed to take amendments Nos. 1 and 2 together? Agreed.
Health Insurance (Amendment) Bill 2003 [Seanad]: Committee Stage.
Sections 1 to 4, inclusive, agreed to.
SECTION 5.
I move amendment No. 1:
In page 5, line 20, to delete "and".
The Minister is aware of my serious reservations about the concept of risk equalisation. I see some reason for it at the beginning but I am worried it will become institutionalised and become a permanent part of the system. I thank the Minister for writing to me in connection with my other reservations about section 6, where one change seemed to imply that the authority would not have the power to make further recommendations regarding the cessation of the scheme. I accept his assurances on that.
Intuitively, the idea of risk equalisation seems bizarre. It is strange that new entrants would have to compensate an existing insurer. I know it is not that simple and that there are arguments about community rating. I am not convinced that community rating deserves risk equalisation on a permanent basis. It appears this will be a barrier to entry to the insurance market. I am concerned that, in the context of all the health services problems, the most important thing we need to get right at the beginning, as we move inexorably towards the private provision of the health service and privately purchased provision, is the insurance market. If the current position, with one dominant player setting the price in the market, continues to obtain, we will not have any level of competition at the insurance level, not to mention in other aspects of the service. It is critical that we get as many participants into insurance provision so we have a genuinely competitive market. We do not have that at present and this Bill will be a barrier to it.
The point has been made that certainty is required in the market and that, until they know the level of compensation they will have to pay, potential entrants will not enter it. That may be a red herring because the existence of risk equalisation rather than its level is the barrier to entry. I would like an in-built assurance that this will not be come an institutionalised way of subsidising inefficient participants in the insurance trade. This is the third risk equalisation Bill and I am sticking my finger in the dyke in trying to stop an inexorable process, but the one barrier or instrument holding back risk equalisation is EU approval. The Minister implied that there are no problems at EU level, but in reality there are outstanding difficulties. The EU is far from satisfied with risk equalisation, for which it has not given the go-ahead.
Amendment No. 2 seeks to ensure that risk equalisation should not be introduced in this country until the Commission has informed the Minister that it approves the scheme in accordance with Article 7 of Council Regulation 659/1999.
I welcome the discussion and I thank Deputy Olivia Mitchell on tabling the amendment. That said, however, I cannot not support the amendment. Anyone who understands the importance of the insurance market and the way it is structured must accept the principle of risk equalisation. A strong case is being made by BUPA against risk equalisation. One can understand that because it would cost the organisation money. If there is to be competition in the marketplace - it is not good to have such a dominant player in a market where competition can be of value - I do not believe risk equalisation will block it. In the main, it has to do with uncertainty in regard to the future of the VHI because decisions about it have been signalled on many occasions but nothing has been done. This does not create a healthy climate for new insurers. The market may be too small.
In order to protect insured patients in a system we have defined to include community rating and lifetime cover, there must be risk equalisation. Otherwise, insured patients will be put at risk. It is a three-legged stool which cannot be put in place without a risk equalisation, which is vital. The long delay in respect of risk equalisation has not benefited patients and has probably increased costs. Either health insurance is treated like all other forms of insurance and we put at risk elderly patients who have many health care needs or we provide a framework which has certain safeguards. I would prefer the second option, of which risk equalisation is part.
I would be enormously surprised if the European Union created a problem in regard to risk equalisation. My understanding is that health insurance is seen in a different light from other forms of insurance. It is correct to raise the issue, but I do not believe we can prevent development of a legal framework on the basis that something may happen at European Union level. We should be making decisions now to ensure that these provisions are included, rather than have them pending for a decision at European Union level.
I agree with Deputy McManus. I thank Deputy Olivia Mitchell for raising the issue, but I agree that this method must be put in place. Almost 50% of the population have health insurance and they must get the best possible deal. We must ensure that measures are fair and that there is as much competition as possible. In such circumstances, therefore, I agree with Deputy McManus in this regard.
The text of the amendment refers to Council Regulation 659/1999 of 22 March 1999. This is a State aid procedure regulation under Article 89 of the treaty. It co-defines existing law in practice and also provides for tougher Commission powers against unlawful aid. Under these rules, the Commission can decide that a measure does not constitute aid or that doubts about a measure's compatibility with the common market have been removed. It can also attach conditions and lay down obligations to enable compliance or decide that the measure is incompatible with the common market and may not be put into effect.
As stated on a number of occasions, there have been detailed consultations between my Department and the EU Commission. The Deputy referred to the phrase "no problems", but what I said is that the engagement with the European Commission has been constructive. I engaged with it in good faith.
No problems.
I described the process in which we are engaged and so on. Earlier comments came from other perspectives.
When the earlier legislation was brought through the House, I indicated that I support risk equalisation. I agree with Deputies McManus and Cowley that it is a necessary balancing provision in the competitive market, based on community rating, open enrolment and lifetime cover. In our view it does not, therefore, constitute State aid.
The European Union's competition directorate took a detailed look at risk equalisation and concluded it had no State aid concerns in that regard. On foot of subsequent contacts from the directorate, my Department submitted a formal notification under the State aid rules referred to in the Deputy's amendment. This notification was submitted, without prejudice, to the position held by Ireland that risk equalisation does not constitute State aid. The notification is currently being examined by the directorate under its procedures in order to reach a decision in the case.
The first part of amendment No. 2, regarding notification, is not necessary and the second part regarding the making of a scheme in the absence of EU approval is somewhat superfluous at this stage. The position is that if the Commission does not find that the measure does not constitute State aid, or approves it as an aid that it is compatible with the single market, it will be legally unenforceable. This is already the law, stemming from our European Union treaty obligations, and does not, therefore, require to be provided for in the Bill. It is clear that if a member state fails to comply with a conditional or negative decision, the Commission may refer the matter directly to the Court of Justice.
In terms of the technical issues, apart from the broader political issues and the philosophical position people adopt in regard to risk equalisation, I do not propose to accept the amendment.
Is the Minister saying that he will not introduce the measure until such time as he gets the all clear?
I am awaiting a decision from the EU on the matter.
The Minister is awaiting it and will not introduce it until such time——
I will not introduce anything until I have heard from the EU.
In effect, the Minister is accepting the amendment, even though not as part of the Bill.
I am saying the amendment is superfluous because there is always the existing legal framework.
However, the Minister will do it anyway?
Amendment, by leave, withdrawn.
Amendment No. 2 not moved.
Sections 5 agreed to.
Section 6 agreed to.
SECTION 7.
Amendment No. 3 is out of order as it involves a potential charge.
That is not the case. The amendment does not involve a charge on the State. My amendment seeks to withdraw such a charge. I find it extraordinary that I must argue this position. I do not know who made the decision to give me a note stating they regret to inform me it involves a charge on the people. Someone should have checked with me if they had a difficulty with the amendment. Perhaps I will explain what my amendment states.
Under the existing Act, the start-up costs are charged to the insurers. The Minister is shifting the charge away from the insurers and on to the people. If we are to be fair, one could argue that his proposal should be ruled out of order, but that is not how the game is played. My amendment seeks to revert to the original position which proposes to hand €500,000 back to the people via the Minister for Health and Children and to ensure that insurers keep to the original plan, which is that the State would pay for the start-up charges and the money would be recouped. A certain expectation, on which we all have to operate, is that these things were understood when they were put on paper by way of an amendment and that they are misconstrued. I have a right to table this amendment.
I received notice that the amendment was ruled out of order approximately five minute before the Deputy. I have a note which clearly states that the amendment is ruled out of order because it creates a potential charge on the people. Section 30 of the 1994 Act granted consent for the Minister to make advances to the authority, out of money provided by the Oireachtas, to meet its establishment costs. Section 7 of the Bill allows the Minister to waive the repayment of all or part of the money advanced under that provision. However, the amendment proposes that this money would be repaid by means of a levy on the premium income of registered health insurers. It, therefore, creates a charge on the people.
It does not.
I have some understanding of Deputy McManus's position. What we are saying does not remove the option from the Minister to recoup this money. This is an enabling provision. It allows the Minister to have an option as to the repayment of all or part of an advance given to the authority. Enactment of the section will not automatically mean that a repayment will be waived, but it will enable the Minister, with the involvement of the Minister for Finance, to consider the matter on its merits in consultation with the authority. It is reasonable and justifiable, particularly with regard to the public service nature of the authority's statutory mandate.
The authority wrote to the Department seeking that the establishment costs would be waived. The White Paper states that the cost of sustaining the ongoing operation of the authority will be met from the proceeds of a levy on registered insurers although the initial setting up costs will be funded by the Exchequer. The authority wrote to me in December saying it was anxious to have a contingency fund in place. My view is that I should keep a watching brief on this as it goes forward. At present, the authority would not be in a position to repay the €500,000.
Who would not be in a position?
The authority.
It is the insurers' levy that pays for it.
I know, but, in terms of the money it has accrued since its establishment, it would not. This is something we can review in a year or two.
There will be no levy until risk equalisation is brought in.
No, the levy is in place. It is paying for the authority at present. It has a staff and is fully operational.
So we are just discussing the set-up costs.
No, the set-up costs were provided by the State. That is the issue with which the amendment proposes to deal. I am simply putting in an enabling measure to allow the Minister to waive it completely and decide not to recoup it from the authority or, having reviewed the authority's finances, to levy it.
We all know the reality of this. In the original legislation, it was laid down that the costs would be paid by the authority by way of levies. There is no time limit on it, but that is the system laid down. The Minister's proposal is that this money does not need to be repaid. Nobody pays bills if they do not have to pay them, so this money will come out of the Exchequer money going to the Department of Health and Children and it will not be available for other purposes. The people will be charged for the start-up costs of the authority, even though the authority is there to ensure that insurers are operating on a level playing pitch. If it was good enough for the original Act, it is hard to understand, in more straitened circumstances, that €500,000 must be charged to the people. That is the net effect. Regardless of what he says, the Minister is not going to get the authority to come up with the money. That is not realistic.
We should give the authority time but we should do so on the basis that this is a system that is self-contained. The authority costs money to start up and run and that money comes from the insurers. That was the original principle. The White Paper is merely that, but the system that was set up under the original Act was, presumably, reflected and deliberated upon within the Department and was found to be the best option.
There are two separate issues here. One is the argument I am having with the Minister, but the other is the argument I am having with the Chairman. It is unacceptable for my amendment to be ruled out of order because it is described as doing the opposite of what it is doing. It must be remembered that €500,000 is not a great deal of money in the overall budget, but Enable Ireland is unable to provide hot meals for disabled children, which cost about €50,000 a year. That problem could be solved ten times over if this money was available. There is a real cost and it is an unnecessary cost to the people to which I am opposed.
Did the Minster say the authority had suggested it wanted a contingency fund?
Yes. The authority has agreed that the establishment costs will be reviewed with the Department. The section is not waiving payment, it provides an option. There is a fundamental difference between providing an option and waiving payment. I have some sympathy with Deputy McManus's position, but the authority is not currently in a position to pay back the €500,000. I am simply saying this is an option we will continue to review with the authority, in terms of an agreed schedule of repayments, if we desire that to be meritorious, in a year or two.
I do not accept that. This is not an option. The section states that there will no longer be a requirement for the money to be repaid. That is not an option, it is a statement. The section does not state that the Minister has the authority to change his mind. It says there will be no requirement for this money to be repaid.
There is a difference between saying there is no requirement and saying that one can retrieve it if one wishes.
If I was on the authority, I would have a certain standing. The authority is established on a statutory basis——
The power is with the Minister in the Act.
The power is, significantly, with the Minister for Finance, so I think we are probably safe enough.
We get on very well.
I sympathise with Deputy McManus. I do not believe it is acceptable for either the Chairman or a Deputy to be notified five minutes before a meeting that an amendment is out of order. However, the Bills Office has decided that the amendment is out of order and my hands are tied. The word, "levy" suggests a charge on people. I will inform the Bills Office that this practice cannot be allowed to continue, but I have no option but to rule the amendment out of order.
It is one thing to get information just before a meeting - it is, of course, a mark of disrespect to the Chairman - but the information we received is completely wrong. How can anyone say the use of the words, "by means of a levy" implies a charge on the people when the amendment proposes that the levy be imposed "on the premium income of registered health insurers"?
I cannot very well explain it to the Deputy except to say that the word "levy" implies a cost. On that basis, I am advised by the Bills Office that it cannot be accepted. I have no option. Perhaps an amendment could be tabled for Report Stage, but, at present, I must accept the ruling.
I would like to have a representative from the Bills Office present during the debate on Report Stage to explain how a levy on the premium income of registered health insurers is a charge on the State. Health insurers are people who run businesses and seek subscribers, they are not the people and no one could misconstrue that. We need to have someone from the Bills Office explain what is going on.
I will arrange for an explanatory note to be forwarded to the Deputy and, if necessary, we will have someone from the Bills Office present.
May I refer to the matter again on Report Stage?
Yes.
The word "shall" is obligatory, it is not discretionary. How, therefore, can there be a waiver? The word "shall" imposes an obligation.
Amendment No. 3 not moved.
Section 7 agreed to.
Section 8 agreed to.
Title agreed to.