As amendments Nos. 2, 9, 10 and 11 are related to amendment No. 1, they may be discussed together, by agreement.
Voluntary Health Insurance (Amendment) Bill 2007: Committee Stage.
SECTION 1.
I move amendment No. 1:
In page 3, between lines 24 and 25, to insert the following:
" "Act of 1994" means the Health Insurance Act 1994;".
These amendments involve making changes to section 1 and inserting three new related sections before section 3. This legislation, through the repeal of the enactment mentioned as No. 2 in Schedule 1 to the Bill, already addresses the provision in the Health Insurance Acts that grants an exemption — limited to two existing cash plan operators — from the health insurance regulatory framework. It provides for the removal of this exemption so that all cash plan operators are subject to the same regulatory framework. However, it has always been envisaged that cash plans would not be subject to the same regulatory requirements as health insurance contracts offering indemnity cover for inpatient services. The proposed amendments provide accordingly.
It is desirable that there be a clear distinction between cash plans and health insurance contracts. The amendments were formulated following consultation with the health insurance authorities and cash plan providers. They provide for the amendment of sections 10 and 12 of the Health Insurance Acts to ensure contracts that do not involve inpatient indemnity payments will be exempt from the same regulatory requirements as health insurance contracts offering indemnity cover for inpatient services. The amendments are to provide that contracts that do not involve such cover will not have to meet minimum benefit requirements in section 10 nor be subject to risk equalisation in section 12. Contracts that relate to relevant health services only, primarily general practitioner and outpatient, or to public hospital daily in-patient charges only are exempt from these provisions.
The amendments to the definition of a "health insurance contract" also provide for the removal of the cumulative requirement currently contained in the exemption from the definition of a health insurance contract and, therefore, from the regulatory framework for international health insurance contracts.
Will the Minister clarify what the term "cash plan" covers in order that we are clear on what is exempted?
Essentially, cash plans have been in place since the 1940s. Two companies are in the market and they cover approximately 50,000 people. They give the individual cash towards his or her GP costs or other health benefits but it is not insurance. Clearly, I am providing through this legislation that cash plans will have open enrolment and can be community rated but they will not be subject to risk equalisation for minimum benefit. If I did that, they would be closed off completely.
Amendment agreed to.
I move amendment No. 2:
In page 3, between lines 26 and 27, to insert the following:
" "Act of 2001" means the Health Insurance (Amendment) Act 2001;".
Amendment agreed to.
Amendments Nos. 3 and 6 are related and will be discussed together.
I move amendment No. 3:
In page 3, line 32, to delete "Act 1963" and substitute "Acts".
These are drafting amendments to capture the Companies Acts, as amended and expanded.
Amendment agreed to.
Amendments Nos. 5, 22 and 23 are related to amendment No. 4 and all will be discussed together.
I move amendment No. 4:
In page 3, to delete lines 36 and 37 and substitute the following:
" "relevant subsidiary" shall be construed in accordance with section 10;”.
It was never intended that the board would be entitled to establish more than one health insurance subsidiary following enactment of this legislation but a reading of the Bill in its entirety would not support such an interpretation. The matter will be put beyond doubt in these amendments.
Amendments Nos. 4 and 22 provide accordingly. The definition of "relevant subsidiary" is now under section 7.
That is an important clarification because if there was a doubt about this intention, it should be clarified.
This was raised in the Seanad.
Amendment agreed to.
I move amendment No. 5:
In page 4, to delete lines 1 to 4 and substitute the following:
" "services subsidiary" shall be construed in accordance with section 16;”.
Amendment agreed to.
I move amendment No. 6:
In page 4, line 8, to delete "Act 1963" and substitute "Acts".
Amendment agreed to.
Section 1, as amended, agreed to.
SECTION 2.
Amendment No. 8 is related to amendment No. 7 and both will be discussed together.
I move amendment No. 7:
In page 4, subsection (1), line 12, to delete "does" and substitute "shall".
These are technical drafting amendments for the purpose of consistency.
Amendment agreed to.
This is my first time going through Committee Stage of a Bill and I hope the Chairman will bear with me. The copy of the Bill I have does not have a line 12 on page 4.
We will suspend for a minute to sort out the relevant documents.
The select committee went into private session at 10.18 a.m. and resumed in public session at 10.19 a.m.
I move amendment No. 8:
In page 4, subsection (2), line 15, to delete "of the Insurance Act 1989 does" and substitute the following:
"(as amended by Part 8 of Schedule 1 to the Central Bank and Financial Services Authority of Ireland Act 2003) of the Insurance Act 1989 shall".
Amendment agreed to.
Section 2, as amended, agreed to.
NEW SECTIONS.
I move amendment No. 9:
In page 4, before section 3, to insert the following new section:
3.-Section 2(1) of the Act of 1994 is amended-
(a) in the definition of “health insurance contract” (inserted by section 2 of the Act of 2001), in paragraph (d)-
(i) by the substitution of "one of the following conditions is" for "the following conditions are", and
(ii) in subparagraph (i), by the insertion of "or" after "State,", and
(b) by the insertion of the following definition:
" ‘in-patient indemnity payment' means any payment made pursuant to a health insurance contract by a registered undertaking for the purposes of reimbursing or discharging, in whole or in part, the fees or charges in respect of the provision of hospital in-patient services to the person concerned.".".
Amendment agreed to.
I move amendment No. 10:
In page 4, before section 3, to insert the following new section:
4.—Section 10 (as amended by section 13 of the Act of 2001) of the Act of 1994 is amended—
(a) in subsection (1), by the substitution of “Subject to subsection (3), a health insurance contract effected by a registered undertaking” for “A health insurance contract effected by a registered undertaking (other than such a contract relating solely to relevant health services or solely to the public hospital daily in-patient charges made under the Health (In-patient Charges) Regulations, 1987 (S.I. No. 116 of 1987))”, and
(b) by the insertion of the following subsection after subsection (2):
"(3) Subsection (1) shall not apply to a health insurance contract—
(a) relating solely to relevant health services,
(b) relating solely to the public hospital daily in-patient charges made under the Health (In-patient Charges) Regulations 1987 (S.I. No. 116 of 1987), or
(c) where such a contract makes no provision for the making of inpatient indemnity payments.”.”
Amendment agreed to.
I move amendment No.11:
In page 4, before section 3, to insert the following new section:
5.—Section 12 (inserted by section 9 of the Act of 2001) of the Act of 1994 is amended by the insertion of the following paragraph after paragraph (c):
"(d) A scheme may include a provision specifying that the scheme shall not apply to so much of the activities of a registered undertaking as consist of effecting health insurance contracts where such contracts make no provision for the making of in-patient indemnity payments.”.”.
Amendment agreed to.
SECTION 3.
Amendments Nos. 12, 13 and 24 are related and may be discussed together by agreement.
I move amendment No. 12:
In page 5, line 2, to delete "would be" and substitute "is".
Amendments Nos. 12 and 13 are technical amendments. Amendment No. 24 clarifies the provision already provided under section 4(b) as regards the board not being granted powers that would allow the VHI to engage in new activities until after authorisation is achieved.
I am confused on a technical issue.
The select committee went into private session at 10.22 a.m. and resumed in public session at 10.23 a.m.
Amendment agreed to.
I move amendment No. 13:
In page 5, line 27, to delete "to it".
Amendment agreed to.
Section 3, as amended, agreed to.
SECTION 4.
Amendments Nos. 14 to 19, inclusive, are related and may be discussed together by agreement.
I move amendment No. 14:
In page 5, paragraph (a), lines 42 and 43, to delete “as agent for another person” and substitute “agent or otherwise”.
These amendments are aimed at improving the structure of section 4(a). Amendments Nos. 18 and 19 also improve the structure of the section and allow the board more scope in respect of additional functions, although only after authorisation.
I tabled amendment No. 17 to address the issue of co-located private hospitals on the grounds of public hospitals and to assert the Labour Party's opposition to this policy. I am not naive enough to think that by amending the Bill I will stop the Minister from proceeding with the policy but I want to set down a marker by suggesting that co-located hospitals should not be covered.
I understand from media reports that contracts will be signed this week on the first three proposed co-located hospitals, namely Beaumont, Limerick and Cork hospitals. The Minister might clarify the accuracy of these reports. It has also been reported that despite a commitment last July to publish details of the leasing agreements it is not intended to make them public. The reason given was the deals will not be completely finalised so the matter needs to be kept quiet. I raise this issue because it is relevant to my amendment.
I put a question to the Minister for Finance to find out the amount of tax foregone on co-located private hospitals but received no information apart from the rate of tax, which everybody already knows. This issue is relevant to the Bill because premiums paid to private health insurers will be affected by coverage of co-located private hospitals. Additional financial issues, such as the amount of money available for public health services and the loss to public hospitals of private patients, have not been addressed. We have no idea as to the financial effect of co-location on public health and people who currently pay for private health insurance. If the status of the VHI is to be changed through this legislation, subscribers need to know how significant changes in Government policy will affect them.
Co-location essentially institutionalises a two-tier system. If patients presenting to accident and emergency units do not have much money, they are put in one hospital but if they can afford private health insurance they are sent to a different hospital on the same site. This significant change in policy will have effects across the board on public provision of health and the more than 50% of the population who have private health insurance. I hope the Minister will be able to indicate how the proposed co-located hospitals will affect public provision of health and those who subscribe to private health insurance, including the VHI.
I share Deputy O'Sullivan's concerns about co-location enshrining a two-tier system. It will be a case of hang left if one is poor and without influence and hang right if one has money and insurance.
The co-located hospital at Beaumont is to be built on the site of a psychiatric unit for which planning permission was received in 2004 and tenders were advertised in 2005.
We must deal with the amendment at hand.
This is very relevant to the amendment. The proposed hospital will not occupy the full site but it impinges to such an extent that the planning permission will be rendered null and void, which begs the question of how much money was expended on the site.
I must ask the Deputy again--
Where does mental health come into the scheme of things?
I must emphasise the point--
The second point I wish to raise--
I ask Deputy O'Reilly to recognise the Chair. Deputy O'Sullivan quite properly raised the issue of co-location in terms of its impact on the amendments and the Bill. I ask the Deputy to address the issue in a similar manner.
The other issue I wish to raise pertains to the provisions in the Bill to allow the VHI become both insurer and provider of services.
That is in order.
That is a dangerous place to go. We will replicate the American model. One will be told to which hospital one can go because it will be a VHI hospital and to which clinics one can go because they will be insured by the VHI. As the market develops and evolves, we will have this HMO system which operates in America and which has been found to be a disaster for people because neither patient nor doctor have a say in where a person goes. Doctors must treat patients as instructed by patients' employers. Similarly, patients cannot seek treatment from doctors of their own choice but must be treated by the doctor employed by his or her insurer. That is an anathema and is a very bad way for us to go. I raise my concerns about both those areas.
There are a number of separate issues here. I refer to Deputy Jan O'Sullivan's amendment. I am not certain whether she is saying the co-location facility should not be covered by the new insurer, the VHI insurance company — in other words, that its members should not be covered to go into the co-location facility — or that the VHI insurance company cannot run, manage or operate the co-located hospital. If the latter is the point, the VHI has no plans to become involved in the operation or maintenance of hospitals. In any event, the insurance company we are establishing under the holding company by way of this legislation cannot be involved in anything but insurance.
On the wider issue of co-location, the Chairman may recall that during the last Dáil there was a good discussion on co-location and Mr. Finn from the HSE and others attended a meeting of the committee. It would be a useful exercise for the committee to devote a session in the next few weeks to discussing--
That is like closing the stable door after the horse has bolted.
The arguments are overwhelmingly in favour of it. When we devised the policy initiative on co-location, hospitals were free to either come forward with a plan or not. There was no compulsion on any hospital to put forward a co-location application. I understand it was the unanimous choice of most of the boards which did so for a number of reasons. It was the most effective way, from a cost point of view, of getting increased capacity on the sites. We have major pressure points in our public acute hospitals. Everyone is aware that we need more single rooms in Beaumont Hospital, St. James's Hospital, Tallaght Hospital and in all the other hospitals. This provides the opportunity to do that.
These new facilities will be provided at less than half the cost of providing them the traditional way. It will keep all the doctors on site. I do not understand Deputy Reilly's view that co-location is bad but that if the hospital is five miles down the road, it is good. This city has approximately 600 category two doctors out of the 2,000 consultants. They can work in two, three or four hospitals. It is not a good use of their time, and from the point of view of managing our public hospitals, that key staff are committed to working in a number of different places. There is a whole host of reasons this policy initiative was devised and approved by the Government.
I would welcome an opportunity to come in with the people from the HSE. There are commercial sensitivities which will be removed shortly. As Deputy Jan O'Sullivan knows, at present 20% of our public beds are ring-fenced for private patients. Part of the new contract of employment for consultants is equity of access to public hospitals. It is not satisfactory that those who have insurance, or the capacity to pay, can get preferential access to publicly funded facilities which are paid for by the taxpayer.
The reality is that the private beds in our public hospitals are subsidised to the tuneof 60%. It costs the hospitals to provide these private beds; they do not make money out of them. Every private bed in a public hospital costs an average 60% to staff so the hospital gets on average a 40% return from the insurer and the balance of 60% is paid by the taxpayer. That is not great value for money. We have given a commitment that the money forgone will be made good to each of the hospitals involved when the co-location facilities are in place.
I do not want to be diverted from the purpose of this legislation. This issue requires dedicated time rather than when I will be available next week to deal with a variety of issues. I would be very happy to facilitate a meeting on the co-location issue with the relevant people, including myself.
We had the opportunity on Second Stage to tease out these matters. I ask members to try to deal with what is before us. I will take up the Minister's offer to discuss co-location, possibly tomorrow week or some morning.
I will not comment on all of the Minister's contribution because it would take too long. However, to say that no hospital was coerced into applying for it is rather specious and disingenuous. It is like asking why have 52% of people in this country opted to pay health insurance. The reason is they have lost faith in the ability to access their public health service. Similarly, the hospitals, seeing the shift in the ground politically — an ideology with which I do not agree — have put their oar in to protect themselves. That is the reality.
The Minister basically said the information on the leasing agreements will not be circulated until a future date. Will she clarify when?
There are commercial issues between the hospitals in the successful bidders. I am not aware of the legal situation in that regard but all the information on these issues will be in public domain. There is no difficulty with that. Each was subjected to a very stringent cost benefit analysis involving procedures which have not been done in the State before. It would be worthwhile for this committee to discuss the issue — hospital by hospital, if it wishes — with the relevant officials from my Department and the HSE over the next few weeks. I would be happy to facilitate that.
We must move on. We cannot have further debate on this issue. We will take up the Minister's offer.
Will we be given the cost benefit analysis in order that we have enough information to raise questions? I know it is a different debate.
I am not too sure about that. We will try to receive as much information as we can before the debate. We must move on because we have much to cover.
The Minister could answer Deputy Jan O'Sullivan's question.
I am not going to allow the Minister to answer her question. I am going to stick to our programme. The Minister will have every opportunity tomorrow week to answer it. We must move on. Is amendment No. 14 agreed?
I do not agree to anything.
I am not trying to rush anything here, I am simply putting the question.
We have raised concerns about two aspects of it so on that basis, I will not agree to it.
The Committee Stage amendments are before us. We cannot add amendments.
I am sorry. I have no problem with amendment No. 14.
To be clear, we cannot add amendments to those before us on Committee Stage. We can table further amendments on Report Stage. Following this debate, the Deputies can table further amendments.
A Deputy
We must mention it.
One must mention it and I have no difficulty with that. Is that okay? If Members have issues to raise, they can do so on future amendments and on Report Stage.
Amendment agreed to.
I move amendment No. 15:
In page 5, paragraph (a), to delete lines 46 and 47.
Amendment agreed to.
I move amendment No. 16:
In page 6, between lines 4 and 5, to insert the following:
"(b) carry out schemes, or otherwise provide or make arrangements, for the provision of, services to the Board,”.
Amendment agreed to.
I move amendment No. 17:
In page 6, paragraph (b)(i), line 8, after “facilities” to insert the following:
"(not including facilities which are co-located on the premises of public hospitals)".
Amendment put and declared lost.
I move amendment No. 18:
In page 6, paragraph (b)(ii), line 9, to delete “agent for an insurer or other person” and substitute “principal or agent or otherwise”.
Amendment agreed to.
I move amendment No. 19:
In page 6, paragraph (b)(ii), to delete lines 11 to 16.
Will the Minister outline the position in respect of this amendment? A significant portion of the text is being removed.
The amendment was already discussed with amendment No. 14 but I will allow the Deputy to ask a specific question in respect of it.
Why is the paragraph relating to the transference of land being removed?
We have not yet reached that amendment.
Am I correct in stating that we are dealing with amendment No. 19?
We are dealing with amendment No. 19, which was discussed with amendment No. 14.
I am not sure whether the Minister addressed the point I am raising. Section 8(1) states:
On the transfer day, all land that immediately before that day was vested in the Board and all rights, powers and privileges relating to or connected with the land shall, without any conveyance or assignment, stand vested in the relevant subsidiary for all the estate or interest therein that immediately before the transfer day was vested in the Board, but subject to all trusts and equities affecting the land continuing to subsist and capable of being performed.
The Deputy is referring to the wrong amendment. Amendment No. 19 involves the deletion of lines 11 to 16 from paragraph (b)(ii) on page 6.
I apologise.
Amendment agreed to.
Question proposed: "That section 4, as amended, stand part of the Bill."
The Minister is probably aware that the VHI does not provide cover in respect of psychotherapy provided by psychotherapists. I raised this matter with the company and was informed that it will only provide cover in respect of psychotherapy provided by psychiatrists. In the context of the development of mental health services, it has been stressed since 1984 that clinical psychologists and psychotherapists should be available as part of multidisciplinary teams. However, cover in respect of the services provided by psychotherapists is not available from the VHI.
The Deputy has made his point and it is on record.
These individuals are not doctors.
They are qualified.
There are no exceptions regarding the people paid by the VHI and other private insurers. I stated earlier that hospitals are paid by insurers in respect of what could be termed the hotel maintenance portion of people's claims and doctors are then paid their fees. Other health care professionals working on multidisciplinary teams are not paid.
Are not the services of hospital nurses covered?
No. I return to the point I made earlier, namely, that insurers pay approximately 60% of the cost of providing private beds in public hospitals. The full cost is not recovered by the Exchequer. Private hospitals agree with insurers — the VHI is no exception in this regard — a rate for the non-doctor portion of a claim. Separate agreements are done with doctors. As I understand it, the VHI and other health insurers do not enter into agreements with other health care professionals. It is a matter for private hospitals to factor that in when reaching agreements with the insurers.
The Minister seems to be implying that the only place in which the situation to which Deputy Neville refers might apply is in a hospital. Clearly, that is not the case. People obtain psychotherapy and counselling services outside hospital. In fact, most of the services in this regard are provided outside hospital settings. As far as I understand it, the VHI provides reimbursement in respect of physiotherapy provided on an outpatient basis once the customer has been referred by his or her doctor. Counselling is increasingly coming into its own as a means other than drugs to treat depression and other stress-related conditions. I hope the Minister is not stating that the VHI has no intention of providing cover in respect of counselling. There would be a major gap in the services available to patients if that were the case.
When discussing the VHI, we must refer to all insurers in the market. I recently engaged in debates with people regarding alternative therapies.
We are not referring to alternative therapies in this instance.
"Complementary therapies" is probably the more appropriate phrase. People feel passionately about such therapies. The question of whether to provide cover is a matter for the insurers. It is to be hoped that in a more competitive market, with more new entrants and newly-developed products, the position will change. I would like to see more emphasis placed on preventive policies rather than on the provision of sickness benefits, as it were. However, that is a debate for another day.
While the legislation provides for minimum benefits, etc., in respect of the range of services provided, the matter to which the Deputies refer is one for the insurers. There is a major debate in this regard, particularly in the context of whether or the extent to which new hospitals are covered. Members are probably all familiar with the debate surrounding these issues. I am sure this debate will intensify when additional facilities and services become available and when new developments occur.
I do not wish to delay proceedings. However, it has been the stated policy of the head of the HSE to try to move people out of hospitals and, ultimately, to reduce the number of hospital beds by using community facilities. If private health insurers do not support this policy, it does not augur well for the HSE's plans in the long term.
I support Deputy Neville in respect of this matter. A study published yesterday suggests that use of drugs in respect of certain mental health conditions is not necessarily the most positive way to treat patients. A number of policy issues arise in the context of mental health in general and the overdependence on using drugs as opposed to other interventions, including psychotherapy, to treat people. I accept that it may not be possible to legislate in respect of this matter. However, it is important that it be highlighted and I support Deputy Neville for doing so.
The requirement in the legislation relates to the minimum benefits insurers are obliged to provide. The more one develops minimum benefits, the more one adds to the cost. Some major issues arise in the context of the extent to which insurers cover rehabilitation and also in respect of addiction counselling and the matters to which Deputy Neville referred. We have tended to take the minimum benefits approach — perhaps very conservatively and cautiously — in the past. This may be why 52% of the population have private health insurance. Risk equalisation and community rating assist in making private health insurance more affordable than it is in the UK, where only 11% of the population have such insurance.
A number of issues arise in respect of this matter and not just in the context of the provision of cover for psychotherapy services. At present, it is a case of what the doctor or consultant says. The same applies if people go overseas. I frequently receive requests from people seeking to take family members overseas in search of particular treatments that may not be available here. Unless doctors treating patients make a satisfactory case to the effect that such treatments might prove beneficial — which does not always happen — insurers are reluctant to provide cover. To be fair, this matter relates to all insurers in the market and not just the VHI.
In the context of the Bill, I can accept that--
The Deputy raised a relevant point. I am conscious of the study and I understand that a programme relating to this matter was shown on television last night. Perhaps we are too quick to prescribe drugs or other medicines and too slow to refer people for counselling and other therapies. That is a valid point.
The Irish College of Psychiatrists would accept that, because there are insufficient numbers of psychotherapists to provide the type of service psychiatrists would like to see being offered.
I welcome the Minister's comments to the effect that mental health is a serious issue and that we should be doing more about it. As stated earlier, it is the Cinderella of our health services. We may not be able to legislate in respect of this matter but we can at least send out a strong message to insurers, health providers and the population at large that greater efforts should be made to provide cover in respect of these services.
I wish to correct a point made by the Minister. The reason only 11% of people in the UK take out private health insurance is because they have confidence in the NHS, which delivers, free of charge, a huge range of services to patients.
I do not accept that. I recently met an Irish couple who lived in the UK and who are in their 60s. They are VHI subscribers and they informed me that the equivalent cost of their insurance in the UK would be €18,000. It was five and six times greater. That is the reality. If we do not have community rating and one is elderly and has a chronic illness, it is not affordable. I will not dispute whether people have confidence in the NHS; I am simply saying insurance is not affordable in the way it is here.
I want to move on.
It is discriminatory on the part of the VHI that it offers different levels of cover for mental health services as opposed to physical health services. That amounts to discrimination.
Those points have been raised and noted by the Minister.
Question put and agreed to.
NEW SECTION.
I move amendment No. 20:
In page 6, before section 5, to insert the following new section:
5.-(1) The Board must achieve solvency and prove itself to be so before any additional powers are vested on it so to ensure fair competition within the market.
(2) The Board shall foster competition within the health insurance market and refrain from engaging in any actions which may hinder the operation of competition within the market.
(3) The Board shall cease to tie or bundle any of its existing ancillary products, or future ancillary products, to its health insurance products.".
The rationale behind the amendment is that the opportunity is being taken by the Minister to empower VHI to enter into other markets where hitherto it did not have the power to go. It has a huge database which it will probably use in selling other products. It is also being given a derogation in relation to its solvency. It should be solvent before it is given all these powers.
I have mentioned before the reason the figure in respect of the solvency requirement in Ireland is 40% as opposed to the EU figure of 25%. The other issues relate to competition. Before BUPA and Vivas entered the market, VHI controlled demand by limiting supply. If one wanted an MRI scan, a CT scan or an ultrasound, one had to get permission. As a general practitioner, I had to refer a patient to a consultant in order that he or she could confirm that it was necessary to have such a scan. It never occurred to anyone that it was not necessary to do this. This was another block put in the way and another expense in the system because one had to pay a fee to see the consultant. Vivas changed all that and BUPA followed suit and, ultimately, VHI. That is the value of competition. I agree with the Minister that that is what we need.
The Minister mentioned risk equalisation and community rating. I subscribe to that principle completely and have no issue with it. It is the quantum and when it kicks in that I have issues with. The figure here has been set at 20%, yet in Australia it is only 4% or 5%. That issue needs to be looked at by the Minister but I do not know whether it can be addressed in the Bill. That a small company such as Vivas or BUPA, now owned by Quinn Direct, should have to pay over large sums to VHI when it made a profit of €76 million last year makes one wonder about the point at which these transfers should occur. If the market is so competitive, why is it that Hibernian or AXA is not in the market? Why are there no European or American companies coming into the market? There are very few players; clearly, it is not seen as very attractive.
Subsection (3) of the amendment reads: "The Board shall cease to tie or bundle any of its existing ancillary products, or future ancillary products, to its health insurance products". If one cancels one's health insurance policy with VHI, one loses one's travel insurance. This is very serious. If VHI is allowed to enter all other areas of activity, as the Ministers wants — so long as the market is fair, I do not have an issue with it — will it continue with its approach, whereby if one decides to cancel one's house insurance policy, one will lose one's health insurance? That amounts to bullyboy tactics to say the least and cannot be allowed to happen.
I hope the Minister will take on board the three issues raised. They are not in any way contentious.
I very much agree with Deputy Reilly that we dampen demand in cutting off supply. That is what happens when there are monopolies in the market. In a normal insurance market insurance companies like to see more supply to make it more competitive, offer better value and more innovation but the opposite was the case here. I welcome the new entrants in the market.
There is a misunderstanding. What the Deputy is seeking in his amendment is covered in the Bill. Section 4 (b) provides that VHI can only enter into new activities post-authorisation, in other words, after the solvency issue has been dealt with. The authorisation which has to be given by the end of this year will require VHI to be regulated by the Financial Regulator. It will have to meet the same solvency requirements as its competitors. I accept what the Deputy has said that the Financial Regulator takes a very conservative view on this matter. The figure of 40% of premium income is very high by European standards but that is the regulator’s view. All companies being regulated in the market have to meet that requirement. Post-authorisation, VHI will be free to enter into new activities but not until then. That is made clear in the Bill.
On the bundling of products, whether it be house insurance, travel insurance or health insurance, that will be a matter for the Financial Regulator to deal with. It is appropriate that the position should be regulated by the appropriate authority.
As regards the size of players in the market, Vivas has successfully grown the market. Many took the view in the 1990s that we had reached saturation point when about 38% of the population had health insurance. Not many envisaged that it would grow to 52%. Vivas has about 120,000 members; Quinn Direct, under 500,000 and VHI, 1.5 million, which figure has dropped to being less than 70% of the market. I accept that it is still far too high and that a better balance is needed between the different players. However, there is huge loyalty to VHI. I regard myself as an active consumer, yet I have not seen fit to move. We are all traditional. Of the number of new subscribers taking out health insurance, about 50% subscribe to VHI and 50% to its competitors. Whether that ratio will continue, I do not know.
On the rate of risk equalisation, most argue that the level is high. We recently received the Barrington report. Incidentally, no money has yet been paid over. We are constantly involved in litigation. The fact is that if one company has a disproportionate number of older people, there is no way it will be able to compete. We all know that older people have more requirements than younger people. If one company has a large number of younger members and another has a large number of older members, there cannot be fair competition, unless there is risk equalisation which is essentially about providing intergenerational support — younger people supporting older people. When we are young, we pay more but we gain the benefit as we get older. I strongly favour such an approach. It is fundamental. I doubt that anybody in government for the foreseeable future will change that approach, as it would have dire consequences for the market and the health system.
The points made by the Deputy in his amendment are covered in section 4(b) of the Bill. It will be a matter for the regulator to decide what one may bundle together. It is far too complicated to be provided for in the legislation.
This is a very broad debate on the issue of health insurance. We all support the principle of community rating, as it is essential that older persons are not deterred from taking out health insurance. These matters have to be determined in an objective way, not by a politician, but by somebody who can do the sums and knows the balance that needs to be struck.
In regard to competition, we would like to see more not-for-profit insurers entering the market. Obviously, the Labour Party has a policy of moving towards universal health insurance. In that context, we would not just like to see VHI and for-profit insurance companies in the market but the solvency issue — the amount of money a company must have — dealt with. A company would need considerable capital to enter the market. We would like, for example, credit unions to provide such insurance cover or workplace health insurance schemes to be an option for people and such not for profit competition to exist in the market as opposed to competition among only private sector companies. I accept that the private sector companies cannot be prevented from entering the market in accordance with European competition law and so on. Given that a regulatory authority has been established, many of these issues are a matter for determination by it. I do not know if the regulator is given political direction, but I hope its operations do not deter new entrants to the market and, from our perspective, particularly not for profit organisations.
I fully support the principle of risk equalisation, but I have questions about some of the details of it. The Minister might deal with one aspect we have not yet discussed, to which I do not profess to have the answer. A person could join the VHI at the age of 30 and continue to be a subscriber until he or she is 70 years of age. Another person could join the VHI at the age of 70, not having made any contributions to it. Risk equalisation does not really address that aspect, which should be considered. I do not intend to discuss it now. I appreciate it is complex and I simply refer to it in passing.
I wish to take up with the Minister the issue of authorisation to which she referred. It is not quite what I propose in my amendment. What I proposed is specific. Is the manner in which authorisation takes place defined? The VHI started acting as an agent, an intermediary for global health insurance in 2002; then it started acting as an agent for travel insurance from February 2005. It was not until April 2005 that the Financial Regulator issued it with the required intermediary authorisation. The issue of authorisation is dubious. The VHI, as a statutory body, has no legal capacity to get such an authorisation under the Investment Intermediaries Act. It has been acting as an illegal intermediary for three years and the Financial Regulator has not issued any warning notice to it, as it does in all other instances. Under normal insurance rules, an insurance company cannot obtain an intermediary licence for the same company. Therefore, the Financial Regulator, has bent the interpretation on all these issues to facilitate the VHI in the past. Is there any guarantee it will not do so again in the future?
I ask the Deputy to speak to the section relevant to the amendment. With what section are we dealing now?
Is the Minister saying the board in achieving its solvency and additional powers is already catered for by authorisation? I am saying that the authorisation is not specific enough and that previous authorisation under IFSRA was, to say the least, lenient. Unless it is specifically laid down, we will not be doing our duty to ensure that what we are trying to achieve, on which the Minister agrees with me--
I know that. However, I must also do my duty here and get this legislation through.
The Chairman's duty is to get it through correctly and not simply to get it through.
Absolutely, but I do not want members to make Second Stage speeches on every amendment.
I am not trying to be smart but simply putting that point to the Deputy.
I simply gave that information to back up the point I was making.
If the Deputy moves his amendment and speaks to it, there is no need to give us the background information to it. If he does that, we will not get this legislation through today.
With due respect, I would like to outline the logic of what I am saying.
Well everything the Deputy says is logical. I thank the Deputy for that point, which the Minister has noted.
I do not want to delay the discussion but wish to make the point that it is healthy to have competition in the market. The new players in this market certainly have been of major benefit.
I agree with the Minister's point that as the VHI was the sole provider in the market for such a long time, its customers, out of a sense of loyalty and satisfaction with the service provided, were reluctant to move and that is understandable. As new players came into the market, they tended to attract new customers and they examined the differences in the health care provision offered by the providers and made an informed choice on that basis.
I hope the Financial Regulator will give serious consideration to the bundling of products because it would be unfair if a person were discriminated against for changing his or her mind about health care provision and were to lose other levels of provision for deciding to move to another service provider. That would be a retrograde step. I hope the Financial Regulator will give that matter serious consideration.
To respond to Deputy Reilly's question concerning the 30 year old and 70 year old subscriber. We are drafting lifetime community regulations, which will provide that essentially one will be advantaged if one joins a company at a young age and disadvantaged if one joins it at an older age. Currently, if a 70 year old has not had health insurance and wishes to avail of it, and if he or she has a pre-existing condition, the waiting period for such a subscriber can be up to ten years. The lifetime community regulations are currently being drafted by my officials and I understand they will be ready in the latter half of the year. It is good to encourage young people to take out health insurance. It will help to support community rating and risk equalisation. The regulations will be beneficial and fair. A number of groups have recommended this measure in the past.
Regarding the other issues relating to the Financial Regulator, they are entirely a matter for it. As regards, when, where and how it licenses operators, politically, the Minister for Finance is responsible for IFSRA but, as a regulatory authority, it is independent in the exercise of its functions.
Amendment put and declared lost.
I move amendment 21:
In page 6, subsection (1)(b), line 25, after “dispose” to insert the following:
"(but only to an entity or person within the public service)".
The intention of this amendment is fairly obvious, namely to prevent the privatisation of the VHI. The Minister proposed to establish a subsidiary of the VHI, to which its main business will be transferred. If this Bill were passed, that would allow for the privatisation of all the business of the VHI. The amendment is designed to ensure that the power to dispose of shares in a subsidiary is limited to another entity within the public service.
The Labour Party does not want the VHI to be privatised. There are several private health insurers in the market and that is in accordance with competition law. However, it is important that we should have a publicly-owned health insurance company.
When speaking on the last amendment, I said we would like more mutual insurance companies and organisations such as credit unions to consider providing health insurance cover. Another possibility is trade unions. We are particularly concerned that the Voluntary Health Insurance Board, and the operations of it under a subsidiary company, should not be privatised.
There is another aspect to this issue, which is separate but also relevant. If the powers were granted to a subsidiary, the policyholder's sole claim in the event of a dispute would be against a subsidiary and not the board. It is a separate point, but I would like the Minister to also address it. Such a change may distance a person's claim from the board.
The main point of this amendment is to ensure that the VHI cannot be privatised. Having regard to the Minister who holds this portfolio and our experience of the privatisation of other companies in the recent history of Government, we want to ensure that the VHI is kept in public ownership.
This amendment is unnecessary because if the ownership structure were to change, it would require separate legislation. It is specifically excluded under section 5(4). VHI cannot dispose of the insurance company and it cannot be sold. If that were to change, it could only be done with the approval of the Oireachtas. The Deputy need not worry; I will not announce in the dark of night that VHI has been sold. However, with regard to the other activities in which it has engaged recently such as the SwiftCare clinics, where it has entered into joint ventures with private interests, I consider that a good and successful option. It is not universally popular in some quarters but I have received excellent feedback from patients. The insurance company cannot be sold under the provisions of this legislation, specifically section 5(4), or the 1996 Act.
Will the Minister make it clear that the section includes subsidiaries, as well as the main company?
It includes the health insurance business.
Amendment put and declared lost.
Sections 5 and 6 agreed to.
SECTION 7.
I move amendment No. 22:
In page 7, subsection (1), line 4, to delete "a subsidiary" and substitute the following:
"one and only one subsidiary ("relevant subsidiary")".
Amendment agreed to.
Section 7, as amended, agreed to.
Sections 8 to 12, inclusive, agreed to.
SECTION 13.
I move amendment No. 23:
In page 8, subsection (1)(a), lines 49 and 50, to delete “the services subsidiary” and substitute the following:
"the subsidiary (if any) formed and established or acquired by the Board in accordance with section 8 for the purposes of providing services to the Board and any of the subsidiaries of the Board (“services subsidiary”)”.
Amendment agreed to.
Section 13, as amended, agreed to.
SECTION 14.
I move amendment No. 24:
In page 9, subsection (1), line 24, after "may," to insert "on or after the authorisation date,".
Amendment agreed to.
Section 14, as amended, agreed to.
SECTION 15.
Amendments Nos. 25 and 26 are related and will be discussed together.
I move amendment No. 25:
In page 9, line 46, to delete "on its market share in the health insurance market." and substitute the following:
"giving particulars of its insured membership figures.".
This amendment addresses concerns expressed by the Opposition parties in the Seanad. The amendment imposes an obligation on the board regarding its membership that it could reasonably be expected to meet.
Amendment agreed to.
Section 15, as amended, agreed to.
NEW SECTION.
I move amendment No. 26:
In page 9, before section 16, to insert the following new section:
16.-The Competition Authority must review the health insurance market on a 12 monthly basis, particularly with a view to examining whether the Voluntary Health Insurance is abusing its dominant position, and to ensure that the Voluntary Health Insurance cooperates fully with any investigation carried out by the Competition Authority.".
I am not in a position to accept this amendment because the Competition Authority is independent and we cannot impose an obligation on it relating to this issue. It is a matter for it to carry out investigations into companies in the market. It cannot be subjected to doing so by virtue of legislation of this nature. Subject to compliance with competition rules, VHI is entitled to the same commercial freedom as all other operators in the market. I am satisfied that this is appropriate for VHI under this legislation.
We discussed this amendment with amendment No. 25.
We did not discuss it. The Minister has a problem with the amendment and I wish to address it. VHI currently holds a dominant position in the market for various reasons. Supported by the Government and the people and initiated over 50 years ago, it was a great concept which has moved forward. However, medicine has changed and the provision of public service health care, unfortunately, has evolved in such a way that many believe it has been undermined. I will not be political about this but given the dominant position of VHI, there must be a body to oversee it and ensure the position is not being abused and that the company is acting in a way which will not inhibit further competition in the market.
There is a problem in the market because there is no competition, aside from Vivas and BUPA. Where are AXA, Hibernian and the other European insurers? Ireland is clearly not seen as an attractive market. The Bill gives additional powers to VHI to engage in other activities. VHI has a huge database with which to do this. There might be issues related to data protection in that regard but that matter has been addressed in the Bill. It is incumbent on us to ensure the Competition Authority or some other authority ensures VHI is operated in such a way as not to deter further competition. Ultimately, deterring competition will mean increasing insurance premia. Insurance is expensive enough but people must take it out because they do not have faith in their ability to access the public health service. It is not that they do not have faith in the service. Most have a good experience in our hospitals and are happy with the treatment they receive. The problem, however, is getting into hospital. Unfortunately, there are still people like Susie Long waiting seven months for colonoscopies. The issue is ensuring there is greater competition in the market.
To clarify, amendment No. 25 achieves what Deputy Reilly seeks. We cannot mandate the Competition Authority which is independent in the exercise of its functions. Section 15 provides that the board of VHI must give particulars of its membership to the Competition Authority. The Deputy's objective can be achieved with section 15, as amended.
It might help to remove the imperative in the amendment. The word "must" could be changed to "should".
The Competition Authority is similar to the Financial Regulator. We have established these independent regulatory bodies which are independent in exercising their investigative functions with regard to competition. It would be highly inappropriate to include the section proposed by the Deputy who is effectively saying he does not have confidence in the Competition Authority.
No, we are alerting the authority to a specific instance.
The Competition Authority is more than aware of the issues involved. I agree with the Deputy that VHI has a dominant position with almost 70% of the market. The issue is whether that dominant position is being abused, and that is a matter for the Competition Authority. There is no need to insert new provisions in the Bill to tell the authority its job. One of the big issues is the fact that VHI has a derogation and does not have to meet the solvency requirements of its competitors. That is very unfair. If a new competitor in the market must place 40% — it was 50% originally — of its premium income in its reserves to meet solvency requirements and VHI must not, it is clearly an unfair position but we are changing it in this legislation. We are requiring VHI, by the end of this year, to achieve authorisation, in other words, to be able to compete on the same basis as its competitors. Thereafter, it will be a matter for the Competition Authority to investigate whether a company in any market, including the health insurance market, is abusing its position or whether there is unfair competition. The main issue as regards competition — I accept scale is an issue — is the fact that VHI does not have to meet the solvency requirements of its competitors. That will be put right at the end of this year. Other than breaking up VHI, for which there would be little support — I do not know how one would do it — I do not see how one could deal with the issue of its size in the short term.
I am not suggesting that but I am trying to raise a flag for the Competition Authority. Notwithstanding its existence, if it were not for Commissioner McCreevy, would we be having this discussion? He is the one who has major issues with the VHI's position, how the board has been behaving and the Financial Regulator's lenient approach to it. His initiative, impetus and the dynamic he created have us here today.
That is not true. I am not aware if Commissioner McCreevy has any issues with the Financial Regulator.
He has issues with the VHI.
He was part of a Government that established the Financial Regulator. He and I commissioned a report that was written by the former Minister for Justice, Equality and Law Reform, Mr. McDowell, that led to the establishment of that authority. I believe most people would accept that it is doing a terrific job. It is independent in the exercise of its functions. The problem is that for its insurance business, the VHI is not subjected to the Financial Regulator because it had a derogation. The whole purpose of this legislation is to change that by the end of this year. It will be a challenge for the VHI to achieve capitalisation to allow it to do that.
Amendment put and declared lost.
SECTION 16.
Amendments Nos. 27 and 28 are related and may be discussed together by agreement.
I move amendment No. 27:
In page 10, subsection (3), line 7, to delete "would be" and substitute "is".
Amendment No. 27 is a technical drafting amendment. Amendment No. 28 is purely a technical measure reflecting the changes made to the Bill since publication as regards the establishment of subsidiaries. I wish to advise the select committee that on Report Stage I will be bringing forward an amendment to this section that will clarify the liability of the board and its subsidiaries for any borrowings that may arise.
Amendment agreed to.
I move amendment No. 28:
In page 10, lines 19 to 20, to delete subsection (5).
Amendment agreed to.
Section 16, as amended, agreed to.
NEW SECTION.
I must advise members that if amendment No. 29 is agreed to, amendment No. 30 cannot be moved because it is a logical alternative to amendment No. 29. They both propose the same provision with slightly different wording. Therefore if amendment No. 29 is agreed to, it would be illogical to move amendment No. 30 as there would be a possibility of two new sections being inserted in the Bill, both making provision for the same thing.
I move amendment No. 29:
In page 10, before section 17, to insert the following new section:
17.-Every order (other than an order made under section 23) made by the Minister under this Act shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the order or regulation is passed by either such House within the next 21 days on which that House has sat after the order or regulation is laid before it, the order or regulation shall be annulled accordingly but without prejudice to the validity of anything previously done thereunder.”.
This amendment came about as the result of an amendment tabled by the Labour Party in the Seanad. The amendment tabled by Deputy O'Sullivan was the same, so I am happy to move this amendment.
I have one question for the Minister. The amendment is practically the same, word for word, but it includes the following wording in brackets, "(other than an order made under section 23)”. There is no section 23 in the Bill so I presume it refers to the original Act. Perhaps the Minister can explain that.
It refers to the commencement order.
Can the Minister explain what is in section 23, referred to in the amendment?
It will be the commencement order for this Bill.
That is acceptable.
Amendment agreed to.
Amendment No. 30 not moved.
Sections 17 and 18 agreed to.
Title agreed to.
Bill reported with amendments.
I thank the Minister and her officials for attending today's meeting. In addition, I wish to thank members of the select committee for their contributions on the Bill and for facilitating its consideration. I also wish to thank all the staff involved.