Amendment No. 1 in the name of the Minister is consequential on amendment No. 2 and both may be taken together, by agreement.
SECTION 2.
Limerick East): I move amendment No. 1:
In page 4, subsection (3) (b), line 16, after "services" to insert "or goods."
Will the Minister explain why he feels it necessary to introduce the amendment?
(Limerick East): The amendment seeks to make the subsection consistent with subsection (c) which relates to agreements in relation to services and goods.
Amendment agreed to.
I move amendment No. 2:
In page 4, subsection (3) (c), to delete lines 24 to 30 and substitute the following:
"(i) the cost, nature, quality and extent of any health services previously provided or then being provided or offered to be provided, and
(ii) the cost, nature, quality and quantity of any goods previously provided, or then being provided or offered to be provided, for the purposes of a health service,
by the health service provider concerned or any other health service provider or by the other person concerned or any other person.".
This is a small but important amendment. A subsection is being proposed which will provide that the VHI can have regard to the general picture concerning the provision of health services of a particular kind or in a particular area when deciding whether or not it is appropriate to make an agreement with a provider. The change involves replacing "by the health service provider or other person concerned" with "by the health service provider concerned or any other health service provider or by the other person concerned or any other person".
I wish to make a few points on that amendment. As far as I can see, the amendment consists simply of adding a few words to the last line. Why are all the other lines removed and put back in again if there is no change? I am speaking about lines 24 to 29, inclusive.
(Limerick East): As I understand it, it is simply the technical way to insert this amendment. There is no change except what the Deputy has indicated.
On the more substantive point relating to the amendment, it is now proposed to insert the words "or any other health service provider". That is the only difference with the existing subsection. These have to be taken into account by the board. When considering whether or not it will enter into an agreement with a provider. I recall a question I raised on Second Stage, which is that the VHI can stop a development taking place if it does not recognise the services provided or to be provided by a provider. It would be acting somewhat arbitrarily, as I pointed out then. I had hoped the Minister might take account of that on Committee Stage, because one of the ways it acts arbitrarily is that it refuses to recognise any private health provider in the mid-west region. It was confirmed to me at the time by the VHI that it does not refuse to recognise private health care providers in any other region. There is at least one private health provider in every region and in Dublin they are numerous.
A small modern hospital on a green-field site has endeavoured to provide private overnight healthcare in Limerick for the midwest region in recent weeks. However, it cannot further its plans unless the VHI agrees to take it on. It is unsatisfactory and seems unfair that the VHI should refuse to permit the practice of private hospital medicine there for the benefit of its subscribers. The VHI permits this in every other region. Will the Minister do something about this unsatisfactory situation which has existed for eight to nine years?
(Limerick East): On the general issue, I am attempting to follow a kind of via media in this case. The VHI is supposed to trade commercially but it is a non-profit organisation. Its mandate is to break even in general terms. The VHI has a virtual monopoly on providing health insurance and difficulties could arise under competition legislation. Difficulties arose in a case in the midlands, to which the Deputy referred on Second Stage. The issue which seemed to be of concern to the Supreme Court was not that the VHI enjoyed a near monopoly in the market, but it would abuse such a dominant position.
I do not want to exempt the VHI from the provisions of the Competition Act. I believe the Deputy's position is similar to mine in this regard. However, to ensure that it can make commercial decisions and not operate at a loss, the VHI cannot be obliged to facilitate every service provider that requests cover. The VHI must have discretion in the service providers with which it enters into service provision arrangements. We are attempting to ensure the VHI will make decisions regarding those with which it enters into contracts, in line with the provisions of the Competition Act. At the same time the company should be able to act in the normal prudent way a commercial enterprise would act. The VHI will have to develop, and publicly state, Protocols which are clear. It will then be obliged to act equitably, in all cases, with those Protocols.
With regard to the provision in a particular region, I am aware of the situation and the recommendations made by the Oireachtas sub-committee which investigated the matter. A variety of proposals have been put forward for the midwest region. However, the only institution providing private healthcare facilities at present is the one on the site of the old Barrington's Hospital. This is being provided on a day care basis and an application for cover has been submitted to the VHI. It is a matter for the board of the VHI to make a decision on this matter. I have no power to direct such a decision but the board would have to act equitably. If there was any suggestion that a dominant position was being abused, the VHI would experience difficulties similar to those to which I have referred.
The private medical facilities being provided at the Barrington's Centre are not overnight facilities. There is no overnight or residential style private hospital in the mid-west region. The population of the region numbers 350,000 and the VHI provides cover for circa 35 per cent of the national population. Therefore, it could be assumed from these statistics that the VHI has 105,000 to 110,000 subscribers in the midwest region. Those subscribers are being placed at a disadvantage.
The Mullingar case is only relevant in part to this situation. Long before the VHI adopted a particular policy towards the Mullingar facility, it operated as a private hospital. It is a different matter in the case of an interest which has not yet provided a facility, which would be very foolish to provide that facility without knowing the position in relation to medical insurance. The VHI provides Barrington's with cover in most cases. Only a limited number of aspects of its operation are not covered. If most medical and surgical procedures that require attendance in hospital for several days are to be covered, the VHI will have to provide cover to some healthcare provider in the region.
I do not make the case of one provider in particular, but the VHI will have to provide cover to someone because it is bound by the spirit of the Mullingar case. However, nobody could take the risk of hoping that judgment applies to them and spend millions of pounds to provide a hospital. They would have to know in advance and would be imprudent if they did not. I urge the Minister to realise that there are 350,000 people, at least 110,000 of them subscribers, who are severely disadvantaged. It is somewhat arbitrary that only one region should be neglected.
Amendment No. 2 to add "by the health service provider concerned or any other health service provider or by the other person concerned or any other person." seems to cover this matter. In the case of the region under discussion, there is no other health service provider or any other person concerned. I hoped section 2 (3) (c) would give the VHI a clear message not to discriminate in favour of or against certain regions, if not made it incumbent on it to provide cover.
The Deputy made a number of relevant points. For the benefit of Members who are not as familiar with the region as Deputy O'Malley and I, the issue is that no stand alone private facility exists there. Private cover is available in the region, however. For example, in County Clare, Bushy Park Treatment Centre provides semi-private cover and the General Hospital and Cahercalla Community Hospital in Ennis both provide private and semi-private cover. In County Limerick the Orthapaedic Hospital in Croom, the Regional Hospital in Dooradoyle, the Regional Hospital on the Ennis Road and St. John's Hospital all provide private and semi-private cover. It is not possible to make a case which states that the subscribers in the region are deprived of private cover. Across the range of facilities, private and semi-private cover is provided.
I take the point that there is no stand-alone private hospital and that these facilities also cater for public patients. As I said previously, it is a matter for the VHI to decide and I cannot direct it. As the Deputy rightly pointed out, the net effect of this amendment is that as well as looking at the services provided by a particular provider they would also look at the general level of service. That seems to be in ease of our region rather than the other way around because, clearly the VHI must at least break even and run on a commercial basis. It does not want to be in a position where it is compelled to duplicate services. If you had a region where there was a stand-alone private hospital, it would be unreasonable to expect it to go in, to be forced into that situation if a group of investors provided another stand-alone private hospital beside it, up the road from it or at the other side of the city. However, I note the case made.
On the general policy point, it is clearly a service in the general mid-west region which a lot of people would welcome. As the Deputy knows, a number of investors brought forward plans and they are at different stages of preparedness but there is also another issue now that we are making a major investment in the regional hospital in Dooradoyle, County Limerick. Many of the consultants there are anxious that private facilities are developed. There is a policy issue involved as to whether one would be better having extra private facilities on the site of the major acute regional hospital or at a different location where there would not be the same range of services.
The Minister would have a greater range of consultants. It seems that over the years it has been undesirable to give a monopoly of treatment to a small limited number of people.
(Limerick East): I agree but I believe in a mixed system of public and private services and I would not like to develop private facilities which would in any way adversely affect public facilities. In certain situations, the consultants attached to the main acute hospital also provide the private facilities. It seems there are major advantages in having that at one location rather than crossing town. Unfortunately, it seems that a lot of certain consultants’ time and attention is spent in the private sector even though they have normal consultants’ public service contracts and are well paid for them. I want to ensure as a matter of policy that what consultants are obliged and paid to do under their contracts in the first instance is done satisfactorily in respect of their public patients and that there is no distraction. To have to meet appointments some distance from the public hospital might be the kind of distraction which I would not find sustainable whereas if the facilities were on the same campus and there was an emergency on the public side, they would clearly be readily available.
In practice, if they do not have to travel, they simply have more appointments at the first place. I do not know whether it makes much difference. Ideally, we should be looking to a situation where consultants appointed to public posts are full-time public consultants and that those who practise medicine practise private medicine only.
(Limerick East): The Deputy might like to make a submission along those lines to the Buckley committee.
Amendment agreed to.
I move amendment No. 3:
In page 4, after line 50, to insert the following subsection:
"(7) Subject to the provisions of subsection (3), nothing in the Competition Act, 1991 shall prevent or restrict any health insurer from exercising any of the powers or doing any of the things provided for in section 2. The Minister may, at any time, suspend, vary or revoke the exemption provided to health insurers by subsection (1) if he thinks it necessary to do so for the common good.".
Section 2 is designed, as we know and as the Minister has confirmed, to enable the VHI to influence and control costs but there is legal advice that these provisions could be challenged under the Competition Act, 1991, especially given that the Minister's colleague, the Minister for Enterprise and Employment, Deputy Richard Bruton, is proposing major changes in competition law.
It would be helpful to the debate if the Minister could make the legal advice from the Attorney General on this section available to the committee. I asked him for it on Second Stage. If he cannot make it available in the form in which it was available to him, will he summarise the Attorney General's advice because it is important to know whether the Attorney General's view is that the section, as it currently stands, will ensure that health insurance providers could be challenged under competition law?
It appears that the VHI or, indeed, any other health insurer entering the market, could be open to challenge if it limits the number of providers of services in certain areas. Without a limit, the proprietors of hospitals and the medical profession would have a significant financial incentive to encourage an increased demand for services with health costs shooting up. Those who might be disappointed then would, I suspect, bring the VHI to court. While none of us wants to see the dominant position of the VHI abused, we want to see competition, if possible, in the health insurance area. Many of us have found to our cost in the past that where competition enters an insurance market, in particular, it does not always result in costs coming down. All health insurers will find it difficult to keep premiums down, which all of us would like to see, if they are constantly being threatened with proceedings in the courts under the Competition Act, 1991.
As we discussed on Second Stage, there are exemptions from competition law for health insurers in other jurisdictions. Will the Minister consider an exemption for the VHI which would, I hope, cover any other health insurance provider coming into the Irish market? Will the Minister confirm that the EU Court of Justice has explicitly recognised the need for insurance providers who are obliged, like the VHI, to offer cover to all applicants, regardless of age and health, to be able to limit their outgoings, even if that has a negative effect on trade in goods and services? Will he comment on the situation in Britain, where NHS contracts do not give rise to contractual rights and liabilities?
Deputy Geoghegan-Quinn's amendment approaches the issue from the other side of the spectrum and from a different philosophical base from that of Deputy O'Malley who is concerned that the VHI would have too much control over the market, exercise it unfairly and, in effect, abuse its dominant position by arbitrarily picking and choosing between service providers. Deputy Geoghegan-Quinn's amendment, in effect, seeks to reinforce its monopoly so that it would be exempt from the Competition Act, 1991. What I am trying to do is to steer the via media and Deputies will appreciate it is quite difficult because it would be easy to step off the line on either side.
The first issue is whether the provisions of section 2 can be challenged in court. Of course, they can. Anything is subject to challenge. The issue is not whether they can be challenged but whether they can be challenged successfully. The Deputy asked me on Second Stage to indicate the Attorney General's position on it. Obviously, any proposed legislation before the House has passed the tests of the Attorney General's office and it would not be before the House in the first instance if the Attorney General was not satisfied that it would withstand challenge.
For the benefit of the Deputy, I will read the briefing note I have on the Attorney General's position. It is a summary of his position. However, I will not be able to explain it further. I will only give the briefing note of the Attorney General's position as it stands, because it would not be appropriate for me to add to the detail by way of explanation. The Government made its decision not to exclude health insurance following consideration of all the issues involved and advice thereon, including that of the Department of Enterprise and Employment. However, the Attorney General's advice, generally, in regard to section 2 was that it is legally sound and that it does not conflict with the provisions of the Competition Act, 1991.
Section 2 removes legal doubts which arose following the Supreme Court judgment on the Ballinderry case in regard to the VHI's legal powers to enter and not enter into contracts with service providers. Furthermore, the issue of whether any exercise by the VHI of a power to be conferred on it under the section would be in conflict with the Competition Act is a separate issue, which, in the event of a challenge would ultimately fall to be determined by a court on the facts of the case.
The exclusion of health insurance from the Competition Act ambit is a matter of policy. It was not the intention that section 2 would exclude the VHI from the parameters of the Act, and it is a matter for the VHI to work within it. While it is Government policy that health insurance is governed by the Act, the matter will be kept under constant review.
On the issue as to whether cases in Europe have allowed other insurance companies in Europe to be exempt from the competition directives of the EU, the Deputy said on Second Stage that the European Court of Justice had recognised explicitly the need for insurance providers who are obliged to offer cover to all applicants regardless of age and health and to be able to limit their outgoings, even if this had a negative effect on their trade in goods and services. The reference is understood to refer primarily to the Duphar case. This is not regarded as constituting a parallel for exempting the VHI from domestic competition law, and I have a series of reasons for this, if the Deputy would like further information on it.
First, the case was about a statutory public sickness fund, and not a private health insurance scheme. Second, the main issue related to Article 30 of the Treaty of Rome, which deals with the elimination of quantitative restrictions on imports between member states. Third, the courts did not specifically address the Treaty articles on competition, Articles 85 and 86, as these only apply to undertakings to which a public sickness fund was not deemed to apply.
The point about insurers having to make cover available, regardless of age and health status which featured in the case, is lessened under our regulatory framework, which will provide for the operation of a risk equalisation scheme. The case was concerned with very specific cost control measures carried out on the basis of objective and verifiable criteria, and not with a sweeping measure, such as the exemption of all private health insurance from the Competition Act, which the Deputy's amendment would appear to constitute.
I appreciate the Minister's difficulties. All of us have given a certain amount of thought and consideration to them. The issue being debated, and as it arises following consideration of the EU directives, is causing a great deal of concern, especially among older subscribers. This issue affects people, and they are worried as to what may happen.
There are, at present, many misconceptions about what is happening and about the changes proposed in the Bill regarding the provision of services through the VHI. One of the principal issues here is that of higher charges on an age related basis. People have a great fear that, having contributed all their lives, they would be faced with higher charges at a time when they are least able to meet them.
It would be helpful, therefore, if the Minister would give an assurance today that the position of members who have contributed over their lifetime will not, in their later years, be altered resulting in higher charges. I understand this is the position, and that those who are in schemes will continue to have the entitlements they have had hitherto on a general charge. People repeatedly express concern to me on this issue, including the implications of this Bill. It is a reflection of how issues are publicised.
I thank the Minister for his explanation, and for giving us details of the case involving the European Court of Justice. The Minister and I want the same thing, as does Deputy O'Malley. The Deputy is not supporting my amendment, but he is supporting the idea that we wish to ensure there is no abuse of the dominant position of a monopoly, in this case, the VHI. In addition, it is our hope and aspiration that competition will reduce costs.
However, my greatest fear on this is that the VHI will end up in the courts, week after week, defending its decisions with regard to health providers, that, as a result, it will have huge costs awarded against it, and in order to recoup them will they pass them on to the consumer, member or subscriber by way of higher premiums. I want to see competition and to see premiums kept as low as possible. Perhaps Members of the committee are of the same view.
If the Minister believes that — the Attorney General advises this will be kept under constant review — he must have a similar fear. If the Minister cannot, therefore, accept the amendment in its present form, perhaps he will consider an amendment on Report Stage that might take account of this, or at least give a commitment that in the event of this happening a number of months after the Bill is passed he will introduce an amendment.
I am opposed to the amendment, and would be opposed to it in principle. The fact that the Competition Act applies to the VHI, and will hopefully continue to apply is useful and healthy. If it reflected on it, the VHI would realise that it is in its own interests that it should not be free to make arrangements of a commercial or otherwise dubious nature.
I do not follow the second part of the amendment, which states: ". . . suspend, vary or revoke the exemption provided to health insurers by subsection (1) . . ." . However, it appears that subsection (1) does not provide any such exemption. It appears to have a different purpose. The amendment may not be drafted clearly. However, the intent of the amendment is made clear from Deputy Geoghegan-Quinn's remarks, and in view of these, I would not support it and urge the Minister to reject it. To interfere with the operation of the Competition Act in favour of a State owned company such as this, which is in competition with others, would give a wrong message. At the time of the passing of the Act of 1991, strenuous efforts were made by several State companies to gain exemption for themselves. We rightly resisted these. If, for example, the Act did not apply to bodies such as the ESB and Telecom Éireann it would be a serious matter for consumers in the broadest sense of the word.
The changes being proposed to the Competition Act in the Bill that is before one of the committees are not relevant. Those changes relate primarily to criminal liability for certain actions. What is relevant are some of the existing provisions of the 1991 Act.
I am glad Deputy Woods raised the issue of older subscribers. This matter is a cause of concern based on nothing more than a fallacy in the public mind. Community rating is the concept which ensures that all subscribers are treated the same, regardless of age or medical condition. Under the Health Insurance Act, 1994 it would be illegal for the VHI to depart from that. As I said in reply to a parliamentary question from Deputy Geoghegan-Quinn, I have no intention of changing the provisions of the 1994 Act in that respect. Whatever is in the public domain in that regard is incorrect. I assure older subscribers that they will be treated on an equitable basis with all other subscribers as heretofore. This Bill makes no difference to that.
Deputy Geoghegan-Quinn raised a number of points. I agree that we should have competition in the market. This Bill will prepare Ireland for competition in health insurance and together with the insurance regulations almost finalised in discussions in Brussels, should enable insurers overseas to make decisions. The Deputy is right that competition does not always bring down costs. Competition frequently leads to improved service and a wider and more varied range of services.
The public should look carefully at what will be on offer when competition is introduced. The insurance packages that might look attractive, especially to young people, might simply be top-up packages for public service facilities. They might not actually get full cover even through clever marketing might make cheap insurance packages look attractive. The VHI must also be put in a position where it can compete with new insurance products so that it can provide alternative packages which could be sold to the public.
Deputy Woods spoke about ensuring the continuance of community rating. In colloquial terms this is an arrangement whereby the young and the healthy subsidise the old and the ill. That is the nature of the system. The only way it can be continued is to ensure that a sufficient number of young people take out insurance when they enter the labour force. The VHI must be diligent in promoting its policies among the young because that is the key to its ongoing viability and success, whether it does so in a quasi-monopoly system or in a competitive environment.
The fear of costs arising from constant court cases was mentioned. That should not arise if the VHI proceeds as it intends to by drawing up standard Protocols. The issue in the Ballinderry case was not that the VHI had a dominant position but that it abused the dominant position. If the VHI operates simply in accordance with the primary legislation before us and the other insurance Acts it will be difficult for service providers to know the rules. However, if the VHI draws up standard Protocols which are available publicly everybody involved in the provision of private health services will know what the situation is. The VHI will be expected to deal equitably in accordance with the Protocols with all providers.
There is something else which I propose to take up with the Department of Enterprise and Employment. Deputy O'Malley is aware that under section 4 of the Competition Act a licence can be granted by the Competition Authority to the VHI in respect of individual agreements with providers. This will ensure that the VHI will not be found to be involved in restrictive practices. It does not clear the VHI for abusing its dominant position but it would help that organisation if it has a licence and is brought to court under section 5. As soon as the Bill is passed we intend to have talks at official level with the officials in the Department of Enterprise and Employment to ensure this.
We cannot fireproof the section or the Bill against challenge. However, we can ensure that the chances of successful challenge are diminished by the standard Protocols and by the procedures under section 4 of the Competition Act so that the Deputy's fears about constant litigation and the huge costs of VHI being transferred to subscribers will not be realised. I certainly hope they will not be realised. We will keep the situation under review but we believe the policy positions we have taken will be sufficient to ensure that the Deputy's fear is not realised.
With regard to cost, we all tend to work according to the consumer price index but medical inflation is well ahead of the consumer price index. Medical inflation is running at 8 or 9 per cent in 1995. There is a constant movement towards more high tech medicine and high tech usually means high cost. There is upward pressure on insurance costs because there is upward pressure on medical costs. As the economy continues to go well, more and more people in good employment will be interested in private cover and private facilities so there is a push towards extra demand on the private side leading to extra cost and higher premia. The response to that should be, first, that the VHI gets its house in order from a management point of view so that it does everything internally which is necesary to control costs. Second, it must be ready to compete across a range of insurance packages. The way to cherry pick a market is to devise packages attractive to young, healthy, low risk people. The danger for the VHI is that it will end up with all the high risk categories and will not have enough young people insured to give the financial balance necessary to continue community rating.
I thank the Minister for his explanation. The standard Protocols will be very important and that reinforces the decision made by this committee to ask the chief executive officer of the VHI to talk to us. That is also reinforced by a comment of the Minister about the point by Deputy Woods regarding older people joining the VHI. As the Minister knows the point is not based on fallacy. He denied what the chief executive said some weeks ago — according to the board he was thinking aloud — that the VHI would charge higher premia for older members joining the VHI now. I am happy that it was not the Minister's policy. The board also made a statement at the time it was not its policy. However, it reinforces the decision the committee made.
I am thankful to the Minister for stating that keeping this matter under constant review will be a priority. Even though he and the Minister for Enterprise and Employment hope that the chances of successful challenges to the VHI will be diminished, it is important that this area, as it develops over the next number of months, is kept under review so that we do not face the kind of difficulties I suggested we might face. On the basis of the Minister's response, I will withdraw the amendment.
Amendment, by leave, withdrawn.
(Limerick East): I move amendment No. 4:
In page 5, subsection (7), to delete lines 15 to 21 and substitute the following:
"‘health-related insurance scheme' means—
(a) a scheme of voluntary insurance the purpose of which is to provide for either or both of the following, that is to say:
(i) the making of payments by the Board to persons in respect of sickness, injury or disease of amounts that are either specified in the scheme or calculated in such manner and by reference to such matters as may be so specified,
(ii) the procurement by the Board of the provision of health services to persons either without charge to them by health service providers concerned or upon payment by them so such providers of part of the cost of the services,
in consideration of the payment by or on behalf of the persons to the Board of subscriptions, premiums or other charges, or
(b) a scheme for the procurement by the Board of the provision to persons of services related to the prevention of sickness or disease either without charge to them by the providers of the services or upon payment by them to such providers of part of the cost of the services in consideration of the payment by or on behalf of the persons to the Board of subscriptions, premiums or other charges.".
The amendment to this subsection is proposed to broaden the possibilities for its application. As drafted, the subsection gives wide discretion concerning the composition of schemes of voluntary health related insurance. It does not explicitly take account of possible developments in the industry, such as the delivery of services through managed care arrangements, that is the delivery of treatment care on a programme basis by agreement between the insurer and the provider, that is providing for welfare checks and periodic scans and tests. I referred previously to the importance of the VHI being in a position to develop insurance packages which would be attractive to the market and to position itself for any competition which may arise. The purpose of the amendment is to allow for capitation type schemes where a person would pay a module of a premium to the VHI in respect of, say, dental care for a 12 months period and the VHI would enter into an arrangement with a particular dentist. Rather than being covered for a particular dental problem which might arise, a person would be covered under a 12 months service contract with a dentist who would agree to provide a number of check-ups during the year and do whatever dental work was necessary. This type of arrangement will also apply to other areas. This type of insurance package would be allowed under the amendment and we want to give it a statutory basis.
Will the VHI or the subscriber decide with whom the contract will be?
There would be flexibility. If people looked for dental cover from their dentist, this would cost them a module of their overall premium or there might be a separate dental insurance package which might not be included in the overall package. The VHI would have a contract with the dentist under which he would provide the service. We normally think of the VHI in terms of a person breaking a leg, going to hospital and being covered for this whereas here we are talking about the VHI covering a health care service which ensures continuing good health rather than insurance which is availed of in an emergency.
Amendment agreed to.
Section 2, as amended, agreed to.