Dáil Éireann díospóireacht -
Thursday, 15 Oct 1998

Vol. 495 No. 3

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

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

Minister for Health and Children (Mr. Cowen)

On the adjournment of this debate I had begun my introduction of this Bill which has a specific purpose to deal with a specific problem brought to my attention by the Voluntary Health Insurance. This legislation is required for it to remain competitive in a particular area of the private health insurance market. This cannot be resolved by way of regulation but, on the advice of the Attorney General, requires an amendment to the parent Act.

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

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

Section 1 provides for the VHI board to have the power to act as an agent for an insurer in the sale of an international health care plan. The section provides that the board will simply require my consent to exercise its power to act as agent in the terms specified in the Bill. The section contains a definition empowering the VHI to hold an appointment as agent for an insurer.

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

Section 1 defines an international health care plan in terms of providing for the making of payments in relation to costs incurred in the provision of medical, surgical or related services. It further defines such a plan as being applicable to persons who will reside outside the State for such periods as the board may specify therein. Section 2 provides that the board, for the purposes of the powers granted under the Bill, will be subject to Part IV of the Insurance Act, 1989.

The VHI Act, 1957, provided that the board was not to be subject to the provisions of the Insurance Acts. However, as the Bill proposes to assign to the board the power to act as agent for an insurer, it was considered, and is provided for under section 2, that it must comply with the provisions of Part IV of the Insurance Act, 1989, which provides for the regulation of insurance intermediaries. The board has advised that it does not envisage any difficulty in complying with this provision. Sections 3 and 4 contain standard provisions relating to expenses and citation, respectively.

The purpose of the Bill is to enable the Voluntary Health Insurance Board to act as agent in the making available of health insurance to persons who will be resident outside the State for temporary periods. It is necessary to amend the Voluntary Health Insurance Acts, 1957 and 1996, in order to empower the board to act as agent to make available an international health care plan. The VHI board made strong representations that it must be able to offer an international health care plan to corporate and individual clients as soon as possible, if it is not to be vulnerable to competitive challenge. I am responding to that request.

The international health care plan to be made available pursuant to the legislation will be based on an agreement between the board and a major international insurer. It will be a matter for the board to negotiate the necessary agency arrangements, practical and financial, with the insurer concerned.

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

Act, 1994, which requires, inter alia, that premiums be community rated.

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

The Bill is specific in nature and does not attempt to deal with issues other than the requirements of the board regarding its capacity to offer an international health care plan. My Department is preparing a White Paper on private health insurance which will address the broader issues. In accordance with commitments contained in the Government's action programme, the White Paper will address the options open in relation to the VHI's future, including the question of a strategic alliance. I have made it known on a number of occasions that all options are being considered in relation to the most appropriate status and corporate structure for the VHI into the future. This matter has been the subject of extensive consultation between officials of my Department and senior management of the VHI.

The Bill reflects the necessity of ensuring the VHI can function competitively in a particular area of business and that it is not disadvantaged, vis-à-vis competitors, in relation to a growing segment of the market. As well as meeting specific customer demands, the capacity to make available an international health care plan will ensure the VHI is equipped to consolidate its existing business in the corporate sector by putting it on the same footing as other insurers which can offer plans of the kind involved.

The provisions of the Bill will enable the board to offer a necessary product in a developing and demanding market. The product in many ways reflects this country's growing international outlook. It was not possible to envisage that the board would be required to offer such a product when the 1957 Voluntary Health Insurance Act was framed. It reflects the pace of change in the private medical insurance market since the passing of the Voluntary Health Insurance (Amendment) Act, 1996, brought about by opening the market to competition and is an indication of the benefits which competition can bring to consumers. I commend the Bill to the House.

Mr. Shatter

Fine Gael will not oppose the Bill in principle and has no objection to its contents but the fact that it is necessary for the Minister to enact legislation to allow the Voluntary Health Insurance board to make available on the market a new product, which is desirable and in the interests of the consumer as well as the board, is indicative of the straitjacket within which the VHI must operate. The time has come for a radical change in the structures relating to the VHI and the manner in which we deal with health insurance.

It is no longer tenable for the Minister to continue to perform the compatible and contradictory roles of regulator of private health insurance, owner of the VHI and price fixer for private beds in public hospitals. The profound conflicts of interests which result from this trilogy of disparate functions is a contributory factor to the increasing cost of health insurance and medical inflation. Last January the Minister announced increased charges for private beds in public hospitals. Some months later a substantial increase in insurance premiums was announced by the VHI. The Minister cannot say, on the one hand, that he is anxious that health insurance premiums are kept within reasonable financial boundaries and, on the other, ignore the fact that his actions have directly contributed to making health insurance more expensive.

In that context it is worth recording the conclusions of the advisory group on the risk equalisation scheme. It predicts that, if the cost of health insurance continues to escalate, the inevitable consequence will be that it will fall outside the financial capacities of many of those currently insured. The public health system cannot cope with the pressures being imposed on it. The only reason they are not greater derives from the fact that in excess of 40 per cent of the population are insured through health insurance schemes, the vast majority with the VHI and smaller numbers with BUPA.

The Minister has not addressed these issues. It is appreciated that he referred to the White Paper but it is something of a mystery that, in the context of all aspects of the health services as they extend from health insurance, public hospital health care and a variety of other areas, he is incapable of making the necessary decisions to develop the health services. There is an endless stream of committees and specialist groups examining every issue that falls on the Minister's lap, including the management of the hospital system, future functions, legislation applicable to health insurance and waiting lists, the majority of whose recommendations the Minister tries to keep secretly hidden. He leaks selected portions to portray himself in a good light whenever there is controversy. The same applies to the way in which he is dealing with the health insurance issue.

The White Paper will provide some valuable insights into how the health insurance system should progress but to date the Minister appears to have ignored all the advice, recommendations and conclusions of the report of the advisory group on the risk equalisation scheme. It recommended that the trilogy of conflicting functions performed by the Minister should be tackled at an early stage. European law requires insurance industry regulators to be independent of industry owners. The advisory group recommended that an independent health insurance authority be established as a matter of urgency. There is no reason the Minister cannot advance that recommendation by bringing the necessary legislation before the House this term. Such an authority would be responsible for the financial monitoring of health insurance, the licensing of new health insurers and ensuring the market delivers cost-effective care. The relationship between the VHI and the State discourages the emergence of new entrants into the market as there is a perception that the market remains one in which all insurers do not have an equal relationship with the various State agencies and do not play on a level playing field.

It is time the Government decided whether the VHI is to remain in State ownership or whether it is to be permitted to take on a strategic partner. It is incompatible with the Minister's function as regulator of health insurance that it should remain within his competence and, as we move towards the Estimates and a new budget, that he should again consider whether to impose additional charges on private beds in public hospitals. The report of the advisory group on the risk equalisation scheme recommended that in order to allow a free market to evolve the Department of Health and Children should allow public hospitals to set the price of those beds in them which are designated as private. The report envisaged the possibility of greater efficiency in our hospital system and some competition in the market to ensure good health services are provided in an economically acceptable way.

I realise we will return to many other issues of concern in the health insurance area but I must comment on one or two issues of great concern. One is an anomaly which derives from our view of the health services in decades gone by. One of the curiosities of health insurance is that an insured person will find that hospital in-care under a psychiatrist is covered by Voluntary Health Insurance schemes but no recognition is given to the position of psychologists who have played, and will continue to play, a very important health role within the system. It is time that VHI adapted its policies to provide cover for treatment by psychologists. The need to provide for a more flexible form of health insurance for those using private services such as dental services must also be addressed.

In the context of the debate in Private Members' time on Tuesday and Wednesday evenings I refer to the capacity of our hospitals to cope with patients' needs. One of the reasons there is not an even greater public outcry about the state of the public hospital waiting lists is that 40 per cent of the population have private health insurance — the majority with VHI and some with BUPA. Their reason for being insured is not to ensure greater comfort during a stay in hospital. All research has shown that the primary reason people resort to private health insurance, despite their entitlement to public hospital care, is that they see it as a means of gaining speedier access to health care when it is needed. In 98 per cent of instances the same consultants provide private and public health care. The quality of care does not differ for public and private patients. What differs is the speed of access. It is a tragic commentary on our public health service that the majority of people who rely on private health insurance do so because of their perception that if their lives are at risk they will have speedier access to consultancy and in-patient hospital services than if they rely on the public health care system.

The increase in population that is occurring as a result of the effective end of emigration and the return of immigrants will place increasing pressures not only on the public health care system but also on the private system which up to now has provided almost immediate access to consultants and in-patient hospital care when required. We must radically rethink the manner in which our hospital services are provided and the Minister must introduce some of the measures debated over the past two evenings in this House. I did not have time to put on the record of the House all the measures proposed by Fine Gael in the document which we have published. We have not yet seen the full report of the working group on hospital waiting lists. Unless the measures recommended by the working group are implemented we will have difficulties not only in the public hospital system but in private medical care as well. We are, at greater speed than many realise, reaching a position where those who have health insurance will find that they too are being put on waiting lists for private hospital care. That will have a further impact on the public hospital health system.

The Minister does not seem to have any proposals to address these problems which are rapidly arising. I am concerned that another committee may be required to sit for another year or two to address this issue. We need a new dynamic from the Minister and his Department in comprehensively addressing the development of our medical services and the interraction between public and private health care and between the provision of public health care and the health insurance schemes so that we have a vision of the health service we want for the State in the new millennium. There is no such vision. There are strategic statements from the Department of Health and Children with wish lists which appear to give priority to patients. However, many patients feel that their ill-health is not given priority by this Minister.

I reiterate what I have said on other occasions, that an extraordinarily good service is provided by doctors, both consultants and general practitioners, and nurses. All too often they are not given the praise they deserve. On occasions when problems with the health service are raised and criticisms of it voiced it behoves those of us who do so to state our belief that unfair and unnecessary pressures are placed on doctors and nurses in our hospital system. These pressures derive from lack of vision on the part of this Minister and his Department in failing to predict where we will go in the future. Far too frequently decisions in the health service are made on a fire brigade basis when problems have emerged which could have been anticipated.

I am fully in support of community rating and I do not wish anything I say in that context to be misunderstood. However, one of the submissions made to the Minister expresses the view, in the context of providing more flexibility within the insurance market, that community rating should not be mandatory for health insurance contracts which relate solely to ancillary health services. It has been suggested that a different approach would facilitate the development of products to finance and manage primary care and also dental care which is an issue I mentioned previously. This very basic consumer issue must be addressed. Consumers are confronted by the advertising battle which goes on between VHI and BUPA and which will no doubt occur in the event of another insurer coming into the market.

The vast majority of people using health insurance products often do not understand what they are covered for and are bemused at what are supposed to be the differences and the benefits of being insured as between the Voluntary Health Insurance Board and BUPA. I suspect that both insurance companies have a vested interest in ensuring there is a degree of confusion among consumers in spelling out the exact similarities and differences, and the benefits and disadvantages of different products.

A key difficulty for consumers is that the cover provided by health insurance contracts is complex. Different plans are presented in different ways and it is difficult, if not impossible, for an individual outside the industry to compare the contracts on offer in terms of the benefits provided and value for money. It should be a regulatory requirement that health insurance contracts be presented in a standard format using standard terminology. There should be a clear understanding among consumers of the differing benefits and disadvantages of the various policies on offer and the different premiums charged by each of the insurance bodies previously in the market. Similar recommendations were made by the Director General of Fair Trading in the United Kingdom in his reviews of the UK health insurance market.

In the context of the supervisory role, I have said in the past and I repeat now that as the current owner of the major health insurance body in the State, it is not appropriate that the Minister play a supervisory role. The health insurers should be subject to financial supervision by the Department of Public Enterprise which is the appropriate body to deal with the supervision of health insurers. It is necessary that that change be made for Ireland to comply with our European Union obligations.

We are told the White Paper will be available at the end of the year. Presumably, when it is available the Minister will do what he now apparently intends to do with the working group report on hospital waiting lists. He will say he wants to consult all the interests concerned and obtain their views. He will also want to consult with his colleagues and by the time all that happens it will be the year 2000.

Will the Minister make the decision this year and, if necessary, introduce a short legislative measure to give the supervisory function to the Department of Public Enterprise? Until a different supervisor to that of the Department of Health and Children is put in place, we will not see new insurers in the market, and it is in the interest of consumers that the market be more competitive than it is today and that additional insurers are attracted into it. There should not be a perception in the market that the Minister for Health and Children and the Department are giving some preference to the VHI in the context of health insurance. It is unfortunate that that is the case.

In this, as in other areas, the Minister should stop playing the role of a spectator watching the players on the field and start making the decisions necessary to confront a variety of health issues in the health insurance area that must be addressed as we enter a new millennium. Those decisions are necessary to ensure that the consumers who look to health insurers are provided with the best possible health insurance cover at the best possible price so that they can get the best possible medical service.

If the Minister fails to address these issues, the inevitable consequence is that there will be even greater pressures on the public health service. In recent years we have seen an increase in the numbers of people taking up health insurance. The Minister should be aware, however, that if the economic ill winds currently hitting large parts of the world hit this State, and if, from a position of employment growth, we enter into a position of job losses, a large number of the people newly signed up for health insurance will examine the cost to them of what is on offer and the benefits that might accrue to them and may terminate their contribution to health insurance and look to the public hospital system, a system that currently cannot cope with the demands made on it.

I ask the Minister to urgently address these issues. When he concludes the debate, I ask him to confirm the exact date the White Paper will be published, that it will be published within a matter of days of his receiving it and that he will not sit on it for months and selectively leak parts of it to see what the likely public reaction might be.

Ms Shortall

My comments will be brief because the Bill is short and specific in its provisions. In so far as the Bill allows the VHI provide a specific product, the Labour Party will support it.

This specific provision has been requested by the VHI. The Minister is correct in acting on this request and allowing the VHI the freedom to act as an agent in the provision of an international health care product. When the VHI was set up, the need for such a product was not envisaged but with greater economic growth and more people going abroad for short periods in relation to their work, the need is now acute, and I welcome the fact that the VHI will be allowed to provide it.

Why is the Bill so limited in its scope? What will happen if the VHI wants to provide another product in six months' time? It would have made more sense to give the VHI freedom to operate commercially over the next two years and provide a range of products because at the end of that time the market will be opened up completely. I do not understand the reason the Bill is so restrictive. Is it not possible to open up the areas in which the VHI could operate? That would be more sensible because the VHI is shackled by the provisions of the Act and I do not see why those shackles cannot be removed for the next two years.

There are a number of other products the VHI should provide. That it is doing little or nothing in the area of promoting a healthy lifestyle is unfortunate. Private health insurers will have to become more involved in this area and also in screening for various diseases. This approach to health care is very cost effective and I would like to see it permeate all our health services, both private and public.

Are there any implications for BUPA in allowing the VHI sell this product? That is not clear in the Bill and I would like clarification of that from the Minister.

On the future of the health insurance market, I look forward to the publication of the White Paper. Like Deputy Shatter, I ask the Minister to be specific about the timescale he has in mind for its publication. Will it be published immediately or will the Minister sit on it for a lengthy period during which all debate will be stifled? I urge the Minister to be clear about his commitments and put the White Paper into the public domain as soon as it is available. I look forward to the publication of the White Paper on the future of the private health insurance market. Like Deputy Shatter, I ask the Minister to be specific about the timescale he has in mind for its production. Will it be published straight away or will the Minister sit on it for a lengthy period stifling all debate? I urge the Minister to be clear about his commitments and to put that White Paper into the public domain as soon as it is available.

I look forward to that debate because there is a number of issues to be addressed, important issues such as the future of VHI and under-capitalisation. VHI outlined the options and we would like to hear the Minister's view on them. That is why the White Paper is long awaited.

A further issue is that of a strategic partner. This is possible but I would like mutualisation of the company to be examined. I hope that will form a major part of the White Paper's contribution to the debate on the future of VHI.

I have reservations about the prospect of the State providing the £70 million in capitalisation which VHI requires. I would not hesitate to compliment VHI on the work it has done and the tremendous service it has provided over the years, but I have serious reservations about making a substantial injection of public funds into private health care at a time when public health services are under-funded. The serious problems confronting the health service have been debated in this House. Many of those areas are now reaching breaking point and the Minister is under obligation to take drastic action to deal with them. We expect a substantial improvement in the financial allocation to the health services in the upcoming budget. These are serious reservations about the prospect of providing additional funding to private health care at a time when the public health service is being starved of funding.

It is not possible to debate the future of private health insurance without looking at the wider context of the future of the health services. I would like to see a White Paper on that. Is it the Government's intention to continue to encourage the development of a two tier health service? Is it looking at any alternatives to that? When VHI was set up, its purpose was to provide health cover to people who did not have an entitlement to the health services. VHI now pays £300 via premiums towards the cost of health care in this State. That was not the intention when VHI was established. Will we continue along that route where more and more people seek to provide for their own health cover?

What about those who already pay health contributions via their PRSI, who pay into what is supposed to be a health cover scheme which they know is of little merit? The scheme only provides entitlement if they can afford to wait for three years, their health problem is not urgent and they are prepared to go onto a waiting list. People are contributing to private health insurance to be assured of getting treatment in the event of becoming ill. I urge the Minister to give some thought to the future development of the health services in general. I hope the future of private health insurance can be debated in the context of the Minister's plans for the health services.

Who is picking up the tab for various costs in health? I mentioned those who pay a health contribution through PRSI but there is also the question of public health services subsidising private health care in hospitals. It would be worth our while to shed some light on consultants' contracts and the manner in which they balance their public and private work. The public is entitled to know what they are getting for the money paid to consultants on very high salary scales, what level of public work they do for the £70,000 they are paid from the public purse.

We need to be clear about the cross-subsidisation taking place. We need to know the facts about it within private health insurance and the extent to which people who are in the A and B schemes are subsidising those on the more expensive schemes. There are people availing of very costly health services in the Mater Private Hospital and the Blackrock Clinic. Who is paying for those services, services which are available instantly with the best possible doctors, level of care and accommodation? What is the breakdown of the costs? Is it a case that people who are paying for the minimum level of cover could be subsidising those who receive first class cover in private hospitals?

There should be clear information on bed costs. Who sets them? Is it acceptable that the Minister has no clear role in that? It is left to the hospitals, VHI and BUPA to work that out. The whole area of costs in the health services needs to be addressed as a matter of urgency. We should know why hospital beds cost so much. An analysis of the use of hospital beds and the mix of public and private is required. The public does not know much about these areas. There is so much medical politics that it is necessary to open this area up to debate and provide the figures to show who is paying for what.

There could be more effective usage of beds in public hospitals. A deplorable situation exists at the moment where beds are controlled by consultants. Often it is in a consultant's interest to use those beds for private patients. Consultants hold far too much power over the way in which hospitals are run and the patients who are treated. I would like the Minister to address that — it is not an appealing job but it must be done. It has been overlooked by successive Ministers for Health but it is time we addressed the issue of control in the medical services.

In relation to the development of private health insurance and the White Paper we have been promised, it is clearly in the consumer's interest to encourage competition and I hope other private health companies will enter the market. It is essential for the development of that market that the three core principles of community rating, open enrolment and lifetime cover are adhered to and that there should be no deviation from those principles. We need rigorous implementation of risk equalisation. That is essential for the future of VHI and the maintenance of a level playing field. Sometimes people who believe that we should have competition at all costs talk about doing away with these shackles to provide a level playing field. To have a level playing pitch it is essential to have a risk equalisation scheme, otherwise there would be a tendency to cherry pick. That can be done in many subtle ways.

New companies coming into the market can encourage younger people who would be low risk to join. Also there are subtle ways of discouraging older higher risk people from joining. The reality is that once a person has signed up as a customer of one company they are unlikely to change. There is a strong customer loyalty and people usually stick with their original company. Obviously some people have moved from the VHI to BUPA but, by and large people, stick with the company with which they started. Unless a rigorous equalisation scheme is implemented there will be a tendency for new companies to cherry pick and the longer established companies will be left with the higher risk. I support risk equalisation.

The Labour Party supports this Bill and its limited provisions. I would have liked it to go further and it is unfortunate that it is so specific. Will the Minister give a commitment to publish the White Paper on the future of health insurance, when completed, and make it available to Members to allow for a full debate?

Mr. Collins

I support the Voluntary Health Insurance (Amendment) Bill, 1998. While I would like to refer to some of the specific provisions in the legislation, I shall touch on some of the broader aspects concerning health insurance and its related problems.

The purpose of the Bill is to enable the Voluntary Health Insurance board to act as an agent in the making available of health insurance to persons who will be resident outside the State for temporary periods. The Bill is being introduced following receipt of advices from the Attorney General that an amendment would be required to the Voluntary Health Acts, 1957 and 1996, to empower the board to act as an agent for the making available of an international health care plan. The VHI has made strong representations to the Government on this issue so that it can offer an international health care plan to individual clients as soon as possible.

An international health care plan made available pursuant to the legislation would be based on an agreement between the board and a major international insurer. Under the plan, the responsibilities and liabilities involved in providing the benefits covered would fall exclusively to the international insurer. The premiums applicable under the plan would be set by an arrangement between the VHI and the international insurer.

Under the arrangements envisaged, the board would market and sell the plan to its clients. The plan would also ensure easy mobility for the client between the VHI cover in the State and cover under the plan. This would be a particularly customer friendly arrangement in the case of people who must reside outside the State from time to time in connection with their employment. The arrangement envisaged will involve the VHI having a share in excess premium income over claims expenditure. While the start-up will involve limited initial outlay by the VHI, it anticipates an early stream of modest income from the plan.

The Bill addresses only the specific issue of acting as an agent for such an international health care plan. The VHI's future role and corporate status is being considered in the context of the preparation of the White Paper on private health insurance.

I would support competition in the health insurance market if I was convinced it would result in cheaper premiums, while guaranteeing quality health care to all subscribers. This is a thorny and contentious subject. The Government considers a policy known as "risk equalisation" should be introduced. Next year's payment to the VHI is part of the Government's risk equalisation policy under which companies which have a younger subscriber base, less prone to sickness, must compensate companies with a subscriber base made up of older members. An expert group appointed by the Government concluded that risk equalisation measures were a barrier to entry into the health insurance market. The Government, on this occasion, has taken the view that the public good must override the need for more competition in the health sector.

All these issues will be discussed and analysed in greater detail as part of the White Paper on private health insurance, which is due for publication in the near future. The balance that must be struck if more competition is to be introduced in the sector providing health care must relate to the introduction of cheaper premia, while guaranteeing quality health care at all times to all subscribers.

I welcome the fact that the Government is introducing a White Paper on private medical health insurance which I am confident will address the thorny problems of health insurance in a balanced and even-handed manner. The Minister for Health has stated that he has received 70 submissions on the White Paper and that officials from the Department of Health and Children have met with over 20 bodies to discuss their respective submissions.

The bottom line is that whether one looks at the issue from the perspective of the public health services or private health services, the patient must always come first. This must be the overriding principle of any policy implemented by the Government or local health boards.

Hospitals and health care institutions exist to serve the needs of patients. At times they serve other purposes also. They are the places where doctors, nurses and other staff who participate in or support the process of health care work. Hospitals are the places where the next generation of the caring profession receive much of their training. They provide stable, well paid employment in the towns and cities which they serve and are significant generators of economic activity. The simultaneous fulfilment of these various roles can obscure the central reason for their existence, which is to protect and enhance the health of patients.

The White Paper must contain concrete proposals which put the health of the patients first. When supporting the principle that the patient always comes first, the Government must continue to make efforts to reduce the waiting lists. There have been some developments in relation to the June figures for waiting lists.

Since taking office the Government has allocated £12 million for waiting list procedures, which is a 50 per cent increase on the allocation provided by the previous Government. In April 1998 the Government established a review group on waiting lists. The group is to examine the underlying causes of waiting lists and waiting times and how best the problems in these areas might be addressed. The review committee has forwarded its recommendations to the Government for its consideration. The report's contents are the subject of consultation between the Department of Health and Children and the Department of Finance. I hope the budget increases to combat waiting lists will be made in the context of the Estimates, as well as in the context of the review to reduce waiting lists. There can be no quick fix to the problem of waiting lists and financial support must be made available if short-term, medium-term and and long-term programmes are to be put in place to shorten them.

I welcome the Minister's commitment to redress regional imbalances in the delivery of health services, consistent with the principle of equity which underlines our national health strategy. Illness does not respect geographical location and the organisation of our services must reflect that axiom as far as it is possible, practical and prudent to do so. This is a central tenet of the Government's overall objective, set out in its strategy statement, of achieving regional self-sufficiency in the delivery of acute hospital services in our health board areas. It is that objective which is driving the major capital investment in hospitals throughout the country under the present programme. This focused programme of investment is aimed at developing strong regional hospitals, augmented by a network of effective local general hospitals, providing people with access in their own regions to the quality and range of services to which they are entitled. The increase of 35 per cent in capital funding for the period 1998-2000, which the Government has secured, is significant in this regard.

This approach to addressing regional imbalances is also evidenced in the implementation of the national cancer strategy and the strategy on cardio-vascular disease. These two major achievements are central to the achievement of meaningful health gain by addressing the two major causes of premature death. In developing new services under these strategies, regional imbalances in the provision of health care will be redressed.

Ms McManus

This is a short Bill with little content and impact but it will benefit Irish people travelling or living abroad and as such I welcome it. There is increasing mobility not just among Irish people but nationals of many states and it is practical that we should make this arrangement.

However, it is a pity that the legislation is being introduced before the White Paper. Other Deputies have mentioned this and I ask that the Minister, in responding, be more specific on the matter. I have no doubt he has a definite date in mind for its publication and he should assist the House by advising us of it.

The Bill demonstrates why the White Paper is needed. There is a central conflict between the Minister's roles as owner of the VHI, owner of hospitals and the regulator of health insurance, and the difficulties in that regard should be addressed. Health insurance is an aspect of health care and cannot be dealt with as part of the market because it would be dangerous to assume that competition will provide choice and protection for people. When the market has been opened to competition it has been governed by fundamental principles in the legislation, such as community rating, open enrolment, lifetime cover and risk equalisation, and these principles must be protected for the future.

VHI private health insurance cover is no longer, if it ever was, about the quality of the accommodation or a choice of menus, it is now a means to jump the queue. Some 40 per cent of the population avail of private health insurance; they would not need it if other circumstances prevailed but it allows them quicker access to treatment and, because of the two-tier system, to better quality care. When the White Paper is published and discussed, I hope we consider the two-tier nature of the system and, while I have seen no evidence of this so far, the Minister has a responsibility to take us beyond the system. This has been done in general practice, as you will know, a Leas-Cheann Comhairle — a predecessor of the current Minister showed great vision at a time when financial circumstances were not as good as they are now, and made it contrary to a doctor's contract to discriminate between public and private patients. That is a progressive principle which must be introduced to our acute hospital service if we are to address the current inequalities. Perhaps the State should take up insurance on behalf of public patients. I do not know the financial implications of adopting that approach but we should look at various models with the set objective of removing inequality.

I am under no illusions about the increased cost of health care. How we will address these costs is extremely worrying and demanding of legislators and policy makers, because technological advances and medical innovations increasingly set standards and create a desire for better health care, and the nature of such advances is that they are extremely expensive. We can see this already in the costs of certain drugs and technologies. We must examine alternatives to the hightech options — I do not mean alternative medicine per se.

Like Deputy Shatter, I am concerned about the exclusion from VHI cover of psychological services and treatments. The Psychological Society of Ireland has made a good case for inclusion in VHI cover, because research shows that psychological intervention can produce a lower cost or a more efficient way of treating a patient, rather than having him or her in hospital availing of expensive treatment. We must consider interventions at an earlier stage.

A recent article in The Irish Times mentioned that I was putting down a parliamentary question on this matter, and I was contacted by a constituent whose son had been seriously traumatised after being in a car accident. He was treated for the physical injuries but the psychological damage done to him was such that he requires ongoing treatment. Since the family cannot claim for psychological treatment although they have been advised this is the best option, and it costs £40 per session for such treatment, the likelihood is that the son's condition will deteriorate to the point where he will have to enter a psychiatric hospital for treatment. That makes no logical sense.

It should be possible to provide cover for treatment under clearly defined arrangements — there are many people who consider themselves psychologists or counsellors but do not have professional expertise or training. It is possible for a register to be applied as the way of assessing whether a psychologist can be considered for this. In Britain they have widened the possibilities for people availing of psychological treatment to claim on insurance — they can now go straight to a psychologist without going through a general practitioner. We should learn from what is happening in Britain and see it as an opportunity to reduce automatic access to hospitals and see if there are ways to pre-empt that access and make it unnecessary to early treatment.

On another issue, I would ask that the civil servants reply, via the Minister, in clear and unequivocal language, because I have already put down a parliamentary question on it and, having read the answer, I do not have a clear idea of the Department's position on it. It relates to where a private patient is in a public bed, not for emergency but for elective treatment. From time to time private patients end up in public beds and are treated by a consultant. It is clear they have to pay consultant's fees. However, at present the VHI is paying the consultant's fees and BUPA is not, because it feels — and I suspect it has very strong grounds — that those circumstances do not entitle a private patient to use a public bed, that it is only in emergencies that a private patient can be put into a public bed. This issue has been raised at wage agreement discussions that have been held over the years and was settled, but the practice is still occurring that private patients are occupying public beds not on an emergency basis but on an elective basis, and the VHI, through custom and practice, is paying the bills. That is very good for the patient who has VHI, but it is very bad for the hospital service that is already in trouble because of lack of beds. I asked a parliamentary question and I was told:

Under the health service in-patient regulations, a private patient being admitted to a public hospital as an elective admission shall not be accommodated in a designated public bed. However, a private patient being admitted to hospital as an emergency admission shall be accommodated in a designated public bed if, and only for such time as, a designated private bed is not available.

I concur with the second sentence. Obviously an emergency case must be admitted. However, we all know that the first condition is simply not being applied, that there are cases where private patients are coming into public beds in those circumstances and the consultants are then looking for their fees. We need to know how the Department is dealing with that issue. If it is the case that the practice is wrong and in contravention of the law, then we need to deal with it. It is part of the problem of waiting lists if beds are being occupied in this way.

There is another issue I would ask the Minister to consider — I do not expect him to have an immediate answer. I raised the issue in the debate yesterday of cancer patients who were in need of urgent treatment but who were not being brought into hospital quickly enough. In the past, people who were so badly in need of surgery would have been admitted to hospital and had surgery within a matter of days of seeing their doctor. Some of these cancer patients, one in particular, has been waiting since July and only went into hospital in the past week. I have subsequently discovered that in the case of two lung cancer patients a consultant was in a position to carry out surgery and the two beds were available, and he was prevented from doing so by the hospital, presumably because of budgetary considerations. I do not know why exactly the consultant was refused the opportunity to operate. We seem to be reaching a new low. Is it the case that the problem is not that the consultant is not available to do the surgery or that the beds are not available but that there is another element that is blocking lung cancer patients from receiving treatment? We are in serious trouble if this is happening, as I believe it is.

There is no real point in debating the Bill in question because it is self-explanatory and we are all in agreement on it. There is not much point either in going into issues relating to the White Paper because we have not reached that point yet, but I would ask the Minister to clarify his view on the inequalities that exist in our acute hospitals, his view on our two-tier system, on how it is operating and on how the tiers are becoming more defined rather than less defined.

Yesterday we heard about the various measures the Minister intends to put in place, some of them short-term and some of them long-term in relation to hospital waiting lists. However, he did not address the kernel of the problem. It is extraordinary that the Minister did not once raise the issue of equality of access in his speech. It is also extraordinary that today, when we are discussing the issue of the future of private health insurance he is again avoiding the issue of the nature of the health service and the acute hospital service in particular, because that is where the problem really lies. We have dealt with it at general practice level. I am sure we could do more in relation to allied services.

On the acute hospital service, the kernel of the problem is that if one has money, if one can buy private health insurance, one can work one's way to the head of the queue, and if one does not have that luxury one cannot get the treatment one needs. There are whole swathes of people in our community who are discriminated against as a result. These are poor people, elderly people, people who are mentally handicapped. It would be interesting to know how many people with mental handicap have VHI cover. I would say there are very few. They are the people who are vulnerable in our society, who do not have the freedom of choice that is a necessity if one wants to get treatment. We have this notion that one can choose to be a private patient or not. It is not a matter of choice. It is a matter of necessity at the moment. Anybody who can afford to go privately goes privately. This in turn increasingly exacerbates the difficulties and the problems for those who cannot do that. Those who cannot are, in the main, the people who need health care most.

When it comes to sickness and ill health it is the poor who suffer most. It starts with stillbirths. The level of stillbirths has a socio-economic basis to it. One can look at the incidence of cardio-vascular disease. The huge impact of social and economic factors mean that the chances of a middle aged unemployed person, a man in particular, having a heart attack are greater than somebody who is not in that category. So those who need the hospital care most are the ones who have the least chance of accessing it.

I appreciate that this is not a new problem, although the problem is getting worse, and I appreciate that the Minister has a hard job to tackle it, but the longer he leaves it, the harder it will get. I would remind him that the Government came into office on a very clear commitment to tackle hospital waiting lists. Those hospital waiting lists cannot be tackled in any real or fundamental way without also tackling the basic inequality in our acute hospital services.

Mr. M. Kitt

The Voluntary Health Insurance (Amendment) Bill, 1998, will enable the VHI to act as an agent for the authorised insurer in the sale of an international health care plan. In my political innocence I always thought that the VHI did cover people who lived outside the country for a short time. I am thinking in particular of the case of students who may have been studying in another European Union country. In the past, the VHI allowed health insurance cover for such students but it was only applicable for six months. Under the terms of the Bill, medical insurance could be provided for people residing outside the country for over six months and up to five years. I welcome the fact that we are now legislating for an international health care plan for people working outside the State.

Private medical insurance was introduced in Ireland in 1957 following the recommendation of an advisory board which had been set up by the then Minister for Health, T. F. O'Higgins. The advisory board investigated the feasibility of introducing a scheme of voluntary health insurance to encourage Irish people to become more self-reliant in providing for their health care needs. The board recommended that a non-profit organisation, established especially to administer a community rated health insurance scheme, would be the best option. The Voluntary Health Insurance Act became law on 5 February 1957 and the VHI as we know it was established.

As the Minister stated, the VHI was established primarily to cater for the estimated 15 to 18 per cent of the population which at the time had no entitlement to services under the public system. In addition, the board was specifically asked to devise its insurance agreements in such a way that they would appeal to those who have public eligibility, so as to encourage self-reliance and mutual assistance on as wide a scale as possible. With its mutual ethos and a customer driven culture, the VHI has successfully met these objectives. Today its membership is at an all time high of 1.4 million members, representing 40 per cent of the population. The VHI has been fortunate in that members who join the organisation have stayed with it down through the years.

The VHI responded positively to the introduction of competition to the private medical insurance market two years ago and is operating very successfully with more than 1,000 new members joining every week. The company operates 6,700 group schemes around the country and pays in excess of £300 million on members' health care claims each year. I understand there are also plans for other private health care insurers to enter the market. Obviously, such competition will be good for the consumer.

In recent times the VHI has addressed the issue of new option plans but some of these plans are very expensive. I hope the VHI will look at the quotes it is providing for option plans it is now introducing.

Many people have been unlucky in the past in not being able to get into the VHI, which was the only private health insurer until BUPA Ireland came on the market. Six years ago a constituent of mine needed an urgent heart by-pass operation. He was quoted £12,500 for the operation at the Blackrock Clinic. He was able to have the operation only because the local community was able to raise the money. That is an example of how costly this type of operation is. It brings into focus access to health care. We have always sought speedier access but it has been a real problem over the years, particularly in the western region.

This legislation allows the VHI to offer a comprehensive range of health insurance plans to people residing in the State. However, the expansion of the economy and greater integration with the European Union has resulted in a significant change in work practices in recent times. Today, an increasing number of people are employed by export companies, State agencies and multinational companies and live abroad for significant periods during their working lives. This is also the case for people working with NGOs in developing Third World countries.

Up to now VHI members who spent time living abroad as part of their jobs have had to rely on the public health system in their foreign country of residence, or they have had to arrange private health care insurance overseas, but that can prove to be very expensive. In 1994, market research among VHI members identified a demand for a product that will provide members who reside temporarily outside the State with comprehensive cover for their health care costs. The Bill will allow the VHI to meet that demand and act as an agent for the sale of an international health care plan under which insurance cover may be provided against health care costs incurred while residing outside the State.

As well as meeting specific customer demands this product will also ensure the VHI can consolidate its existing business in the corporate sector and operate effectively in a competitive environment. Given that other insurance companies can offer international plans to Irish expatriates, if VHI is precluded from providing this service, the other insurers would have a distinct competitive advantage over VHI. When BUPA Ireland entered the Irish market it not only introduced domestic competition but also competition through BUPA International which has plans in countries throughout the world.

The VHI-proposed international health plan would be available for Irish people who intend to live and work outside the jurisdiction for periods of, typically, more than six months and up to five years. The main features of the product are medical insurance cover, evacuation and repatriation services and medical assistance services. People currently insured with VHI will be able to transfer to the international plan without waiting periods or pre-existing illness restrictions, provided they have served out the normal restrictions on the domestic plans A-E and A-E options. They will be transferred back to the domestic plans on the same terms when they return to Ireland. The cost of health care can vary in other European Union countries and throughout the world. Obviously, the VHI will have to look at this issue.

Since VHI is excluded from offering insurance outside the State, this Bill will give VHI the explicit power to act as an agent for an authorised insurer. The Bill provides for the exercise of this power to be subject to the consent of the Minister. It provides that the insurer, on whose behalf the VHI may act as agent, shall be authorised in accordance with the regulations governing the conduct of non-life insurance business. It also provides for the VHI board to comply with Part IV of the Insurance Act, 1989, which covers the regulation of insurance intermediaries.

The proposed international health plan will not be subject to the Health Insurance Act, 1994, and therefore the requirements of community rating and risk equalisation will not apply. That is an important issue. I favour the fact that we have community rating with the VHI. Other medical insurance companies, such as BUPA, have always assured us they would be very interested in this point. BUPA International is established in 170 countries worldwide, so it can transfer its members more easily from one country to another. I understand it provides temporary cover for Irish people working abroad and that is likely to continue because it is an international company. The cost of health insurance varies greatly from country to country and it is an issue private health insurers must examine. There is now a great interest in private health care and, given the cost involved for those not covered by medical insurance, it is understandable that people would seek the best quotes from VHI and BUPA.

An issue concerning access to health care which is of great interest to Deputies is that there has not been regional development in the provision of health care. In the past 20 years people have had to travel to Dublin for coronary care or heart bypass operations or to Cork for eye operations. I compliment the Minister, Deputy Cowen, and the Minister of State, Deputy Fahey, on the welcome provision of large amounts of money for new developments in Galway University College Hospital. Especially welcome is the provision for heart bypass operations and cancer treatment. Cancer treatment is something I always raised when a member of the Western Health Board because I could never understand the argument that St. James' Hospital should have priority over Galway, especially as these services were not provided in the west. We now look forward to a time when people will have access to these necessary services in their own regions.

There have been many complaints about private health insurance, that it has not provided for dental care or orthodontic treatment, which can be very expensive if a person attends a private practitioner. The question arises whether we should try to have the insurers cover the area or whether we should provide more funding for private dentists to take over some orthodontic treatment and dental care. It has proved very difficult for the Western Health Board to find suitable people to work in the area. The tendency is for people to go to the private sector as orthodontists or highly qualified dental technicians. The VHI should examine this area. It should also examine complaints from mothers, especially first-time mothers, that they receive so little cover for their hospital stay and that they must leave early. This is a subject of discussion between the VHI and major hospitals.

There have been calls in the debate for a strategic partner for the VHI. I would like to hear the Minister's response on that and he might refer to it when the White Paper is being discussed. I would like to see a discussion on a White Paper on the entire health area because one aspect cannot be isolated from the other. The White Paper on private health insurance should examine the entire health area.

There is a need for other private insurers to enter the market and, no doubt, this will happen in the context of the European Union. I hope that, regardless of who enters the market, the community rating will be maintained. VHI and BUPA have said they are open to all subscribers and VHI is fortunate that those who started with them have stayed with them by and large. There is the suggestion that some of the new insurers will cherry pick the system and accept only young and fit people. It must never be forgotten that services are badly needed for the elderly. As more elderly people live longer, it must be ensured that services are available for them. I hope the private insurers remember that and will not cherry pick the system so that they do not have to pay out large health care claims.

I welcome the Bill and hope there will be other opportunities to discuss the operations of insurers such as the VHI.

Mr. Creed

I wish to share my time with Deputy Boylan.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Mr. Creed

This Bill is a technical but important amendment to existing legislation governing the operations of the VHI. It brings home to us that we are living in a global village and that, fortunately, many Irish people now have opportunities to voluntarily work abroad. It is important that, in doing that, they have adequate health insurance. Like other speakers, I was under the impression that such a facility was provided by the VHI. The legislation clarifies the position and ensures that those people who travel abroad will have adequate health cover. That is welcome.

There is a corollary to that service offered by the VHI to people who go abroad. It is the duty of care which exists for the VHI and others who operate in the domestic health insurance market to cover returned emigrants who may have had health insurance all their lives and find that, when they return home, they do not have any health insurance here and that no company is willing to cover them. I have had occasion recently to make representations to the VHI about a returned emigrant who, for all the years he worked abroad, had health insurance. The VHI, because of the age of the applicant, refused to provide any cover.

That is most unacceptable. It appears to me to fly in the face of community rating, although the VHI disputes that.

In the motor insurance industry, if one changes insurance companies with a full no-claims bonus, one is entitled to a quotation from another company. However, it does not operate in that way in the health insurance industry and there is a loading because of age. If people have lived in another country and have had health cover for all their lives, there should be an onus on providers of health insurance to continue that cover.

The emigrant returned from America had health insurance all his life with a company called Blue Cross Blue Shield. To the best of my knowledge, the VHI had a reciprocal arrangement with that company for many years but it was recently terminated. I accept that I am highlighting an individual case but, because of the lure of the Celtic tiger and emigrants' desire to return home, there will be an increasing flow of people into the country who paid health insurance abroad. It would fly in the face of the principle of community rating — which underpins the operation of health insurance operators in Ireland — if they found themselves at a disadvantage. It would also appear to be a corollary of the provision in the Bill which enables the VHI to provide cover for people travelling abroad. The VHI should be obliged to provide cover for people returning to Ireland who paid health insurance abroad.

I would like the Minister to comment on this issue, which will begin to arise on a more frequent basis because of the numbers of people who emigrated in the 1980s — when 40,000 to 50,000 people left Ireland each year — returning home and who have discovered that economic opportunities await them here. Health insurance is an important consideration, particularly for people with families. It appears that the Bill envisages the reciprocal type of arrangement.

I welcome the Bill which deals with a minor change which ensures competitors do not have an unfair advantage over the VHI rather than providing the company with any particular advantages. However, there are a number of other issues in the health insurance area in respect of which many people are awaiting a meaningful response from the Government. It is interesting that approximately 40 per cent of the population are covered by the VHI. I am not familiar with the number of people insured by BUPA but I am sure that number is growing. That is an indication of the importance people attach to health insurance. It is also an indication of widespread dissatisfaction with the standard of the existing public health service. The VHI has become a vehicle, through private health care, for people of means to jump queues and ensure they receive hospital treatment earlier than those who do not have health insurance cover.

It appears that VHI premiums are increasing if not on a quarterly basis then certainly twice a year. The issue of medical inflation is at risk of putting the cost of voluntary health insurance — with the VHI, BUPA or another company — beyond the reach of many people on average incomes. There are difficult times ahead for the Department and the Minister in terms of grappling with this issue. I do not know what is responsible for fuelling medical inflation but advances in technology and the demand that all forms of treatment should be available to everyone are obviously two of the factors involved.

I have an unfounded view — I cannot substantiate it in detail — that there are certain vested interests in the health service which are making a considerable killing at the expense of people who are unable to afford private health insurance. The interests of consultants are catered for by a constituent of mine — he is also a close personal friend — Finbar Fitzpatrick who, I have no doubt, does an excellent job on their behalf. Will the Minister assess the current contracts under which consultants operate which enable them to mix public and private practice? As previous speakers stated, on occasion, private patients are being admitted to public beds for elective procedures. As a member of the health board I am aware that this happens on a nudge and wink basis and consultants are making a killing at the expense of public patients.

Minister of State at the Department of Health and Children (Mr. Fahey)

It would be helpful if the Deputy could encourage Finbar Fitzpatrick to spell out a few home truths for our benefit.

Mr. Creed

That is the Minister of State's responsibility but I will give him every possible assistance.

Figures to which Members referred during Private Members' Business this week indicate that in excess of 30,000 people are on hospital waiting lists. The type of behaviour which involves consultants and hospital authorities putting private patients in public beds happens at the expense of public patients and it is adding to the length of the waiting lists.

Deputy Michael Kitt referred to orthodontic treatment. This area is causing enormous anxiety to parents and teenage children, who are particularly conscious of their appearance and who require orthodontic treatment as a matter of urgency. Will the Minister investigate why the cost of orthodontic treatment in Northern Ireland is only a fraction of the cost which obtains in the Republic? I understand that orthodontic treatment in Northern Ireland costs 50 per cent less than in the Republic. I will stand corrected if the Minister informs me otherwise. I am aware of people who have availed of treatment in Northern Ireland because they could not afford to do so here.

As is the case with psychology services, why is the cost of orthodontic treatment not covered by the VHI? From my experience, the Southern Health Board encountered enormous difficulties in encouraging people to work in the public orthodontic service because of the amount of money they could earn in private practice. Will the Minister review the guidelines governing eligibility for orthodontic treatment? Those guidelines are extremely restrictive and people are suffering considerably because they cannot afford to seek private treatment or they do not qualify under the guidelines. Even if they do qualify, the waiting lists for treatment are very long. Many people suffer considerable emotional trauma during their teenage years, they are taunted and bullied by their peers and they refuse to go out because they are conscious of their appearance. At our age that may appear to be a cosmetic issue but for teenagers it is extremely important.

One of the other areas responsible for fuelling medical inflation involves drug companies, the cost of prescribing drugs and the demand for new drugs. Nothing brings this home more than the recent phenomenon involving the wonder drug, Viagra. I spoke to a pharmacist recently who informed me that in the region of £1,000 worth of Viagra was being sold each week on prescription by their shop which shows the enormous capacity of new drugs to fuel medical inflation. When Viagra becomes available in due course on the GMS — I have no doubt it will become available — medical inflation will be fuelled further. The relationship between GPs and drug companies is worthy of closer investigation. The demand that the latest wonder drug should be prescribed in cases where generic drugs could be equally effective must also be investigated.

We are fortunate that the health service, public and private, has in its employ people of great ability who do wonders for the patients they treat. However, there are inequities in the service and people who cannot afford to pay for treatment are being by-passed by those on voluntary health insurance. Problems are also being fuelled by a minority of those employed in the medical profession. These matters must be investigated because, if they are not, the premiums charged by VHI and other companies will continue to escalate. While at present 40 per cent of the population are covered by the VHI — over 50 per cent of people are covered when BUPA subscribers are taken into consideration — this figure will diminish significantly if the rise in the cost of premiums continues. That will have horrendous consequences in terms of increasing the numbers on waiting lists which are already excessively long.

Mr. Boylan

I thank Deputy Creed for sharing time. I welcome the Bill. My principal point — I want the Minister to examine it — involves an anomaly between voluntary health insurance in the Republic and that in Northern Ireland. I was a strong supporter of the VHI and have recommended down through the years that people have voluntary health insurance because of the overall cost of medical care, which has not decreased in recent years. The cost of medical care is now beyond the reach of most families.

Deputies Kitt and Creed referred to orthodontic treatment. I emphasise the astronomical cost of this corrective procedure which is necessary for young people. It is practically impossible to have the corrective procedures carried out in the period when correction can take place in the growing years, because of the long waiting lists. Parents are forced then to take it up with a private practitioner where one is talking of bills in excess of £1,000. Deputy Creed said it was much cheaper in Northern Ireland. It may not be that much cheaper but it is certainly readily available at a cost.

With regard to the VHI, I am delighted that BUPA Ireland has entered the marketplace and challenged the VHI. I have lost confidence in the VHI's standards. It is a company which reads the fine print. It is concerned with where it cannot and will not pay. I formed that view as a result of the experience of a good friend of mine who had reason to visit his doctor with an ailment which had troubled him for 20 or 30 years. It was something he needed to have addressed having lived with it for a long time. His GP recommended that he attend Cavan General Hospital where he spoke to a doctor who, on examining him, said a successful operation could be carried out. The doctor recommended two specialists in the field, one based in Dublin and the other attached to Cavan General Hospital. Needless to say, being from Cavan he took the advice of the specialist attached to that hospital who, the doctor assured him, would deal successfully with his problem. The specialist advised the patient to come to his surgery at Tyrone General Hospital in Omagh. The preliminary examinations, blood tests and so on were carried out at Cavan General Hospital and the patient then travelled to Omagh. The operation was carried out by this eminent man and I am delighted to say 12 months later that it was an outstanding success. A niggling ongoing problem of the previous 20 or 30 years was gone and the man had a whole new lease of life. The patient, who was a fully paid up member of the VHI, sent his bills to the VHI and that reputable insurance body refused to pay because the operation was carried out outside the State.

The patient came to me as a constituent and I took up the issue with the VHI but I was simply up against a stone wall; the company refused to pay. It advised me, strangely enough, that if the patient had been outside the country and had been in Northern Ireland on business and had fallen ill, the company would cover him. However, because the specialist attached to the North-Eastern Health Board and Cavan General Hospital invited the patient to come to his surgery at Omagh for the operation, the company refused to pay. I do not accept that; I could not accept it. I have tried and failed, but I have not let go yet and I am advising the House of this disgraceful carry on.

It has now come to my notice from the publicity which I received on local radio in raising this matter that another patient of Cavan General

Hospital had the same experience. This person was recommended by another specialist attached to Cavan General Hospital who also works at the marvellous Tyrone General Hospital in Omagh to go there for the necessary procedure, but the VHI will not pay. That is not acceptable and it is not good enough.

I will go further. In the case of patient A all of the procedures leading up to the operation were carried out at Cavan General Hospital. The person in question, being a busy man and not having time to stay overnight, went in on a daily basis for these tests and because he was not an in-patient but was considered an out-patient for the tests the VHI would not pay these costs either. Had the patient gone into hospital the night before or a week before and stayed longer at a greater cost to the VHI, the company would have paid for all of the costs incurred as an in-patient. If there ever was a stupid regulation, that is one. It is totally unacceptable, that the more costs one incurs the more proportionately the company will pay and the less costs one incurs the less the company will pay. That patient did not stay overnight preceding the operation but travelled to Omagh in the morning because the hospital is conveniently only about 30 miles from his home. The distance to Dublin to the other specialist who was recommended was more than 90 miles. Needless to say, the patient took the convenient option which was recommended and which involved working within the North-Eastern Health Board area and the VHI refused to pay. That is not acceptable. If the Minister wants the details of the people concerned, I will be glad to give them to him. Even though that was 12 months ago, the patient has paid his bills because he is not the type of person who would live with that.

I have certainly had second thoughts about the VHI. Unless the company comes up front on this one, I certainly recommend that people shop around for an insurer. I am delighted that BUPA Ireland has entered the marketplace and offered competition. The VHI obviously thought it could treat people in its own way and not in the best interest of the patient.

Mr. M. Moynihan

The proposed legislation will allow new schemes to be offered for sale to Irish customers which will allow complete health cover throughout the world. The present VHI scheme is excellent and the facilities are superb, but anybody who has an accident while on holidays or working in a foreign country is faced with the problem of meeting massive health care costs. This is particularly the case in America where medical care is very expensive. We are all familiar with people who have had accidents in another country and the high cost of treatment is left to the family of the victim. We are fortunate that Irish people are very generous and all calls for financial assistance for such causes are well supported. This Bill will see an end to this arrangement and Irish people can travel with confidence throughout the world secure in the knowledge that their health care needs will be covered.

Since its establishment in 1957, the VHI has provided cover on a non-profit basis. It had a massive customer base and offered a varied health cover plans to suit every individual. Option plans have been introduced recently to cater for the enhanced cover requirements of customers and this new facility of an international cover plan will further enhance the service and improve the product it offers.

Recent EU directives have opened the market to competition and we are fortunate to have a company with a solid reputation and good marketing record now operating in Ireland. The VHI's statutory monopoly has ended and the market is open to competition. This will ensure that all players remain competitive while constantly striving to improve their products and services. These two health insurance companies operating in Ireland offer affordable prices, open enrolment, life cover and community rating.

We have had an excellent health care facility in Ireland coupled with highly competent research centres in our hospitals, laboratories and universities. We must continue to invest in health care for all sectors of society.

We have recently opened a major new hospital at Tallaght offering state of the art facilities. In my constituency we have seen additional investment in Mallow General Hospital and St. Patrick's Hospital, Kanturk. To maintain a good health care service it is imperative that we continue to invest in local health care.

It is accepted that early detection of serious illness improves the chances of survival. We must maintain local facilities if we are to continue with the current trend of preventative medicine. This is particularly applicable to rural Ireland where people, especially the aged, may have difficulty arranging travel to medical centres in the absence of adequate public transport.

Local hospitals cater for people in their own environment and facilitate the visits of family and friends, which helps the recovery process. We must ensure such services are always provided and that we continue the current strategy of providing local health care. This is especially the case with Cork University Hospital, which has a very good cancer treatment unit. When patients are faced with the detection of cancer they and their families often have fears and concerns. It is not always practicable for people to travel long distances to avail of chemotherapy or radiotherapy. We must ensure they are available at least to a reasonable extent within local areas. While the services provided by Cork University Hospital are second to none, the Minister, the Department and public representatives must ensure that patient after care is top class.

The hospice movement, respite care and the care of the terminally ill is very good. The hospice movement provides an excellent service throughout the country, but more investment is needed. We should encourage this service as much as possible. I have visited a number of hospices and have seen the dedication of the staff and the nurses. It is a rewarding experience to observe the support and help they extend to patients and their capacity to put them in good form.

Acting Chairman (Mr. O'Malley)

The Deputy will realise this is the Voluntary Health Insurance (Amendment) Bill, 1998. The debate should be on health insurance rather than the health services generally.

Mr. M. Moynihan

Hitherto, the VHI has offered services to those who are least likely to incur illness. It does not cater adequately for the elderly. There is little point in excluding cover for ten years for an illness — even for a minor illness — an elderly applicant may have suffered. If, for example, a 55 year old applicant suffered a minor heart complaint a couple of years earlier, he or she would be 65 years of age before the VHI would provide cover for any related illnesses. Increased competition should ease this problem. In addition, the VHI needs to provide cover for a number of treatments it currently excludes, such as dental care and orthodontic treatment.

People with VHI cover or other forms of health insurance who work and live abroad have had great difficulty in getting adequate protection. Many have had to pay huge bills which their families have often had to meet. In some cases, this has necessitated fundraising events to facilitate their return to Ireland or to ensure they received health care abroad. This is unacceptable. If a VHI subscriber is not satisfied with the way he or she is treated by a consultant, who may not have a good bedside manner, that consultant can submit a claim for whatever fee he or she so wishes without consulting the patient. The patient can write to the Voluntary Health Insurance Board, but how can he or she protest about the way he or she was treated by a particular consultant? That matter should be examined. That issue was raised by a constituent last weekend who told me he was charged more than £300 by a consultant who saw him while he was in hospital for five minutes and he was not treated with the respect he deserved. However the majority of consultants provide an excellent service and they cannot all be tarred with the one brush because of the treatment of one consultant.

Mr. McGrath

I welcome the opportunity to discuss the Voluntary Health Insurance Board. The Bill introduced by the Minister is worthwhile. It provides that Irish nationals working abroad for a period will have access to the medical insurance they require. The Bill provides an opportunity to examine the VHI and to remind the Minister that some other provisions should have been included in it, which would have improved it.

The VHI was set up in the 1950s and was a welcome development. As a young person, I recall the discussions that took place in our house as to whether we should join it. I do not believe that my father, who used to put things on the long finger, joined it, much to the disgust of my mother. The late Paddy Shaw, who lived in my area, was one of the first directors of the VHI. Due to the foresight of people like him, the VHI has developed to the stage it is now at.

The VHI has grown over the past few years and it now has 1.4 million customers in Ireland. Subscriptions bring in £300 million per year. That represents tremendous growth and the number of subscribers have gradually increased over a number of years. It is interesting to note that a health care company, Oxford Health Plans, located in Mullingar recently and many of its claims are processed there. I was told by one of the executives that the company has a membership of 1.4 million in the United States and it has a multi-billion dollar turnover annually. Health insurance in the United States is multiples of what it constitutes here and it costs a great deal more. That company has 6,000 staff dealing with its 1.4 million customers, which is very different from the VHI's streamline operation. We should commend the VHI for the small amount it spends on administration on behalf of its customers.

Hospitals now submit claims directly to the VHI for payment on behalf of subscribers, a worthwhile and recent development. I recall on one occasion a number of years ago a doctor told me that he had treated a VHI subscriber and looked after him very well and he sent his bill to the subscriber who in turn submitted it to the VHI. In the past the VHI sent the cheque in full payment to the subscriber who subsequently reimbursed the doctor but that subscriber failed to reimburse the doctor, and was able to enhance his bank balance considerably as a result of good treatment by the doctor who was left to whistle for his money. The streamlining of the payment of bills has been a great help and there is also a clawback provision in respect of tax relief.

The VHI is a non-profit making organisation and some of the interest groups who gain from it sometimes tend to forget that. Its 1.4 million subscribers pay their subscriptions and that fund is distributed to the various interest groups, hospitals and doctors, and a small amount is used to cover administration costs. Those interest groups compete annually for a share of the £300 million fund. If the VHI is not the first arm, it is the third arm of the Department of Health and Children. It subscribes substantially to the public health service by way of covering the cost of subscribers when they are hospitalised in public hospitals. However, the major proportion of its expenditure goes to private hospitals, many of which are dependent on its funding and the doctors get a substantial amount of its fund. Those competing interest groups vie to increase their charges and are anxious that their fees are increased annually. The main impact of that is the subscriber has to pay an increased subscription. We have seen a hike in the level of the subscription year after year. This matter should be examined.

In that regard I propose that an ombudsman should be appointed to deal specifically with problems related to the VHI, or the remit of the Ombudsman should be expanded to include disputes concerning the VHI. The Minister of State, Deputy Fahey, might put that suggestion to the Minister. The acting chairman will be aware that subscribers who have a dispute with the VHI over the payment of a bill or other matters have no means of redress. The VHI is the judge and jury on any disputed claim. I have had recourse to contact it over the years on various matters and it tends to reconsider the matter, but inevitably it responds to the effect that having reviewed the position it finds there is no valid claim. That is regrettable because many subscribers have been annoyed about the way their claims were dealt with by the VHI and it is unfair that they do not have some means of redress.

The remit of such an ombudsman should extend beyond dealing with disputes. It should cover the competing request for funds by hospitals and doctors. Such an ombudsman could deal with requests for increased fee payments. The doctor or the hospital concerned could refer the request to such an ombudsman who would have competency to examine it and, if necessary, negotiate between the bodies. That would provide a facility for discussion and negotiation which would ensure the subscriber would not be ripped off on all occasions. Such a role is important and it is remiss of the Minister not to provide for it on this occasion.

The acting chairman will recall that in its recent report on the VHI the Oireachtas Joint Committee on State-sponsored Bodies recommended the appointment of such an ombudsman. The recommendation may have been made before the acting chairman was a member of the joint committee. The joint committee was strongly of the view that an ombudsman should be appointed to deal with such disputes. The Minister would be well advised to accept that recommendation.

A particular dispute at that time gave rise to many problems and highlighted the need for the appointment of such an ombudsman. That dispute arose between a hospital in my area, St. Francis medical centre, and the VHI, and it turned out to be very bitter. It subsequently ended up in the Supreme Court. I regret the Minister of the day, either because of negligence or active hostility, did not facilitate efforts to resolve what turned out to be a major dispute. Initially cover for the hospital was withdrawn, the case went to court and was appealed to the High Court and in turn to the Supreme Court. The net result was a cost to the subscriber which amounted to millions of pounds.

When we consider the VHI's annual turnover, there has been a hike of 2 to 3 per cent in members' subscriptions over a period of time. The VHI should not have taken that matter that far. I was annoyed by that because I spent a good deal of time trying to resolve the dispute and put forward various proposals. I was aware that I did not have the capability to resolve it, but I put forward proposals for a mechanism that could help resolve it. On that occasion the hospital was prepared to accept those proposals for mediation, but the VHI turned them down. I recall that a meeting I set up with a VHI executive and a representative of the hospital to try to work out a mechanism to resolve the dispute was cancelled on the morning it was due to take place.

I have an opinion on who intervened to cancel that meeting. Hopefully with the Freedom of Information Act now in place, I will get to the bottom of that matter, which was disappointing. The ordinary VHI subscriber had to pick up the tab for the £5 million or £6 million, not to mention the difficulties which ensued for others involved. The hospital employees were put on short time because there were not enough patients. Some doctors, nurses, domestic and administration staff lost their jobs and some were put on short time. A great number of them lost money. This was unfair and could have been resolved. I hope the Minister of State will refer this to the Minister and Departmental officials. There is a great need for an ombudsman to review disputes between the various bodies. One could have a specific VHI ombudsman or the remit of the existing Ombudsman could be broadened.

The other issue as regards the VHI is the competition which has now appeared on the home front, especially in terms of the plans available. The Minister said new members are joining the VHI at the rate of 1,000 per week. It will be interesting to see how its competitor has fared. I am sure it would say new members are joining at the rate of 1,100 per week — it would certainly have to outdo the VHI. This area is increasing in importance and it must be looked at carefully.

The introduction of competition was worthwhile. The committee strongly recommended that the market be opened up for the benefit of the subscriber. As public representatives, we should bat on behalf of the consumer. If VHI is to survive, continue and stave off competition, it must expand within the terms of this Bill and appoint an ombudsman to deal with disputes.

Mr. Naughten

I welcome this useful and important Bill giving new options to the VHI which will hopefully tackle some of the problems in the health service. The VHI will act as an agent for the sale of an international healthcare plan which will provide against healthcare costs incurred for those residing temporarily outside the State. This is important for young people, especially students, who leave the State to work during the summer or study for a year. Many students have scary stories to tell about getting injured or ill outside the State and having no insurance cover.

This provision also applies to the elderly. I recall a case where a woman went to the United States and broke her hip while there and she had to pay for a hip replacement. I know of a 28 year old man who went to Canada on holiday for three weeks and had a heart attack. He had no health insurance cover and came back after three weeks for treatment. It is unacceptable that a person has a heart attack in the first week of his holiday, receives no medical assistance for the following two weeks because he is not covered and has to come back here to be treated. It should not happen and hopefully with the introduction of this Bill some of these problems will be alleviated.

I am wary about private insurance companies coming into this country with the deregulation of the market, cherrypicking young and middle-aged people and turning away the elderly or those with chronic conditions. This type of discrimination has existed in the motor insurance industry for years. Young people cannot get insurance because of the huge cost. The same will happen in the health insurance industry unless we ensure the provision of a community rating. This is a huge benefit in encouraging the elderly to take up health insurance and it must be complimented. One criticism I have of the voluntary health sector is that only about 40 per cent of the population are in the VHI or BUPA. We must look closely at encouraging more people to take up voluntary health insurance, perhaps by subsidy.

Private patients are given priority medical treatment. In the past couple of days, an increase of 26 per cent in the public waiting list was announced. Part of the problem is due to private patients taking up public sector beds. This is leading to increased waiting lists and some people must wait up to two years for treatment. There is a 20 per cent chance that someone waiting for a heart by-pass will die if they are on a public waiting list. What do hospitals do? They prioritise private patients and put them ahead of public patients who may have been waiting six, 12 or 18 months for a procedure to be carried out. Someone with VHI cover gets precedence and the public patient is told to go home and ring the hospital the following week to see if it has a place.

Hospitals charge private rates for a private patient in a public bed. This should not be the case. It is causing an increase in the charges the VHI is paying to hospitals and thus the charge on those who take out voluntary health insurance. Subsequently, it is a disincentive for those on public waiting lists who do not have VHI cover to take it up as the cost becomes more prohibitive. We must look at the comparison between private and public waiting lists. One will benefit the other.

Many hospitals in the country have private beds. Roscommon County Hospital has very few in the general and psychiatric services. It is trying to put more private beds into the psychiatric unit as the health board receives more money for private patients. A great deal can be done by targeting resources at district hospitals. They can provide private beds but should also introduce additional procedures for public patients. People with VHI cover should be encouraged to have procedures carried out in smaller hospitals. This will decrease waiting lists in public hospitals, like the two regional hospitals in the Minister's constituency — University College Hospital and Merlin Park Regional Hospital. The Minister should seriously consider my suggestion that extra resources be channelled to smaller hospitals as a means of tackling waiting lists which have increased by 26 per cent in the past 12 months.

The VHI does not provide cover for orthodontic treatment. There are 3,589 young people on the waiting list in the Western Health Board region where routine procedures are rarely performed. Young people are assessed prior to entering secondary school and on reaching the age of 18 are informed they are no longer eligible. Some have been waiting between ten and 12 years for treatment. The sooner it is provided — preferably at regional centres — the greater the chance of it being successful. Again, some of the procedures could be performed in smaller hospitals. It is only the worst cases that receive attention. This is causing serious problems, including depression, in an era where young people are so conscious of their appearance. When will the report of the review group be published?

Acting Chairman

Will the Deputy confine his remarks to the insurance aspects of the matter rather than a discourse on the health services?

Mr. Naughten

The point I am trying to make is that if the VHI was to provide cover for orthodontic treatment the numbers on public waiting lists would reduce. The review group should consider my suggestion seriously.

More people should be encouraged to take out voluntary health insurance. Only 40 per cent of the population are covered by such schemes. The medical card system is a joke. The income limit for a married couple is £129 per week. Many lowincome families do not qualify as a result. The income limit for family income supplement is £230. The guidelines should be reviewed.

The cost of providing cover for students attending college is prohibitive. An effort should be made to have more people included because the service provided by general practitioners in colleges is atrocious. If young people were covered by the VHI, they could choose their own general practitioner. They have to wait up to three weeks to see a general practitioner in college. Every student should be entitled to a medical card.

The elderly should also be encouraged to take out voluntary health insurance from the VHI or BUPA to alleviate some of the problems being experienced in the public sector. The principle of community rating should continue to be the cornerstone of the market. Every elderly person should be entitled to a medical card regardless of income. They should not be means tested.

The VHI and BUPA do not provide funding to finance health promotion campaigns, a number of which have been conducted by health boards in connection with drug awareness and suicide. We should combat these problems before people end up in hospital when they will become a cost to these companies. There is need for greater co-ordination of the activities of county councils, voluntary youth organisations and the voluntary health insurance sector to tackle these issues. We have very serious problems. I recently read that the UK Green Party are promoting drugs awareness. It recommends a chemical test of the purity of ecstasy tablets. While I do not agree with such an idea, it represents a new and radical approach to the problem of drug abuse. All the bodies involved, including the health boards and the VHI must re-examine our methods of tackling this problem. Garda seizures will not solve it. Education and the promotion of health awareness are needed to deal with the demand side of the problem. The voluntary health sector has failed in this area. We should look at the health information campaigns which have been put in place in Britain. We hear of radio stations offering help lines which make young people aware of the risks involved in taking drugs and we return inevitably to the question of funding. The voluntary health sector must be encouraged to participate in funding health promotion.

The Department of Health and Children and the voluntary health organisations have failed to promote men's health while the issue of women's health has been prominent for many years. The question of suicide must be addressed as a health issue. The voluntary health insurance sector has failed in its role to promote health awareness which is a vital aspect of any health service. The problem of waiting lists can be alleviated by a health awareness programme which will keep people out of hospitals in the first place.

The Minister must examine these issues and hold discussions with the voluntary health insurance sector on the question of health promotion.

Mr. Barrett

The extension of the services provided by the VHI is to be welcomed because we live in a rapidly changing world. We have greater mobility and it is not unusual for people to go abroad for short periods. It is important, therefore, that the VHI has the power to provide a temporary service for people when they are abroad.

I compliment the VHI on the role it has played in our health system since its establishment, I hate to think what would have happened without it. The company was an integral part of our health system at a time when the resources of the State were less than they are today. However, there is now a real threat to that service. The VHI has traditionally provided health care cover for the duration of a person's illness, whether that was for 12 months or five years. The trend now is to offer units of money as insurance cover. This practice will be detrimental to the health of the population if it is allowed to continue. This new practice means that when a customer's units are exhausted he or she will no longer have cover. What will happen to the health of the patient in such circumstances? This problem is particularly acute in psychiatric medicine. In the United States people who need long-term care are often discharged from psychiatric hospitals and given only a supply of drugs because their units of cover are coming to an end. The health service is not being provided in the interest of the patient, it is simply based on the amount of cover provided by his or her insurance scheme. It would be detrimental to the health of our citizens to allow such a system to develop here. In our desire to be competitive and to offer choice to consumers we must remember that voluntary health insurance is an integral part of our health system.

If this trend is allowed to continue we may reach a stage where a public patient receives better treatment than one covered by an insurance scheme because a public patient with a long-term illness will be treated until he or she is cured while an insured private patient will be treated only until cover runs out. This is a real danger which could arise from increased competition in health insurance.

Health insurance companies should be obliged to provide members with insurance cover while they are temporarily abroad equivalent to what they would receive here. Companies must not revert to a system of units of cover and members who are temporarily abroad must not be caught in a situation similar to that which I have just outlined.

In his public utterances on health insurance, the Minister must make the public aware of the difference between the various types of cover on offer. I want to be sure that if I pay my premium and then become ill, I will be covered for as long as it takes to cure my illness. I would not want to have to leave hospital because my cover expired and wait until I had built up sufficient units of cover before returning for treatment. Such a situation would be detrimental to our health service.

I welcome the extension of powers the Bill gives to voluntary health insurance companies, but I am fearful of possible changes which could take place in health insurance cover. I hope such a system will never operate in this country.

Minister for Health and Children (Mr. Cowen)

I thank all Deputies who participated in the debate. While the intent and purpose of the Bill is specific, it has given Deputies an opportunity to raise many pertinent issues that will be addressed in the context of the White Paper due to be published towards the end of the year. Deputies articulated issues of concern to them in terms of the service being provided and the type of schemes on offer.

There is a recognition that private health insurance has been an important factor in the funding of the provision of health services in Ireland. A growing number of people are taking out private health insurance, with a high proportion of the population, in percentage terms, now covered. Successive Governments have not sought to dictate the level of coverage. Traditionally, private health insurance has been taken out on a voluntary basis by members of the public.

The success of private health insurance derives from the fact that we have a community rated market. If it were risk rated, older people and the chronically sick would have to pay much higher premium levels. The numbers taking out private health insurance are also a reflection of the strength of our economy and we have seen private health insurance emerge in significance as an employee benefit. Health insurance also attracts tax relief.

My fundamental responsibility is to ensure that the interests of both the public and private patient are protected; the public patient in terms of ensuring universal access to public hospital services, and the private patient in relation to ensuring that the fundamental elements of our private health insurance system are maintained.

I want to deal with some specific points raised in the debate. Deputy Shatter raised the issue of insurance contracts. I accept that it is essential consumers should have details of health insurance contracts expressed in clear language. Considerable improvements have been made in this regard but there may be a further need for improvement, and I will consider the point the Deputy raised in relation to the White Paper.

Deputy Shatter also raised the issue of psychological cover. He and other Deputies made the point that there is scope for improvement in relation to additional professional services to be covered as part of health insurance contracts. Indeed, this may be an area where there is scope for competition between insurers.

The current system of designation of public and private beds, an issue raised by many Deputies, dates back to 1991. It is in the interests of hospital management to have private patients treated in designated private beds. The position regarding beds used in emergency cases is as I already explained to Deputy McManus. Patients treated as private patients are liable for consultants' fees and private patients who are accommodated in public beds are not liable for accommodation charges.

In reply to Deputies Kitt and Creed, VHI currently operates what is known as VHI Assist which provides cover for people going abroad for holidays and other temporary periods. However, as market research and ongoing requests clearly indicate, VHI considers it essential that it be empowered to offer comprehensive cover in this regard, particularly for those travelling abroad for longer periods.

Deputy Shortall queried the important role played by consultants in the control of the health services and the need for them to be part of a management process in hospitals. In relation to clinicians and management generally, the challenge in meeting patient needs demonstrates the need for teamwork in our hospitals. We know the provision of the bulk of hospital services requires teamwork in the wards, operating theatres and outpatient departments. Effective teamwork is based on respect for each member's role and on methods of working which integrate the contribution of each team member. We need to elevate this approach to the corporate level in all our hospitals.

A great deal of work has been undertaken on this front in the past decade and since the introduction in 1991 of consultants' contracts, many consultants have been to the fore in participating in pilot studies on clinicians in management. I am pleased to say those early pioneers at St. James's Hospital as well as those in Cork, Wexford and the north west have now been joined by several other centres. The current contract is built on this experience and provides the framework and opportunity for a collaborative approach to managing our hospitals to be introduced nationwide. The recently published Report on the Commission on Nursing made a series of recommendations which will also give momentum to this process.

There will be difficulties ahead but all those who participated in the pilot studies seem to agree that they would not wish to go back to the old ways. That sentiment has to be the inspiration for those who have not yet embarked on this course of change. I dwelt on this issue at some length when I spoke at the Irish Hospital Consultants Association dinner in Galway last Saturday night.

There are successful examples of clinical directorates where the more modern idiom of management process is in place. There is no question that with the impact of technology and the range of new procedures coming onstream in the delivery of health care, we need clinicians to recognise the concerns of managers in terms of budgetary limits. At the same time, management must also be aware of clinicians' aspirations to provide best practice at any given time.

Clearly people must speak a common language in terms of providing the best possible cost effective service in a hospital setting. That can only be done where there are structured arrangements such as clinical directorates and liaison with management, specialist and clinician, so that the effective running of the hospital is not compromised by people going in opposite directions in their operational responsibilities.

Deputy Shortall raised some issues in relation to the consultants' common contract. The current contract on offer to hospital consultants is effective from 1 January this year and was agreed following lengthy negotiations with the medical organisations concerned. Under the terms of the contract, hospital consultants sign an individual contract with hospitals or health boards and agree how the commitment is to be discharged having regard to the nature of the service to be provided to the public hospital system.

Hospital consultants are engaged to provide at least 11 three-hour sessions in the public hospital service each week and are also required to be on call outside normal working hours to deal with emergencies as appropriate. Consultants are paid a basic salary together with additional payments for being on call and also for being called out to deal with emergency cases.

The contract includes a grievance procedure in the event of non-compliance by either party with the terms. In addition, the employer can also invoke the disciplinary procedure where necessary. Under the terms of the existing contract, consultants are enabled to engage in the treatment of both private and public patients. Private patients may be treated in public hospitals or in private consulting rooms. The contract offered takes into account the consultants' commitment to the public hospital system and is remunerated accordingly.

Other speakers raised the issue of the economic cost of private beds in public hospitals and whether there was a subsidisation element involved. They suggested, for example, that the role of the Minister in authorising any premium increases sought by the VHI board on the one hand and the question of increasing the price of private beds in public hospitals on the other amounted to a conflicting interest on the part of the Minister.

We intend to deal in the White Paper with the supervisory role of the Minister in the context of private health insurance and in relation to new corporate structures for VHI, which are currently the subject of intensive discussion by the parties concerned. We recognise the need to deal with the question of supervision and regulatory functions. There is perhaps a more direct involvement by the Minister in dealing with the strategic direction of the private health insurance markets.

On the question of economic costing, the Department has estimated that on the basis of information available to it in relation to claims made to health insurance companies, an increase of 9 per cent in the private and semi-private bed charges in public hospitals, such as the increase made at the time of the 1997 budget, would add approximately 2 per cent to the annual cost of claims. There can be no suggestion that seeking increases in the cost of private and semi-private beds was solely responsible for the level of increase in premium charges. That emanates later in the year, usually in June or July, and comes into effect in September. That is often put forward as the exclusive reason for increased premium charges, but it is not correct. We estimate that the 1997 changes would have been responsible for an increase of 2 per cent. It must be acknowledged that at a time of increased costs of delivering health services the Department of Health and Children is entitled to seek further revenue from whatever sources it can as contributions towards a very costly and expensive service. The current rates of bed charges levied for private and semi-private accommodation still falls short of the full economic cost of such facilities in public hospitals. The Department's policy is to implement charges which reflect the full economic costs of these services. We have made some changes in the two budgets during my time in office to alter the balance in that regard, but we have not achieved that yet.

The consultative process for the White Paper is almost complete. The report of the advisory group on risk equalisation was published only in July. A number of key interested parties wanted to see that group's recommendations. A meeting with BUPA was held in late September, shortly after receipt of its submission. The detailed VHI proposals on corporate structure were submitted on 30 September and a meeting was arranged between it and the Department last week. Interdepartmental discussions will take place with the Department of Finance next week on the implications of the proposals.

Further to receipt of the submissions from various Departments, the Department's actuarial and insurance advisors have been requested to review the legislative framework with a view to ensuring greater competition, stability and consumer protection. Detailed possibilities have been identified and we should have firm proposals later in this session.

Deputy Boylan raised the question of the VHI being authorised to act outside the State. Currently it can act only as private health insurer within the State. The possibility of it operating outside the jurisdiction did not arise under the current legislative framework. That is why we are giving it powers to be an agent of an international insurer for the purpose of providing an international health care plan for citizens of the State who are temporarily resident abroad. For Deputy McGrath's information, the VHI is a member of the Insurance Ombudsman scheme.

Deputies will realise that the issues around health insurance are many and varied. The White Paper will deal with a variety of complex issues, including the role of private health insurance in the health service, the current legislative framework and the role and corporate status of the VHI. These are sensitive and complex issues which required a detailed input from interested parties and professional opinion. It is anticipated that the drafting of the White Paper will be completed towards the end of this year. I will then be in a position to bring a draft White Paper to Government for its consideration. Although I will be part of the process at that stage, I cannot give any iron clad undertakings. Once the Government has fully considered the matter and taken decisions on the implications of the policy proposals in any draft White Paper being prepared, I will of course make it available in the public domain as a statement of Government policy on this wide and complex area, which has spanned the tenure of successive Ministers. I recall being in the House as Opposition spokesperson when Deputy Noonan was Minister for Health. This consultative process and reappraisal of the legislative framework for private health insurance was in gestation at that time. We received nearly 70 submissions and had detailed discussions with many of those who have a keen interest in this area. We will take their views into account before coming to a final decision at Government level.

I thank everyone who spoke in the debate. Points were raised about private health insurance coverage. I emphasise that is meant to cover primarily episodes of acute care. Long-term patients are entitled to public hospital services. The minimum benefit regulations cover a basic 100 days cover in respect of psychiatric services and the VHI currently provides 180 days cover in that area. I note the core principles in relation to private health insurance are community rating, open enrolment and lifetime cover.

The Bill is intended to enable the VHI to compete with products on offer within our current health insurance market. It is intended that the White Paper will be completed at the end of the year and the question of the desired corporate structure for the VHI will be dealt with in that paper. I thank Members for their contributions and look forward to returning to these issues and the specifics of the Bill on Committee Stage.

Question put and agreed to.