Health Insurance (Amendment) Bill, 2000: Second Stage (Resumed).

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

Deputy McGrath was in possession but he is not in the House. I call Deputy Kelleher.

I welcome the opportunity to discuss this Bill which will amend and extend the Health Insurance Act, 1994. Private health insurance plays an important role in the provision of hospital services to a large proportion of the population. The Minister for Health and Children, Deputy Martin, intends that this Bill will provide a framework which further supports the development of a vigorous and competitive private health insurance market.

The Bill implements improvements and innovations in the general regulatory framework outlined in the White Paper on private health insurance published by the Government in September 1999. The Bill also aims to provide an enhanced scope for competition in the market, while strengthening the basis on which solidarity between generations operates through community rating.

The essence of and challenge to legislation in this area is to strike a successful balance between good common values which have served our significant insured population well, and the encouragement of competition which will benefit consumers in terms of choice, price and service. The achievement of this balance is at the heart of this legislation.

The voluntary private health insurance system has developed to its current high penetration levels on the basis of specific and widely-accepted core principles of community rating, open enrolment and lifetime cover which provide extensive safeguards. The health insurance market was opened to competition under the Health Insurance Act, 1994, enacted in the interests of the common good. The Act provides significant safeguards for insured persons in the context of opening the health insurance market to competition in accordance with EU obligations.

The 1994 Act requires health insurance undertakings to operate in accordance with community rating, open enrolment and lifetime cover. It also provides for minimum benefits whereby undertakings cannot provide less than a specified level of cover. In addition, it provides for risk equalis ation, the sharing of community risks and the registration of undertakings.

The Act also provides for the establishment of an independent regulatory body known as the Health Insurance Authority. During the passage of the 1994 Act, it was indicated that, because regulation in this area represented a completely new departure, the framework would be reviewed in five years. The programme for Government laid the ground for the preparation of the first policy statement on private health insurance delivered in the White Paper.

The White Paper outlines how the health insurance system complements arrangements for the provision of health services to the public. In that context, it refers to the advantages resulting from the mix of public-private practices in hospitals. Notwithstanding this, and as stated in the White Paper, the primary concern is to ensure equal access to public health services. Since taking office the Government has pursued this responsibility through an extensive programme of current and capital expenditure. The Estimates highlighted the Government's commitment to ensure we have a proper public health service.

For many years people were concerned we were drifting towards a two-tier health system. We have a long way to go to ensure those in the public health system receive equitable treatment to those on private insurance. There are long waiting lists for those in the public health system but this is not the case for those with private insurance. We are trying to address this issue and will continue to do so.

The Government acknowledges the difficulties in health and is allocating huge resources to this area. It is timely that we have set up a value for money audit system for which many people called over many years. This Government has increased the resources going into the service on a day-to-day basis by almost 60%, yet we still have long waiting lists. However, we should not despair because, if we continue to allocate the resources and address the blockages in the system, I am confident the Minister and the Government will overcome difficulties regarding waiting lists and other procedures.

During the past 25 years major strides have been made in the technology available to surgeons in our hospitals. Those technological advances create and perpetuate new waiting lists as new procedures are carried out. Many people who heretofore would not have been able to avail of such treatment can now avail of it in the public health sector, and such advances create waiting lists. We must continue to ensure that those in receipt of the public health service have access to a fair and equitable service. It would be disingenuous if we allowed a drift towards a two tier health service, as has happened in other countries, particularly the United States, which did not address the problems presented in time.

As the demographics here change over the next number of years, greater pressure will come to bear on the public health system, as the present young population moves into the higher risk category. We must put in place the necessary strategic measures to ensure we get ahead in terms of the waiting lists and that as the population grows older we have a proper procedure in place to ensure that they can avail of health services.

I have raised the matter in other fora of people taking out health insurance. From speaking to my peers and younger people, I am aware that they are not very conscious of the need to take out health insurance cover until such time as they take out a mortgage or move into the workplace. Eighteen year olds or 19 year olds are vibrant and healthy and are not as conscious as older people of the need to take out health cover. We must address that issue by way of advertising or tax incentives. I feel strongly, not only about the need to take out health insurance, but also life policies to ensure that in times of need people cam claim under them. We have failed to encourage young people to take out such insurance in the past. The Minister might address that issue in the broader context of insurance.

The Government has made an extra £150 million available to the health services since taking up office, which represents an increase of almost 60% in the day to day resources being invested in the services. This level of increased investment will be sustained. The Government has also recognised that the current health infrastructure is inadequate for the delivery of a truly modern and effective service. The total of £2 billion made available by the Government under the National Development Plan 2000-2006 represents almost a trebling of the investment compared with the previous seven year period.

The serious approach adopted by the Government to health capital funding is highlighted by the fact that this is the first time a national development plan has included health services to any significant extent. The national development plan will bring positive benefits to all sections of our health services and will enable substantial improvements in the physical infrastructure, equipping of acute hospitals and in facilities for the intellectually and physically disabled, older persons, the mentally ill and children in need of care and protection. The thrust of the national development plan is to create an infrastructure that will bring about significant and tangible advances in delivering a more patient-centred accessible service.

Public patients who take up 80% of our public hospital bed capacity will benefit significantly from the investment in this hospital sector. That is an indication of the Government's planning, in particular in the national development plan, which takes account of the demographics and the need to put in place large-scale infrastructural development in the health service. We all remember in the 1980s when it was necessary to reduce public spending and substantial cuts were made in the health services from which we are now recovering. We have the necessary financial resources available to put in place the required health infrastructural development, which is very timely.

This Bill is welcome. A health insurance company that has come into this market is concerned about the issue of risk equalisation. Section 10 inserts an exemption from risk equalisation in the case of new insurers entering the market. The period of such an exemption will be three years from the date the insurer concerned commences carrying on a health insurance business. A new insurer will, however, be required to make statutory risk equalisation returns in respect of the conduct of its business for all but the first six months of the exemption period. These returns will not be reckoned by the health insurance authority for the purpose of risk equalisation. While that is welcome, have we gone far enough? If the purpose of the Bill is to encourage and ensure there is more competition in the marketplace to drive down the cost of health insurance cover, we must consider if health insurance companies who wish to enter the market, which has become competitive since the entry of BUPA, will be discouraged by the existence of a risk equalisation scheme, irrespective of the three year exemption class for new entrants to the market.

We will have to consider that area, given that new entrants to the market will face high start-up costs, they will have to invest heavily in advertising to break the loyalty to the existing insurance companies and they will have to cope with the economies of scales. We will have to reconsider this matter to ensure that we do not discourage new entrants to the market to ensure there is vibrant competition in the health insurance sector, which it is hoped this Bill will help to bring about. If the Minister was satisfied with this aspect, I assume he and his officials have examined it and taken all the factors into account.

Section 10 goes a long way towards addressing the concern in this area. BUPA has raised a concern regarding risk equalisation. We could not accept insurance companies cherry-picking low risk categories, as is the case in the motor insurance industry. It would be dangerous to go down that road in terms of health insurance. I am satisfied the Bill ensures that every health insurance company entering the market will have to take on all people interested in taking out health insurance, regardless of their risk category.

I welcome the provision in section 5. It provides that in addition to providing to maintain the existing protections for consumers in relation to the setting of premiums on a community-rated basis, it prohibits the varying, on the grounds of age, sex or sexual orientation, of amounts payable by insurers in respect of the treatment and care of insured persons. It is important that we write into legislation and express in this House the need to ensure that everybody should be treated equally in terms of health insurance cover, unlike what happens in the motor insurance industry where companies can cherry-pick applicants. They target the low risk categories, which has imposed a major burden on the high risk categories, particularly young male motorists.

With regard to broader health policies, the Minister has been vocal and forceful in trying to ensure a reduction in the number of young people who smoke. While we introduce Bills such as this and spend vast resources on health infrastructure and equipping acute hopsitals, we must urgently address the habit of smoking. People began smoking cigarettes simply because they were unaware at the time of the health implications, but research in recent years highlights, in great detail, the risk involved in smoking, particularly when one begins to smoke at a very young age. We must be vigorous in mounting a campaign to discourage young people taking up that habit. The difficulty is that when one is young and energetic and hanging around with one's peers, tobacco-related health problems do not come into the reckoning. We must target young people in primary and secondary schools by introducing a proper campaign on no smoking. We might consider asking sports people and well known personalities to participate in an education video to highlight the dangers of smoking. It is sad to observe that the first thing many young people do on leaving the school premises is to light a cigarette.

I know more than anyone how difficult it is to give up cigarettes but we must continue to pursue this as a high priority. In recent years we have had a vigorous anti-drink driving campaign which was successful because resources were targeted and advertisements shown. Society has accepted that it is not acceptable to drink and drive and we should now impress the dangers of smoking on the public mind. That has not worked so far and there is no point in kidding ourselves. When people reach 30 or 40 the effects of smoking cigarettes catch up with them because they are short of breath but young people are taking up smoking in droves, particularly young girls. They are under pressure from other areas such as models and advertising agencies. The subtle impression is given that if girls smoke they do not put on weight and they can look like wafer-thin models such as Claudia Schiffer and Naomi Campbell. That puts huge pressure on young girls and we should be conscious of that.

As I said, sports stars in educational videos might have an impact on young males, as boys are involved in more physical sports and might be conscious that if one smokes one's ability to reach the highest level in sport is reduced. We must be continually vigilant on this as we have a young population. If the percentage of people taking up smoking is maintained there will be a huge burden on the State in 30 or 40 years providing health care for those suffering serious illness because of smoking such as lungs, oesophagus and throat cancer as well as heart disease. For those reasons this should be a high priority.

The Bill is welcome and has broad support. I am concerned that if we put too many restrictions on health insurance companies we may not be able to get them into the country in the first place. We have a small population and the economies of scale may not be attractive to outside companies. The Government has acknowledged the need for huge resources to be put into health and the value for money audit is something to be welcomed. When we compare hospitals and health board areas we must find where the blockages are. Why are waiting lists not reducing given that £500 million has been invested in the health system? Why is there not a tangible and immediate reduction in waiting lists? Should we be more forceful? Are consultants in hospitals pulling their weight regarding the delivery of a health service to those in the public health system? Should we address that?

If people are underperforming there should be a mechanism to address that. The public would be very supportive of a system whereby we get tough with people in the health service from the administrative to the medical side. If they are underperforming and do not reach an acceptable standard, there should be a mechanism to sideline them and to ensure that the health service we want for the people is available to them. I hope the Bill is successful in what it is trying to ensure. Only time will tell.

I wish to share my time with Deputy Gerry Reynolds.

I welcome the thrust of the Bill in general and do not intend to deal with the nitty-gritty of the legislation, as that was done by the party spokesperson, other than to say that health insurance should be available to those who want to go down that route. VHI and BUPA have made a major contribution to the health service; VHI has done so over many years while BUPA joined the market more recently. It is essential to encourage more young people to take out health insurance early on and, in doing so, to encourage more companies to compete in Ireland for business. Competition has proved valuable in other areas in the past. While it is important that all ages be covered by any company entering the market, we must ensure as many companies as possible can compete to cut the costs involved.

Regardless of what other speakers have said, there is a two-tier system. The Minister of State is well aware that if one can pay one can get into the Blackrock Clinic or the Mater Private Hospital or other hospitals in weeks if not days. Those with health insurance or cash can get immediate attention but those with medical cards must wait. The budget was an opportunity for the Government to recognise the problems of those who cannot afford medical cards but it was missed. Concessions were rightly made to those over three score years and ten, and that is Fine Gael policy though I would like it lowered by at least another five years. Those under 18 and young families have not been considered, however.

Imagine a person working for less than £180 per week, which is about the minimum wage, and being told he is not entitled to a medical card if he has a wife and three children. That family must pay a doctor £15 or £20 for a visit and up to £43 per month in medical costs, which is a minimum of £12 per week. A call to the doctor and medicine costs at least £20 per week. This is totally unfair and the level in the means test should be at least doubled for such families to ensure that all young people under 18 are brought into the free schemes.

We have heard a lot about the amount of money provided for the health service since the Government took office; one speaker said there has been a 60% increase, which is a massive increase in three and a half years. One has to look at the reality. A lot of money has been thrown at the system but I asked a parliamentary question this week about the number of nurses in the health service at present compared to 1995. The answer was very simple. There are no figures for this year but there were 204 fewer nurses in the system in 1999 than in 1995. No wonder people cannot get treatment in hospitals and wards and beds are unavailable. There are not sufficient nurses to man those beds. We may need more hospitals but the least the Minister can do is to ensure there is a proper number of nurses available. The previous Minister, Deputy Cowen, certainly won the battle as far as the nurses' pay increase was concerned. However, the Government lost the war. Nurses who were prepared to come back to this country, who had left because of low income here to take up opportunities elsewhere, did not come back and others left. We have 204 nurses fewer at the end of 1999 than we had at the end of 1995. Is this any way to run a health service?

The Minister said in this House recently there was a 60% increase in funding and that there were thousands extra involved in the health service. If we do not have the nurses and doctors, we cannot have the service available to make sure that patients are looked after on time. The Government has broken its own guidelines by virtue of the fact that so many people are still waiting 12 months or more to receive treatment they should have already received. Some 587 adults have been waiting for cardiac surgery for more than 12 months. In other words, 74% of those on the waiting lists have been there for more than 12 months, which breaks the Government's own guidelines. They may wait for up to two years but will wait at least for 12 months. For children, the guideline is six months and 87% of those will be on a waiting list after six months. Regarding ear, nose and throat treatment, for adults the figure is 3,105, 62% of whom have been on a waiting list for more than 12 months. For children the figure is 1,538, 73.41% of whom have been waiting for more than six months. Some 819 adults, or 53%, have been waiting for more than 12 months for urology treatment.

Monaghan General Hospital has been closed down as far as the operating theatre is concerned and the maternity unit is under pressure. The board was advised to close it down and but for politically elected board members, it would have been closed. This hospital is four miles from the Border. It is vital that the cross-Border communities in that region maintain the maternity hospital. There is an opportunity for the Minister for Health and Children, Deputy Martin, the Minister of State and others to work with the Minister, Bairbre de Brún, to make sure the peace that is thankfully there, is utilised to the full and a maternity hospital is maintained there. It is unreal to think of that region, in a fairly isolated part of the country, being left without any maternity unit. We heard a great deal tonight about the national development plan and all the money available. I beg once again that the Minister for Health and Children should clearly state the Government's commitment to Monaghan General Hospital. The Monaghan region has suffered for more than 30 years from the troubles in Northern Ireland and has not had the opportunities many other areas have had.

The Minister should make sure funds are committed. I know the health board has been promised overall funding, but it is vital that the promises being made in all sorts of mysterious ways be guaranteed and that we receive that to which we are entitled. If Monaghan continues to be ignored more and more patients will have to be transferred to Dublin hospitals. Beaumont Hospital which serves the Monaghan region has a 45% increase in its waiting list, an increase of 1,053 between June 1997 and June 2000. The Mater Hospital waiting list has increased by 45% as well, an increase of 1,280 patients. St. Vincent's Hospital had an increase of 118%, almost 2,000 patients. In spite of all the money being thrown at the system, the waiting lists grow and patients suffer.

In the Cavan-Monaghan area, there is a serious problem with suicides and other related difficulties. The Minister should make sure that proper services are available for those that suffer from depression and alcohol related problems. It is not good enough that sick people do not receive the proper care whenever facilities are not available. I urge the Minister to re-examine that.

I am glad to have the opportunity to speak on the Health Insurance (Amendment) Bill, 2000, and will raise a few points having read the Explanatory Memorandum. Under the main points it states that:

2.–(1) The Bill provides for a change in the key definition of a "health insurance contract". In particular, it removes from the scope of the legislation schemes of insurance which are solely concerned with "ancillary health services" (e.g. out-patient services, general practitioner services and dental services).

I thought that BUPA and the VHI were negotiating on behalf of their members so that these ser vices would be covered under health insurance. I am not as well read on this legislation as I should be but does this proposal mean the legislation will prohibit the voluntary health insurance companies in providing that type of health insurance to members? If that is the case, it is a backward step because companies are trying to put in place a scheme where members of the VHI and BUPA would be allowed to claim for out-patient, general practitioner and dental services. One of the larger costs to individuals paying health insurance, especially members with young families, involves the number of visits they make to their general practitioner, dentist and out-patients service. If I have read and understood this correctly, I oppose it. Perhaps the Minister can clarify that when he makes his reply.

I welcome the provision to support the financial stability of community rating through allowing insurers discretion to apply late entry premium loading in specified circumstances. It is very necessary and should be dealt with immediately. The establishment of the proposed health insurance authority should happen sooner rather than later. On any opportunity I have to speak on health issues in the House, I express my huge difficulty with the administration of health services. If we are to establish a health insurance authority we should privatise the VHI. Section 5 which provides for a special measure relating to entry by new insurers to the market will also help. We must allow greater competition. It is unnecessary for the State to be involved in health insurance. If we wish to bring in more competitors to a relatively small market and the administration is given to the Health Insurance Authority there will no need for State involvement. I call on the Government to seriously consider privatisation of the VHI.

The VHI increases over the past few years have been dramatic. Even though most private health subscribers have VHI plan B or the equivalent BUPA cover, they still find it difficult to access health services. They must wait to see consultants and for hospital beds. I know of two cases in the past six months where people were transferred from one hospital to another for medical reasons. Because of an administrative mix-up they were refused cover as it was stated it was for convalescent and not medical purposes. That is appalling. These people had contributed to the VHI for 30 years. Families are vulnerable where a family member is ill. If a general hospital needs an extra bed and a patient is transferred to another hospital for medical care, the VHI say it will not pay for it. That is distressing for the family. It has taken six or seven months to resolve those problems but it is the attitude that bothers me. The VHI's attitude is, even though you may have paid into the VHI for the past 30 years, it will not cover this unless you prove your case. That puts more pressure on a family. This matter should be addressed.

Many speakers have said they do not want a two tier system. I listened to Charlie McCreevy state the amount of money he has put into the health services. I compliment him on that. I do not know if any political party has the courage of its convictions but I suggest that 60% of the money given by Charlie McCreevy to the Department of Health and Children is eaten up in health board administration. There are six health boards. In 1975 there were 95 administrators administering the health services in Dublin. Today there is a staggering 11,000. In the greater Manchester area, which is larger than Ireland, there are 3,000 health administrators and there are more hospitals there than in this country. One does not need to be an economic genius to work that out. Even if Charlie McCreevy put all the Exchequer funding into the Department of Health and Children—

The correct title is the Minister for Finance.

—the problems would not be resolved. The money is not being spent at the coalface and that is why we have ward closures, waiting lists, a shortage of nurses and people waiting for a year and half to have a hip replacement operation.

I applaud the fact that the Government introduced medical cards for those aged 70. Fine Gael will reduce this to 65 years. Is it of any benefit to them? I do not believe it is as they do not receive a service. Political parties must look at the way this is administered. It may not be politically astute to say this because there administrators living in all constituencies but there should be an embargo on the recruitment of administrators. We have sufficient. The money should be given to those who provide a service to the patient, the doctors, nurses and orderlies.

We must look at the way the service is structured. There is a difficulty with consultants. I know the Minister of State was a practising medical person. Although I do not have that experience I know consultants have so many public and private beds. There should be more consultants. The role of doctors, junior doctors, nurses and orderlies must be looked at. It must move on. The way they work is archaic. It will take time and effort but that is where the money should be spent. If we put money into the health services without resolving these issues there will be serious difficulties.

I welcome the legislation. It gives an opportunity to the VHI to become a private company. We should encourage more health insurance companies into the market to ensure best value for the consumer.

I welcome the Bill as a necessary continuation of the deregulation of the health insurance market. It plays a vital role in duplicating our national health services. It gives people an opportunity to provide for themselves and be prudent in taking care of their health.

The Voluntary Health Insurance Board has, over a long number of years, done a fine job in promoting these worthy aims. However, times change and society develops. Competition is now seen generally, and at European level, as being good for both the customer and society. This Bill is designed to facilitate the further growth of competition within the health insurance market. In particular, I welcome the continuance of the very strong protections that exist in the market to ensure affordable health insurance is available to everyone and that we do not go down the road travelled in other jurisdictions such as the USA and Britain. These protections are community rating, open enrolment, life time cover, the ability to transfer from one insurer to another, without penalty, and minimum benefits. They have served us well and will continue to do so.

I have a concern that the provisions to exempt the important areas of primary care from the community rating requirements may lead to the undermining of community rating. It is good for consumers and is vital to underpin the Government aim of having affordable health insurance for everyone. I ask the Minister to address this matter. I do not need to tell the House about the benefits of competition. The Government has been to the forefront of deregulation and the opening of markets to competition, with all the benefits this has brought to the consumer. To date, competition in the health insurance market has been relatively limited and only one new entrant has come into the market to compete with the VHI. Even that limited competition has already brought great benefit to both the market and consumers. For the VHI, it has resulted in a greatly improved financial position in a market with a history of instability prior to competition but which is now more vibrant and stable than ever. Its profitability has increased to levels not seen before. Last year it made an underwriting profit of more than £50 million. Its membership has increased and it recently announced record membership levels. Its claims, as a percentage of its income, has improved every year since the introduction of competition. It has competed vigorously within the market, becoming more user friendly, improving benefits and launching new products. It has proved to be a tough competitor and they have competed vigorously within the market becoming more user friendly, improving their benefits and launching new products. They have proved to be tough competitors in getting the lion's share of young people coming into the market and that is as it should be.

This has been achieved in a market which has become very stable, which continues to grow rapidly and in which the safeguards of community rating, open enrolment, life time cover, free transfer and minimum benefits have operated to ensure there has been no cherry picking. These important safeguards have ensured that the three great fears of a reduction in the market size, older people being forced out of the market or the VHI getting into financial difficulties have not come to pass.

However, what is needed in the market is more competition and to date, we have replaced a monopoly with a duopoly and while that is better than a monopoly, it will not satisfy the needs of society for a competitive market within health insurance.

While this Bill seeks to improve the framework within which competition can develop, I greatly fear that the proposal to reintroduce risk equalisation threatens not just the emergence of further competition, but the existing competition. Deputy Cowen, when he was Minister for Health and Children, abandoned this scheme and, as we have already seen, no dire consequences have flowed from that abandonment rather the market has continued to go from strength to strength. No evidence has been produced to show the need for such a scheme or to demonstrate how the absence of such a scheme will result in market calamity. It is an unproven measure that has never been introduced in a market with only two competitors and has never been introduced on a scale as extensive as that proposed in Ireland. Its existence in Australia did not prevent the collapse of the health insurance market in that country and it has been abandoned in many states in the United States.

The whole concept of risk equalisation has been proposed to the Government by its actuarial advisers, Mercers, and has been strongly supported by them. Is the Minister aware that in a report prepared for the Department by the American office of Mercers, they state that the case for or against risk equalisation has not been proven by extensive actual experience. This was said by the Government's own actuaries – the very people who have proposed this scheme. They went on to state that risk equalisation has been studied repeatedly but not given a fair trial.

Is the Department suggesting that Ireland and its health services should be used as some sort of guinea pig for an untried and unproved academic concept to test somebody's pet theories? Moreover, it is a concept that has been rejected by the much larger body of Irish opinion as represented by Irish economists, in particular. The continued threat and possibility of such a scheme are seriously deterring other competitors from entering the Irish market. If the Department must have risk equalisation, then it should only be a reserve power if competition is to work in the marketplace.

Strict criteria for its introduction should be put in place in the Bill and should be under the control of the health insurance authority and the Minister. They should be easily understood, required only in the event of market failure, transparent to both current and new competitors and allow people to judge the risks that they are undertaking in coming into the market. It should deal with real problems that cannot be resolved by the market and by the existing powerful protections. It should not operate simply to protect one competitor in the market in an arbitrary fashion.

The perception that the Government, the Department or this Bill is in some way aligned to the interests of the VHI is not good for our international reputation and I urge the Minister to look at the risk equalisation provisions in the Bill. They continue to threaten the limited competition that already exists and they seem to be at odds with the general Government policy of promoting deregulation and competition in pursuit of the public good. The damage that risk equalisation does is clear but without any reason to believe that any benefits can accrue in practice from such a system.

I ask the Minister to look at some of the provisions in the Bill with a view to amendment. The provision that companies which provide health insure free as a benefit for their employees should not be able to insure part of the risk themselves seems to be an unnecessary interference in the affairs of companies and the operation of competition. I understand that risk management schemes are common in many companies and allow companies to have more affordable insurance while managing their own risk. I see no reason they should not be allowed to continue to do this in the area of health insurance.

I am curious about the provision in the Bill which seeks to impose on those insurance companies which provide cash plans as distinct from health insurance schemes the requirement to pay the benefit from these insurance cash plans directly to the holders of the policies. As things stand, people with these types of insurance policies can assign the benefit from them directly to anyone. Indeed, the ability to assign payment of a debt is a fundamental principle of common law which has existed for centuries. I wonder why this provision has been introduced as it does not seem to have any relevance and deprives existing customers, who have these types of scheme, of a benefit which they should already enjoy.

What the health insurance market needs is more competition, not less. Competition is good for society and for consumers and needs to be encouraged in every field of business in this country – not only in airlines, taxis and telecoms but in health insurance, power generation and in the other areas of monopoly that still exist. To achieve more competition in health insurance, we need clarity and certainty. While this Bill is welcome in its efforts to achieve that, I fear it may have the opposite effect.

With your permission, a Cheann Comhairle, I would like to share my time with Deputy Owen.

I listened with interest to what my constituency colleague said about risk equalisation and I support all he said. BUPA has set up an operation in Fermoy which is in our constituency. It has entered the marketplace and is providing a very good service. At the same time, I wonder why risk equalisation is seen to be necessary at this time. I am not convinced it is a good thing – in fact, I have spoken to people in BUPA and they are very concerned about it. They told me it may have the effect of getting them to review their presence in the market in Ireland. If risk equalisation is brought in as proposed, it could have the effect of driving BUPA out of the Irish marketplace and of deterring other such companies from entering it. The Minister has the power to put it in place but I believe it is something about which we need to be very careful.

As Deputy Ahern said, we should put measures in place to attract other competitors into the marketplace. The VHI has done a fantastic job over the years. It certainly needs restructuring and support but we should not do that at the expense of the population and the marketplace as a whole. The Minister might indicate to the House current Government, departmental and ministerial thinking on this matter. Has the Minister looked at all the studies which have been done on this issue? Is he aware of the country by country analysis by BUPA International that this proposal cannot be sustained? Will he tell us why he believes this is so important at this time? We need to encourage and attract others into the marketplace. We must be careful not to do anything which would deter or drive people out of the market.

Competition is important at every level. BUPA's involvement in the marketplace helps all sides. The number of people who take part in private health insurance has increased dramatically since the arrival of BUPA. People should be encouraged to take out private health insurance as much as possible but it must be affordable and competitive. There is a logic to what I am saying.

On the general issue of health, despite the Government putting huge sums of money into the health system there are still terrible inequalities and injustices. A man telephoned me recently saying he was in terrible pain and needed a hip operation. I tabled a parliamentary question which was referred to the Southern Health Board and a got a reply about two weeks later informing me that the man would have to wait for two and a half years but that, perhaps if he saw his GP, something might be done. The Minister of State, being a doctor, will have to agree there is something terribly wrong here.

I also had examples of people in similar circumstances during the past two years who were left waiting. They decided to go around their relatives and family members and managed to get the money together. Lo and behold, miracle of miracles, they got the hip operation done. Why is this? There is a two-track system. I understand the same consultants are involved. There is something wrong with a system that cannot look after people in terrible pain, and those who cannot come out of their own houses because the quality of their life had deteriorated over a number of years. The whole health system must be examined. Money is not enough. The structures in place need to be looked at.

Another man telephoned me three days ago. He was waiting for a hospital bed in order to have a back operation. He was on the public system and was told it might be done in January, July or August. Finally the doctor said he would fit him in on such a date but asked the man to telephone the hospital beforehand to ensure everything was in order. He did so and was told, "Sorry, the bed is not available now. Can you ring again next week and we will see?" This man is in agony. He is wondering if the operation will take place before Christmas. He may have to wait until after Christmas and the wait could go on and on. This is not good enough. That person should be given a date and told his operation will take place on a particular day. He should then go to the hospital, be treated with respect, undergo his operation and plan his life. That is not happening. It is an organisational matter. Why cannot this be done? I cannot understand it, except that there are possibly two tracks – a track for those who have money and a track for those who have not; in other words a track for those on private health insurance and a track for those on public health. It is not good enough that this is happening.

As an elected public representative these people telephone me as I am sure they telephone the Minister and other Deputies. The constituents expect us to telephone the doctor, surgeon and so on but they are under terrible stress and we annoy them by telephoning them. One particular person said to me, "If politicians telephone me what can I do? We are doing the best we can." It is up to the politicians in power to solve the problem. We are talking about human beings in Deputy McCreevy's £4.5 billion Ireland, to whom this is happening. While the Minister of State is caring and compassionate, and the Minister is doing the best he can, more needs to be done in the organisational structures. That is what is wrong.

There are consultants who possibly hold on to beds, book beds in advance and hold people in hospital beds who cannot find out when they are to go home. While there is a charter of patients' rights more needs to be done. Patients should be treated with more respect in the hospitals.

This is an important Bill which seeks to amend the law to ensure competition comes into Ireland. It is a disappointing Bill because it has failed to tackle a number of issues regarding the provision of a fair and equitable health system. There is no doubt we have a two-tier health system. I am an advocate of health insurance and the more people who use health insurance the better. If people are paying for private health insurance the facilities to treat them should be available but not at the cost of somebody who is waiting to receive public health care. That is why the recently published health document by our spokesman, Deputy Gay Mitchell, set out a system which we believe will bring more equity into the health care area.

National health systems worldwide can be funded in three different ways: by private finance based on voluntary contributions as in the US where health care is out of the reach of most people; directly from taxation which is the system in the UK, the National Health Service; or by the State from compulsory social insurance which is how much of the health care is paid for in Europe. I continue to hear wonderful things about the provision of health care in France, for example, where nobody is on a waiting list and where staff are waiting to deal with patients as they arrive as opposed to patients having to lie on trolleys, wait for service, wait to get in a queue to be seen by the consultant and finally to join another queue.

Try to picture a person who came to see me recently in my clinic. He worked all his life until August, in January he was diagnosed with a cataract in one eye and his name was put on the list. He thought the procedure would be carried out and that all would be well. In August the second eye began to give trouble and he now has cataracts in both eyes. He has had to give up his job and has become totally dependent on his married daughter. Every day, after she leaves the children to school, she has to deal with an otherwise perfectly healthy man. He is in receipt of welfare payments. I intervened on his behalf by putting the matter down as an Adjournment debate and I got a response from the Department to say he has an appointment at the end of January at least to get one eye done. I am holding my breath in case when it comes near the date he will get a call to say, "Sorry, we cannot take you". He is a healthy man, apart from the cataracts, who has had to give up work and become a burden on the State because the State cannot provide him with the most ordinary of operations that can be carried out in a day care centre. Such an operation would give him back his life and allow his married daughter and her husband to look after their children and family without the worry and concern of her father.

I also saw a woman last week who has cataracts. Her first appointment to see a specialist is over six months away. In the meantime God knows what deterioration will have taken place.

Perhaps she will become totally helpless. She is almost totally helpless now and needs care and attention almost all the time. This will put another burden on the State as there will probably be an application for carer's allowance to look after that woman because she will not be able to look after herself.

Where is the system going? As the old adage says, take care of the pence and the pounds will look after themselves. What are we doing to our health service? We are subjecting people to pain and suffering and damaging the fabric of their lives by making them wait for operations and procedures such as cataract removals. It is frightening to think about it.

Deputy Stanton referred to people waiting two and a half years for a replacement hip operation. If they had that operation within a reasonable waiting time – they could probably cope with waiting three to six months – there would be a huge improvement in the quality of their lives and the lives of the relatives who have to take care of them, not to mention the saving for the State.

It is disappointing that this legislation has not attempted to widen the scope of the provision of care. What are the Minister of State's views on the proposals by the VHI to broaden the health products it supplies? It has proposals, for example, to enter into the provision of child care. Will we see legislation to allow it expand into such areas? It is good to open up the market to competition. However, I do not envisage many other insurance firms entering the health insurance market here. Given the size of the country and the number of people who can afford health insurance, the market is probably taken up by VHI and BUPA. I am interested to hear the Minister of State's view on that.

However, if we are introducing competition, it is important that it will bring genuine rather than illusory benefits to our population and will not allow for cherry picking. I agree with Deputy Gay Mitchell who expressed his disappointment that the Government, without any real explanation, has increased the 18 month lead in period proposed in the White Paper on health insurance to 36 months. There is a possibility that a company could use that 36 months to cherry pick. I would like an assurance from the Minister of State that that will not happen.

I note that much of the legislation – sections 2 to 7 – deals with the proposed treatment of ancillary benefits. The Minister of State said that removing ancillary services from the scope of the 1994 health insurance legislation will encourage competition and the development of more substantial forms of cover and improved health status. This is at a time when there is a well established pattern away from in-patient care to day care, out-patient care and primary care, with people going in in the morning, having their procedure done and then going home. It is possible that more substantial ancillary care will follow this trend in a competitive environment.

It is right to encourage innovation in benefit design by avoiding any form of legal benefit prescription or equalisation fund at this stage. However, if the industry succeeds in marketing more substantial benefits, does the Minister of State think we should retain community rating for ancillary care? If we are to have intergenerational solidarity in regard to hospital care, surely the same must apply to non-hospital care, especially when that type of care is likely to grow in importance and volume. Given advanced technology and increased medical research, more and more people will avail of day care for short procedures.

I spoke to someone in the health insurance business who told me it is well recognised that insurers can segment the market by various targeting and benefit design techniques. However, it would be more desirable if they were required by law to offer their products to all age and risk groups at the same price. The Minister of State may think that goes against community rating. However, it is important that these products are marketed to all age groups. The Minister of State has considerable power under section 13 of the Principal Act to ensure product availability is made widely known across all age groups.

We have received information from VHI and BUPA about this legislation, as I assume the Minister of State has. I sought to raise this matter on the Adjournment but I did not get an opportunity to do so, so I will raise it here now. There is a flaw in the Breastcheck system which has been widely publicised by the Minister, Deputy Martin, in regard to women aged 64 years. If they are not "consented" before they reach their 65th birthday, they are disenfranchised from that service. I ask the Minister of State to take that point on board. The age group selected for Breastcheck is 50 to 65 years. A woman who is currently 64 years of age and finds that the service will not come to her area for another 18 months should not be debarred from getting that service if she was 64 when the service was set up in February of this year.

The impression has been given, in the announcement of a big extension to this scheme, that areas other than the Eastern Regional Health Authority, the North Eastern Health Board and the Midland Health Board will have this service available very shortly. My understanding is that it will take at least another 18 months to two years to finish the three health boards which have been listed. A false impression is being given to people in other health board areas who feel they will be able to get checks very soon. The Minister of State must speed up the process and ensure the necessary resources are there and that women who are currently in their 64th year are not debarred from getting this service. That rule should be changed now.

In warmly welcoming this Bill for the provision of competition in health insurance, I want to place on record that, despite this competition, a huge cost is imposed on people who wish to obtain health insurance in Ireland. The cost of health insurance, whether with VHI or BUPA, still represents a major burden for families. That is a matter of serious concern. Many people have to place themselves in debt on an annual basis or make major cutbacks in other areas to pay for their health insurance.

While profit is a motive for the firms in question – and they are making considerable profits – we must be careful to ensure individuals are factored into the equation. This is very important and has not been given the level of significance which it deserves. Too much emphasis is being placed on profits and there is a need to row back on that. I wish to share my time with Deputy Belton.

Is that agreed? Agreed.

The VHI has been heavily criticised from time to time. It was established by the then Minister for Health, Thomas F. O'Higgins. To his credit it has stood the test of time and other countries have examined how it has worked. While I do not wish to engage in party politics, it is to the disgrace of the Minister's party that a number of years ago the Government took moneys from the VHI to help the Exchequer when both were facing difficulties. The VHI needed assistance in trying to cope with major problems. Despite the difficulties encountered by the Government, it was inappropriate to take money from the VHI. That exercise set the VHI back to a considerable extent and it was a cause of major difficulties later.

The Health Insurance Act, 1994, was of great benefit to the public. It was also very good in terms of regulating health provision. The Act requires insurance providers to operate in accordance with community ratings, to provide life time cover, minimum benefits, risk equalisation and the registration of undertakings. All are important.

A visit to any hospital will confirm at first hand that the health services are in crisis. Hospitals are seriously understaffed at all levels, from top surgeons, general surgeons, nurses, cleaning staff and other personnel, such as physiotherapists and radiographers. The shortage of nurses is very serious. For too many years it was impossible to enter the nursing profession but today we have insufficient nurses to meet the demand. This problem must be addressed.

Children with serious congenital defects, such as a heart problem, should be entitled to medical cards. I have had running arguments with the Minister and his predecessor concerning their failure to provide them. They have said that to do so would contravene guidelines laid down by the health boards. One case I know of involved a baby for whom the parents could not get a medical card. It meant the mother had to give up work and the child had to be brought to England to be operated on.

There is something seriously wrong when a health board refuses to provide a medical card to a child requiring an operation. There are a number of similar cases across my constituency, some of which involve children with serious long-term health problems. The children in question should be at least granted medical cards and the required operations should be expedited. Given the success of the economy, children and their parents should not have to travel to the UK to have surgical operations. There should be sufficient funding to ensure they are undertaken in Ireland.

I am seriously concerned about the problems facing hospitals. Members of the Dáil and Seanad are telephoned regularly by people needing hip replacement operations in the hope that we can expedite things. It takes an inordinate length of time to see a surgeon after which patients are put on a waiting list to go on a waiting list. When that happens the patient may have to wait 18 months before an operation is performed. There is something very wrong with a health system that allows this to happen. It must be addressed. These issues are of grave concern to many people.

It is very difficult to become a patient in a hospital for the elderly. While there have been improvements, much more needs to be done. There should be planned investment in homes for the elderly to ensure elderly people are looked after with dignity during their twilight years.

I welcome the extension of medical cards to all pensioners over 70 years of age. However, it is essential that every old age pensioner be given one. The guidelines controlling the issuing of medical cards must be examined. If a health board refuses to issue one a discretion should be granted to the Minister to sanction one in urgent and important cases where medical evidence indicates that it is required.

The purpose of the Bill is to address the regulation of the private health insurance market and facilitate its development to ensure that Irish consumers have access to a similar range of products and services as consumers in other developed countries. The Government has said the community rating system is the cornerstone of the Irish system. It has been in place for the past 40 years and ensures that everybody pays the same premiums for the same cover, regardless of their age or health. That is why almost half of the population has private health insurance. In other risk-rated countries only 10% to 15% of people have such insurance. This frees up valuable and needed resources in the public system for those who cannot afford insurance.

Like other Members I constantly hear from constituents who are placed on long public health waiting lists and who are shocked at the length of time it takes to secure an appointment to see a specialist. There is nothing worse in politics than to feel helpless when contacted on a constant basis by people in horrific pain who are on a waiting list for a hip replacement or a knee operation. The Government has the resources but not the will or the know-how to treat these people instead of leaving them on waiting lists for two years. In many cases these are elderly people who can ill afford to cope with pain. They are honest citizens who have worked hard, yet they must wait for an operation. It is hard enough to have an operation without waiting day in and day out to be called for it. The Minister should do everything possible to reduce the waiting lists.

Community rating makes it possible for people to afford effective health insurance throughout their lives. That is why Ireland's community rated market has almost 50% market penetration for health insurance, while the risk-rated UK market with four major health insurers has only 12% penetration. Risk equalisation, which spreads the cost of claims among insurers in proportion to their share of the market, is the foundation stone of community rating, according to all the experts, including actuaries from Ireland, the US, Europe and Australia. It prevents new insurers from cherry picking the least risky subscribers and leaving the higher risks to existing insurers.

Without a risk equalisation scheme to ensure market stability, community rating would collapse. This could mean that people who had subscribed to a health insurance fund for years could be forced out of the system due to higher premia. A reduction in the number taking out health insurance would not lead to a reduction in the demand for health care but would lead to a reduction in the funds available to pay for it. The only alternative would be higher taxes or longer waiting lists. God knows the waiting lists are long enough already.

For some unexplained reason this Bill proposes to give new entrants to the market a three year dispensation from risk equalisation. This would undermine community rating and would mean that current members of health insurance schemes would be subsidising a new entrant to the market. The three year dispensation from risk equalisation proposed in the Bill for new entrants to the market is not the answer to attract further competition. Delaying the implementation of risk equalisation will destabilise the market, disadvantage consumers, force older and sicker people out of health insurance schemes, put extra pressure on the public system, devalue a significant State asset, erode trust in the private health care system and decrease investment in health care.

The young and healthy might see some initial benefits from a delay in the implementation of risk equalisation as new competitors fight for their business, but they would also be squeezed out of health insurance once they got older or sick. Generating more competition and take up of private health insurance in a well regulated market will free up resources for investment in the public system.

Community rating and risk equalisation is not anti-competitive. It operates in Australia where more than 20 companies compete in the health insurance sector. Increasingly, Governments around the world are turning to community rating with a form of risk equalisation or risk sharing as the most equitable system of health care insurance. Community rating underpinned by a form of risk equalisation operates in various countries. Risk equalisation limits the ability of insurers to profit from risk selection, based primarily on age, but it does not inhibit competition in the area of product design, cost efficiencies and service initiatives.

A recent World Health Organisation report on health funding praised Ireland's community rated system of payment as one of the fairest in the world. The 1997 Government advisory group on the risk equalisation scheme, which was established by the then Minister for Health and chaired by Gerard Harvey, concluded in its report that risk equalisation is essential to underpin community rating.

The VHI, which has served generations of families well for more than 40 years, has called for the speedy implementation of the risk equalisation scheme to underpin community rating, ensure market stability and attract further competition. According to my sources, BUPA is doing extremely well in the Irish market. I understand the average age of its membership is 26 compared to an average age of just over 35 for the VHI.

This Bill also proposes that people who enter health insurance aged 35 years and over may be levied an additional amount on top of the normal community rated premium. This proposal will help to copperfasten community rating. It will also limit the ability of people who have not contributed to a health insurance fund from taking advantage of those who have contributed all their lives. This means that people who wait until they are older before joining for the first time will pay more. It will not affect existing members. If a person is 86 years of age and has been a member since he or she was 21, he or she will still pay the same annual premium as a 21 year old who joins the scheme for the first time.

I also understand the VHI is seeking a change in the Bill to extend its commercial remit which is currently limited to health related insurance products. This would allow the VHI to respond to market demand for additional products and services, such as child care and occupational health care.

We must examine the issue of subsidies for private nursing homes so that people at the end of their days will be taken care of and that they will not be afraid and nervous about who will pay and where they will go.

Under this Bill the proposed regulatory regime seeks to impose on the only new entrant we have had to the health insurance system, BUPA which is based in Fermoy, a draconian regime which is designed to stifle competition. It is proposed that the new entrant should make risk equalisation payments to the VHI, which is the long standing monopolist in this field. This is excessive since we already have open enrolment and community rating. To require new entrants to make payments to a long established monopoly is a serious deterrent to new entry. There is a danger that Ireland will not now gain the benefits of deregulating the health insurance market. The great success of deregulation is that it brings new alternative producers and products into the deregulated market and that the previous monopolist responds by shaking off monopolistic indifference to costs and consumers. This Bill generates, as one might expect, much debate about health matters and services. It is about competition, competition policy and insurance law and policy. It does not really deal with the health service as such.

The fundamental difficulty with the Bill is the fact that the Minister for Health and Children is the sole shareholder – in effect, he is a monopolist – in the principal company involved in health insurance in this country, he is the regulator and he is the promoter of this Bill which sets out the rules under which the regulator, his own company, and new entrants must operate. The Minister for Health and Children, a majority of the House and a majority of the Irish people may think that that is acceptable because we have been doing this kind of thing for many years. However, the fact that those to whom I refer may believe it acceptable is irrelevant because the ultimate decision will be made elsewhere by institutions which do not tolerate this kind of behaviour, namely, the Commission in Brussels and the European Court in Luxembourg. It is before these two bodies that the Bill will either stand or fall if and when it is enacted.

I suggest that it will fall if it is passed in its current form and not amended significantly in order to level the playing field. The European Union will not stand for a situation in which the sole shareholder in the existing monopoly company makes the rules by which all others must operate, particularly when those rules are designed not only to put the single existing competitor out of business but also to ensure that there will never be more than one such competitor.

In a debate on health one is supposed to speak with emotion and gratitude about different aspects of the health services. At times, the VHI almost ranks alongside nurses in terms of the thanks we should give to it. I acknowledge that fact. The VHI did well out of me for over 30 years because I never submitted a claim. I am not, therefore, too embarrassed about having made a few claims in recent years. I hope, God willing, that I may make a few more before the VHI finally writes me off. Some of my constituents feel they were treated well and generously by the VHI over the years while others have a very deep sense of grievance.

Having acknowledged my indebtedness and that of others to the VHI, I must state that this is a regulatory Bill and that it is not satisfactory. I will not try to stop its Second Reading because it should go before a committee. There is quite an active committee of the House which has taken a fairly sharp view of the provisions of the Bill, of the basic unfairness of the situation and of the rules that are now being written. I hope the committee will amend it in a way that will make it acceptable not to the House or the Irish people but to those who will pass final judgment on it, namely, the Commission and the European Court.

In the event that the Minister or the Minister of State believe I am merely expressing a vague view as to what are the possible legal consequences, I wish to refer to an opinion written earlier this year by one of the leading authorities in the European Union on these matters. The man to whom I refer, Professor Claus Dieter Ehlermann, is eminently qualified, perhaps more qualified than anyone else in the Union, to express a view on matters of competition law and competition policy. Mr. Ehlermann is currently professor of competition law at the law department of the European University Institute which is situated in Florence. The institute is one of the leading postgraduate universities in the European Union and its president is Dr. Patrick Masterson, former president of UCD.

Professor Ehlermann is also currently a member of the eight person appellate body of the World Trade Organisation which is responsible for deciding on the most important trade and competition based legal disputes in the world. He was formerly, among other things, director general of the European Union's legal services from 1997 to 1998. Subsequently he served as director general of DG4, the Commission's competition directorate, from 1990 to 1995. As already stated, I do not believe there is anyone better qualified in Europe to express a view on what is proposed in the Bill.

I have had the advantage of reading the professor's opinion which, as one might expect, is very long and much of the detail might not be of great interest to Members of the House. However, the very succinct and clear conclusions reached by the professor at the end of his opinion must be of interest to Members, to the Minister for Health and Children and to his officials who, I trust, will take them on board between now and Committee Stage. There is not much point in enacting the Bill if it is going to fall in any event.

The professor reached six conclusions, the first three of which relate to the right of establishment in the Treaty of Rome and also to the provisions of the third non-life insurance directive. I believe I was involved in introducing that directive as President of the Council. The first of the professor's conclusions reads as follows:

The introduction of the planned risk equalisation scheme would amount to a violation of Article 3 of the third Directive, according to which "Member States shall take every step to ensure that monopolies . are abolished by 1 July 1994".

There is no doubt that the Bill is in violation of Article 3 because, under its terms, we were obliged to abolish our monopolies in this field by 1 July 1994 and six and a half years later we are some way short of fulfilling our obligations. We are now trying to go through the motions of opening the market when, in fact, we are making secure the position of the State monopoly which is owned and regulated by the Minister and which, under our European obligations, we were obliged to abolish by 1 July 1994.

The second conclusion of Professor Ehlermann is:

The introduction of the planned risk equalisation scheme would also amount to a violation of Article 43 of the EC Treaty – the Rome treaty – which forbids, in principle, restrictions on the freedom of establishment.

There is, of course, in practical terms a severe restriction on the freedom of establishment in this country. Who would want to establish when one has to do so under the terms set out in this Bill, drawn up by the Minister who is also the principal shareholder of the existing State monopoly?

Conclusion No. 3:

The planned risk equalisation scheme cannot be justified by Article 54(1) of the third Directive. Article 54(1) is not at all applicable to a risk equalisation scheme.

Apparently the Minister and his Department have argued that it is and that it gives them some sort of exemption. The plain fact is that it does not apply and they cannot use that protection in their argument.

Professor Ehlermann, in his three later conclusions, considers the situation which arises under the European Union's rules on State aids.

Conclusion No. 4:

A payment made according to the planned risk equalisation scheme to the VHI or to BUPA Ireland would be a State aid that fulfils the conditions of Article 87 of the EC Treaty.

Conclusion No. 5:

Such a payment would be a new aid. It would therefore have to be notified to the Commission.

Conclusion No. 6:

Such a payment could not be authorised by the Commission if it were a payment in favour of the VHI which was financed by a payment or charge imposed on BUPA Ireland.

That is precisely what is proposed here and it cannot be done. One of the leading authorities in Europe on this matter says it cannot be done. Why do the Minister and his Department persist in trying to get this Bill through for the benefit of their own company and to the exclusion of others?

We may all feel emotional about the VHI and aspects of the Irish health services. However, we live in the European Union and, whether we like it or not, we are subject to its rules. For that I often say, thanks be to God. Thanks be to God the rules are made somewhere other than in the political back rooms and bureaucratic areas of Dublin where they tolerated such awful things for so long. The rules are made elsewhere and they will be adjudged and enforced elsewhere. There is no point in our looking into our little hearts and saying we are cosy here in Ireland, we know the VHI since 1957, it looked after granny before she passed on and will look after the mammy and myself. We are living in the real world and the Minister and his Department will have to come to terms with that. One cannot get away with this kind of stuff in the real world any longer. One could do this when Deputy Tom O'Higgins and many of his successors were Ministers for Health but it cannot be done now.

I urge the Minister for Health and Children to rethink this Bill before it goes to committee. Deputy Batt O'Keeffe, who is chairman of the Select Committee on Health and Children. and the members of the committee may want to think carefully about this measure and its implications. There is no point in ploughing on with something because we think it would be nice if it is going to be struck down. It would be better to come to terms with the reality of the treaties under which we now operate and the laws which have been established from those treaties and from the regulations and directives made under them.

The Minister for Health and Children and this House are no longer supreme in what they want to adopt. We should adopt something fair and reasonable rather than what is here. We should adopt something that will be seen in Brussels and Luxembourg as fair and reasonable. I can say with confidence that this will not be.

Mr. Hayes

It would be useful if Members who have heard Deputy O'Malley would reflect on his words. The heads of this Bill were passed by the Cabinet. Given the number of Deputy O'Malley's party colleagues who are members of the Cabinet, one wonders how it accepted the Bill when Deputy O'Malley is so vehemently opposed to it. If the predictions put so plainly and starkly by Deputy O'Malley come to pass, we will have put in place a legislative provision which could be struck down by the European courts. Before we pass this legislation, we should be absolutely sure about its validity. In his useful contribution, Deputy O'Malley has questioned that validityvia the comments of an expert on competition policy. We should consider these comments on Committee Stage.

We are discussing this Bill on the assumption that we have a satisfactory health system and that we will continue as we have for the past 70 years. However, the premise on which this debate is based is false. Some months ago the new Minister for Health and Children, Deputy Martin, came to his Department with great fanfare, to reform the Irish health system. This innocuous and, as Deputy O'Malley warns, inoperable Bill is the only product of his tenure to date. This is the Minister who was going to solve the crisis in the Irish health service.

Since the Bill was published my party, in the proposals which we launched two weeks ago, has approached this problem from a different viewpoint. Virtually all public beds available in our hospitals are also available for private patients. Fine Gael believes this is wrong. Deputy O'Malley argues for competition and I accept that people have a right to private health insurance. However, those who cannot afford health insurance also have rights and they are entitled to have their public health system defended. One does not have competition when private patients are taking public beds. If people wish to spend their money in private hospitals I say, good luck to them but they should not take beds which are intended for the 60% of the population who cannot afford private health insurance.

Fine Gael proposes that each hospital would have to set up an independent board which could negotiate directly with private health insurers for the work they wish to undertake. That seems a fair and sensible suggestion. If Members are suggesting there are great advantages to private health insurance, albeit with the monopolistic powers of which Deputy O'Malley spoke, why do we have the kind of problems which exist in the health service? Will the Minister of State refer to a proposal set out by Deputy Mitchell two weeks ago which suggests a radical change in the health insurance market? We either have a free market or we do not. If we have a free market, those with private health insurance should go to private hospitals and stop taking beds in public hospitals from the 60% of people who do not have private health insurance.

If one is arguing for the purity of the market, as Deputy O'Malley is doing, then fair enough. However, let us have a market where public health patients go to their own hospitals. This would be the net effect of Deputy Mitchell's proposals because various private health insurers would negotiate directly with hospitals for the services and packages they require. This seems fair and it happens in some EU countries which are closely allied to the treaties spoken of by Deputy O'Malley. If it happens there, it can happen here.

I appreciate the difficulty with regard to Deputy Mitchell's proposal in that it would require a large number of additional private health insurers – at present we only have BUPA and VHI. Deputy O'Malley stated that the Minister is the regulator but I thought the Health Insurance Authority had regulatory powers on this matter under the 1994 legislation. I stand to be corrected but the net point is, if we are to have a market, and people want private health insurance, they should have it in their own hospitals.

Everyone is entitled to a basic health care system. However, at present if a consultant is trying to get a bed in a public hospital he can do so. The net effect of this is that someone else who does not have private health insurance is placed further down the list. Let us have a market approach but let public health patients also have their say. Let us have a public health system for public patients.

All kinds of nonsensical snobbery is attached to private health insurance. I cannot understand the justification for fees and costs which people are charged when they go to hospital. The Health Insurance Authority should investigate the costs associated with putting people through hospital. The situation is not competitive and it is nonsense to suggest we have an open market. Until we have such a genuine market in which there is genuine choice and each hospital has a genuine negotiating capacity with each private health insurer, we will not get the necessary improvements in services.

For all his talk over the past seven months since his appointment as Minister, Deputy Martin has not delivered on his promises, and we have not seen the kind of radical shake-up of the health system he promised some months ago. This Bill is not the answer to our problems and it could even be struck down if the European court upholds the opinion cited by Deputy O'Malley.

Let us have a system in which private health insurers compete against each other, thereby driving down costs. This has not happened to date as the entry of BUPA has not driven costs down. I accept the Government has increased health spending by about 75%, yet we have not seen any appreciable difference in the service. What kind of vested interests are working within the health industry to ensure that a massive injection of public spending has not delivered appreciable differences on the ground in acute hospitals? The system has to be changed.

Even in the last year of this Dáil, the Government has an opportunity to think afresh and radically about establishing a private and public health system where hospitals compete for various services. It may be that those who have private health insurance will select the public health option if they find an improvement in services.

Will the Minister of State comment on Deputy Mitchell's proposal on Second Stage for a hospital food inspectorate? The standard of food in the public health system is not good in terms of nutrition and presentation. The British Government recently appointed a food tsar who will continually inspect food provided to patients in the public health system. We need a hospital food inspectorate and I endorse Deputy Mitchell's comments on this matter. I hope the Minister of State will respond positively to the suggestion because we have a two-tier system. We have an exceptionally good system for private patients who comprise 40% of the population and in which people are treated in an effective and efficient manner. However, we also have a public system which is in crisis. I hope the Minister of State will take on board the suggestion for a food inspectorate so public patients will be treated with more dignity in hospitals.

More diseases are contracted in hospitals today than in the past. There was a reference to the super bug but there are a number of diseases in our hospitals. This should not be the case and some kind of inspectorate should be in place to monitor the quality and standard of service of food, cleanliness and hygiene in the public health system.

I welcome the announcement in the budget to radically expand breast screening programmes and I congratulate the Minister of State and the Government for this measure. However, why was there no similar announcement for a nation-wide screening programme for testicular and prostate cancer, which are a growing phenomena? I raised this issue some years ago when dealing with men's health. It is important that if a screening programme is put in place to deal with the appalling situation regarding breast cancer, a similar nation-wide screening programme is put in place for testicular and prostate cancer which are a growing phenomena and which have to be dealt with.

In a recent reply to a parliamentary question, the Minister conceded that, since Tallaght hospital opened, the number of acute beds provided was less than that provided by the four constituent hospitals before they were amalgamated. That is ridiculous. There is a 75 private bed unit expansion to Tallaght Hospital, which I welcome. For the first two years of its operation, fewer hospital beds were available than had been available when its four constituent hospitals were in operation. That is ludicrous.

Given that Tallaght Hospital deals with the west Wicklow and Kildare constituencies, and a growing area of suburban Dublin, we need further acute support in terms of additional hospital space by way of a radical expansion to that hospital or a new hospital to provide for the new suburbs that have been established on the fringe of the city and specifically in the Kildare and Wicklow areas. We have reached capacity in terms of the number of acute beds available for public and private patients within the south west region. The current position is not good enough. We need more acute beds. An additional hospital to serve the greater Dublin area might have to be provided. If so, we should be at that planning stage now, given that two years after the opening of the Tallaght Hospital, which is doing tremendous work, terrible demands and pressures are being placed on it.

If the Government was serious about dealing with the crisis in our health service, it would propose legislation to guarantee public patients a maximum period of waiting for various treatments and procedures. The point has been made on countless occasions during the debate by Members on all sides of the House that it is not acceptable for those who are in severe pain to have to wait a considerable period, three to five years, before receiving treatment from this State through our public health system.

We should set out in legislation another proposal put forward in Deputy Mitchell's document, a maximum period of waiting for various treatments and operations. That would guarantee public patients that their required treatments would be provided within a specific period. That could happen, if we changed the fundamental premise of our health system by ensuring greater competition and allowing each hospital to negotiate directly with private health insurers. We need more insurers in the market. It is a relatively small market, but the notion, as outlined by the kind of buccaneer privateer approach, that more health insurers entering the market will result in a lowering of the cost of health insurance is not proved by the facts, particularly since BUPA has come into the equation. I welcome BUPA into the medical care equation here but there is no evidence that costs have reduced or that a better service is being provided for patients. It falls on the State to provide for a public health system for the majority of people, which should be second to none.

I hope the Government in the remaining time available to it, which I hope will be very short, will examine this situation afresh as opposed tinkering with the problem by way of introducing the legislation before us.

As someone who spent 15 years of my life as a member of a local health advisory body and health board, I tried to learn a little about the administration of health services here. Despite all my efforts, to this date I am as confused as I was the day I started. One of the first lessons I learned about the administration and delivery of health services was the power of the large hospitals, the power of consultants and the power to dictate policy, to deliver services, to designate the location of hospitals and to determine the speed with which people went through hospitals, etc. We have also had time to observe the UK experience, where similar problems arose. I would have thought that by this stage one of the things we should have learned is that the services are provided for the customers. The population should have ready access to the health services, but they do not nor have they had for a long time, nor does it appear likely that will happen in the foreseeable future.

Dealing with that problem requires a radical reassessment of the services required and their delivery. As to whether that is done by way of a combination of public and private beds, all public beds or all private beds, when I was a member of a health board I thought that public patients should also have access to private beds by way of an arrangement. I reached that conclusion because that would mean there would be competition in the health services in another form. Competition can act in two ways. It can act positively or negatively. One can achieve one result or the direct opposite, depending on how the system is allowed to work.

We have a serious problem in that the chances of a medical card holder receiving the degree of attention in terms of access required are slim enough. For example, the average hip replacement patient or cataract operation patient has to wait for a procedure and while they wait they suffer. Nobody seems to care that in very many cases that happens in respect of elderly people. None of us, including the youngest of us, is getting any younger. It would be awful to think that as we get that little bit older nobody would care whether we gained access to the health services to which we have contributed and require or desire.

I do not know that the Bill will do anything to improve the position. I take on board Deputy O'Malley's submission regarding competition and the European Union. From my knowledge of the Union, it does not always apply the competition rules it professes to support. Some of the biggest powers within the Union are the most coy when called upon to apply those principles. In any case of liberalisation and expansion or improvement of the services, the degree to which the risk is carried by those in the health insurance business will have an impact on what happens to the quality and standard of service and to the consumer. The degree of risk involved will undoubtedly be a factor to be considered by those providing the insurance. It is important for us all to consider exactly what happens in practice. We have a community rating under the VHI, which was introduced for a very good reason, to eliminate cherry picking. It would be very easy for incoming and more competitive companies to apply a cherry picking procedure. BUPA has come on stream and has done a good job. It also was bound by similar restraints. I assume that future entrants into the health insurance market will also be expected to have due regard to similar situations. On the point Deputy O'Malley made regarding competition, the European Union does not allow restrictive practice; that is true. At least, it is not supposed to allow restrictive practice. However, quite a number of such practices exist in the EU at various levels and are operated by various countries, not always the smallest nations.

In examining what we propose to do now, we must take into account observance of the EU rules and directives while at the same time recognising that for a long time patients requiring services in this country have not had access to them to the degree they should. Unless there is a major change in attitude people will leave the country to get those services elsewhere. The Department of Health and Children is already considering this for patients with specific requirements.

One reason for that is we seem to be bogged down in a health ideology born 40 or 50 years ago, when the population was much smaller than it is now, when patients' expectations were much lower and when the country was vastly underdeveloped compared to today. What was acceptable then is no longer acceptable, nor will it be acceptable in the future. Consumers today expect a faster degree of delivery of service and a higher quality of service. If they are paying, either through voluntary or mandatory contributions, they expect to get the service.

Our job as parliamentarians is to do our best to bring to the attention of the Minister the need for delivery and that applies on both sides of the House. We must also bring to his attention the failure to deliver in the past. That does not apply to just one Government; nobody has a monopoly on that. The reality is that we got away with this for quite a while. It is no good saying they were able to do no better in Britain. We have a smaller operation and should be able to do better. We should be able to deliver faster and more effectively and we should be more cost-effective.

In a few years the age profile of the population will have changed again, which is likely to put a further strain on services. Many young people will be making voluntary health insurance contributions and in many cases there will be very little draw-down for years afterwards. I hope we do not see services curtailed for the aging, greying population at present. I know the Minister of State will say that this proposal addresses this and I hope it does.

Generally throughout the voting world the clout of that older population, with the exception of one or two countries, is not the same as it was and they must depend on others to deliver for them. I ask the Minister of State to remember that and to try to set higher standards here than have applied elsewhere. Remember the old adage: the customer is always right.

I thank Deputies for their contributions. The debate has been wide-ranging but it must be borne in mind that the purpose of the Bill is to amend and extend the Health Insurance Act, 1994, in the context of enhancing competition in the private health insurance market, in the interests of the customer.

The need for early establishment of the health insurance authority was raised, as was its composition. The Health Insurance Act, 1994, provides for the establishment of a health insurance authority comprising five persons, including the chairman. The White Paper stated that in considering appointments to the authority the Minister would seek nominations regarding suitable persons from appropriate professionals and representative bodies. This has been done and the Minister intends to establish this important independent authority in the very near future.

Affording VHI greater latitude regarding the services it can provide was raised and separate legislation will be prepared in due course to address the issue of VHI's future corporate status. Meanwhile, the Minister is considering the approach made to him by VHI, following publication of the Bill, for inclusion of an interim provision regarding services it may provide.

Regarding community rating and risk equalisation, the best way to explain risk equalisation is in the context of community rating. True community rating means that the risk of major medical expenses is shared across the full market if a community of people opt to purchase health insurance. This means there is solidarity between young and old, healthy and sick, across the whole system. The effective operation of this solidarity forms the very basis for community rating.

Several Deputies raised issues regarding risk equalisation but I wish to clarify some matters on which Deputies appear to be misinformed. My Department's insurance actuarial advisers, Mercer Limited, has unequivocally and consistently maintained that risk equalisation is a necessary support to maintain community rating in the competitive health insurance market operated on the basis of open enrolment. In view of comments during the debate it is appropriate to put on record the clear view of Mercer Limited on risk equalisation.

Risk equalisation is fair to consumers who expect that the stability of the system that they have contributed to for many years will be protected. Generally they should not have to pay significantly more for health insurance cover simply because they find themselves with an insurance company which covers a higher proportion of older or less healthy lives. Risk equalisation is fair to insurers. The fact that they have to insure all comers and charge them the same price limits their ability to protect themselves from aspiring claims ratio. Risk equalisation redresses this potential competitive imbalance. Risk equalisation will only result in payments where there are—

On a point of order, can the Minister of State guarantee that he will make available to us the transcript of that evidence—

That is not a point of order.

Is the Minister of State reading the advice given to him or his Department's view of that advice? This is crucial to the debate. Is he reading the advice as prepared by his officials or is that the actuarial advice?

It is the advice prepared by my officials.

Can the advice be made available?

I see no difficulty in providing that.

Risk equalisation will only result in payments where there are material differences in risk profiles. Put simply, the system requires the healthy to pool their experience with the less healthy. This is true community rating. Risk equalisation limits the extent to which healthier people or their insurers can avoid this responsibility and profit at the expense of the rest of the health insurance consumers.

Risk equalisation is not discriminatory between insurers. It redresses an imbalance in risk profiles between insurers. Any insurer could, as a result of its relative claim profile, be a contributor or a beneficiary of the risk equalisation fund. Risk equalisation is supported by a wide range of independent experts. I emphasise that under arrangements to be made pursuant to the Bill, the Health Insurance Authority will have a considerable role in determining precisely when and how risk equalisation will be implemented. I reiterate that the EU's third non-life insurance directive provided for the application of risk adjustment between insurers, referred to as loss compen sation. I appreciate Deputy O'Malley's interjections in regard to this and we will look at them further, particularly on Committee Stage. In this connection, at all material times EU Commission services were made aware of Ireland's proposals to include risk equalisation in its regulatory arrangements for private health insurance. Prior to publication of the White Paper, my Department engaged in providing Commission services with detailed information on the health insurance regulatory framework, particularly with regard to risk equalisation. Reference was made characterising the criteria to be used in connection with risk equalisation as academic and mathematical. It is only right that any calculation has a sound, mathematical basis. I also emphasise that the criteria being used, age and gender, are universally accepted as reliable determinates as regards health profiles of different populations.

In addition it is recognised that these factors alone do not fully explain the health risks which different populations can represent, thus making it appropriate to include an additional measure relevant to health status. It would not be the best policy approach to safeguard community rating and the stability of our system to only give consideration to risk equalisation measures when evidence of market failure became established. The whole thrust of the approach to be implemented is to avoid the emergence of such a situation.

The broad effect of the proposed risk equalisation arrangements will be to protect consumers from the potential adverse effects of differences in risk profiles by bringing insurers with either good or poor profiles closer to the market average. Within this approach there will be provision for generous recognition of the potential of insurers to achieve better claims experience through good insurance practice and efficiency rather than by virtue of having better risks.

The Minister assures Deputies that the proposed arrangements which will centrally involve the health insurance authority in determining when the circumstances are considered to warrant the commencement of risk equalisation, will reinforce the position that will be exercised very much as a reserved power. It is intended that the commencement of Irish equalisation will be ultimately determined by reference to what is in the overall best interest of health insurance consumers, not the commercial interests of any insurer.

Concerns were also expressed regarding a 36 months exemption from risk equalisation arrangements in the case of new insurers entering the market. It has become apparent and reflects indications from insurance interests that an 18 months exemption would not be sufficient to encourage entry to the market. It was, therefore, considered appropriate to increase the window period to a duration with greater impact on how potential entrants might view the market opportunity. In this connection Deputies should bear in mind the cost and challenges facing a new entrant wishing to establish in the market, not least among which are the strong brands, extensive health insurance experience and marketing strengths of the two existing players.

Fears that the window will be exploited have been highlighted. However, the matter has been carefully considered and the Minister is satisfied that the concerns expressed should not arise. The scale of the advantage which any insurer could gain over such a period would be marginal. It is unlikely that any global or established Irish insurer would risk its brand or reputation for such a small potential reward. Furthermore, any new enterprise formed with the specific purpose of trying to exploit this measure would first have to meet the rigorous prudential and other regulatory requirements for conducting insurance business in the State. A number of issues concerning possible effects of the provision of the Bill to remove ancillary health services from the scope of health insurance regulatory arrangements were outlined. I noted with interest the points raised and I will give careful consideration to whatever related amendments may be warranted in this area.

Some concerns were expressed regarding the public private mix and the view that the position of public patients can be adversely affected under such a system. As stated in the White Paper, the Government is committed to ensuring that public patients benefit from the mixed system and that any potential drawbacks are addressed. To put this matter in perspective, I draw the attention of the House to the fact that, notwithstanding nearly 45% of the population having private health insurance, only 21% of beds in public acute hospitals are designated for private patient care. Private facilities are also provided by independent private hospitals which receive no public funding.

Since 1991 there has been an increase of over 25% in the proportion of the population insured, much of which is attributable to the rise in national prosperity and increase in employment, yet the increase in the proportion of designated private beds in the public acute hospitals has been just 6%. The recent ESRI study commissioned by my Department found no evidence to suggest that elective admissions of private patients to public beds were taking place.

We should also bear in mind the acute health care needs of a significant number of people are catered for by the independent private hospital sector which has the effect of displacing a potentially significant demand for publicly-funded health services. That said, it is clear there are shortcomings in our system which need to be addressed, including equity of access. The Government is committed to improving public health services and is providing the necessary resources towards that end.

Reference was made also during the debate to the need for investment to be accompanied by reform. I agree with the need to pursue reform. We must be careful that the manner of doing this does not impact negatively on patients in terms of the continuity or quality of their care. I will provide some examples of areas where reform is being pursued by my Department in partnership with the relevant provider's interest.

Nursing is a splendid example of where real and substantial progress is being made in pressing ahead with the agenda for change recommended by the Commission on Nursing. This is being done in partnership with all the key stakeholders involved, including the nursing unions. The implementation of the structural reforms advocated by the commission will transform the way in which the nursing profession is regulated, educated and developed.

The work of the medical manpower forum is aimed at enabling us to move ahead with necessary and effective strategic changes in order to address the key medical staffing and training issues in our public hospitals. There is also important ongoing work to develop a process and culture of quality assurance in our hospitals. This will serve the interests of patients going forward and will ensure that delivery of these services is clearly patient centred.

I assure Deputies that the provisions contained in this Bill facilitate competition to the maximum extent possible while protecting community rating. Any risk equalisation payments will arise only where there is real, not academic differences, in the risk profiles of insurers. The statutory scheme which will govern the operation of any such payments between insurers will also have the flexibility in terms of the exercise of discretion on the part of the health insurance authority, to ensure that it will not be commenced without good reason and that it will be proportionate in its application. The approach to these arrangements will have due regard to the overall best interests of all consumers.

I again thank Deputies for their contributions to the debate on this Bill. I note, naturally enough, that many of them were extraneous and concerned the general health issues. There will be opportunities for Deputies to address these health issues in regard to the budget debate on health, which keep occuring.

We want the Government to address them, not us. It is Christmas time and I will not be here very long.

Question put and agreed to.