Tuesday, 31 January 1989
Dáil Éireann Debate
That Dáil Éireann calls on the Government to ensure that the VHI Recovery Programme is altered so as to rescind the decision to abolish the drugs refund scheme by availing of alternative policy options which would remove cross subsidisation of plans and allow a more actuarial approach to health insurance.
During the Dáil recess the Government announced a recovery programme for the VHI. The public and this House were already aware that due to the complacency and delays of the Minister for Health in dealing with the financial crisis in the VHI there would have to be a very severe package of measures but no one ever supposed that it would involve the abolition of the drugs refund scheme. It seems incredible that this Government should inflict such hardship on over 40,000 families in such a callous way.
In moving this motion the Fine Gael Party, with the assistance of the rest of the Opposition, will seek to rectify what has been an appalling proposed injustice on people who have not caused a problem for which they have been asked to carry the principal burden in rectifying. In my contribution I wish to outline in detail the hardship that many patients will suffer because of the abolition of this scheme; the reasons why this is the wrong option to resolve the VHI's problems; why our total drugs situation is in chaos in this country without any response from the Minister; alternative VHI options in terms of financial recovery and the future direction of the VHI.
There are umpteen long term illnesses or recurring illnesses that require expensive treatment and drug usage to control. Perhaps the best highlighted of these is asthma. There are at least 100,000 asthmatics in this country. It is estimated that 10 per cent of GMS drugs expenditure in 1987 was for asthmatics. Somewhere between 10 per cent and 15 per  cent of all children are asthmatics and 6 per cent of adults are asthmatics. It is very common for families who have asthmatics to have more than one child suffering from it. It is also common for monthly drugs expenditure to be of the order of £70 per month. Yet, because of the expense of inhalers and tablets there is substantial evidence of under-treatment with the proper drugs. It is simply vital that asthmatics get their proper drugs with the proper financial assistance if they are not to become so ill as to require hospitalisation.
Kidney sufferers require very expensive and continuous medication and treatment to deal with renal failure. I have received many individual letters from people suffering from what I term minority illnesses that do not have such a high public profile or public awareness. Specifically I refer to Chrohn's disease; people suffering with colostomies and other long term illnesses that break down immunity in the body; heart disease and arthritis are two very common ailments, particularly among the elderly, which require constant medication. Hypertension or blood pressure equally requires a steady constant flow of medication to control. People who are unfortunate enough to have a glaucoma or high cholesterol levels require regular monitoring and drugs. We have the whole series of psychiatric illness in which we have seen in recent decades a transformation in the type of care from institutions to a community care approach simply because of the evolution of drugs and injections to cater for mental illness.
All of these people have been specifically targeted by the VHI, the Minister for Health and the Government as being the scapegoats for their mismanagement and incompetence resulting in the financial position of the VHI and the subsequent proposal to abolish their entitlement to a drugs refund up to the level of the State drugs refund scheme i.e. £7 a week maximum. This is a fundamental injustice because it cannot be argued in any way that this aspect of an out-patient scheme which has an excess  policy of £170 only caters for cases of hardship and which is not open-ended is the cause of the VHI's problems.
The cost of the drugs refund scheme last year was £7.6 million. If one analyses the VHI accounts prior to, during, and after their financial difficulties one sees that there are a number of factors whereby changes have taken place. I am referring to the increase in expenditure on administration, the huge claims now being made under diagnostic services, the advent and exploitation by high technology private hospitals through new claims and the increase in moneys paid to public hospitals for pay-beds. How it is that those factors, which can be directly attributed to the changing circumstances of the VHI are not items for the single largest saving in their recovery programme but rather instead they go for the soft target of a scheme that has been in operation since 1967 which operated for almost 20 years without causing the VHI financial difficulties and which was not a major factor in the transformation of circumstances for the VHI?
The consequences for the VHI of this proposal if it is allowed to go ahead will be first, that many people whom I have referred to with long term illness will instead not maintain their membership of the VHI simply because they need that money to pay for their drugs. Thus, the increased membership which the VHI obtained over the years because of the drugs refund scheme and for which they actually canvassed at the asthma organisation and other functions, will move away in disillusionment and reduce VHI premium income.
The second effect of this ill-conceived proposal is that those patients with long term illness in the community who are controlling their health care and maintaining their quality of life through proper and adequate provision of drugs will be unable to afford such medication and will relapse into a greater spiral of sickness and ill-health resulting in very expensive in-patient hospitalisation, often in beds costing £1,200 per week. The whole thrust of agreed health policy of successive Governments over the past ten  years has been to develop the primary care, community care and out-patient services within the health system. This decision flies in the face of all that thrust. This serves to underline that this Minister has no palpable overall health policy or strategy that is based on optimum care for the public and maximum cost effectiveness.
The drugs refund scheme as operated by the VHI is one of the few schemes for which there is a maximum possible payout for any individual subscriber, as the maximum anyone can claim is £336 a year. This is even in spite of the fact that a lot of health boards are charging £5 per month to administer the drugs refund scheme, resulting in the State drug refunds scheme only commencing at the level of £396 per year.
I have many times publicly referred to the unacceptable situation in relation to drug costs in this country. This Government persist in an agreement with the Federation of Irish Chemical Industries that allows for UK prices plus 10 per cent to be paid for most drugs. Many drugs that are commonly used and paid for under the VHI drug subsidy scheme can be bought at least half the price in many EC member states, if not a majority of those states. It is not acceptable to wait until 1992 or in the nebulous expectation or hope of some parallel imports to rectify this situation. The Minister has not only not got a good deal for the taxpayer in terms of the price paid for drugs but also has allowed a situation where there is no effective competition or price control for private drug usage. The common mark-up of drugs among pharmacists is 50 per cent for both the long-term illness scheme and the provision of drugs through sales directly to the public. It is simply anomalous that the State pays a different price for drugs through different schemes. We have at the moment the medical card scheme whereby drugs are paid for, the long-term illness scheme for some 15 classified illnesses and the State drugs refund scheme operated through the health boards. There is an urgent need for some rational approach to this.
I am referring specifically to the fact  that a chemist is paid £1.24 per item through the medical card scheme but he gets a 50 per cent mark-up on the same item if it is done through the long-term illness scheme. It makes no sense. CEOs in health boards are replacing medical cards with long-term illness cards.
In the last election Fianna Fáil specifically referred to hardship for individuals with a high drug requirement. In the Programme for National Recovery under the ironic heading “Caring for Basic Values” they specifically say:
we will take immediate steps to ... search out ways to improve the system for individuals yet at minimal or no cost to the State. An example is the problem of sufferers from long-term illness using the drugs refund scheme who are now expected to make large outlays each month. Most of this money is eventually refunded by the State. Having to provide money for several months is often difficult for limited eligibility patients.
What is being done by this Government to assist those individuals? Nothing except a total worsening of the situation by an increase of the threshold for the drugs refund scheme and the proposed abolition of the VHI drugs refund scheme.
Again, we see a delay and inaction from this Minister in relation to the introduction of a proper national formulary for generic drugs and effective guidelines to ensure their operation so that people do not have to pay for the same drug using a more expensive brand. All aspects of the medical profession are agreed on the potential savings in this area.
Similarly, it is now quite obvious that of the 800 over-the-counter drugs that were delisted from the medical card scheme when Deputy Woods was Minister for Health, there are still some 40 drugs out of that list which have caused the taxpayer a lot more expense by virtue of the fact that because cheap over-the-counter drugs such as antacids are no longer available and very similar products such as Tagamet costing a multiple of  those referred to are being prescribed by doctors.
If we analyse the drug situation in Ireland and if the Minister has any real genuine concern for those with long-term illness there is a variety of different options he can pursue to help them. They are a renegotiation of the deal that allows for excessively high prices to be paid for drugs in Ireland relative to costs in Europe; a rationalisation of the number of State drug schemes ensuring a uniform system of payment to pharmacists; new effective guidelines for the greater use of generic drugs for all patients and a greater usage of limited over-the-counter cheap drugs for some basic illnesses. The Minister recognised these problems in Opposition and yet almost two years later had done nothing to rectify the system but unfortunately instead exacerbates it through this proposed abolition of the drugs refund scheme.
It is important in this debate to reflect on the VHI position in order to ensure a proper reversal of the decision relating to the drugs refund scheme. It is undoubtedly true that if the Government had produced their present recovery programme—or any recovery programme —a year earlier, in December 1987, the saving to the VHI subscriber alone would have been of the order of £13 million. In any business a problem undetected and not rectified is exacerbated if accumulated losses are allowed to develop and in this instance deplete reserves to an extraordinary low level of £4 million from a February 1987 high level of £29.3 million. Right throughout last year the Minister for Health denied the existence of a financial crisis in the VHI and accused the media, myself and others of being alarmist and scaremongering when we suggested net losses of £22 million for the two year accounting period. As it transpired his complacency in awaiting more reports on the VHI board from the team of consultants and others as well as his general inaction have resulted in the present recovery package having an excess of severity because of these accumulated losses.
 The reasons for the VHI crisis are, first, the lack of proper cost control in the VHI. It is quite obvious that the VHI entered into commitments in recent years which were not properly costed. They simultaneously failed to negotiate with key elements of the health service including the Department of Health, private hospitals and the medical profession, and were, therefore, wide open for exploitation by all concerned. This resulted in all claims jumping at a multiple of the rate of inflation and at a far greater rate than any possible premium and revenue increase.
It has been argued that lack of premium increases is the problem in the VHI. I have heard it suggested by those in private hospitals and elsewhere that Deputy Desmond's refusal to give premium increases was the nub of the problem. I reject that because, prior to the recovery package, fees increased in the VHI by 53 per cent since 1984 while the consumer price index for the same period was some 17 per cent. We had a fee increase of 8 per cent in December 1987 and a further proposed fee increase now between 3 per cent and 25 per cent all of which is above inflation. The VHI have increased fees very rapidly over recent years. It is wrong to say that denial of fee increases by successive Governments is the reason for the problem.
Secondly, it is undoubtedly the case that the mismanagement of the public health sector resulting in indiscriminate loss of beds and wards had a direct knock-on effect on the VHI with more people claiming on the VHI and demanding services that were becoming inaccessible through the public health service. This, coupled with the very large increase in the per diem rate in pay-beds in public hospitals were a major drain on VHI resources. Some private hospitals would argue that this per diem rate increase was the major problem. I disagree. I have to point out that on any comparative costings there is no doubt that this private daily rate charge in public hospitals to VHI subscribers is still heavily subsidised and good value relative to private hospital care. The capital and equipment  charges are not included and therefore, it is not an economic charge.
Thirdly, the VHI allowed a huge increase in hospital capacity in recent years. I am referring to the provision of two new high-tech private hospitals, Blackrock Clinic and the Mater Private Hospital. These are drawing down in the order of £20 million per annum from VHI funds. Blackrock Clinic were allowed an open-ended claim system that was completely non-viable in insurance terms and which bears such scrutiny. When D and E plans were first negotiated it was agreed that if a patient covered under those plans went to the Blackrock Clinic all maintenance charges would be paid. I know that the VHI legally tried to resist some of the whopping bills that came in but found that they could not overcome the problem. I am glad that because of the public outcry in this regard, negotiations that the VHI have been trying to conduct in relation to cost control are now meeting with success. Open-ended insurance of this kind could never have been viable.
The Mater were allowed to increase fees at a critical stage and predominantly gave cover to people who were not insured for it in the B and C plans. Unfortunately—and this is the tragedy and reality of health economics at home and abroad in any report one reads—it is very clear that need equals capacity. If capacity is increased in an uncontrolled and unbridled way it will be fully utilised because the managers of those hospitals will ensure virtually 100 per cent bed occupancy.
The VHI wrongly projected that the hospital claims rate from their subscribers for those under D and E plans would be the same as was the case across the other plans of approximately 14 per cent per annum. They were wrong in their calculations. This did not apply as people consciously got extra cover if they suspected that they would require expensive in-patient hospital treatment. Moreover, the target of 10 per cent of VHI subscribers joining plans D and E has not materialised to date. All this  allows hospitals to compete on technology, which is very expensive, without competing on prices. Simultaneously the medical profession, most notably consultants, were allowed to inflict on VHI subscribers a situation where full indemnity was not being offered for consultants' services and extra payments had to be paid by patients over and above what the VHI would cover them for. It is quite common now for someone having a cardiac bypass to have to pay £1,000 to the surgeon on top of what the VHI allow. Little cost control was exercised in the area of diagnostic fees in relation to pathologists who, through new technological developments, were obtaining in some instances huge incomes because of an unfair system of payment. Also, it seems that there was no comprehensive medical audit to monitor the necessity for the increased level of diagnostic testing generally which seems to have been of minimal benefit to patients but which was extremely costly. Once one has a machine one should ensure that it is used in such a way that it pays for itself.
Fourthly, administration costs have increased at a rather excessive rate. I am aware that the VHI argue that they are in line with international comparisons. However, it does seem that they were more competitive heretofore. In the latest accounts we see that administration costs rose during the past year by over 21 per cent. In comparative figures, between 28 February 1975 and 28 February 1985 administrative costs per insured member rose from 99p to £5.54. This change of over 460 per cent seems to be unjustified and well in excess of inflation for the same period.
It is quite obvious on any fair analysis that it is impossible to include that the VHI drugs refund scheme which had been in operation for over 20 years was responsible for the present mess. Consequently, it is simply unfair and unjustified to make this unwarranted attack on the long term ill in this recovery programme. It is this inherent injustice, rather than any political consideration, that has motivated this motion tonight and must  surely oblige the Government to rethink their position.
I would now like to outline some alternative recovery measures for the VHI. When one looks at the financial returns for 1987-88 for the VHI one will see that claims rose by 28 per cent to £141.6 million, and income by just under 13 per cent to £126.4 million. One can see therefore that there is an urgent need to increase income and control costs, to put it in its most simplest terms. In relation to raising income, one has to accept that premium increases cannot be the sole basis for increasing revenue as premiums can reach and probably are reaching unaffordable levels, especially in the context of trying to gain new membership from middle to low income families who perhaps need the VHI most. There is substantial growth potential in membership; 34.1 per cent of the population are members of the VHI. Before I continue, a Cheann Comhairle, I forgot to mention at the outset that I would like to give ten minutes of my time to Deputy De Rossa.
Mr. Yates: It also seems from analysing the figures that the average age of the membership is the key to future growth. The present trend is that the age profile is increasing, with the average age last year rising from 30.43 years to 30.67 years. It seems obvious, if one takes a more actuarial approach, that it would be possible to give limited incentives to people in their twenties and thirties for a limited period to join. These are the people who are not joining the VHI and who are taking the conscious decision that they can afford not to join the VHI in their early years. They make this decision on the basis that they receive no  benefit whatsoever from ten to 20 years continuous VHI premium payments without any claims. I believe therefore that a limited no claims bonus, say, up to 25 per cent should be introduced right across the board. I wish to emphasise that this would not alter the principle of community rating which I very much support and will continue to support. I support those Deputies who have stated that this must be the only basis on which foreign competitors are allowed to offer health insurance in this country. It is the only fair principle. I am saying that we should target new membership and encourage young people to join. I do not believe that we should penalise illness but at the same time we should try to attract more revenue into the VHI without increasing premiums. These two issues are not mutually exclusive.
Similarly, the VHI should give discounts to those who look after their health and operate personal programmes of preventive medicine. Here I am referring to those who annually or biannually voluntarily go for comprehensive health check-ups, to have their blood pressure and cholesterol levels tested, and so on and also, to those who consciously do not smoke or drink excessively. It should be possible to devise a system of discounts, even on a pilot basis, to again have a greater actuarial approach, so that those who look after their health are not subsidising those who are abusing theirs. This approach will have to underlie future public health policy as international experience shows that real health goals, such as increasing life expectancy, can only be attained through improved preventive medicine.
In relation to claims, greater cost control will have to be exercised. I referred earlier to the need for competition between hospitals on price and the only way to resolve this is through the introduction of a fixed cost per treatment system of payment by the VHI to private medicine. I am referring to the international experience of the establishment of diagnostic related groups whereby fixed payments are made for different categories of treatment with a peer group  review committee made up of medical experts to establish average bed stays with a disaster clause for unforeseen circumstances. Once a fair basis has been established for such a table of costings, hospitals would have to conform to that price structure or else the VHI would not be able to prop up their inefficiencies or cost overruns.
The practice heretofore of paying different prices at a multiple of their cost for high volume extras such as drapes, gloves and syringes was simply lunacy in financial terms. There has been much public comment and even resentment in relation to the level of cross subsidisation by 94 per cent of VHI members in plans A, B and C of the more expensive luxury plans D and E. The Minister has admitted that this is a problem and it is self evident from the varying proposed premium increases that a subsidy has been paid to date. I believe that the only way to effectively root out cross subsidisation between plans is to reorganise the plans into three simple categories of cover which would conform to the three different types of hospital care, that is, private or semi-private beds in public hospitals, be they voluntary or owned by the health boards; low technology private hospitals, such as the Bon Secours in Cork, Galvia in Galway and Mount Carmel; and the high technology private clinics, such as the Blackrock and Mater private clinics. People would then know in advance by paying into these different categories what type of cover they could expect, and, accordingly, would pay for it.
I very much support the concept of greater fee control in relation to the finance paid to consultants and others for certain services, such as diagnostic work. A per case method of payment must be vigorously pursued by the VHI for routine operative work carried out by biochemists and technicians in our hospital laboratories. A streamlined system should be introduced to ensure that different hospitals are on the same system of payment and that anomalies of distorted mega incomes are not allowed so that revenues to which hospitals are entitled are genuinely paid and a level  of competition is introduced, especially within the Dublin area, for such services. Administrative expenses will have to be trimmed through greater levels of computerisation and through a streamlining of paper work. I call on the Minister to look at areas where the public health service administration overlaps with the work of the VHI to see if unnecessary duplication can be eradicated. All in all, I believe that these proposals represent a sensible, reasonable and responsible approach to the VHI crisis which is based on identifying the factors which caused the crisis that currently needs to be addressed. Failure to address these and to tackle other elements, such as the VHI drugs refund scheme, may leave the fundamental problems unresolved.
The Minister for Health has attacked the Fine Gael Party on this motion on a number of grounds. He has referred to the proposals Fine Gael made during the last election campaign relating to prescription charges. I am very pleased that the Minister can remember that far back as many of us had thought he had completely erased from his memory the role he played as Opposition spokesperson for health in the putting up of posters which stated that “health cuts hurt the old, the weak and the handicapped” and the specific commitments he made in relation to converting the drugs refund scheme into a subsidy scheme to avoid cash flow difficulties for patients. The Minister would have a lot more credibility in attacking my party if he acted on his own pre-election promises. I emphasise that the people Fine Gael are trying to protect in this motion do not form an élite group in our society. The only factor that distinguishes this middle income group is that they have to depend on the VHI as they do not hold medical cards. Many may only be marginally over the medical card income and in an established poverty trap within the health services vis-á-vis entitlement. They could not afford to have a serious bout of illness in their family. We are talking here about the average industrial worker, about postman, garage mechanic or office worker. They are appalled to see through  mismanagement and no fault of theirs, despite increasing premium payments, the insolvency of the VHI.
Fine Gael favour a mix of private and public health services, based on the principle of equality of clinical services and access to health care. Because of the negative effects of the Government's public health policies this equality is deteriorating. A further attack on the middle income group will not rectify this problem, only exacerbate it, as the public health services could not cope in the circumstance of a collapse of the VHI. It is, therefore, vital that the VHI recovery programme is carried out in a particularly sensitive way so as not to reduce VHI membership and to maintain the perception that the VHI are really a worthy organisation who care for people as they have done heretofore. The Minister's action has jeopardised all of this in an unfair way.
Finally, we in Fine Gael in this debate have an open and constructive attitude towards what steps the Minister can avail of to rectify this problem and injustice. I have outlined in my speech a number of different options within existing drugs refund schemes operated by the State how a rationalisation and reorganisation of those schemes would give resources to assist the people that this motion seeks to help. We have also constructively put forward a series of varied alternatives as to how the VHI could alter their recovery programme more equitably. The purpose of this motion is not to score politial points but to rectify a callous, heartless and badly thought out decision to abolish the drugs refund scheme.
In conclusion, I call on the Minister to concede from the discussions, representations and correspondence he has received from the very many organisations and individuals who are affected by this decision that there is a case for meeting their needs. He must now through his Department take the necessary action to alleviate hardship.
Proinsias De Rossa: I want to thank Deputy Yates for the time he has given  me out of his allocation so that I can speak on this motion and The Workers' Party amendment. Obviously The Workers' Party amendment seeks to retain the drug refund scheme but indicates that how it might be done is different from or additional to the proposal put forward by Deputy Yates. While obviously we do not agree with everything the Fine Gael Party propose in relation to the health services, I believe the parties in Opposition have an obligation to demonstrate to the Government that they cannot simply abolish or allow to be abolished the drugs refund scheme for those who need to have insurance cover for the £28 which the health boards do not refund.
The VHI were set up specifically to assist people who were not covered by medical cards and hospital services cards or who were not on the long-term illness list. It is not appropriate to simply try to resolve the problems of the VHI by attacking those who are least able to carry the burden. The VHI have done a very good job over the years in filling the gap I have referred to. However, in recent years they have increasingly fallen into some difficulties as a result of two trends: one is the trend for those in the medical business to treat health as a means of making large profits and to milk the VHI as indeed they have milked the long-term illness scheme and a whole range of other medical services which the taxpayers either pay for or subsidise. Also, the Government have pushed more and more people into the private sector through cutbacks in the health services, thus putting strains on the VHI which they have not been able to carry. I have to say also that in principle I am not in favour of having a two-tier health service, the general public health service and that provided by the VHI. Nevertheless until such time as an equitable public health service is implemented, which provides health care on the basis of need and which provides choice as well, then clearly we have to defend the service provided at present.
There is a fairly major problem for those of us who oppose the cuts in the  health services and indeed there is a problem for patients generally because it has been demonstrated in the past few years that various interest groups who have opposed various aspects of the cuts and who have had their particular needs satisfied or their demands deflected in some way, have gone away satisfied or otherwise, but patients by and large are left to paddle his or her own canoe. It is not satisfactory that, as the Minister admitted here in the House some months ago, there are over 700 children waiting for ear, nose and throat operations in Temple Street Hospital while the Minister continues to argue that public health services are adequate. It is extraordinary that there is not a greater row about this fact, but it would appear that if various major interest groups are satisfied, then by and large the patient is not thought of.
It is not acceptable either that the Minister should allow the VHI to penalise their subscribers in the way it is being proposed to do by abolishing the £28 refund scheme. In our amendment we propose that the cost of that scheme could be greatly reduced by looking at the way in which drugs are paid for by the VHI and health boards. Under the VHI scheme and the health board scheme refunds sought on drugs bought on prescription from chemists are paid for at full retail price as distinct from drugs under the general medical services being paid for at wholesale price plus a prescription charge. As I said earlier, it is not acceptable that various interests in the medical business should be allowed to rip off the taxpayer in this way, and that effectively is what it is. It is a known fact that some of the drugs being prescribed on which refunds can be claimed have a mark-up of almost 100 per cent. That is not acceptable and some form of restriction has to be introduced on the mark-ups and prices which chemists are entitled to charge.
I have also argued that the VHI should not be involved in the business of providing cover for luxury hospitals under schemes D and E. We have opposed this  from the very beginning. What is particularly galling about it is that the taxpayer subsidises this cover for those who go to luxury hospitals because those who take out the cover for these hospitals are entitled to a tax rebate based on their taxable income and in general these people are the ones who were paying the 58p rate of income tax up to the last budget but who will now be paying 56p in the £. The generality of VHI subscribers are subsidising those who wish to use luxury hospitals and the general taxpayer subsidises them as well with regard to tax refunds which they can claim.
I urge the Minister to rethink the way in which he is enabling the VHI to recover. I urge the Opposition parties in this House to come together and demonstrate to the Minister that we want to retain this refund scheme and the only way we can do that is to vote tomorrow night as a single body against the Government's amendment.
“acknowledges that under the legislation establishing the VHI, responsibility for the management of its affairs is vested in the Board, subject only to the approval of the Minister for Health and accepts that the Minister had no alternative but to approve the Board's Recovery Programme which was prepared in accordance with the best actuarial advice available and designed to ensure the continued viability of the VHI”.
The original motion put to the House tonight is self-contradictory and shows a fundamental misunderstanding of the nature of health-insurance and of the realities underlying the recovery programme of the VHI Board. Indeed, yet again, we hear Deputy Yates coming forward with simple answers to some of the most complex health problems that exist and, as he often does, he produces simple answers to problems that have taxed the  minds of some of the greatest health administrators in the developed world over the last 25 years. Tonight again he made the allegation that he was telling us about the crisis in the VHI and we were denying it. Before Deputy Yates became spokesman for his party I had already appointed consultants to the VHI as an indication of my concern. Wild statements such as Deputy Yates made on TV one night, that the VHI are insolvent, are not very helpful to what Deputy Yates obviously recognises are a very important limb of the health services. It is important that nobody would try to undermine the recovery plan or to erode confidence by making wild statements that cannot be substantiated.
The motion proposes that the VHI board should be required to rescind their decision to abolish the drugs element of their out-patients scheme. It also calls for a more actuarial approach to health insurance. I have made it clear on a number of occasions in recent weeks that the board's decision in relation to the drugs benefit was, in fact, taken on actuarial grounds. It is in line with the firm advice of the international actuarial experts engaged to advise the board in the preparation of their recovery plan, and it is in line with the advice given to the then Fine Gael Minister for Health, Deputy T.F. O'Higgins, in 1956 by the advisory body which led to the formation of the VHI.
To put the matter into perspective, I will put on the record of the House the circumstances which led to the VHI recovery plan. Although the VHI recorded a small surplus in the financial year March 1986 to February 1987, the underlying relationship between their claims expenditure and their subscription income was deteriorating rapidly in the course of the year, due to a number of cost factors which I will discuss in more detail later. The emerging problem was greatly exacerbated by the action of the previous Government who refused to sanction a necessary premium increase in 1986. I do not know how Deputy Yates can come in here tonight and justify that  decision not to give an increase. Consequently, the board incurred losses of £12.3 million in the year March 1987 to February 1988. Indeed, a similar loss is expected in their current year.
Dr. O'Hanlon: I monitored the situation closely when I took office and, following discussions with the VHI board, I authorised an average premium increase of 8 per cent, almost three times the rate of inflation, which took effect in December 1987, yet Deputy Yates seems to feel that increase should not have been allowed at the time——
Dr. O'Hanlon: The first problem, as I see it, with regard to premium increases was in 1986 when the then Minister refused an increase. Despite the increase I allowed, it became apparent in June of last year that costs were still escalating above the projected levels. With the agreement of the VHI board, I, therefore, in July 1988 appointed consultants to carry out an extensive examination of all aspects of the board's operations and to recommend measures which would achieve two objectives, to ensure the board's finances remained in a sound position and to ensure that the board's structures, plans and business practices were geared to enable them to survive in the more commercial environment which may well emerge in the years ahead.
That having regard to the fact that the Minister for Health considers that the Voluntary Health Insurance Board  has an important role to play in the health services in Ireland, its health insurance scheme should at all times accurately reflect the thrust of public health policy; that it should be managed in an effective and efficient manner and having regard to the introduction of a more commercial environment and a probable greater liberalisation of insurance markets in 1992; to examine all aspects of the VHI operations, in particular:— (a) the board's financial position; (b) structures at board and management levels; (c) schemes and methods of payment; (d) accounting systems and procedures; (e) compuerisation; to make recommendations in two phases regarding
the entire range of functions performed by the VHI and the extent to which these would require modification in the light of possible competition from other EC health insurance companies in a free market situation from 1992 onwards.
As the House is aware, Mr. Noel Fox was appointed consultant and he consulted with the firm. He is a member of Oliver Freaney and Company, with Spicer and Oppenheim and R. Watson and Company consulting actuaries.
When I received the first phase of the report in October 1988 it was clear to me that an immediate recovery programme would be necessary to achieve the first of these objectives since the ongoing level of losses was such that without prompt action the board would have exhausted their reserves during 1989. I do not have to remind the House how serious it would have been had the reserves been exhausted because then the VHI board would  have been insolvent. That, obviously, would have been very serious for our health services and for the subscriber.
The VHI board appointed Mr. Noel Fox of Oliver Freaney and Company, who was leading the team of consultants, to the post of recovery manager and to facilitate the preparation and implementation of the recovery plan I appointed Mr. Fox as a board member. In December 1988 the VHI board's recovery plan produced by Mr. Fox in conjunction with other members of the board and the senior management of the VHI was submitted to me and announced in late December. It is very clear, therefore, that prompt and decisive action was taken in order to avert a potential crisis for the VHI board and their 1.2 million members and to ensure the balanced provision of public and private health services of which the VHI are in integral and essential part.
Again I remind Deputy Yates, who referred to action not being taken, that I have outlined the action that was taken, and I am quite satisfied that I, my Department and the Government acted expeditiously in, first of all, allowing the increased premium of 8 per cent, which was almost three times as much as inflation, then in appointing a consultant as soon as we realised, in June that finances were not to our satisfaction. As soon as we had this report the VHI board appointed the same consultant recovery manager and I appointed him as a member of the board to facilitate the recovery plan.
As I said, the VHI are an integral part of our health service and of the public and private mix. They account for approximately 10 per cent of the spending on our health services at £140 million per annum. In the light particularly of what Deputy De Rossa was saying, it is important to recognise that 4,000 bed days are provided for private patients through the VHI but four million bed days are provided for public patients through the public health services. In addition 1.5 million patients in a population of 3.5 million are seen in public outpatient departments each year. Therefore, I am satisfied that  we have an excellent public service. Those figures do not take account of the 400,000 bed days for private patients or those who attend their own doctor and do not find their way to hospitals.
I should like to say something about the causes of the VHI's financial difficulties. There has been considerable discussion, much of it very badly informed, concerning the causes of those difficulties. The difficulties arose from a number of inter-related factors. These were: two new high-technology private hospitals came on stream at the same time in May 1986; the technology available in existing hospitals also improved and was used more intensively; payments to consultants rose sharply due to the nature and volume of work being done; payments to the public hospital sector also rose significantly and out-patient claims, particularly those relating to drugs, also rose rapidly.
In regard to the two new high-technology private hospitals it is no harm to remind the House that they were built during the term of office of Deputy Barry Desmond of the Labour Party. Indeed, he was Minister for Health in the Coalition Government who accepted the D and E plans which Deputy Yates seems to cast some doubt on tonight.
Dr. O'Hanlon: It is unreasonable to suggest that the two high-tech hospitals were solely responsible for the financial problems of the VHI. That is not the case. I should like to refer to the technology that is available in existing hospitals, which is being used more intensively and is being improved as time goes on. In fact, last week I opened a new Xray unit in a public hospital and the cost of the equipment was £5 million. It is the most modern equipment in the world.  Indeed, some of the specialist equipment available in St. James's is not available anywhere else in Ireland or Britain. It is the first equipment of its kind to be installed in any hospital in the world. It is important to recognise that in our public service we are providing for public patients in a public hospital the most sophisticated high-technology equipment. In regard to bed closures I should add that while St. James's closed some beds last year their throughput of patients increased by 7 per cent, an indication of efficiency in the hospital.
Dr. O'Hanlon: Payments to consultants rose sharply due to the nature of the work being done. For example, there is much more demand now for by-pass surgery and hip replacements. The latter has become a much more popular type of high-tech surgery. They all play their part in putting pressure on the finances of the VHI. None of the factors I have mentioned on their own were primarily responsible for VHI's difficulties. They arose from the cumulative effect of so many upward trends in claims costs. In particular, I must refute the allegation which has been made by some interests that VHI's difficulties can be blamed largely on cost increases in public hospitals. In fact, less than 20 per cent of VHI's claims expenditure goes to public hospitals, a share that has actually fallen over the past five years, despite the fact that the previous Government increased public hospital charges by 150 per cent during their period in office. Since I became Minister, however, public hospital charges have only risen by 3.5 per cent.
Dr. O'Hanlon: It has also been suggested by some commentators and implied in the wording of the Fine Gael  motion, that the removal of the drug benefit is in some way a consequence of VHI's losses on the plans which provide full cover for the new high-technology hospitals. This also is quite untrue. Each area of VHI's insurance coverage was examined by the international actuarial experts and changes were recommended where they were found to be necessary. The detailed study of claims experience showed that three of the five hospital plans were significantly under-priced. This related to the existing plan C as well as to the new plans D and E. The weighted premium increases which have been applied to each plan are designed to counter this.
There has been talk of one plan subsidising another but it is not as simplistic as Deputy Yates would have us believe. Of all the patients who were admitted to hospitals last year under the D and E plans only 36 per cent were in the high-technology hospitals. The other 64 per cent were in other private hospital accommodation. They could rightly argue that they subsidised the other hospitals rather than the two high-tech hospitals. Those in plans B and C have also had access to the two high-tech hospitals in this city. The decision to withdraw the drugs benefit is based solely on a very careful study of both the rationale for, and the claims experience of, that particular benefit, taking account of the most expert advice available.
The purpose of health insurance is to provide cover against unexpected and non-routine health costs. The international consulting actuaries who participated in the study of the VHI board's operations, firmly recommended the withdrawal of the drugs benefit element from the out-patient scheme. These experts pointed out that an insurance scheme should cover only those events which are of sufficient uncertainty to meet the accepted definition of an “insurable event”. It should not cover predictable costs which could be claimed persistently by the insured parties. They found that costs under the out-patient scheme were running out of control, and concluded that the withdrawal of the  drugs benefit was essential to the financial recovery of VHI. It is interesting to note that the original advisory body in 1956 which led to the formation of the VHI also recommended strongly that out-patient drugs and medicines should not be covered. The following is an extract from their report:
In the case of persons who are not hospitalised, the cost of these items should be regarded as normal household expenditure capable of being met from income. If benefit were included in a scheme in respect of them there would be obvious possibilities of abuse. An insured person would be disposed to avail himself of the benefit in the knowledge that he would be able to recover his outlay. Furthermore, the incidence of claims would be frequent, and administrative costs would be unduly high, as it would be necessary to require the production of medical certificates, receipts and so on before claims could be paid. We are of the opinion that it is not feasible to include a benefit for drugs and medicines supplied outside hospital.
That statement was made by the advisory body on a voluntary health insurance scheme that advised the Fine Gael Minister for Health, Mr. T.F. O'Higgins in 1956. It is interesting to look at how their predictions were borne out in practice.
Dr. O'Hanlon: Historically the VHI had included in its out-patient scheme a drugs benefit designed to assist the minority of members who might have exeptional drug costs in any one year. What had developed in effect was a system whereby a relatively large number of members were receiving, on a virtually permanent basis, large refunds for ongoing drug costs for long term conditions. In other words, the benefit which was designed to meet exceptional drug costs had become in effect a regular annual benefit for many members.
 As an illustration of the difficulties inherent in the drugs element of the out-patient scheme, an individual with a chronic illness, who had not been a subscriber to VHI, could join the lowest-priced plan for an annual subscription of about £110. He would then automatically be entitled, immediately, to an annual refund of between £231 and £336 for drugs and medicines. Such a member could thus be guaranteed an annual return considerably in excess of his premium— in addition, of course, to having cover for hospital care. I would be very interested in Deputy Yates's actuarial assessment of that incentive to join VHI and its long-term implications for the entire scheme.
Dr. O'Hanlon: It will be clear from what I have just outlined to Members that the VHI board's decision to phase out cover for out-patient drugs and medicines, as policies come up for renewal, was in fact based entirely on expert actuarial advice. I am sensitive to the needs of those with chronic, long-term illnesses, but this is not the way to provide for them. Furthermore, the restoration of the VHI drugs benefit would do nothing for the 30 per cent of the population who have neither a medical card nor VHI cover — people unable to afford VHI. This sizeable part of our population also deserve consideration in any examination of how best to provide for exceptional drugs costs.
Dr. O'Hanlon: It is necessary, I believe, that Deputies should fully understand the terms of the various drugs schemes including that of VHI, before making any judgments. A drugs refund scheme is administered by health boards  under which any person incurring expenditure of more than £28 a month on prescribed drugs and medicines is entitled to a refund from the health board of the amount in excess of £28. This scheme is, of course, not affected by the VHI decision. Indeed, the vast majority of patients who are on long-term treatment have to pay their £28 per month because they are not in the VHI, and many are not able to afford it.
Dr. O'Hanlon: This scheme is not affected by the VHI decision. Those who were members of the VHI could claim the first £28 a month under the VHI drugs benefit, subject to the overall threshold on out-patient expenses of £170 per year for a family and £105 per year for an individual. Therefore, the cost of the one prescription for a VHI member was partly paid by VHI and partly by the health board. No Member in the House believes that two agencies under the aegis of a Department of State should process claims for the same drugs so that one would pay up to £28 and the other would pay the remainder. No sane Deputy would suggest that that should be done.
Dr. O'Hanlon: It will be quite some time before the impact of the withdrawal of the VHI drugs benefit is felt by most members. The removal of cover will affect them only when their policy comes  up for renewal — every member's existing insurance contract will be honoured in full. Since claims under the out-patients scheme are normally made in arrears at the end of the year it will in fact be next year before any financial impact is felt by most members. For the small number of members who receive refunds on a six-monthly basis, it will be at least August before any impact is felt.
I have for some time been reviewing the operation and rationale of all the community drugs schemes, including the drugs refund scheme and the long-term illness scheme. At present the annual cost of these two schemes is £21 million. In looking at the existing arrangements it is clear to me that there are a number of aspects which must be addressed.
A major difficulty is caused by the need for patients under the drugs refund scheme to pay the full retail price of the required prescriptions and then having to wait some time for reimbursement. In many cases this can cause hardship and in my review I will be examining possible alternatives.
Dr. O'Hanlon: As Deputies know, patients may have to pay £100 and wait three or four months for a £72 refund or pay £160 and wait for a month or three months for a £132 refund. In any drug refund scheme which is designed to meet the needs posed by continuous medication or particularly high costs, it seems to me that the existing open-endedness in relation to the range of drugs covered is not defensible. Under the general medical services scheme there are restrictions in relation to the drugs which are available to patients, based on medical requirement. It is hardly equitable that under the drugs refund scheme non-medical card holders are entitled to reimbursement without such restrictions. It is no harm to remind the House that 9 per cent of the total cost of the health bill is spent on drugs — almost £120 million — which is a large subsidy on drugs, so people should not get the impression that they are paying the full cost of their drugs.
 These are the main issues which I am considering to see how the available funding can best be deployed and targeted towards the areas of real need. I will be announcing my proposals in due course. Indeed, I will not select a number of illnesses as Deputy Yates did because I believe that everybody who is on continuous medication has a long term illness. Whatever scheme is in place will be equitable. I would now like to turn to the second part of the Fine Gael motion, which calls for “alternative policy options which would remove cross-subsidisation of plans and which would allow a more actuarial approach to health insurance”. The motion would thus seem to be demanding an end to the VHI's policy of community-rating.
There are only two restrictions on joining VHI. First, there is a waiting period for cover for hospital treatment for conditions which existed before joining. Secondly, one cannot join after the age of 65 unless one has already been in continuous membership. In every other respect, however, insurance cover is available on the same terms to all who require it, regardless of age and medical condition. VHI varies its premiums only in line with different levels of cover sought by its members.
The differences in the average claims expenditure per member under VHI's various plans are made up of two components: differences in the level of cover chosen by the member, and differences in the average claims rate. The first of these is a matter of choice on the member's part and can, therefore, be reflected in the premium. The second factor arises because of differences in risk factors between the memberships of the plans — principally because the average age differs from plan to plan. This cannot be reflected in the premiums without infringing the principle of community rating. One must therefore be very careful in considering the question of cross-subsidisation of VHI plans. As long as factors such as the average age of members differ from plan to plan, the claims pattern and the relative profitability of the plans will also differ. This  is inevitable under community-rating. It is, of course, a different matter if the premium structure does not adequately reflect the costs of providing the different levels of cover chosen by members. This can be remedied by premium adjustments, as has been the case with the recent weighted premium increase.
The question of the extent of cross-subsidisation of those using the high-technology hospitals is a particularly complex one. Usage of specific hospitals is not related solely to membership of particular plans. While plans D and E provide full cover for the Blackrock Clinic and the Mater Private Hospital, members of these plans make extensive use also of the other private hospitals and, indeed, of public hospitals. Those on the lower-cost plans also make very considerable use of the two high-technology hospitals.
Commercial health insurance companies in countries where they operate do not, of course, apply community-rating at all. Instead, they determine premia on the basis of an actuarial assessment of the risk associated with each category of client. Those who are older, or present a greater medical risk, must pay more, or may even find that their cover will not be renewed at all.
VHI was not established to be an independent commercial insurer. It was set up as an integral part of our national health policy, and as such, operating on the principles of community rating and non-profit, secured recognition of its monopoly status by the European Commission. It has, of course, been suggested that it will not be possible to preserve this status in the context of the general liberalisation of insurance markets in the European Community after 1992. This may yet have to be the subject of negotiation but even if there is no monopoly status, the principle of community rating can and will be preserved, so as to ensure that voluntary health insurance remains available, on equitable terms, to all who require it.
In relation to the more specific details of the future role of the VHI board and of voluntary health insurance in general,  I am at present considering the corporate plan submitted by the VHI board. This is a five-year strategy to enable the board to meet any challenges which may emerge. I will also have, within the next few months, the report of the Commission on Health Funding, which is also relevant to this area. I will take account of both of these reports in deciding on the policy proposals which I will put to the Government regarding the longerterm role of the VHI.
In conclusion, I would stress again that the VHI recovery measures were based on the most expert actuarial advice, arising from an extensive study of the board's operations. They will ensure the viability of the organisation so that it can continue to play an important role in the funding of health care. It would be entirely wrong to jeopardise this by interfering with the recovery strategy in the manner proposed by Fine Gael. Their proposals show as much understanding and sensitivity as did their decision, when in Government, to impose a £1 per item prescription charge on medical card holders——
Dr. O'Hanlon: ——a measure which, if implemented, would have taken over £20 million a year from the most vulnerable groups in our society. Indeed, the Deputy himself said there might be a number of asthmatics in one household. If there were six asthmatics in a large family, with a medical card, it would have cost them £30 per month, £5 per prescription per person holding a medical card.
Dr. O'Hanlon: Fine Gael abolished rural dispensing so that elderly people living in rural areas right down the west coast had to travel sometimes 20 miles to a chemist shop to get their drugs. That is the approach of Fine Gael.
Actuaries have stated that any change  in the plan would have very serious consequences and should not be made until reserves are built up. This is a crash recovery plan with a balanced approach. The corporate plan to which I have referred is on the way. Hospital benefits for people will be the same in 1989 as they were in 1988. I am satisfied that, in the circumstances obtaining, there was no alternative but to approve the recovery plan proposed by the Voluntary Health Insurance Board prepared with the best actuarial advice and expertise. I commend the amendment to the House.
Mr. D. O'Malley: This is the third time in six years that a debate has taken place in this House on an Irish insurance company which, by any standards, I am afraid, is insolvent. I am not trying to create any scares in saying that. The Minister suggests that perhaps we should not say things like that. I am referring to the VHI's own report and accounts for the year ended 29 February 1988 where, in note 4 to the accounts, the auditors point out that, at 29 February 1988, the minimum solvency margin amounts to IR£26.9 million while actual reserves are IR£17.5 million, a deficiency of IR£9.4 million. The minimum solvency under the EC's regulations is a figure that is frequently very low indeed. Most non-life companies would have reserves and assets which far exceeded it. It is very distressing to find this position obtaining today in an Irish State company which has a total monopoly of its market — 100 per cent and no opposition whatsoever.
If one looks at the accounts, in particular at the comparative results for the last eight years, on page 12, for instance, one finds that this most regrettable position obtaining today in respect of this company has all come about in two years because on 28 February 1987, the VHI had stronger reserves and larger net assets than they had at any time in their history; that is just under two years ago. Apparently the estimates available unofficially — and which nobody seems to deny — are that for the year that will end in a few weeks time the underwriting loss will be in the region of IR£25 million for the year ending 28 February 1989 and the reserves that will then be left, in three or four weeks time, will be IR£4 million; IR£4 million when the board have accepted the minimum requirement under EC regulations, which will probably be somewhere in excess of IR£35 million. Therefore, the company, by any standards, is in an insolvent position. I take no pleasure in saying that but it is necessary to say it to illustrate the position.
It is regrettable that, for many of us, this is the third time in six years we have talked in this House about a position of that kind. At least the other two insurance companies that went down were competing in the marketplace; they did not have 100 per cent of their market. The fact that this board have got themselves into this position warrants some examination. Indeed, what they are now trying to do, very belatedly, to get out of that difficulty also warrants some examination and consideration of whether they should receive the appropriate support.
There are some very startling things contained in this report. This board — which has been getting into the most appalling financial difficulties over the past couple of years — announce in this report, published within the last month or two, that they have decided to establish a medical audit function which will be introduced in the coming year. They say this will establish criteria for justifying admission to hospital and for necessary length of stay. They say the audit unit will closely monitor both areas and will take action to ensure that their recommendations are adhered to. It is incredible that at this stage, 32 years after their establishment, the board are actually doing that. It is incredible that — I suppose almost uniquely among medical insurance companies of this type throughout the world — they have no fixed amounts for routine activities, fixed payments, but pay hugely different amounts of money for exactly the same procedure depending on where it is carried out and,  inexplicably, allow certain hospitals to operate on a open-ended basis so that, no matter what they charge the client, the VHI pick up the tab in full anyway. For example, an operation which I heard the Minister describe this evening as common — which unfortunately is common only in this country in the private sector — is an orthopaedic hip replacement widely needed by many people suffering from arthritis and similar-type complaints but for which public patients who have medical cards have to face a very long waiting period. It was two years; I am told now it is often three years and longer while the suffering and pain incurred by such people during that time is appalling.
Mr. D. O'Malley: They just have to wait because they are not private patients or subscribers to the Voluntary Health Insurance Board. Were I to be afflicted with such a complaint in the morning and was a subscriber to the VHI, I could have my choice of ten or 20 hospitals in this country any one of whom would take me in and operate on me next week. There is something fundamentally wrong in that. It is extraordinary that if I go for that operation to a private hospital in the city of Galway I can have the operation carried out for £2,000 and the VHI will pay that; but if I go to a particular institution in the city of Dublin to have exactly the same operation done in exactly the same way and in the same period and, apart from the capital involved, with the same running costs, the bill will be £6,500 and the VHI will pay that in full, too. That is wrong. They should say that if it can be done for less than one-third of the cost somewhere else one has to go somewhere else, and if one insists on going to an institution that charges £6,500 for a £2,000 operation that they will pay the £2,000 but that one would have to pay the £4,500 oneself. I would have thought things like that were self-evident. They could pay a basic fee for something that is identifiable and is precise, but they do  not do it for some extraordinary reason. It is only now that they are beginning to bring in some kind of audit system on these matters which exists everywhere else.
To that extent one at times feels that they are the authors of their own misfortune to a great extent, but when one looks back over their history, particularly over the last two years, it would be quite unfair to suggest that the VHI are the sole authors of their own misfortune. They are very seriously affected by Government policy of the last two years and it is no coincidence that the reserves of that company should drop from an all-time high of £29.5 million to an all-time low of £4 million in the two years that the present Minister for Health has held office and pursuing the policies he is pursuing.
We have heard tonight from Deputy Yates, Deputy De Rossa and others as to all the various possible causes of the difficulty and virtual demise of the VHI. I have no doubt that there is a contribution made to the present situation by various factors such as those mentioned by Deputy Yates and others but to my mind the biggest single one, when one examines it, is the sudden upsurge in the number of private beds in public hospitals which has arisen in the last year or so, that were in fact public beds before where medical or surgical work was being carried out at public expense for the benefit of the people who were not in a position to pay for it themselves. Those wards in many of those hospitals were closed down. The hospital became frantic and approached the Minister for Health and were told, in many cases, that they could reopen these wards provided they did not let in a public patient and provided that every patient that occupied a bed on that floor was a guaranteed paying patient, that they had better check that such a patient had full membership of the VHI before being allowed in because it was only on that basis that they were being allowed to reopen these wards.
Mr. D. O'Malley: The result of that decision has been a huge upsurge in the cost of claims against the VHI who are suddenly being asked to pay for a whole lot of things that they would not have been asked to pay for before. Undoubtedly, there are other factors. There is a major complication with the two high-tech hospitals in Dublin that are frequently mentioned. One cannot make a definitive judgment, from what I can see, in regard to those two hospitals because the Voluntary Health Insurance Board and the Minister for Health have both refused to disclose the total amounts received under and paid out under these plans D and E. As a result one cannot make a final and definite judgment in that regard and there is every possibility that the allegations against those hospitals as to the influence they have had on the Voluntary Health Insurance Board are too strong. It is very possibly quite different in fact. So far as one can estimate, about £20 million was paid out last year to those two hospitals, and that is not the enormous proportion of the total VHI claims we have been led to believe.
What has happened now in the last number of weeks that has led to this motion is that at long last something is beginning to be done in regard to the VHI to try to steady it up and at least slow down its headlong plunge towards oblivion. Curiously enough it is not in some of the more obvious areas where it could clamp down on expenditure that the first real step has been taken. It has been taken in relation to the drugs refund scheme which is not a major financial factor within the VHI Board's finances because the total cost of it in the year ending February 1988 appears to have been £7.6 million, and that is a very small proportion of their total expenditure in that year. It is a scheme which is not as valuable as has been alleged in recent weeks. If one looks at the figures for which it gives cover, they are all relatively small. Because there is a drugs refund scheme for expenditure in excess of £28 a month the maximum amount that could be covered by the VHI scheme is £336 a  year but an excess of £170 for a family exists under the VHI scheme.
One has to look at the number of people who are within the VHI scheme at the moment. It amounts to 34 per cent of the population. Thirty per cent of the population have medical cards and are therefore fully covered and 36 per cent of the population, amazingly enough, have no cover either from the VHI, the general medical services or under the medical card scheme, and that is an enormous proportion. One has to ask oneself, at a time like this, where the hardship is greatest, and the hardship is unquestionably greatest on those who have the misfortune to suffer from long-term and chronic illnesses, who are going to be ill over a lengthy period and who have to take, for the necessary treatment of their condition, expensive drugs. We have listed in our amendment a number of these, illnesses that are not already covered under the long-term illness scheme. They include cancer, heart disease and chronic asthma. The expense of those is enormous. It has been suggested to me that perhaps one of the most expensive of all are patients who have had a kidney transplant and who, for the rest of their lives, have to take extremely expensive drugs to ensure that the transplant is not rejected by their bodies. They are the people on whom the Minister  should be concentrating his attention now. I am glad to see from the Minister's script that he is thinking at last in those terms. I fully agree with the point he made earlier tonight that it is ridiculous that we have this duplication at present where one has to have two sets of receipts, one for the VHI and one for the health board in order to get back the excess over £28. It seems bureaucratic madness to continue all this. These things should be amalgamated as quickly and as effectively as possible. We should not have a continuation of the rather ridiculous and complicated position we have had up to now. Provision should be made for those who are in need and these include a large number of people who unfortunately have no support at all, either from the State or from an insurance company, for their medical expenses. I do not think ordinary inexpensive drugs for short-term and minor illnesses should be covered. They should not be put in the same category as essential life-preserving drugs for long-term illnesses.
For that reason I find it difficult to disagree with what is at last said in the amendment which the Government put down today. Nonetheless, I greatly regret that they have caused, by their policies, such an incredible deterioration in the position of this board in the past two years. Their attempts to begin to put it right are extremely belated but at least I have the advantage of seeing in what they are now doing in respect of this, perhaps one of the smallest and least important aspects of the continuing losses of the VHI, a determination to begin to do something about the matter.
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