MIONTUAIRISC NA FINNEACHTA
(Minutes of Evidence)
Dé Máirt, 20° Meitheamh, 1933.
Tuesday, 20th June, 1933.
The Committee sat at 11 a.m.
THE LEAS-CHATHAOIRLEACH (Mr. M. F. O’HANLON) in the chair.
Mr. L. J. DUFFY called and examined.
188. Chairman.—As you very kindly sent in a valuable statement of evidence, Mr. Duffy, perhaps you would like to read it, in the first instance?—I was invited by the secretary to give evidence, and I agreed to do so, but I have not consulted anyone with regard to my evidence. Therefore, I am speaking in an individual capacity.
189. Mr. Dowdall.—You are secretary of the Distributive Workers Union?— That is so.
190. Mr. Farren.—And chairman of approved societies?—Yes, chairman of the Association of Trade Union Approved Societies. I should make it clear that there are two associations of approved societies, Mr. Hutchinson being chairman of one, which is an association mainly of diocesan and friendly societies. The association of which I have been chairman is an association of trade union approved societies.
191. Chairman.—We quite understand your position.
Mr. Duffy read the following statement:—
1. As has frequently been pointed out, the fundamental basis of national health insurance legislation in these countries is, the compulsorily insured worker is free to join any approved society that will accept him; prior to 1930 he was free to remain outside the approved society system altogether if he were so inclined and as an inducement to remain unattached the State placed at his disposal its wide-spread Post Office organisation without charging him a penny for the additional facilities it provided for him!
2. Because of the hostility aroused by the health insurance scheme at its inception all kinds of groups and lodges and organisations were encouraged to become “approved societies.” So far as Ireland was concerned many of these approved societies were quite small and have remained so, even where the membership extends throughout the whole of the Saorstát. Instances have been cited of societies with one or two members only in a town or district.
3. FREEDOM OF CHOICE: Within a system of compulsory insurance voluntary approved societies are an anachronism. They exist only to pander to the fetish known as “freedom of choice.” They are alleged to be voluntary associations of insured persons who have grouped themselves together because of their vocational affiliations or geographical propinquity, but in practice they are powerful vested interests in the management of which the insured persons have no effective voice whatever and the main function of which consists in canvassing against each other for possession of State insurance stamps. The voluntary approved society system evolved in Great Britain, as we know it has been rejected by every other country in Europe which created a system of sickness insurance.
4. In addition to the defects inherent in a system of voluntary approved societies the health insurance scheme in its application to Ireland had, and continues to have, the disadvantage of being divorced from medical treatment. The societies are concerned only with the payment of benefits; except in the case of a society with a disposable surplus nothing can be done by them to prevent illness or cure disease. In recent years, therefore, due to the ravages of unemployment, the demands on the insurance funds exceed (in some instances to the extent of 50 per cent.) the sickness expectation which originally determined the financial provisions of the Act. Also because of unemployment the revenue of the fund from contributions declined. Between 1923 and 1931 the membership of the approved societies increased by one per cent., but the expenditure of the societies on benefits increased by 65 per cent. Meantime there was a slight increase in the frequency of contributions, but not merely enough to compensate for the very considerable increase in the benefit expenditure. In the case of one society for which I have figures, the value of the contributions paid in respect of men increased by 6.44 per cent. between 1923 and 1931, while the expenditure on benefits for men increased by 133.78 per cent.
5. MEDICAL CERTIFICATION: No doubt to a certain extent the percentage increase in the benefit expenditure is attributable to irresponsible certification. Where insured persons consult the doctor to obtain treatment the society can reasonably rely on the accuracy of the doctor's certificate, but there is a large element of the insured population not in a position to pay for their medical treatment, who have recourse to the doctor to provide them with certificates for the purpose of claiming insurance benefit and there is some evidence that in these cases certificates are issued indiscriminately. Medical certification which is essentially divorced from medical treatment linked to a system of canvassing and jockeying for position under the competitive society system has destroyed the financial foundations on which our health insurance scheme was founded.
6. One of the anomalies which has disclosed itself in the approved society system is the disparity between the rates of benefit provided for insured persons of different classes. The fact that one society is paying sickness benefit at the rate of 20/- a week to men, while another can afford to pay 15/- only, must not be regarded as evidence that the first-mentioned society is well managed and the other improvidently managed; the very reverse may be the case. The extent to which the benefits provided by any society can exceed the statutory rate is determined by the class of people that constitute the society and not by the character of the management. Obviously a society composed entirely of bank clerks will have a better chance of paying additional benefits than a society composed entirely of dockers. It is here the so-called “free” choice breaks down; the docker may choose to join the bankers’ society, but the society has taken power in its rules to exclude him and one of these exclusive societies will shed 99 per cent. of its idealism rather than surrender one per cent of its exclusiveness.
7. ATTEMPTS AT UNIFORMITY: Various proposals have been advanced to secure greater uniformity as between the several approved societies in the matter of administration and rates of benefit. Each of the 65 societies in the Saorstát has its own set of rules, follows a procedure determined by its management committee and in regard to this State scheme of social insurance ignores altogether the “National” character of the service. Independent of anything the society may do, its resources are determined by circumstances over which it has no control. Clearly uniformity was impossible. It is not practicable to pool the surpluses of the several societies and any attempt to do so would be resisted by the societies which have a surplus. But a point has been reached when some steps must be taken to secure that the insured population as a whole will, in fact, receive the benefits for which, under the Act, they have contracted. According to an actuarial forecast the loss of £50,000 experienced in the five years 1924-1928 will have increased to a loss of £647,000 by the end of 1933; after exhausting the reserves carried forward from previous valuations it is estimated that in one group of societies there will be an aggregate deficiency of £280,000 to be met at the end of this year. No doubt some societies will be found to be solvent, others will have a disposable surplus out of which to provide additional benefits, but a number of societies will be in deficiency and in the absence of a State subsidy cannot continue to provide the minimum statutory benefits.
8. In these circumstances amalgamation or unification of some kind seems inevitable. The proposals contained in the present Bill are not new; they were advanced in 1924 and were considered by the late Minister for Local Government and Public Health in 1929. Certainly they were not favoured by the representatives of the approved societies who examined them at that time. Commenting on the proposal in February, 1930, the Association of Trade Union Approved Societies said:—
“We believe there is but one real alternative to the approved society system, i.e., a State scheme of social insurance embracing sickness, invalidity, maternity, mortality, unemployment and workmen’s compensation.”
It seems obvious that all the advantages lie with a system that provides contributions by means of a single stamp and administers its benefits from one office. The existing arrangement is chaotic.
9. A stage has been reached, however, where it is generally agreed that if the health insurance scheme is not to collapse the present Bill should be accepted subject to certain amendments. It cannot be the final stage in the reorganisation of our social insurance scheme, but it may afford a breathing space while the whole ground is being surveyed.
10. The amendments to the Bill which I should like to suggest are:—
(a) Section 4 (4). The manner in which the Committee of Management is constituted is objectionable. It will be quite impossible to devise any method of election which will secure the nine members’ representatives are in fact representative of the insured members. This provision should be altered to enable the Minister secure the services of representative insured persons from various areas in the State.
(b) The proposal to appoint employers’ representatives as such is open to grave objection.
(c) Seeing that the object in view is the selection of a Committee which will efficiently administer the Scheme, the alternative method of appointment suggested would provide that the Chairman, Secretary and Treasurer who would be whole-time members of the Committee, would be appointed by the Minister; that he should also appoint three Trustees who should have qualifications as (a) doctor; (b) lawyer, and (c) social worker or administrator. Twelve other persons representative of insured persons to be selected by the Minister on the advice of various groups of insured members of the society would complete the Committee.
(d) Section 4 (3). In regard to the provisional Committee it is suggested that one of the three members of the provisional Committee should have experience of approved society administration and that he should be the Chairman.
(e) Section 22 (1) This sub-section makes provision for the payment of compensation to the holders of qualifying posts in existing approved societies who are not offered permanent employment in the unified society. It requires amendment in two respects; in the first place a person who holds a qualifying post in an existing society should be free to decline permanent employment in the unified society if he prefers to follow some other occupation and still preserve his right to compensation, and, in the second place if the holder of a qualifying post at the moment believes he would be justified in resigning that post (having no assurance that he will secure suitable employment from the unified society) to obtain permanent employment elsewhere he should not forfeit his title to compensation.
(f) Section 22 (3). The provision for the payment of compensation to part-time employees is unsatisfactory and has caused considerable uneasiness amongst the part-time employees of approved societies. Many of the persons concerned for a number of years have earned from £7 to £25 per annum by way of remuneration arising from their employment under the Health Insurance Acts. It is suggested that employees in this category who have had five years’ continuous employment at an average rate of remuneration of not less than £7 per annum should be treated for the purpose of the sub-section as if they had been whole-time employees of the society.
(g) in paragraph (d) of the sub-section it is suggested that in line 24 after the word “absent” the following words should be inserted: “Whether he resumed his employment with that society or with some other society”, so as to safeguard persons who although continuing to be employed in approved society work did not resume their former employment on the termination of a labour dispute.
(h) In paragraph (c) of the sub-section the words “or by way of bonus” in line 42 should be omitted.
(i) In regard to the question of compensation generally it is noted that no provision has been made to provide compensation for the parent body of an approved society (i.e., a trade union or friendly society) in respect of premises or buildings acquired by them primarily because of their engagements under the Health Insurance Acts. There are instances of organisations which found it necessary to take on lease (or buy) and equip premises, because of the volume of their State insurance business, they would not otherwise require, and the Bill should be amended to afford them reasonable compensation for the outlay involved.
(j) Section 15 (d). Under the provisions of this proposal on the day on which the engagements of an existing approved society are transferred to the unified society, the services of all persons engaged in the work of administration of that society are terminated, In view of the contracts now existing between societies and their employees under which notice is required to terminate the engagement in some cases three months’ notice is provided for—this seems an iniquitous provision and should be amended so as not to disturb the terms of an existing contract.
(k) Section 13. By this Section societies are not permitted to fix or alter the remuneration of any person appointed by them after the passing of the Act in the case of appointments made after 5th April, but before the passing of the Act it will not be lawful to pay a higher rate of remuneration after the passing of the Act than was paid to a person holding a similar post before the 5th April, and in the case of existing appointments it will not be lawful to pay remuneration at a higher rate than that paid before 5th April. It is submitted that there is no provision to prohibit before the passing of the Act the creation of new posts and attaching to them extravagant remuneration, nor is there any provision to recover extravagant payments made after 5th April and previous to the date of the passing of the Act. It seems essential these abuses should be guarded against.
11. It is suggested that in the filling of higher posts the unified society should be obliged to follow the practice now prescribed for local authorities; it will be realised, however, that in the first instance the staff should be recruited from the employees of the existing approved societies.
No attempt is made in the Bill before the Oireachtas to place health insurance on a better financial basis; if the expenditure on women’s benefits were examined scientifically there is no doubt that alteration in existing scales of benefit would be found necessary.
192. Chairman.—May I say, Mr. Duffy, that the statement of evidence you have put before the Committee is a very valuable one? Do you wish at this stage to add anything to it?—No.
193. Mr. Farren.—I gather from your evidence, Mr. Duffy, that you do not approve of the present system of social insurance at all: that the present extraordinary system was bound to break down?—From many points of view the system is unsatisfactory. For instance, for years we have been endeavouring to find some means by which we could check duplication as between sickness and unemployment insurance claims. A method was found eventually by which some check was established, but it is not satisfactory yet. The thing that strikes one principally is this: that an ordinary insured person in the country has to dispose of two insurance cards, one relating to sickness insurance and the other to unemployment insurance. These are dealt with by two separate organisations in no way related to each other. The employer is bound to buy two stamps and to employ a staff to have these stamps charged up to the person’s account and affixed to his cards. Apart from that, the worker, if he is thrifty, makes provision for other kinds of social services, such as death benefits and insurance of various kinds. In the third place, there is the worker who is injured by an accident and who is entitled to compensation under the 1906 Act. Very often he finds great difficulty in recovering the amount of compensation awarded—that is if the employer is not insured and turns out to be insolvent.
194. I gather that you are not in favour of the present Bill dealing with national health insurance, but rather of the State introducing a comprehensive insurance scheme?—Yes.
195. Covering sickness benefit, unemployment, insurance, and mortality benefit with the one stamp?—Yes, I have held that view for a long time. It should be borne in mind that when the original Insurance Bill was introduced in 1911 provision was made in it to cover mortality risks, but it is understood that at the request of very powerful insurance corporations that provision was omitted. My view is that all these risks should be covered by one State insurance system.
196. It is quite clear from your evidence that you are satisfied that an increase in unemployment automatically brings an increase in claims for sickness benefit?— As a member of the Advisory Committee that was set up two or three years ago I produced evidence, which seemed to me to be convincing, that the increase in sickness expenditure arose very largely from long spells of unemployment.
197. In addition to that, would you suggest that the system of medical certification in this country has been responsible for the fact that so many societies find themselves in a bad position at the moment?—I think it would be correct to say that to describe medical certification, as we know it, as a system would be a misnomer.
198. Mr. Dowdall.—What would you call it, Mr. Duffy?—I do not want what I have said to be taken as a general reflection on the medical profession, but there are instances such as I have referred to where people have recourse to a doctor merely for the purpose of getting evidence that they were ill. These certificates are issued without any attempt at examination. The doctors merely give them out as you would give out a ticket for relief.
199. Mr. Farren.—Is it your opinion that if the system of medical benefits in operation in Great Britain had been introduced into this country it would have had the effect of preventing many of the abuses that arise here under that head?—It would have had this effect: that an insured person who visited a doctor went for the purpose of getting treatment and that it was the doctor’s job to get him off his hands as soon as possible—in other words, to cure him rather than to certify him.
200. So that if we had a system of medical benefits in this country it would be the business of the doctors to cure insured people who went to them?— Quite.
201. But under the system as we have it here a doctor simply gives a certificate as to incapacity?—That is so.
202. Would you agree that the amount of remuneration which the doctors get for doing that is not sufficient to warrant them in giving the amount of time that would be necessary to examine insured persons thoroughly?—The amount pooled, on which the doctors draw, is quite sufficient, but divided by the number of certificates issued it is quite infinitesimal. I would imagine that, in many cases, doctors get only 3d. or 4d. per certificate.
203. With regard to the benefit fund of national health insurance, I understand the position was this: that up to a point it was solvent?—Yes.
204. Of course you are aware that there were what were known as the Contingencies Fund and the Central Fund built up, I understand, out of the contributions of insured persons?—Yes.
205. Have you any knowledge of the position of these two funds?—At the moment I cannot say.
206. Are you aware that at a certain point contributions from the Contingencies Fund—a fund to which members contributed—were stopped?—I am aware of that. I think the Commission took the view at one stage that these funds were sufficient for the purpose and ceased allocating payments to them. I understand that is the position. I think that no matter what happened, whether or not these payments ceased, you would not have altered the net result to-day.
207. It seems to me extraordinary that, the actuary having round about 1926 examined the accounts of the national health insurance societies and advised that the Contingency Fund and the Central Fund were sufficient to meet all demands that were likely to be made on them, in a few years after the next valuation that took place it was discovered that these figures were wrong?—I think that probably would be explained by reference to the experience of the society of which I am secretary. Take the case of men alone. Our expenditure on benefits payable to men cost us 12/4 per head in 1923. In 1924 the expenditure went up to 14/1. In 1925 it was 14/6; in 1926 it was 19/5; in 1927 it was 24/9; in 1928 it was 24/11; in 1929, 26/-; in 1930, 29/2; in 1931, 28/9, and in 1932, 27/11. Taking the year 1930 and not including that portion paid by the employer, the men’s contributions equalled 14/1, while their benefits cost 29/2. The benefits returned to the male members of our society were equivalent to 8.3d. for which 4d. was paid by them in contributions. I think that will explain what has happened in recent years to upset all the financial calculations regarding national health insurance. If all the funds, as I understand it, of the societies now existing were pooled there would still be a deficiency of £280,000.
208. Mr. Dowdall.—I should like to know what authority you have for that statement, that if all the funds of the existing societies, those who have a deficit and those who have a surplus, were pooled there would still be a deficit of £280,000?—That is an estimated figure. There has been in existence for many years an Advisory Committee. That Advisory Committee consists of a number of representatives of approved societies who sit and discuss insurance matters with officials of the Department and with the Commissioners when the Insurance Commissioners existed. The Minister and his officials reported to the Advisory Committee, about a year ago, I think about June of last year, that the estimated result of the valuation which will take place on the figures of the approved societies as at the 31st December, 1933, will show a deficit of £280,000. The figures are available and a calculation can be made which is reasonably accurate.
209. Is that calculation made by an actuary?—I am so informed—by a Government actuary.
210. Mr. Farren.—Has this Advisory Committee data at their disposal to enable them to come to these conclusions? —No, they have not data before them, but they have had submitted to them reports by the Insurance Commission and by the Minister. The present Minister addressed the Advisory Committee on this very point. I am afraid I have not got a copy of the Minister’s address here, but it was published in the newspapers at the time. In that address he set out the financial position as reported to him by a Government actuary.
Mr. Dowdall.—I shall have something to say on that.
211. Mr. Farren.—From your evidence, Mr. Duffy, one must come to the conclusion that you are in favour of the proposals of the Government for the establishment of a unified society?—I do not know that that is the ideal way. Of course we shall always quarrel about methods, but my view is that the idea of having 65 approved societies dealing with State insurance seemed a joke from the start. Worse than that happened. Take for instance the case of a society that is paying merely the statutory rate of benefits, say 15/- a week for men. The State pays two-ninths of that benefit. Another society which is more fortunate because of the character of its members, not because of better management—I want to get rid of that—is able to pay 20/- a week in sickness benefit and is able to provide services such as dental treatment, hospital treatment and optical treatment. That is, providing extra benefits probably equal to 4/- per week. In the case of that society which provides benefits costing 24/- per week the State also pays two-ninths of the full cost.
212. The State pays two-ninths of the cost of all benefits paid whether additional or not?—Yes.
213. On the point of the classification of the different members in approved societies, your evidence is that it is not fair that people in a privileged position or in a sheltered occupation, if I might put it like that—members of societies who can contribute 52 stamps a year, who hand in their half-yearly cards regularly, who are in constant employment, and who have all the advantages of proper medical treatment—should be placed in that privileged position as against the casual labourer, the man who may have only put four stamps on his half-yearly card?—I have no objection to that differentiation, but I object to that system being called a national health insurance scheme.
214. Your evidence is that you have no objection to these people having these advantages such as the friendly societies had in the old days, but you say it is not national health insurance?—It is a contradiction in terms to speak of a national scheme in which there are 65 different units all having separate arrangements and with many different rates of benefit.
215. I may take it that you do not approve of the present system and that you think that the proposals of the Government are at least an improvement on the present system?—They at least secure uniformity and make it easier to arrive at a general scheme of national insurance.
216. Do you think that the present system even with the institution of medical benefit could be made a success?— I am afraid not.
217. Your opinion is that with the unified society there should be proposals for the extension of medical benefits?— In regard to the question of medical benefits, so long as the present system of certification continues and so long as there is no provision for medical benefits, unification will not reduce the cost of benefits. It may reduce the cost of administration, which I may say is not excessive, but it will not reduce the cost of benefits. That is my opinion.
218. Do you think that if in the new society there was some system of medical benefits, instead of the present system of certification, it would help in the better management of societies?—Of course I am not ignoring the fact that there may be some difficulty about medical benefits because somebody has got to pay for them,
219. Would not the cost of the medical benefits be more than compensated for by a better management of the society?— Yes, but I am coming to the arrangements with the doctors. Originally in Great Britain the cost of insurance was 2d. a week higher than with us. That 2d. a per week represented the cost of the medical benefits. But the 2d. was based on the assumption that there would be 48 stamps per contributor per annum. We know from our experience in this country that the number is much less. There are instances of societies that have not an average of 25 stamps from their members. Well, then, 2d. per week would not provide medical benefits in the case of such members. It is doubtful if 3d. would provide medical benefits. Therefore the question arises, in talking about medical benefits, whether you are to consider that that should be paid for by the insured person or the employer or paid for to a substantial extent by the State. My experience is that it would be profitable to the State to provide it.
220. There is one other question. It is with regard to this question of the manner of the appointment of the committee of the proposed unified society. According to your evidence, you think it is impossible to get proper representation for insured persons under the proposals in the Bill?—Yes; that is to say if the intention is that the nine members of the Committee will be elected and elected by the insured persons. I do not think that 1,000 would vote in such an election.
221. What percentage do you think would vote?—Probably one-tenth of one per cent. would vote.
222. You think only that many would take sufficient interest in the election?— Who votes now? Take, for instance, the big societies. They call a public meeting and send notice to probably 50,000 or 60,000 and when the meeting assembles the number present would not fill a room.
223. Do they carry out the election by delegate voting?—Not as far as I know. It is only trade union societies that have a delegate vote.
224. You think that proposals in the Bill in this matter of electing the committee will not be successful?—I think it would be nearly as bad as the attempt to elect the Seanad on a universal national vote.
225. Mr. Farren.—I do not think the election to the Seanad was quite as bad as the election of the management committee might be.
226. Mrs. Clarke.—You made a remark about women’s insurance. Is it not in as favourable a position as the men’s?—No, I am afraid not.
227. Are there any causes for that?— The causes probably would be that a tremendous number of young girls are going into employment of one kind or another. If they lose their job I think the remedy is to seek sickness insurance benefit. At all events that is alleged. There is, I think, some ground for the allegation. But the fact remains that the cost of women’s insurance is out of all proportion to the estimated expenditure.
228. Are they as favourably dealt with as the men?—They are much more favourably dealt with. In our case in 1930 the women members on an average paid in contributions 10/2½ per head. That does not include the proportion paid by the employer. They received in benefits 32/9 per head. So they received 32/9 for a payment of 10/2½; whereas the men out of a contribution of 14/1 received only an average of 29/2 in benefits.
229. The societies in paying out benefits to the women make no difference between them?—They will not get the same rate of benefit. Of course they are not paying the same rate of contribution as the men. The women are paying less. The statutory rate of benefit for a man is 15/- and for a woman 12/-. But they pay contributions on an actuarial basis. Both are equivalent in the case of additional benefits. The women actually get back the same proportion as the men. There is this advantage in the case of the women, that their benefits work out more in the aggregate. There is this additional advantage, that if a society undertakes to pay 5/- a week over and above the statutory rate of benefit the society is to add to the 15/- for men 5/- and to the 12/- for women 5/-, whereas the women would actuarially be entitled to less.
230. Do you think that a change in the system would improve the women’s condition—you say that when they go out of employment they apply for sickness benefits?—Yes.
231. Most doctors are soft-hearted about this kind of thing. If you had a different system—and you say there is no system—the women’s case would be improved by that system?—That is true, but the experience in Great Britain and in this country is that the financial basis as applied to women were unsound from the start. If I remember correctly in the case of domestic service we expected the illness would be 100; the actual illness was 293 or something like that. I am not quite sure of the exact figures, but it was about that.
232. Would you have any suggestions about improving the position?—I made suggestions from time to time but I could not make them now without considering the matter more fully.
233. Mr. Dowdall.—In connection with this deficit which we were told will exceed at the end of the next valuation period a sum of, I think, £280,000, I think you told us that that was on the basis of an actuarial estimate?—Yes.
234. In the Seanad we were told that some form of actuarial forecast of that sort had been made. I asked Sir Joseph Glynn about it and he said “no.” And I then asked him, “have you not a sort of temporary actuarial investigation?” and he said, “we have no temporary actuarial investigation.” He said that the Department watched very closely the expenditure. They made up their minds, he said, after the last valuation in 1928 that they were to do one of two things: increase the contributions or reduce the benefits. But, as a matter of fact, the figures for the 1928 valuation do not justify the estimate of a deficit of £280,000 on this valuation?—I understand that the position became worse in 1929 and 1930. In so far as our society is concerned the evidence is that the position has become worse.
235. Can you give some figures in reference to what a man got in 1929 in relation to what he contributed—please give me the figures again?—In 1929 the value of the contributions of men was 29/1. Their benefits cost 26/-. In 1930 a man contributed on an average 28/2 and his benefits cost 29/2. So that in fact he received in benefits alone 1/- more than the contributions. Then you must make provisions for the cost of administration.
236. I quite agree. Would you give me the figure for 1924?—In 1924 the contributions averaged 25/7 for men and the benefits cost 14/1; in 1925 the contributions averaged 24/1 and the benefits 14/6. I might point out that the position in regard to women is worse in 1930. In 1930 the contributions for women were 23/10. That, of course, is the joint contribution from the woman and her employer.
237. Is not a part of that contributed by the State?—The State does not contribute two-ninths. They meet two-ninths of the cost of benefits. That is the value of the stamps. The average value per head in our society of the stamps was 23/10. Her benefits in the same year cost 32/9.
238. Of course, you readily understand, having regard to the great volume of information that you have given, that it is impossible for a layman like me to digest these figures at once. If I may put a question through the Chairman, I would ask that we should have an opportunity of having Mr. Duffy back again, if needed, before the end of this Inquiry.
Mr. Duffy. I am quite agreeable. There was a big jump, after 1928, in the expenditure on sickness and kindred causes; and, while it may be true that nothing arose out of that year’s valuation that would justify an alteration in the system, it is quite conceivable that the position worsened very much after 1928. That was the estimate of Sir Joseph Glynn when he presided at a conference in which this estimate was put before us.
239. That was borne out by what the Parliamentary Secretary said. With regard to extension it is not forecasted in the Bill as to the benefit extending to mortality. Would that, if it came about, do away with industrial insurance? I am afraid that is what the companies fear themselves. In fact, that was the only substantial case made against it.
240. In respect to the very much wider system, which you refer to, and which also includes medical benefits, what reaction would that have upon the dispensary system?—No doubt it would have considerable reaction. That was considered and discussed in 1924. The difficulty, of course, from the workers’ point of view is this: that at the moment the Dublin artisan has a right to go to the dispensary, or to the large clinical hospitals in the city for treatment. It is suggested that if medical benefits were included in the Act he would be paying for what he now gets for nothing.
241. Having a little experience of the panel system in England and the dispensary system in Ireland I think that the dispensary system is very much better?— We have no treatment under any panel system and the existing dispensary system here, as it is administered, is not availed of by the artisans.
242. Senator Farren.—Have you any experience of the dispensary system here? —No.
243. Do you know how many artisans avail of the dispensary system here?—It was represented to us, over and over again, that they will not avail of it at all.
Senator Farren.—They are quite right.
244. Chairman.—You described the hostility that was shown to the National Health Insurance system at first. Will you tell us exactly what it was?—I would describe it as largely the hostility of the Tory politician to an act of Liberal administration.
245. How does that arise here?—In this way: that the fashionable ladies in Rathmines, and other such places, loudly proclaimed that they would not become tax-gatherers and that they would not lick stamps.
246. It was confined to that area and was not universal throughout the country?—I would not say that. The opposition was manufactured by that type of Tory politician. I do not think there was any hostility generally, certainly not amongst working people.
247. As to the question of the freedom of choice of a society by an individual, there is nothing in that in your opinion. It is purely a fetish?—Yes.
248. You gave an extreme example in the case of a docker demanding admission to a society of bank clerks?—There is no freedom in this sense. A young person of 16 years of age is invited to join an approved society. In other words, he is asked to join a society. In 99 cases out of 100 he does not know the name of the society. He knows the collector, perhaps, but he has no knowledge of the merits or demerits of the society.
249. In reply to Senator Farren, you said you favoured a comprehensive scheme of insurance—unemployment insurance, national health insurance and medical benefits. How would such a scheme operate? Take the question of members alone. You have at present unemployment insurance in Ireland numbering 350,000. You have 450,000 covered under the national health insurance scheme. How would you manage in one scheme with one stamp to cover the whole of these persons?—I suggest there are not two types. There is one type that is the employed person paid less than £250 who is non-manual. If he was paid £1,000 as a manual worker he is covered by insurance, both for sickness and unemployment. There are certain types covered by national health insurance but excluded from unemployment benefit, and these are of two main classes—the domestic servant and the agricultural labourer.
250. Do you suggest that they should be covered by unemployment insurance as well?—I do.
251. That would be a still further extension of your comprehensive scheme?—It means covering for unemployment insurance and all the other social services persons such as I have indicated. I go further. In the evidence we submitted, in 1924. we suggested a rise in the salary exemption level up to £350 a year.
252. Does not that introduce a new principle?—I would not say so. It is merely an extension of an existing principle. There is a principle as to whether the domestic servant should be covered. My answer is that she is not covered except for sickness benefit.
253. You are suggesting a very comprehensive scheme. You gave comparative figures to Senator Dowdall, and said that these figures explained what happened in recent years?—Well, I do not know if the figures explain it. At least, they indicate that there has been a change in recent years; that is to say, that, while the frequency of contributions has increased very slightly, the expenditure on benefits has increased very substantially.
254. To what do you attribute that?— I attribute that to, probably, unemployment; that is: unemployed persons getting sickness benefit who may not be entitled to it.
255. Have they increased relatively with these figures between the periods you suggest?—Since 1924 the increase has been very considerable. I should imagine that in 1919-1920 and 1921 in the society with which I am connected—shop assistants and clerks—the amount of unemployment would be very small, but during the last seven or eight years I imagine it would be 20 per cent.
256. You mean the actual numbers unemployed?—Yes. That is one of the factors. The vitality suffers during unemployment. I know of people who have been unemployed for three years. I know of one particular man, who had a very good position in the city, who is now sleeping in the Iveagh Buildings. He will be a charge on our funds. Under the Prolongation of Insurance Act an unemployed woman could be a charge on the society’s funds for years without stamping any cards. Then there is loose certification. For instance, there are people who do not even see a doctor, and they can get a medical certification without examination. There are instances where a doctor has issued a certificate for several weeks.
257. What steps do you take in such cases?—Our own society is fortunately situated in that respect. Take a case like Arnott’s, a claim from them will come not from the individual but through a committee in the house. It comes through what we call a shop steward, and there can be no fraud there. The steward knows all the facts of the case. If we find that this person has lost his job and probably is not as ill as the certificate suggests, we can have him examined by a doctor appointed by the society. If the man is dissatisfied with the doctor’s finding he has a right to appeal. If he exercises that right we appoint an arbitrator and he appoints another arbitrator, and the two arbitrators jointly appoint an umpire. From the decision of the arbitrators there is an appeal direct to the Commissioners. During the time the Commissioners held office, up to December last, one of the Commissioners heard the appeal—either Mrs. Dickie or Doctor McGuire.
258. You stated that one of the main defects or weaknesses in the system of national health insurance which has obtained in this country up to now has been that the benefit payments have been out of all proportion to the contributions in their amount and frequency. You are in favour of unification. How is a scheme of unification going to rectify that?—I do not think that the scheme of unification is going to rectify that. I have already said so. I think it is going to provide opportunities to improve it. At the moment, I should imagine that there are thousands of cases of evasions because of the multiplicity of societies.
259. Just because of the multiplication of societies alone?—Yes. For instance, if there is one society it would be possible for an officer of that society to go into the house of, say, Messrs. Clery and Company and check their books. At present, it is nobody’s business to see it done. In our society we keep a register and keep a person instructed to collect and distribute cards, but you cannot do that satisfactorily with so many societies. I may say that that is one aspect. My view is that the principal ground for unification is uniformity in regard to administration and to benefits. I imagine that that is the main case for a unified society.
260. So that, notwithstanding that hardships may be inflicted on some, you still stand for the principle of uniformity?—I am an official of a society which has paid additional benefits and have provided them from 1921 onwards. There will be small hardship there, but we take the view that the alternative will be collapse. We take the perhaps selfish view that the present system will lead to a total collapse. It was put to the Minister that the only way to save the system as it now exists until such time as it could readjust itself was to provide £280,000 on loan. Without that there is reasonable grounds for expecting a collapse to come. We are much better situated than most other societies.
261. Your view is that collapse is coming unless some steps are taken to put matters right?—We are paying today in benefit to the members more than the value of the total contributions. We have certain reserve funds from which we get interest.
262. You have not had to call on your reserve funds yet?—No.
263. But you are nearly having to call on them?—We will have to call upon our reserve funds if something is not done.
264. That state of things could not continue?—No. As a matter of fact the amount invested by our society in recent years is not at all proportionate to the investments in other years. As I say, our society is in a better position than most societies, but take a society of, say, workers of a casual character, such as dockers and carters; their position must be very bad. I was informed that in the case of one society on disablement benefit alone it costs an average of 20/- a week. That is the payment made after the statutory 26 weeks’ sickness benefits have been exhausted. It is paid at the lower rate. It is a benefit that goes on for ever.
265. Mr. Farren.—Up to 70?—Yes.
266. Chairman.—It may go on for ever. What do you mean by 20/- a week?—In 1932 we paid 27/11 in benefits to our members. Taking the whole membership, the amount of benefits was equal to 27/11 per head. One society of which I have some knowledge paid 45/- per head, and I would imagine its contributions are much fewer than ours. Our contributions averaged 28/9, and the society I speak of had a contribution of 18/9.
267. Mr. Dowdall.—What was your worst year? I think you gave 1930 as the worst year?—Yes, I think 1930 was the worst year.
268. You told me your contributions in 1930 amounted to 28/2 and you paid 29/2 in benefits?—That is correct in the case of men. In the case of women the contributions were 23/10 and the benefits 32/9.
269. In addition to the 28/2 which is contributed the State contributed to your benefit fund two-ninths of the 29/2?—Yes.
270. That would amount to 6/5?— Approximately.
271. That would make 28/2 plus 6/5 available for benefit. Is that right?—Not necessarily.
272. Where is it wrong?—The 28/2 is not calculated in respect of the same individuals as the 29/2. You may have 1,000 new members in a year, and they would not be entitled to benefits at all in that year.
273. But this would be for a completed year, and your 1,000 new members, so far as those two figures are concerned, would not come in?—Take it this way. If you subtract the State grant from the 29/2 it would be a fairer way of making a comparison. You have to consider the net expenditure.
274. I do not think that is quite right, because the amount available for benefit is your contribution plus two-ninths of what you are paying in benefits?—I am afraid I could not accept the putting of it that way.
Mr. Dowdall.—I do not think it is disputable. I do not think you can dispute that.
275. Mr. Farren.—Does anything come out of it for administrative expenses?— Yes, we must account for the administrative expenses.
276. Mr. Dowdall.—Is it not a fact that in a year the amount available for benefit is the amount of contribution plus two-ninths of the benefit?—You must look at it this way. We do not know until 1932 what is our revenue for 1930, nor do we know what our expenditure is for 1930, because the benefit year and the contribution year do not synchronise. The benefit year commences on the first Monday in January, and the contribution year commences on the first Monday in the preceding July. It is not the same year at all.
277. You may take five years if you like, but it might not be so good from your point of view, let me say. Take the quinquennial period ending in 1928. You have a valuation and everything else based upon that. In that period what would be available for benefit would be the contributions of the employer and the employee plus two-ninths of the benefits paid?—No. There is one essential error. The State also pays two-ninths of the administrative expenses.
278. That is even more favourable from your point of view?—I am not endeavouring to make the case favourable or unfavourable. I am endeavouring to establish the facts as I see them. We receive from the persons paying contributions 28/2 and we pay benefits to the extent of 29/2, but they are not the same people.
279. Of course, they are not?—To the extent of 90 per cent. they may be the same people, but there is a margin of 10 per cent. and that represents different people.
280. I submit that what is available is the contribution of the employer and the contribution of the employee plus two-ninths of the benefit paid plus two-ninths of the cost of administration—that is the amount available for benefit, minus the cost of administration?—In broad outline you may take that as reasonably accurate. Of course, there are deductions.
281. What are they?—You must redeem the moneys originally advanced to the fund.
282. That is the paper credit?—That must be redeemed.
283. That has been extended over a period of thirty years?—I think the period is fifty years.
284. Chairman.—You stated that as regards the appointment of nine persons who would be representative of the members of the unified society, only one per cent. would vote. Is that not very unlikely? You say that at present members take very little interest in societies and, whilst in theory members have some say and influence in control and management, they do not choose to exercise it. You also mentioned that their meetings have been held in small rooms. In the existing approved societies you have more or less permanent officials. In the case of a small society, it is managed by a committee and that may be an unpaid post— unremunerative?—That is not necessarily so.
285. In a lot of societies it is?—That is a matter for the committee and for the society. A society can pay its committee members if it so chooses and some of them do so.
286. Ordinarily within a society there is very little in the way of change?—The rules are based on a very wide principle of democracy and the management of the society can be influenced to any extent that the members desire. In fact, there are greater powers to influence the administration of an approved society at present under the society’s rules than there will be under the management of the unified society, because the Minister comes in and exercises a veto in respect of appointments, salaries and other things.
287. Is there not the other factor which operates in the other direction, that even though they are no longer approved societies there is likely to be a clash between these organisations and, in fact, an endeavour to secure as many votes as they can to get as adequate a representation as they can on this committee of management?—I am afraid that if that clash takes place it will be on religious grounds only, and that is a most undesirable kind of clash.
288. Do you not think there will be a clash on the ground of callings, trades and professions?—I do not think so. If that clash were to take place, the farm labourers and domestic servants and unskilled workers would swamp all the crafts three times over.
289. Do you not think an endeavour will be made to get the farm workers to vote to secure adequate representation for them?—I suggest that the farm worker does not know the first thing about what an insurance society is.
290. Would you go so far as that?—I would.
291. My experience of farm labourers is entirely different. I find that they know a considerable amount. They certainly know how to take the fullest advantage of it?—I agree with that. If the farm labourer wants benefit he manages to get it, and the domestic servant also. As regards administration, I have the experience of a domestic servant in my own house whose society was changed three times and she did not know it. The agent changed his affiliations and took the members’ cards with him and she did not know anything about it. She would not. She handed her card to a certain person. I discovered afterwards, because I knew the reference numbers and the identification, that the cards were actually changed to three different societies.
291a. I could not agree with you that the vote is likely to be as small as that, and I am sorry to hear you say that if there is a clash it will be on religious grounds, as that would be a great pity? —I take this view. You want to elect nine members of a committee. It is obvious that we want somebody from Donegal on the committee, somebody from Connemara probably, somebody from Dublin and somebody from Cork. I cannot imagine what kind of an appeal the ordinary insured worker in Donegal will make in Dublin, or in Cork, or Limerick, or Connemara.
292. What are you assuming will be the method of selection in future under this Bill—it is not defined in the Bill?—It says nine persons, in the section referred to, representative of members of the unified society. It goes on to say that they will be elected in accordance, I think, with rules to be prescribed.
293. How do you assume, accordingly, that whoever is responsible for the drafting of the rules will not have some regard to the considerations which you set out?— Because I cannot see anything else in the Bill.
294. The Bill gives power to draw up regulations. May not regulations be drawn up meeting your points in that respect?—Probably, but I should like to see it very definitely stated. I should like to look at it again, but, as I understand it, the Bill provides for the election of nine persons.
Chairman.—The Bill does not provide for the election, if you take the manner of election.
295. Mr. Farren.—The Committee of Management are to provide regulations under which they should be elected. From your experience, what percentage of members of approved societies since 1912 have voted for the election of committees of management?—I would be amazed if I was told that one per cent. ever exercised the franchise in any society. I should imagine it would be one-tenth of one per cent. in the larger societies. There are, of course, exceptions. If you take the case of trade union societies who have delegate conferences it is different, because they have branches, and the members of the branches appoint the delegates to the conference. In our case there would be 50 or 60 delegates coming from various towns in the country where we have branches and the members would appoint these delegates. In Dublin, out of 4,000 members, I think 120 voted for the election of delegates.
296. Chairman.—You say that the proposal to appoint employers’ representatives, as such, is open to grave objection. What is the objection?—My first objection is that the Committee of Management is appointed to administer a social insurance scheme, and I do not think it is desirable that persons coming in as employers should be introduced. In the second place, I have considerable experience of employers coming into committees as employers, and they feel almost always bound to take a line as employers.
297. Have you any more objection to an employer going on the committee as an employer than to an employee going on the committee as an employee?—I would not like to see an employee going on the committee as an employee in this case.
298. You are satisfied that the employee will regard himself in a different way?—If he is put on as representing employees he must so regard himself.
299. How do you get over that point— the different manner of treatment in respect of them? Why should you object to employers having representatives? They need not necessarily go on as representatives of employers; they are there in their individual capacity and why should you object to them?—I think the principle is bad.
300. Mr. Farren.—You have no objection to an employer being appointed on the committee if he has a knowledge of the administration?—Precisely.
301. Your point is that the persons nominated should not be nominated as employers’ or employees’ representatives, but as persons who are competent to administer this scheme?—There is no provision here for employees’ representatives.
302. Chairman.—Who is going to select these?—The Minister.
303. You would be prepared to leave the right of selection of the employers’ and the employees’ representatives to the Minister?—I take it there is no employees’ representative.
304. There is no provision, but it is very nearly the same thing at all events? —No. There is provision for the selection of representatives of insured persons.
305. You call him an inusured person, but he is an employee?—He is not quite.
306. In fact he is?—I agree that he is an employee personally, but he is going on as an insured person to administer the funds of his own organisation.
307. He pays a contribution to the funds, just as the employer does?—Quite. The employer is different to this extent, that he is not receiving benefits and has nothing to do with the manner in which they are provided.
308. Except to contribute a portion of the money which goes to provide them? —To contribute to the State a portion of the cost.
309. Contribute to the fund?—To the State by buying insurance stamps.
Mr. Dowdall.—He has to see that they are put on the cards?
310. Chairman.—He has a certain responsibility?—He pays his contribution.
311. Mrs. Clarke.—As an argument for unification, I should like to know is it possible for persons to belong to more than one society at present?—No.
312. How can you trace that?—There is only one card and you must surrender the card to your own society when it is stamped, unless you go out and get a card of your own independently of the society and stamp it at your own expense.
313. It would be additional expense?— Yes.
314. He would have to pay the employer’s share as well?—Yes, and he would run the risk of being found out.
Mr. Farren.—If you do not surrender all your cards to one society, you are not entitled to benefit.
The witness withdrew.
MR. M. P. O’DONNELL, called and examined.
315. Chairman.—You have submitted a statement of evidence?—We have set down a few points.
316. In what capacity are you giving evidence? I am speaking as Secretary of the Approved Societies’ Association of Ireland. Since the invitation came from the Select Committee, we held a meeting of the Dublin members of our executive committee and they authorised me to come here and give evidence.
317. You are giving evidence on behalf of your Association?—Yes.
318. They share your view?—Yes.
319. Would you now read your statement of evidence?—The statement is as follows:—
“The Association is a voluntary Association of Saorstát Approved Societies. It comprises 46 out of the total of 65 Societies, and the members constitute 76 per cent. of the insured population. It is very representative in character, including Societies of all sizes, from those with less than 1,000 members to those with 30,000 members, and one with 90,000; and of all types, viz., Friendly Societies, Employers’ Provident Funds, Denominational and County Societies, and Labour Societies. Some are purely local Societies and others operate throughout all parts of the Saorstát.
The Association is recognised by the National Health Insurance Department, and nominates representatives to act on the National Health Insurance Advisory Committee (which is a statutory body appointed under Section 58 of the 1911 Act) and on other Committees set up by the Department.
The objects of the Association are to assist in the development of National Health Insurance, and generally to protect the interests of insured persons and their Societies and the interests of those concerned in the administration of the Act.
The Association meets at least annually, but special general meetings are convened to consider questions of exceptional importance. Otherwise the work of the Association is carried on by an Executive Committee elected on a provincial basis, which meets occasionally, and by a Sub-committee of Dublin members which meets very frequently.
The policy of the Association in respect of all important matters considered since its formation 13 years ago, has been unanimously decided. Moreover, it has received the co-operation of two large Societies representing 13 per cent. of the population—the Prudential and the Irish Amalgamated—which do not desire formally to affiliate with any Association. In short, the Association, by consulting the Committees of Management and officers of the 48 Societies referred to, has expressed the views of approximately 90 per cent. of the insured population on all relevant matters.
With reference to the Bill at present before the Senate, I am asked by the Association to state, at the outset, that the threatened break-down in the finances of national health insurance is in no way attributable to any defect in the approved society system or to inefficient administration by the societies. The system is being conducted efficiently and economically by the 65 units. The Insurance Department in fact, could withdraw approval from any society which was not conducting its affairs in the best interests of its members, or compel the society to transfer its engagements to a well managed society. In the past these powers have been exercised mainly in relation to small societies which, owing to a limited administration fund were unable to provide the skilled assistance necessary for the proper conduct of what is a very technical and complex business.
The serious position of a number of approved societies is due to causes beyond their control. The trouble largely arises from the high rate of unemployment experienced by this country (in common with other countries) in recent years. Unemployment has resulted in a very low contribution average. It has reduced the standard of health of the working classes, causing an excessive number of claims. It has also given rise to malingering, a condition of things which is not improved by an over-benevolent outlook on the part of certain medical certifiers who issue certificates of incapacity for work where actual incapacity does not exist. A difficulty in the Saorstát—not experienced to the same extent elsewhere—is the nonavailability of suitable work for persons who are partially but not wholly incapacitated and who, therefore, become a permament charge on the funds.
Another cause is an actuarial underestimation of the cost of women’s sickness and disablement benefits, in regard to which no data was available when the scheme was framed in 1911. A further cause is widespread noncompliance, which, as may readily be understood, is mainly among the healthier portion of the community, because the man or woman in bad health takes care to secure the protection afforded by the national health scheme.
With regard to the unification of approved societies, the attitude of the association, briefly stated, is as follows:— Unification was put forward for the first time by the National Health Insurance Commission in the year 1924, in the course of the Enquiry into Health Insurance and Medical Services, as one of three methods by which the administration of the Acts could be simplified and the cost of the National Health Insurance Commission reduced. The Association, after most careful consideration, expressed its definite opposition to the proposal in a Memorandum recorded in the reports of the proceedings of the Committee, and stated that the objects aimed at could be achieved in a better way. The Committee reported in favour of “Unification—if feasible,” but following representations by the Association to the Minister no action was taken. In point of fact, with the co-operation of the societies the administration of the Acts has since been simplified and the cost of Central Administration reduced.
The situation, however, has now undergone a considerable change. In view of the report of the Government Actuary, unification has been brought forward chiefly as a means by which expected deficiencies in a number of societies on the next valuation will be avoided. The Association has considered the financial position as disclosed to them by the Minister for Local Government and Public Health, and having regard to the fact that he has expressed his inability to accept alternative proposals submitted by the Association and has definitely arrived at the conclusion that unification is the best method of surmounting the present difficulties, the Association felt that it should withdraw its opposition to the proposed change and co-operate in making the unified society as successful as possible. In taking this course the Association anticipated that adequate compensation would be provided for officials whose services would be dispensed with.
As regards compensation, the Association considered that it should be on as favourable a basis as the compensation provided under recent legislation for somewhat analogous conditions. This was on the basis of a gratuity for those with less than five years’ service and a pension for those with five years’ service or over. Unfortunately a scheme on those lines which was submitted by the Association to the Minister did not commend itself to the Minister, who stated he was advised that the cost would be excessive. In the Bill as introduced, proposals were included for compensation by way of gratuity which the societies felt did not do justice to those affected. The Minister, however, has since made a generous advance on the terms, and the Association accepts the scheme now embodied in the Bill as an equitable settlement.
There are two classes, however, not covered by the Bill, viz., certain part-time clerical workers who render service both to the approved society and its parent body, and local part-time agents. No compensation is payable unless the earnings from the approved society constitute the employees’ principal means of livelihood. It is felt that hardship will arise in certain cases, and it is hoped that the Minister, before the Bill is finally passed, may reconsider the matter and provide some compensation for these persons.
I wish to refer, if I may be permitted, to some statements made to this Select Committee by Sir Joseph Glynn last week. He mentioned that the establishment of over 120 approved societies in Ireland at the inception of the Act in 1911. created a difficulty for the Irish Insurance Commission, which found that there were too many societies.
I would point out that the difficulty, if it was one, was the creation of the Insurance Commission itself. Apart from four Irish societies approved by the Joint Committee, there were 119 societies directly approved by the Irish Insurance Commission which had the power to refuse approval. As a matter of fact, the Irish Commissioners, like their colleagues elsewhere, made every effort to secure the greatest possible number of societies, because the Government was most anxious to set up adequate machinery for the administration of national health benefits. Not only were existing organisations, such as friendly societies, trades unions, etc., invited to undertake the administration of national health insurance, but the formation of new organisations on a county or diocesan basis was also encouraged. A number of small and uneconomic units were approved, and many of these, in course of time, got into difficulties and were compelled, as Sir Joseph Glynn stated, to transfer their engagements to well-managed societies under threat of withdrawal of approval.
Sir Joseph Glynn also stated that, following the decision of the Government in 1925 not to proceed with unification, the approved societies made no effort to reduce their number by way of voluntary amalgamation, but this Association had clearly pointed out that before any question of voluntary amalgamation could be considered by the societies, it would be necessary to give power to negotiating societies to pay reasonable compensation in respect of compulsory loss of employment, and this was not done.
Later, in the course of the debates on the National Health Insurance Bill (1929), the then Minister for Local Government and Public Health—having regard to an amendment moved on behalf of the Fianna Fáil Party— announced that he would introduce a Bill enabling the Insurance Commission, in the case of voluntary amalgamation of societies during the ensuing two years, to give compensation to employees of approved societies whose services, as a result of such amalgamation, would be dispensed with, and which would further enable the Commissioners, after two years, to bring down the number of societies, if necessary, to 12 or 15, similar compensation being given to employees displaced under that arrangement. The Bill referred to was not introduced. That is the explanation of the failure of approved societies to reduce their number by voluntary arrangements. It cannot be a matter of surprise that societies failed to take a line of action which would have caused very great hardship to some of their officials.
Sir Joseph Glynn also referred to the scale of compensation under the present Bill, and said it would be a burden on the insured people for the next 20 or 25 years, also that compensation would have to come out of the pockets of the insured people. In this connection, I have to point out that the insured people will not be called upon to pay more for administration than the moderate amount they are paying at present. It is true that some reduction in the ordinary costs of administration would naturally follow unification, and that the savings would be utilised for some years to provide compensation. This happens where any business firms amalgamate for future advantage. Moreover, it is unthinkable that insured persons, for the sake of saving a few pence per year, would wish to impose hardship upon those who, labouring under most serious disadvantages, organised and preserved the national health insurance system for them when it was in danger of a break-down.”
320. Chairman.—According to you, the scheme of unification was put forward chiefly as a means by which expected deficiencies in a number of societies on the next valuation could be avoided?—That was our belief.
321. That was your belief?—Yes, that was the real reason for the scheme.
322. Could these deficiencies have been avoided by any method—if, for instance, the number of societies had been reduced to ten or eleven by a voluntary engagement?—No, that would not have had any effect on the deficiencies.
323. What, then, would have been the purpose of reducing?—If a society with a substantial surplus took over a society that was in danger of having a deficiency, obviously, the deficiency would be covered up. If you could get societies that were likely to have a deficiency to amalgamate with those societies which had a surplus, it would, in effect, be the same thing as unification.
324. Apparently, they were in danger of unification by voluntary arrangement? —We were pressed by the Commission to reduce the numbers. They felt that the number was excessive and costing them an excessive amount in central administration, and we stated that we would arrange by a voluntary method to reduce the number of societies if we were empowered to give compensation to those officials whom we displaced.
325. That was a recommendation only from the Commission?—We were anxious to facilitate the Department, as far as possible.
Was it the Department or the Commission?—The National Health Insurance Commission.
326. You were anxious to facilitate them?—We were anxious to facilitate them, and we felt that we could reduce the societies, if we had been empowered to give compensation.
327. And the only good result from that would be a reduction in the cost of administration? I am to infer that from your remark?—I do not think the Commission were anxious to cover up deficiencies, but they might have been. If there had been a society which was running the risk of a deficiency, it is quite possible that the Commission would have made an effort to get that society taken over by a society in surplus, and it is quite possible that they would have succeeded.
328. When you refer to the cost of administration, do you mean the cost of the administration of the societies running themselves or of State supervision and audit?—Central administration.
329. Central administration and not society administration?—No. It has never been put forward as a reason for unification that it would reduce the cost of society administration.
330. Not very much, at any rate?—It follows naturally that the cost of administration will fall if you merge all the societies into one, but that was never put forward as a reason for unification.
331. Would it not also follow that if you reduce 65 societies to one the cost of administration will be reduced and that if they reduced voluntarily to 11 or 12, the cost of administration would also fall? —Yes.
332. The cost of State supervision and audit would also fall?—It would.
333. Why has the cost of State supervision and audit in this country been so very high? I understand that the comparable figures were 5/2 in 1900 here as compared with 1/3 in England—That would be answered by the Insurance Department who did, in fact, put up a memorandum before the Committee of Inquiry in 1925 explaining that. They attributed it to the sparse population which is very widely spread in this country, the greater number of appeals arising involving cost, great laxity in regard to compliance and various matters of that kind. Naturally, it is more costly to administer insurance over a small number of persons than in Great Britain, where they have 14,000,000 or 15,000,000 people. I think the cost is now 2/7.
334. For administration?—For central administration. From some figures mentioned lately by the Minister, I gather that the figure is 2/7.
335. In 1920 the cost was 4/3¼ and then it actually increased?—I am not aware of that.
336. It started fairly high?—The insurance department renders services to other departments and there is no real separation in the estimates. We worked it out from the estimates that the figure was 5/2 and it was pointed out that the real figure was 4/3.
337. You are not too enthusiastic about this suggestion of unification, apparently? —No; the societies in our association take the view that the present system is satisfactory and should continue. Of course, the financial difficulty was not contemplated at that time.
338. At that time?—Yes.
339. Do they still take the same point of view that the difficulties are not inherent in the system?—Quite so.
340. They hold that same point of view still?—They hold that, the State having given the right to people to choose their own societies in 1912, they are aggrieved by the withdrawal of the right and the taking away of their vested rights in surpluses and future surpluses. They regret that.
341. They regret that?—Yes; they accept the Minister’s statement that the scheme is the only way of preventing, as he put it, the bottom falling out of the Insurance Act.
342. Speaking for 90 per cent. of those covered by national health insurance, you are accepting the scheme because it is put forward by the Minister and you are going to do your best to make it successful in operation?—Yes.
343. That is your attitude?—Yes.
344. I understand that when the Committee was sitting in 1927 three suggestions were put forward to remedy the situation, one being nationalisation, one unification, and then limitation. I take it that your attitude still remains the same, that the defects were not inherent in the scheme and were not so formidable. What were the defects in the system which you had in mind concerning national health insurance?—There was a great deal of non-compliance in the country, which has not been corrected. Then there is laxity of certification, while unemployment has presented grave difficulties and reduced our income much below normal expectations. The Act, as framed, took as the basis 48 contributions per year. The figure is now 40, and it is as low as 33 and 34. It has never gone over 40.
345. Have you any complaint with regard to the lack of uniformity of the scheme of benefits?—No.
346. You have not the same complaint now regarding uniformity generally?— We have no complaint to make. So far as we know the societies are working satisfactorily, and are giving satisfaction to the members.
347. In regard to what you state are defects in the working, but which are not inherent, what is the remedy for non-compliance?—Of course it means an increased staff of inspectors throughout the country and a stricter attitude on the part of the Legislature.
348. What does that mean?—There is the greatest difficulty in bringing cases to court, and a nominal, if any, fine is imposed. Unless very strict fines are imposed by the bench, we think things will not improve.
349. With regard to certification, how would you remedy the condition of things which you say exists regarding the attiture of the medical profession?—I do not know how that can be remedied. We think an extension of the referee system would be beneficial. The laxity is so general that it is hard to find a remedy.
350. It was suggested to the Select Committee that if insurance was made to cover a scheme of medical benefits any defects would, to a great degree, be remedied?—I agree with that. I approve of the extension of medical benefits, and gave evidence to that effect before the Committee in 1924.
351. Do you stand for that extension still?—We think it would effect an improvement and would be desirable in the interests of the health of the people.
352. Have you given consideration to the question of cost; how it would be likely to affect the parties contributions? —I am afraid that a payment of 2d. per member would not meet it. At the time we fixed that figure there was an estimate of the cost of the medical scheme. We thought that medical benefits, if applied to this country, should include dependants as well as the insured individual and we thought that possibly 3d. per member per week divided equally between the employers and employees would make that scheme possible. Failing that, we were prepared to agree to a limited scheme applicable to the insured people only for a payment of 2d. weekly.
353. If you accepted the principle of medical benefits at all, in order to have the scheme a success, would it not be necessary to make it applicable to the dependants of insured persons?—Yes.
354. You believe that?—Yes.
355. You think that if there was an extension of health insurance to cover medical benefits that would meet one of the great shortcomings?—To a large extent, but it has not cured it in Great Britain. Laxity in certification is still there, and complaints are still arising.
356. Is there the same laxity?—We understand there is laxity in Great Britain, but nothing to the same extent as here. We think medical benefits would be a great help here. In addition, it should reduce the cost of sickness benefit by improving the health of the insured population.
357. Under what control would it operate here? Is it the local authority would be responsible?—I would not like to express an opinion on that. That is a very big question. A Committee sat to investigate that, but I do not think it reached agreement.
358. The comment was made that an added call would be made on the employer and employee in respect of insurance in that respect and that the rate would be likely to be a burden on one party. Have you given any consideration to that?—No.
359. If you were not enthusiastic for unification, do you agree with the comment of another witness, that we are tending towards collapse, unless there is a scheme of unification brought in, but that the proposed scheme is not sufficient to meet the position?—My view is that unification will not settle the financial difficulties. At the present moment the income of the societies as a whole is not equal to the benefit expended.
360. Under unification, I may infer from your remarks that you are likely to have lesser cost of State supervision and audit? —I think so.
361. You are likely to have lesser cost of administration?—Yes.
362. You are likely to have a tightening up of the whole machine, and better supervision, as well as whole-time officials on the job and moneys which, at present, go to part-time officials. I take it it has been your opinion that the part-time system has not been satisfactory, and that these moneys will be available to pay whole-time officials who will go into and deal with an area. Are you not likely to have less non-compliance and malingering. and are you not likely to meet the financial difficulties to which you referred? —I do not agree that the part-time system is a bad one. In the unified system there will be part-time officials.
363. You have 2,500 at present?— Whole-time officials will not be able to go into the country. There will have to be subsidiary part-time officials to receive claims and to perform inspection duties. Possibly there may be a little tightening up in benefit expenditure but, on the other hand, we feel that in the unified society there will be a greater tendency to illness, because people will look upon it as State money, and the incentive to draw State funds is greater than to draw funds from any particular society.
364. Do you think there is anything in what was put forward that one of the things which obtained up to now was that there was more direct contact with the individual. Is there anything in that?— Yes. A number of societies are in close touch with their members, and voluntary workers throughout the country render very valuable help.
365. Just the same as the doctors, they take a very human view of the issue of certificates. Do you not think the committees take a human view in cases of unemployment?—I would not say that.
366. I partly inferred from your remarks that in the system in operation there were certain defects and that these cannot be remedied until some change is brought about. I gathered that while you thought there was a necessity for a scheme of unification you did not accept it too enthusiastically?—The big difficulty that we see in it is the financial difficulty. According to the report of the actuary, the societies on this valuation are going to show deficiencies amounting to, I think, £510,000.
367. But there are other societies going to show a surplus?—Yes, and after setting off the reserves of these particular societies there will still be a shortage of £280,000. I think, by the way, that Mr. Duffy did not give the correct figure. Speaking from memory, I think he said that the societies as a whole, if their reserves were pooled, would show a deficiency of £280,000. I do not think that is correct. £280,000 represents the net deficiencies of the societies in deficiency after the contingencies and central fund has been exhausted.
368. I think Mr. Duffy covered that in his evidence. He said: “According to an actuarial forecast the loss of £50,000 experienced in the five years 1924-1928 will have increased to a loss of £647,000 by the end of 1933; after exhausting the reserves carried forward from previous valuations it is estimated that there will be an average deficiency of £280,000 to be met at the end of this year.” That is after exhausting the reserves carried forward?—I do not think that is correct. After exhausting the reserves of the societies in deficiency there will be a deficiency amounting to £280,000 in respect of these societies. As against that, under unification you will have got £335,000 of a surplus in the other societies, and in the contingencies fund of these societies another £70,000. My point is, that under unification there will be a surplus on the next valuation.
369. Mr. Dowdall.—Taking all the societies in and all their reserves, what will the position be?—There will be a surplus under unification.
370. Chairman.—Therefore, on that there is a lot to be said for unification?— It is a way of getting over the financial difficulties, certainly.
371. Mr. Dowdall.—I think not because until the next valuation the societies which are in surplus will enjoy their surplus additional benefits?—Money for additional benefits has already been provided for at the last valuation and set aside. But if you take the expenditure of the present quinquennial period and set it against the receipts of this quinquennial period, there is a deficiency of £650,000. that is an estimate, but it is obvious that that state of affairs cannot continue. We have some figures here with regard to the growth of expenditure. Taking 1923, which was a high year. we find that the cost of sickness and disablement benefit in the case of men has gone up, as between 1923 and 1932-33, by 89 per cent. In the case of women the cost of these two benefits increased in the same period by 63 per cent. All benefits—sickness, disablement, maternity and additional— have increased by 79 per cent. since 1923. That is an enormous increase. The number of certificates issued has increased proportionately.
372. Could you give the increases, if any, in contributions?—No. I believe it was certified recently that there had been a considerable increase in the amount o stamp sales, but it is hard to know what effect that will have on the next valuation. That may be due to people coming into insurance for the first time, or to a greater number of people complying, but they will carry their liability with them into the society. On the other hand, if it indicated a better average rate of contribution by insured people, that would help the valuation: by increasing the present average of 40 contributions and bringing it closer to the actuarial estimate of 48.
373. Could you give me the amount of contributions in 1923?—I could not.
374. You have simply the perentages? —I have not been dealing with contributions at all. I have been dealing with benefits.
375. What was the total you paid in benefits in 1923?—£406,704.
376. And 90 per cent. of that would be roughly £360,603?—That figure of £406,704 has now gone up to £730,775.
377. Has the cost of administration increased?—Of course, it follows that there must be an increase in the cost of administration, because the societies are now dealing with 80 per cent. more claims than in 1923. The amount allowed for administration still remains the same—4/5 per member per year, based on the membership and not on the work discharged.
378. Has that been exceeded in your organisation?—It has.
379. To what extent?—Are you referring now to the association or to my particular society?
380. I think you stated that you represented 76 per cent. of the insured population?—I understand the statement was made by the Minister in the Dáil that the present cost is 4/10 per member per year as against the 4/5 which is the maximum amount allowed under the regulations. I would like to point out that that figure is only 42 per cent. higher than the figure allowed in 1912 when it was 3/5. It has since been increased to 4/5. For a period of three years it was 4/10 but it came back again.
381. We had the figure of 2/7 mentioned here for central administration. Is that in addition to, or is it included in, the 4/10? It is additional, but it is not charged against the State Insurance Fund.
382. So that the cost of administration is at the moment approximately 5d. in excess of the statutory amount?—Yes.
383. Have you any idea what was the extra payment of benefits over what the actuary would allow on the number of stamps on the card?—I could not answer that. All I would say is this, that for £100 expected in regard to sickness benefit in the case of men——
384. Could you include men and women?—I could not The payments to men in respect of sickness benefit amounted to £90 for each £100 expected and for disablement £200 for each £100 expected. For women the figures were: sickness £120 for each £100 expected and disablement £400 for each £100 expected.
385. Unification will not help any of these figures?—Unification of itself will not. These figures depend upon the issuance of certificates by doctors, upon the supervision of claims and on the attempt to reduce malingering to the minimum.
386. Do you think there would be better supervision?—It may possibly be that better supervision could be achieved under a unified society.
387. As against that you gave it as your opinion that possibly an insured person thinking that he was drawing from the State instead of from his own society might try to get more money?—Quite so. One has to balance all these factors.
388. But there are these factors?—Yes.
389. Have you any idea of the number of officials permanently employed in the present number of societies or in your own organisation, which represents 76 per cent. of the membership?—I think there are about 450 officials—indoor officials. Some of these are employed part-time; they are rendering service to the parent body and to the approved society.
390. Chairman.—They are mainly clerical?—Yes. There are about 90 part-time and about 360 whole-time. That is taking the 65 societies as a whole.
391. You have told us that there is close personal contact between the members of the society and the society, or perhaps I should say the officials of the society?—Yes.
392. We have been told rather the opposite, you know?—Of course, you have got small societies which have very close contact with members and then you have very large societies which have not.
393. Sir Joseph Glynn mentioned a society which I think he said operated in the neighbourhood of Donnybrook and he said that when he asked a member of the society what society he belonged to, the member replied “Mr. Darcy’s.” That seemed to me to convey that though the man might be in close association with the society he did not know the name of it, but he knew the working officials? —Quite so.
394. Do you think that is so all over the country?—It indicates that the insured members were closely in contact with the society.
395. Do you think that, as against the defects in the present system, with a unified society, which must be central, there is likely to be hardship and injustice inflicted in certain cases on people in the country?—I do not think so. We have a large society, some 90,000 members at present, and no hardship is being inflicted on the members.
396. I believe that if the insured member’s card is not handed in in time, and if he reports sick, his benefit is likely to be delayed for a month?—That is possible under the scheme.
397. It is possible under the present scheme?—Yes.
398. It is the rule, I think?—There is a statutory prohibition against crediting that card in view of the absence of the card but that would only relate to a very late card.
399. It would relate to a late card but it is a fact. Sometimes I think it happens that when the insured person is known to be a person of good character and not a malingerer, the local society pays benefit and does not inflict a penalty?—I cannot admit that any society would break the law but I think that the humane factor would operate there. It might be felt that the local agent was at fault in not collecting the card, for example, and the society would not, in that event, penalise the member concerned.
400. I may have a number of persons employed, for example, and I would have 40 or 50 cards. By an oversight perhaps a card would get mislaid through the inadvertence, I will not say through the negligence, of one of my staff who is supposed to hand in the cards. Would it not be a hardship on the insured person in that case if he were refused benefit?— In that case the insured person would have a remedy against his employer.
401. But you know that a person does not go to law with his employer in such a case. In these circumstances would it not be real hardship to refuse benefit?— I do not think any real hardship would arise in that case.
402. It does not, in fact, but would it not be likely to arise under a unified society?—I do not think so.
403. Well, you think, then, that the official in Dublin is going to break the law?—If the insured person withheld his card unreasonably long, quite possibly he would be penalised but that is his own fault. I think that if there were any extenuating circumstances or any faults other than on the part of the insured person, the difficulty would be got over. I should not like to penalise a man for anything which did not arise through his own fault but I would penalise the employer if he was not complying.
404. You might have cases of this kind arising where there had been bona fide compliance extending over a period of years?—I think in case of necessity the facts would be represented to the Insurance Department, and the Commission asked to allow credit for the card.
405. I hope your optimism is justified. We heard a good deal of the humane view. Taking the humane outlook both on the part of the members and the officials of approved societies, that when not carried too far is not undesirable?—If it is not carried too far.
406. Let me take the case of a man who is unemployed. Things are not too good at home with his family or friends, and he really is not able to work. He is not sufficiently nourished. That man gets some benefit out of the National Health Insurance Fund. I am not speaking strictly from the actuarial point of view, but I put it to you as an alternative that if that man goes on—really he is becoming ill from malnutrition—that the cost to the State from some other source would be a great deal more than if a little laxity were allowed in the earlier stages?—That would open a very wide door if permitted. As we see, it has largely contributed to the present financial difficulty.
407. Will unification seriously do away with the present financial difficulty, in present circumstances, in your view?—I do not think so.
408. In your view are there too many approved societies at the present time?— I would rather not answer for the Association. We certainly could have reduced the number if we were given the power to compensate those going out. There are those powers in the present Bill.
409. The Insurance Commissioners could have withdrawn approval from any society at any time?—Yes, for cause.
410. Chairman.—Not at their whim, but for cause?—Yes.
411. Mr. Dowdall: If they had done so naturally the number of approved societies would have been lessened?—Yes.
412. Do you think there is any advantage in having some element of competition amongst approved societies?—We think it is very healthy.
413. In other words, there is something to be said for it?—Yes.
414. No such competition can exist under a unified system?—None at all.
415. You state on page 3 of your statement: “The situation, however, has undergone a considerable change in view of the report of the Government actuary.” Have you seen that actuary’s report?— We have been given extracts from it. I am a member of the Advisory Committee and as such I have been given extracts from that report.
416. It has never been published?—The Minister I think issued a statement to the Press in which a number of figures were given.
417. How long since?—Twelve months ago.
418. Unification was put forward for the first time at the National Health Commission in 1924?—Yes.
419. There was no deficit then?—It was not brought forward as a remedy for financial breakdown—none was contemplated then. It was brought forward to reduce the number of societies, the cost of central administration of the scheme, and that inequality of benefits was not desirable.
420. It would probably be some injustice on paper to people more favourably situated?—After the Act was passed in 1911. Every encouragement was given to people to form themselves into groups. Every encouragement was given to those in sheltered groups to come together. That was the admitted policy of the State at the time. It may be said that the term “National Health” was not appropriate. The Government set out with the intention of organising a series of groups into societies.
420a. Legislation was discussed with the Minister for Local Government and Public Health in Mr. Cosgrave’s Government?—Yes.
421. And you say it did not commend itself to the Minister as the cost would be excessive?—That is the cost of the superannuation scheme that we submitted in connection with the present Bill.
422. I would like to consider that with anything submitted to the previous or present Minister. We will deal with the present Minister. The cost of administration or expenses comes out of the funds now?—Yes.
423. The superannuation scheme you suggested would be less than that expense?—Yes.
424. Let me put it to you this way. Let us say the case now is X and Y. X will continue to be employed, and a fraction of Y will be the expenses, because he has been superannuated. He wanted to be superannuated at the full scheme, but your suggestion would involve some decrease on the cost of administration?— We think so. It was thought that more would go out under a superannuation scheme than the unified society would like to go out. Some people would go out on compensation, and their places would have to be filled. We thought the unified society could afford to pay pensions to those who went out.
425. I take it that the number of people who would go out voluntarily would be relatively small?—Yes, but I think those who might go out would not be people whom the unified society think should go out. There might be people in the country whose services would be required but who, for family reasons, would not like to move up to Dublin.
426. You told us before that “a number of small and uneconomic units were approved and many of these, in course of time, got into difficulties and were compelled, as Sir Joseph Glynn stated, to transfer their engagements to well-managed societies under threat of withdrawal of approval”?—That is so, and the easiest way to get over the difficulty was to induce such societies to approach others and merge into them. If you withdrew approval a number of societies would have been forced into the deposit contributors fund which was abolished some years ago.
427. Mr. Dowdall.—In view of your representing such a number of societies, there are two questions that I think it would not be fair to ask you.
The witness withdrew.
Mr. T. Hutchinson, F.F.I., called and examined.
428. Chairman.—Mr. Hutchinson, I take it that you associate yourself with Mr. O’Donnell’s statement of evidence and with his replies to the queries that we have addressed to him?—Yes. There were two particular points that struck me, and that I should like to mention. Questions have been asked as to what will be the position in the unified society—will the unified society be able to get over these financial difficulties. I should like to emphasise this. There are two factors operating that brought about these conditions, and as long as these factors continue to operate no change in the present system will help the financial situation. The two factors I refer to are unemployment and the lax medical certification. Unless some solution of these two problems is found the unified society, to my mind will be in the same position as the societies are in at present.
429. Not to the same degree?—Not to the same degree, but the improvement will not be substantial. Sir Joseph Glynn mentioned the system of medical certification. I think he referred to it as a rotten system. I go further and say it is an appalling system.
430. Mr. Dowdall.—Mr. Duffy goes still further, and says it was no system at all.
Mr. Hutchinson. It is a system by which any insured person—for instance the Chairman—can go to a doctor and get a medical certificate.
Mr. Dowdall.—Not on his face value.
431. Mr. Hutchinson.—Certificates were issued wholesale by doctors all over the country without examination. I will give you an instance of a case that came before the Medical Complaints Committee. A doctor was asked did he examine the insured persons when they came before him. The doctor replied that he did not. He asked how could he examine 300 or 400 people in an afternoon. In other words, he asked them what they were suffering from and took their word for it. That sort of thing is wholesale throughout the country, to my knowledge. It was pointed out that of course the societies had a remedy, that if they had a proper system of sick visitation, they would be able to ascertain for themselves. There again, I disagree, because you are up against the evidence put forward by a man versed in medical science, as against a man who knew nothing about medical matters. Once a medical certificate is issued it is very difficult to upset it. The society has to get the opinion of the medical referee.
432. Chairman.—The sick visitor can only come in after the certificate is issued?—The sick visitor gives an opinion. You have the opinion of a layman on the one side, and of a specialist on the other. You have got then to get the opinion of a third person. The referee comes along some time after the person has been first examined. The ordinary certifier has been seeing the person for a week, but as the medical referee sees the person on one day, the whole system is absurd. That was the system that was given to the societies, and it was supposed to be a protection against malingering. To my mind it had the exact opposite effect. It encouraged malingering. That is one of the factors that has operated to bring about the present state of affairs. The other tremendous factor is unemployment. Where you have unemployment rampant, of course you have a tremendous amount of additional sickness, and you have an incentive to malingering.
433. Mr. O’Donnell.—In support of what Mr. Hutchinson has said, I was speaking to a dispensary doctor recently. He told me he had put 15,000 cases through his hands in the previous six months. That is an average of 600 a week.
434. Chairman.—Applicants for certificates?—Yes. Under the dispensary system of treatment both at their homes and at the dispensary. Of course most of these people were looking for insurance certificates. It is quite obvious that every man cannot be examined under the national health insurance scheme.
435. You accept these figures?—I have no reason to doubt the figures.
436. Mr. Hutchinson.—I should like to mention also that I agree as far as unification is concerned that the present system is absurd because there is no uniformity in the rate of benefit as the administration is proceeding at present. On the one hand you have certain people who only get the normal benefits of the Acts and others are getting substantial additional benefits. You have persons for whom the Act was originally established—that is the casual dock labourers and people of that kind faced with a reduction of benefits after the next valuation. That is an absurdity. Of course that is one of the principal reasons why unification is desirable.
The witness withdrew.
Dr. R. J. Rowlette called and examined.
437. Chairman.—You are appearing in an individual capacity?—Yes. I want to make that clear. Though a member of various medical organisations, I have not discussed my evidence with them, nor had I any opportunity to do so. Any evidence I give must be taken as purely individual.
438. You are President of the Irish Medical Association?—Yes.
439. But you are not appearing on behalf of them?—No. I have no authority from them to voice their views.
440. Notwithstanding that, you can be taken as very representative of the medical profession. In regard to this Bill, you recognise the relation of this question of national health insurance with the question of health?—Yes.
441. How do you associate the two questions?—It seems to me that national health insurance should be something more than a mere provision for payment to a man while sick—that it should be an attempt to improve the health of the country as a whole and, particularly, of the classes that come under insurance. If you study the Acts on which the system is based, you will find that that is the essential idea and that it runs right through these Acts. Perhaps I may refer to a few specific instances. In the first place, the essence of the Act, as originally introduced, was the provision of treatment and not merely the provision of a cash payment. That provision was, of course, deleted in the application of the Bill to Ireland and, consequently, we have had a truncated system of national health insurance in Ireland from the beginning. The essence of the system originally was the provision of curative treatment for insured persons as well as the provision of a cash payment which would allow them to remain out of work while work was injurious to them. I shall come back to that point. Secondly, the Acts were associated for many years with sanatorium benefit—the treatment of tuberculosis. That has now disappeared from the Acts—wisely, I think—because the local authorities have become active. They were stimulated by the provisions of the original Act and it was found that the work was being duplicated and that tuberculosis work could be more expeditiously and efficiently done by the local authorities. The State still provides a considerable amount of the funds, which formerly came out of national health insurance moneys, for tuberculosis work. Two other provisions, which are still in the Act but which have never been put into force, deal with the general question of health. One was the power given to insurance committees—that power does not remain in Ireland, because these committees have disappeared—to undertake investigations as to the health of districts with which they were concerned—for instance, the incidence of certain diseases causing heavy loss to insurance funds. I do not know whether that provision has ever been made effective in England, but it was not made effective in this country, although that provision remained from the original Act of 1911 up to the amending Act of 1929.
There is still provision in the Acts whereby the Insurance Commission could provide certain funds, amounting to a penny per insured person, for the purpose of research. In this country, no money has ever been provided by the Insurance Commission for research. In England, I think money has been provided. These are four instances showing that the intention of the entire legislation had to do with the general health. It seems to me that in recent years, partly for the convenience of administration—as regards the tuberculosis change, I recommended that and I think it was a proper change—the importance of the health aspects of the system has, in the changes made, tended to become less emphatic. Attention has been given to the purely administrative aspect—cash benefits and similar benefits. That seems to me to be spoiling the work of the Acts. I do not want to be taken as saying that the Acts have been a failure or anything like that. They have been very useful, but I think they have not been as useful as they might have been, because of that change of view with regard to health. I think that we should look to having a system which deals with health insurance very closely co-ordinated with the public health system of the country and with whatever public curative system there is in the country. That was recommended very strongly by various inquiring bodies in the past—that there should be close co-operation between the system dealing with public health curative work, such as that done under the Poor Law, and with national health insurance work.
442. Are you satisfied that the Bill before the Oireachtas effects an improvement in that direction—No, but I shall come on to that later. The Irish Public Health Council appointed in 1919 made, in 1920, a very radical report, as at that date. Much of what was recommended in that report has been carried out since. It recommended the reorganisation of the entire curative and preventive medical system of the country. A good deal has been done on those lines. It recommended the establishment of a State medical service which would deal both with curative work, done under the Poor Law at present, and the work of national health insurance, bringing in a system of medical attendance for insured persons—not medical benefits in the narrow sense, as in England, where one associates the work with the panel system, but medical treatment for insured persons in the wide sense. That was recommended in 1920 and, naturally, the Government did not take any steps at that time.
443. Mr. Dowdall.—Why do you say “naturally”?—There were many things happening in 1920 which interfered with social improvements of that sort. When we got an Irish Government subsequently, steps were taken in the direction indicated. Most of the changes that have taken place in Poor Law service and under the local authorities—for instance, the establishment of county medical officers of health—were anticipated and recommended in that report of 1920. In the report, which I think you have before you, of the Committee of Inquiry, appointed by the Minister for Finance in 1924, recommendations are made on the same lines, that there should be closer co-ordination, and that State medical services would be desirable, though there might be obstacles in the way of their immediate establishment, but the underlying idea was the co-ordination of the whole health system of the country. You asked me a very pertinent question as to whether I thought the present Bill affects that. I think that it affects it in this way, that it proposes to set up an extremely powerful body which will, as soon as it is set up, develop vested interests, and its duty will be to carry out one part of the health work of the country without being in contact at all with the other health activities in the country and, it seems to me that if the whole system is to be really effective, it should be co-ordinated into one system, and should be under direct State control.
444. Chairman.—Direct State control? —Yes, that is my view. If you set up such a body as that proposed in this Bill, that body will not be concerned with health. The societies have never concerned themselves very much with questions of the health of their members, other than the provision of cash benefits, or whatever other benefits they may be able to give. They have not concerned themselves with such matters as the incidence of disease among the members, the incidence of disease in particular trades or occupations, or any other such things which could be well done by a State Department with the machinery at its control, and the whole of the local Government machinery under its direction. This new body will, it seems to me, have this great drawback—I admit, at first, there will be economy——
445. You admit an economy?—Yes, I recognise that and I have signed that in a report previously. There will be economy in administration, but you will have a more powerful body than the individual societies were.
446. Is there a danger in that—Yes, I think there are several dangers in it. This body will be able to make its own views more effective and it has never taken much interest in the health aspect of national health insurance. I think there is the further danger that it will be much harder for the Government Department, controlling or supervising it, to keep its views strongly imposed on this society than it was with regard to the 65 smaller and less influential societies. Again, I think there is the possible danger, looking at it from the point of view of the citizen, that a State society, such as this, encompassing very different interests, political, religious, social, and so on, might find it to its advantage to interfere in political matters and try to get control of members of the Legislature and to interest them in its point of view. There are suggestions that, in the early days of national health insurance, the Government of the day—I want to emphasise that because I am not speaking of National Health Insurance Commission or of the administration—were influenced in various matters by political pull. The mere possibility of that is great in the future because you will have so many different interests amalgamated for one particular purpose—to make the will of this society effective—and, as an ordinary citizen I distrust the committing to a body almost independent, such as that, the administration of what should be a very important part of the health system of the country. That is my attitude towards the proposals in the present Bill. It makes the society more powerful and puts them in a stronger position to make their will effective and, possibly, effective in a dangerous way and not merely in maintaining their point of view against Government control.
447. Your point of view is that, if it is proposed to go so far as to provide a scheme of unification, you ought to go further?—Yes, you ought to go further and have, if you like, a nationalised system of insurance, that is, a State system. I understand that England is one of the few countries in which there is national health insurance where it is not a State system. In most countries in which there is national health insurance, it is, I understand, a State system, administered by a department of State, and not committed to outside bodies, over which control is not as strong as it is over a State office.
448. Might I ask you, in regard to that, how you would meet the contentions of those who stand opposed to the scheme of nationalisation?—Their contention is that the introduction of such a scheme makes the State responsible for the payment of benefits. That would, subsequently, induce a temptation to spend more money, to increase benefits and, as a next step. would lead to an increase in State supervision and an increase in local administration. Would it be worth it—setting out that disadvantage as against the possible advantage to which you refer?—I would put the danger the other way—the danger of the State diminishing benefits.
449. There is that danger?—We have the example of the old age pensions and more recent matters before us. I think the danger might lie in that direction
450. It might diminish, as in the case of the old age pensions, the individual figure set out, and reduce it from 15/- to 12/-. Would not there be the likelihood that, under State guarantee, the actual amount of the benefits would be increased? —The total amount?
451. The total amount, the cost to the State?—I do not see that it follows. I do not see any argument that would suggest that it would follow. Is it the suggestion that a Government, to make itself popular, might lavish benefits?
452. That would be one aspect of it?— That is a possibility, but it may act in either direction. I look on the State, however, as a more responsible body to deal with it than a society. You asked another question as to whether the State would be responsible for benefits. I think it is bound to be, if it establishes a society, and bound to give a guarantee for benefits, that is, minimum benefits.
453. And to maintain minimum benefits?—Certainly. The position under the Acts at present is that an insured person has a choice of several societies. He can join a secure society but it is on that account that minimum benefits were not guaranteed by the State, but, if you compel a person to join one society, I think that, in all honesty, the State should guarantee minimum benefits.
454. Would you go so far as that?— I would and I would say that, if you compel a person to join a society, you must guarantee him a minimum benefit provided by the Act.
455. Under a scheme of unification you will, you say, have the State financially responsible?—Yes, it should be.
456. You say that it is likely to result in that?—I do not know what is likely to result.
457. But there should be State responsibility?—There should be, in all fairness.
458. To the insured person?—Yes. If he is compelled to join a society, it is the duty of the State to see that the society fulfils its side of the bargain and to guarantee the minimum benefits.
459. And, in that case, the Minister would not have the control he should have if the State were to be responsible under this scheme as set out in the Bill?— Under this scheme, he will have no financial responsibility unless the scheme breaks down as regards minimum benefits but I think he must take responsibility then.
460. You feel that if the result of this scheme of unification is such as to exceed a certain financial responsibility, the Minister should also have more administrative control?—Yes. My own view is that the unified society not merely stands in the way of the development I think desirable but it puts obstacles in the way. It is not a stepping-stone to it but an obstacle and the stronger it is, the greater obstacle it is.
461. You referred to a scheme of medical benefits. You have not altered in your view in any respect in that connection?— No; I still think that a proper system of curative treatment is necessary.
462. In conjunction with any scheme of national health insurance?—Yes, it is only half a scheme without it. I am not committing myself to a panel scheme when I say that or to any particular way of administering medical treatment, but I think that medical benefit, in the sense of curative treatment, is an essential part of any proper system of national health insurance.
463. What is likely to be the effect of the present Bill, if it should become law, on the co-operation which seems so desirable on the part of the medical profession in working out any scheme of national health insurance?—I am afraid it will make it more difficult. Up to the present, the medical profession has found the National Health Insurance Commissioners very sympathetic. We have had our differences but they have been very sympathetic and, for many years past, the co-operation between them has been very close and friendly. There has not, however, been, up to the present, co-operation between the society representatives and the medical profession and we have generally found that they adopted a more or less hostile attitude towards the medical profession in regard to national health insurance and, in so far as their power is being increased by the establishment of this society, I fear that co-operation would become more difficult in the future.
464. And you regard it as essential to secure that co-operation?—I think every body regards it as essential that there should be co-operation.
465. The attitude of the medical profession is that it is more inclined to co-operate and it should be permitted to co-operate and that viewpoint has to be considered to bring about that end? —Yes, it is quite anxious to co-operate.
466. You know that complaints are made in regard to this question of certification?—Yes, I have heard them.
467. Would you choose to express any opinion about them? It is said that doctors are rather remiss in that respect and some contend that they are, of necessity very lax and remiss. Would you express even a personal view in that connection?—Yes, I would. I am quite sure that you could get evidence from the office of the National Health Insurance Commissioners of laxity and remissness on the part of quite a number of the certifiers, but I do suggest that those cases are individual cases and not representative of certification as a whole. My opinion is that the certification system, as it has been worked, under proper supervision and with the help of the referees appointed by the National Health Insurance Commissioners has, on the whole, been the best method of getting evidence of incapacity that was possible under the conditions.
468. The best method?—The best that was possible under the conditions and, on the whole, it is fairly satisfactory. There are many faults and I have heard instances of very bad faults, but the mere fact of the same instances being trotted out time after time by the societies makes me think that they are not quite as numerous as they might appear.
469. The instances that are quoted are very much the same; they have a knack of repeating themselves?—Yes, they remind one of a stage army walking across the stage. One hears the same cases quoted time after time.
470. If that is so, is it not rather peculiar that you have this great increase in the amount of money issued by way of benefit? It is contended that that is largely due to what I might call over-certification?—In the first place, it has been pointed out that that is not peculiar to Ireland. It exists also in England, where national health insurance is a much bigger business than it is here, and where there is medical treatment. I have not got any recent figures, but a sub-committee of the Advisory Committee to the National Health Insurance Commissioners studied this subject a couple of years ago.
471. Mr. Dowdall.—In England?—No, here, and I happened to be a member of that committee. It was pointed out to us that the increase in England was somewhat similar to the proportionate increase here. I do not think it was as much but it was very alarming in England as well as here.
472. Chairman.—Notwithstanding the fact that they had a scheme of medical benefits?—Notwithstanding that, and therefore, closer supervision of the certification.
473. It has been more or less held out to us that this problem, if there is a problem, of medical certification would be largely solved if we had introduced a system of medical benefits here, because doctors would be responsible for treatment as well as the issuing of a certificate?—Supervision would, of course, be closer with medical benefits, and I think that those doctors who are lax would be less lax, but what I want to get at is that I think that the general increase in the payments of benefits is something outside certification either here or in England. It depends, to a considerable extent, on the increase in sickness connected with unemployment in the two countries.
474. Connected with unemployment and consequent on it?—Definitely connected with unemployment more than with any other condition of the time.
475. So that you think that the extension of unemployment, apart altogether from any laxity on the part of doctors, would be largely responsible for these increased figures?—Yes, I think so. If a man and his family are living for four or five months on 10/- or 15/- a week, their health becomes bad.
476. We had given to us to-day a figure which might interest you and on which you might, perhaps, comment—that benefit in respect of sickness and maternity in this country in 1923, amounted to £406,704, and that the comparative figure under these headings, in 1932, was £730,770. That is an amazing increase?— It is.
477. And it is very hard to justify it?— Similar figures up to 1930 were before the sub-committee, a few years ago.
478. You will admit, of course, that that seems to denote increasing laxity in the matter of certification?—I have not any knowledge which would allow me to accept that.
479. We have to concede that there is increased unemployment. There is no question at all about that, but you do believe that the introduction of a scheme of medical benefit in this country would tend to eliminate any laxity there is in respect of certification?—It would tend to diminish it, certainly. On the question of the relation of unemployment to this matter, I think that unemployment has increased very largely the number of what one might call borderline cases—the case in which a medical man is in some doubt as to whether a man is incapable of work or not. That is the question on which he has to give an opinion—that so-and-so is incapable of working by reason of such disability. I think that the fact that the man has been out of employment and has been only half-fed for months will increase the number of borderline cases.
480. It has been said that, when this Bill becomes law and when you have more central control, the number of sick visitors is likely to be increased and that they, in a way, will tend to prevent malingering. Do you believe that that will be the effect of this Bill if it becomes law?—One would expect a society like this to be more efficient than some of the smaller societies at present. I should expect it, certainly.
481. Would you expect that the tendency to appoint whole-time officials in a greater number and to do away, to a great degree, with the part-time agents and officials would be all for the good?— It would be.
482. Particularly in regard to malingering?—I do not know how far malingering enters into it. No doubt there are malingerers, but I do not know how far the question of malingering enters into it. There is another point I should like to mention. When we were speaking of economy being brought about by the amalgamation of societies, I should have put this point—that very much greater economy would be brought about by bringing them under a State Department.
483. That is, under the proposed system rather than the present system?—At present, you have a Commission or, now, the controller, working this office. It is a State office. You must have a considerable amount of duplication with the societies between him and them. Bring them all into one society and you still have duplication between the State office and the other.
484. Is that likely to cost very much in the way of extravagance?—The striking thing about national health insurance here is that the main expense has been in the State office.
485. I wonder why is that? Could you offer any figures in regard to that? I put a question to a witness this morning pointing out that the cost of State supervision and audit here was roughly 5/2 per head for one year and that the comparative figure in England was 1/3. Have yon any comment to make as why the cost should be seemingly so excessive as compared with the cost in England?— You asked me about the relative expenses in England and Ireland and if I could explain that. That was discussed, and I think you will find some reference to it in that report. As well as I remember the explanation given by the Insurance Commission at the time was that the overhead charges in Ireland, in proportion to the number of members, were bound to be very much greater than in England. The Commission was dealing with less than half a million people. I think the figure at the time was 450,000. In England they were dealing with 12,000,000. Because of that the overhead charges were bound to be heavier in proportion to the number of members.
486. But would that follow? Would it not be dependent upon another consideration? You then had a considerable number of societies. You have 65 at present. Some years back the number was 120. Would it not be largely dependent on the fact that, in connection with supervision and the carrying out of audit you had such a number of societies? Would not that be an important factor in regard to State supervision and audit?—The position as regards that would, I imagine, be similar in Great Britain. In proportion to numbers, I think you would have quite as many in England.
487. Here you have one official appointed per 1,400 members. In England you have one official for each 9,000? —The point that the Commission made was that there was a larger establishment necessary here in proportion to the number of members.
488. Do you think that it accounts for the disparity in the figures—5/2 and 1/3 —for what one may call similar work? The difference between these two figures is alarming?—At that the time, the difference was not as much. I think the figures then were 3/8 and 1/4.
489. At any rate, you say that even under unification the economies will not be effected which could have been effected under a scheme of nationalisation?—Yes. Under unification there will still be some duplication and consequent expenditure. Under nationalisation the whole thing could be dealt with in one office and would clearly be less expensive than under this, where you propose having two offices, one, so to speak, watching the other. That must lead to a duplication of work, to some extent. While I say that I also want to point out that I am not an expert in administration.
490. That is another argument that you would advance in favour of nationalisation which you think would eliminate the dangers of a big business combine using undue influence for its own purposes?—On pages 22 and 23 of the Interim Report of the Committee of Inquiry, presented in 1925, will be found a summary of my views on that. I have not altered my views since.
491. You made one very strong statement in that report. You said: “A society comprising in its membership all the insured persons in the Saorstát would be a formidable commercial combine, so large and so powerful that it would be beyond the control of either the official supervising authority or of the Oireachtas. It would be to the interest of such a combine to gain a power on each of the Parties of the State, and to attempt to pervert government at its source.” That is a great danger facing any scheme of unification, but you would hardly go so far now as to contend that “it would be to the interest of such a combine to gain a power on each of the Parties of the State, and to attempt to pervert government at its source”?—I think it is true to say that it would be to its interest to gain such a thing, but I do not say the danger is very imminent.
492. You would hardly put that point of view as strongly now as you did then? —Well, of course, I am ten years older since I wrote that.
493. The Committee would like to have your views on the question of the establishment of a medical service of national scope?—My view is that there should be a State medical service combining in its activities all the present medical activities concerning public health and combining with them a system of treatment for insured persons: a system that would combine all our preventitive work at present—the work of our country medical officers of health, our various curative services, dispensaries, county hospitals, tuberculosis sanatoriums, public hospitals—I am not dealing with voluntary hospitals—but public hospitals that are rate-supported or partly State supported at present. My opinion is that you should have a medical service dealing with both the curative and preventive side. There should also be definite activity devoted towards research. Fairly precise suggestions on those lines were made by the Irish Public Health Council in 1920, some of which have been adopted, such, for instance, is the scheme dealing with county medical officers of health and putting the cost of health services on a county basis rather than on a union basis.
494. I take it you are advocating a scheme which would bring about co-ordination between the national health insurance system and the system that now represents what used to be the poor law system?—Yes.
495. Do you think it would be possible to do that by amendment of the present Bill?—Of course, it would enlarge the scope of the Bill enormously. I desire to draw the attention of the Committee to an amendment that was moved by the present Minister for Local Government and Public Health—he was then in Opposition—on the last occasion that a National Health Insurance Bill was before the Dáil. I am referring to the 1929 Bill which introduced certain minor amendments subsequent to the presentation of the reports of the Committee set up in 1924. When the 1929 Bill came before the Dáil, Deputy Seán T. O’Kelly, as he then was, moved an amendment to this effect that the Dáil “declines to give a Second Reading to the National Health Insurance Bill, 1929 until proposals have been laid before the Dáil providing for (1) the administration of national health insurance through one society; and (2) medical benefit.” At that time, the present Minister laid down as essential these two requirements. He is now proposing one and I would like him to include the other. I am sorry that he cannot go so far now as he proposed then.
496. Have you made any calculation as to what the introduction of medical benefits in the Free State would be likely to cost? We were told by one very important witness that it would be roughly about 2d. per head more. We had later evidence that the cost would be quite a bit more than that?—I could not give any help on that. The matter, I think, was fairly well discussed in the Final Report of this Committee of Inquiry.
497. But the position has been very much changed since that report was issued?—Yes, but I am afraid I could not give any information on it.
498. I take it you will agree that 2d. a head more is putting the cost very mildly? —Yes.
499. Mr. Dowdall.—You are aware that under the Bill three members who will act as trustees are to be appointed by the Minister?—Yes.
500. They may be removed by the Minister?—Yes.
501. And three members to represent employers are to be appointed by the Minister?—Yes.
502. It is provided that they also may be removed by the Minister?—Yes.
503. Having regard to that, that there will be these three very important men as trustees, as well as three representatives of the employers, do you still think there is political danger from this organisation being set up?—Yes, I do.
504. Notwithstanding that six out of 15 are to be nominated by the Minister? —Yes. That method opens the way by which political influence might be used.
505. Even though the nominations are by the Minister?—Yes.
506. I do not go out of my way usually to be particularly kind to my political opponents, but in the case of Ministers in any Department of State that I have known up to the present, I would not be very much afraid of political danger arising from their appointments under Bills of this kind.—What I am thinking of is that there is the possibility of a society adopting such methods. I hope I am quite wrong, and let me say, at once, that I am not making any attack on Ministers.
507. I am not at all enamoured of this Bill, but I think there is an element of State socialism in what you are advocating?—You do not damn a thing by calling it a name.
508. I do not like socialism. I am rather in favour of the right of private judgment, and for that reason I am opposed to this Bill. With regard to certification and its relation to unemployment benefit, have you any doubt that the great increase in benefits paid to members of approved societies has been due to unemployment? —Very largely, I think.
509. You said that unemployment gives rise to a number of what I think you very properly defined as borderline cases? —Yes.
510. Speaking now from your knowledge of the medical profession and what you said in relation to public health, notwithstanding the fact that certification in borderline cases may be hard on the fund of an approved society, is it not, on the whole, better in the interests of public health to issue a certificate in these cases than run the risk of a man getting a more serious breakdown?—I do not think so. I do not think that the certifier is entitled to sign away the money of other people because he meets a hard case.
511. You adhere to that, notwithstanding what you said as to public health?—I do. I do not think it is right to sign away money that is there for another purpose.
512. I take that in conjunction with what you said in regard to laxity and to similar cases being trotted out repeatedly. But let me put this. In certain districts, in cities particularly, where you have a vast amount of unemployment, can you expect a medical practitioner to examine all the cases that come before him so closely as to prevent persons getting on to the funds of a society who are really not entitled to get on?—Of course, that will sometimes happen.
513. We have been told that under the unified society there will probably be more supervision by the sick visitor. May not that open the way to abuses on the other side: that the sick visitor may press a person to go back to work before he is really fit?—There is that danger.
Chairman.—But is the sick visitor likely to do that?
514. Mr. Dowdall.—As a matter of fact, I have heard of a very extreme and very disgraceful case over the week-end and I am in a position to substantiate it. No matter what system you may devise you will always have malingerers. Would you call a person suffering from malnutrition and threatened with illness because of malnutrition a malingerer?— No. Before I leave I would like to refer to one small point dealing with the question of “being capable of work.” There is no legal decision as to what the term “being capable of work” means. Taking the essential underlying idea of the national health insurance scheme, my view and, I think, the view taken by most medical men, is that the words “incapable of work” mean that a man is not able to work without further danger to his health and that the words should be interpreted with reference to the state of his health. The intention of the Legislature was to protect his health and to restore him to health, therefore the words should be interpreted in that way, with that general intention of the Act in view. I think a doctor is entitled, if a man is not able to work without running serious risk of injuring his health, properly to certify him as incapable of work. That is, I think, the principle of the Act.
Chairman.—We are very indebted for your attendance here to-day.
The witness withdrew.
Mr. J. W. Brownlee, A.C.I.I., F.F.I., called and examined.
515. Chairman.—You are Secretary of the Irish Amalgamated Health Insurance Society?—Yes.
516. You have had the advantage of hearing the evidence which has been submitted by the last witness?—I could not hear it very well.
517. You did hear the evidence this morning?—Not very well, but I know what it was.
518. Do you wish to make any comment on the evidence which was submitted to us, or do you wish to express a point of view which may not have been adequately expressed in regard to some matter already covered?—Yes.
519. On the questions of valuation, I take it?—I think, on the whole, the basis of this scheme has not been approached in the right manner.
520. That is a rather broad statement? —It is. I am an associate of the Chartered Insurance Institute. I held that degree for years before the Insurance Act came into operation. They are on the edge of what we call the Actuarial Association and were afraid their examinations would merge. Life insurance has been a particular interest of mine from that until 1912, when the Insurance Act began. In fact I am 30 years at business altogether. I carefully read the Act in 1912 before it came into force and I then concluded, as an individual, that it was going to lead into some funny straits for the reason that you had individual societies and different managements. If you put specified groups into societies, each one different from another, you are bound to have different rates of benefits at the end of a certain period. It could not be avoided. I was amazed to know that a national scheme was put in the hands of approved societies at all. However, I think Mr. Lloyd George might not have got it through otherwise. I am chiefly interested in, and come before the Committee chiefly in reference to Section 25 of the Bill as passed by the Dáil. This has not been altered in any way and has not been touched on at all in any debate.
521. There was no debate on it then? —I do not think there was any debate as it is.
522. It will be interesting to have your views, then?—I have read all the debates right through so that I am acquainted with the views expressed pretty well. If I were introducing an amendment to the Bill in the Seanad, I would have it inserted in sub-section (1), which reads:—
No valuation shall be made after the passing of this Act under Section 36 of the Act of 1911 of the assets and liabilities of any approved societies.
I would add there—
“or of the unified society.”
I would then delete the next two paragraphs.
Mr. Dowdall.—Let us see what the next two paragraphs are.
523. Chairman.—I shall read the next two paragrapahs:—
(3) The provisions of the Act relating to surpluses and deficiencies shall apply to the valuation of the assets and liabilities of the unified society under the immediately preceding sub-section, as if the members of all approved societies were members of the unified society as at the date at which such valuation is made.
(2) The valuation of the assets and liabilities of the unified society made next after the passing of this Act under Section 36 of the Act of 1911, shall be made on the basis that the assets and liabilities of the unified society include the assets and liabilities of every approved society existing at the date as at which such valuation is made, and that the insured members of every such society are insured members of the unified society.
Is that not understandable in a sense? You would argue for the deletion of these two sub-sections?—Yes. In 1912, when the societies began, they had not any money. In 1932 we had, roughly, three and a half millions.
524. Reserve and Contingency Funds? —Invested funds, exclusive of paper money. In 1912 the insured population were at a specified age, and in 1932 the ages of the members have not grown. That is the point I want to get at clearly, that in a compulsorily insured population, when everybody has to be insured at the age of 16 and upwards if employed, the relationship of the ages remains the same at all times, throughout all the years.
525. Mr. Dowdall.—As a general average principle?—Yes, just as in the census of 1881 and 1926, the relationship of the ages remain practically to a decimal, identical. If that were not so, in 80 years everybody would be old. Eighty years hence the relationship of the ages will remain the same as to-day.
526. Chairman.—What has that got to do with the amendment?—Here is the point. Reserve values are brought in for the purpose of meeting increases in ages.
527. Have they not a more direct relation to persons becoming insured when over 16?—For every person insured over the age of 16 we get a reserve value. Every year they go on that reserve value increases.
528. The reserve value increases. That reserve value is only paper credit, and that paper credit is being wiped out by the money which comes in?—We have to hold that the reserve increases as the age of the member increases. The reserve value begins, say, at the age of 18 with a few shillings and increases to about the age of 55. My point is that if we had a unified society from the start of the scheme there would not be any necessity for reserve values, because the age of members would not be increasing. Having all the insured members in one unit, the ages would always bear the same ratio. On the other hand, I might have started a society, say, with 1,000 members in 1912 and have taken in no more members. These members’ ages would be increasing, so my assets must increase to balance that until they had reached the age of 55. Then they would gradually diminish down to, say, 70.
529. Fifty-five is the peak point?— Fifty-five or 56 is the highest. That is the answer, because the ages in the different societies, one with another, are all different. There are no two societies in which the ages are alike. Take the unified society. The valuation ceases because you are not insuring a variable group; you are insuring the whole body and the ages of members would not be increasing.
529. Is not the valuation more comprehensive than that? Is it not more comprehensive than relating it directly to the question of reserve values?—In the case of the unified society it would not be.
530. May I get your amendment clearly. The sub-section states:—
No valuation shall be made after the passing of this Act under Section 36 of the Act of 1911 of the assets and liabilities of any approved society.
You desire to have added to that,
“or of the unified society”.
Why not have a valuation of the unified society, so that we may know where we are?—I know where we are.
531. How do you?—Take for instance the figures quoted here. In 1932 there was an increase in funds of £155,000. That was the figure quoted by General Mulcahy, and I assume that it is correct. So that if the unified society began to operate to-day or on the 1st of January next year, it would have an income of £155,000 right off. It had that left out of income. Then it has an income by way of contributions, State grant and interest. That is the income on one side. Then on the expenditure side we have benefits and administration expenses.
532. Chairman.—And State supervision.
Mr. Dowdall.—That is administration.
Chairman.—It is not exactly administration. It is not quite the same thing as administration.
Mr. Brownlee.—It does not very much matter. When the income is set against expenditure, there is £155,000 more than is required. This scheme relates to reserve values. It saves the State paying the interest on these reserve values, and it saves the societies paying towards a sinking fund, 1½d. per contribution. It is different for men and women, but there is an average payment of 1½d. All you will have to think of in future will be an annual income, and instead of the Minister having to battle with a deficiency, there will really be a surplus of three and a half million, from which you derive a good interest income. Really it is the interest on that invested fund that makes that increase.
533. Chairman.—But you can see this, that in every properly conducted institution, business or undertaking it is necessary to have a stocktaking each year?— It is.
534. It is necessary to have in a business concern an audit and statement of accounts?—Exactly, but a valuation is different.
535. A valuation is not very much different. It is going to take into account the assets and the liabilities of the unified society. The valuation is going to consist of some method whereby the assets and liabilities of the unified society over a period shall be definitely ascertained by those who are competent to ascertain them. That is what the section sets out. It says also that there is not to be any valuation of the small societies even if they are not transferred. Those who are not transferred shall not have a separate valuation in this quinquennial period, that is, the valuation that is to take place next December. But there is to be a valuation in the unified society How can you argue against that? It is a big business concern in which there has to be a stocktaking in order that we may know all the facts relating to the assets and liabilities. The auditor makes a report on these matters; that is what the valuation will be. No business man could argue against that being the proper method of getting this work done. The section as set out recognises the fact that there are societies which will not have been transferred to the unified society by next December. An endeavour is being made to find out how the scheme of national health insurance will work out under the unified system and what is going to happen is that this valuation is going to be made as if certain societies which have not been transferred have been transferred. That is all this section sets out and why amend it?—Stock-taking is quite a simple thing compared with valuation. A valuation takes into account future liabilities and the present value of future contributions. That is the work of valuation.
536. It is an estimate?—It is an estimate with a valuation.
537. And quite rightly so when you had 65 societies?—Yes, but with the unified society why take into account the present value of future contributions and the present liability for future benefits?
538. Why, under a unified society, should not the actuary, who is responsible for any estimate, have regard to the expenditure in future as compared with contributions, and why should he not recommend whether economies could be effected or whether benefits could be increased or not? Why should he not carry out the same work as heretofore?— There is no reason for the simple reason that, taken as a group, the ages of the members are not increasing in that entire group. It resolves itself into a simple question of annual income and annual expenditure. Future estimates are not necessary.
539. Is it not necessary that the valuation should take into account certain considerations which were taken into account heretofore by the Actuary? Supposing there was a valuation for one or five years and that there was a great likelihood that the contributions of the insured persons and the contributions of the State would not be sufficient to meet the benefits on the existing scale, perhaps some recommendation might be made?— It could be made. If the total income were not sufficient to meet the outgoings you would have to balance, just like the ordinary accident insurance company, by increasing premiums.
540. Should there not be a recommendation in that respect as in the past?— An income and expenditure account is quite a different thing in the eyes of an actuary to a valuation. If you take life assurance companies, they value their assets as has been done in the case of societies in the past. They have to make a present valuation of future premiums, say the present valuation on their liability to pay £100 to the assured at death, but the accident insurance companies do not make such a valuation because the annual income meets the annual outgoings. When we get the unified society that is all that will be required.
541. In your amendment you say that there should be no valuation of the unified society?—Yes.
542. What are you going to substitute for it?—Annual accounts.
543. It entirely depends on the interpretation of the word “valuation”?— I was speaking of the valuation provided for in the Bill.
544. You are speaking from your interpretation of the word “valuation,” but possibly there is a different interpretation. Suppose the valuation in the future did not come to much more than you say—making available these figures covering income and assets, on the one hand, and liabilities on the other—you would be satisfied with the interpretation of the word “valuation”?—There is the meaning of “valuation” in that section to be considered.
545. But while you are suggesting that, you do not put forward any amendment?—You could add: “There shall be a trading account for the year.”
546. There is a little contradiction in respect of that. Look at sub-section (2): “The valuation of the assets and liabilities of the unified society made next after the passing of this Act …” That is exactly what you are suggesting? —No.
547. Mr. Dowdall.—This is the work of an actuary rather than of an auditor?— That is right.
548. Chairman.—May I refer again to sub-section (2), which states:—
The valuation of the assets and liabilities of the unified society made next after the passing of this Act under Section 36 of the Act of 1911 shall be made on the basis that the assets and liabilities of the unified society include the assets and liabilities of every approved society existing at the date as at which such valuation is made, and that the insured members of every such society are insured members of the unified society.
There must be some contradiction as between the interpretation the draughtsman put upon that—particularly upon the word “valuation”—and the interpretation Mr. Brownlee puts upon it.
549. Mr. Dowdall.—In an ordinary trading concern, where you are buying and selling, you have, without any doubt, subject to a reserve for bad debts, a definite value on your assets and liabilities with, again, the reservation that the price at which you take in stock may not be the price at which it is realised. In the valuation of liabilities in insurance, a certain percentage is allocated for unexpired risks?—Yes, in fire and accident.
550. The figures for life are pretty rigid, I think. Your proposition may not be sound, inasmuch as the trend of legislation recently has been to promote the manufacture here of a great many things that were hitherto imported, and, in agriculture, to develop tillage as against grazing. In those two important respects, you have fundamental changes in the habits and occupations of workers. Would not the re-action of that have a tendency to alter your figures so as to make it advisable that an actuarial valuation should be made periodically?—No. In every year there has been a surplus of income over expenditure. That has been the case from the beginning of the operation of the Act. We have £3,470,000 in twenty years, which is roughly an average of £175,000 a year. Who has contributed that? It has been accumulated from the members, from the State grant, and, latterly and largely, from interest. At first, there was no interest; we had no funds. If we have an income which is greater than our outgoings, we are solvent perpetually without a valuation. It is a simply annual income and expenditure account, and at the end of January in each year—a month after the close of the year—you can tell the position instead of waiting two years before you hear the result of the valuation made at the end of the period. You can easily tell and adjust your position any year. Valuations are made by life assurance companies but not by fire insurance companies, or accident companies. That is because there is an annual contract and the income in the case of fire and accident should meet the claims for that particular year. They can tell at the end of the year whether the department has, or has not, improved its position. With life assurance, they cannot do that. It has to be done actuarially, and a valuation made on the same lines as the valuation under your Section 36.
551. Chairman.—What are the factors to be taken into consideration under Section 36 of the Act of 1911?—The form and basis of the valuation are very much left to the guidance of the Commissioners.
552. I must disagree with you in that. You are putting the case that this depends on the word “valuation” and the limitation, by interpretation, of that word. Here is what Section 36 says:—
“(1) A valuation of the assets and liabilities arising under this Part of this Act of every approved society and of every branch of an approved society shall be made by a valuer, to be appointed with by or with the approval of the Treasury, at the expiration of every three years dating from the commencement of this Act, or at such other times as the Insurance Commissioners appoint; the time so appointed may be at shorter or longer intervals than three years and at regular or irregular intervals and may apply to all approved societies or any particular society or societies.
(2) Every such valuation shall be made on such basis as may be prescribed.”
I suggest that the words in that section refer to a valuation of the assets and liabilities?—I agree with you.
553. The valuation is of the assets and liabilities. I infer from your remarks that that is the very thing you want taken into account?—There is a difference between us. Every five years, we get a valuer’s report for our society. That is quite different from an ordinary income-and-expenditure account. If I had known that any difficulty would arise, I could have taken that report over and shown it to you.
554. The practice which you follow is one thing. With that, you are incomparably better acquainted than I am. But here is what the Bill says:—
“The valuation of the assets and liabilities of the unified society ....”
That, I take it, refers to assets, on the one side, and to liabilities, on the other, which are the very things you yourself are referring to?—I discussed this matter with my own Committee, the members of which are all life assurance men, some of them with 30 or 40 years’ experience. They can grasp my point thoroughly because they know what a valuation is in the technical sense. It is quite a different thing from the ordinary book-keeping transaction regarding what was got in and what was paid out. Our assets would be our invested funds. Our liabilities would be any accounts and benefits we might owe. That is a simple thing, but the liability under the Bill is a different proposition altogether. If you read the remainder of the provisions, you will see that certain things happen and have to be brought in. Instead of there being a deficiency or even a small surplus at the end of 1933, there is a sum of three and a half million pounds upon which the members may never claim.
555. I take it that that is a different statement altogether, having no direct relation to, or dependence upon, your proposed amendment. You are referring to £3,000,000 worth of assets, which, you say, are untouchable. The members cannot, you say, receive any benefits arising out of the interest resulting from the investment of those funds. The other matter you are referring to is the form of the valuation and you are trying to bring about a condition of affairs whereby there will not be a valuation?—Whereby there will be an ordinary audit, but no valuation.
556. Just where we differ is as to the interpretation of valuation. That valuation will, in my view, have relation only to the assets and liabilities of the unified society and will not cover those other matters you have in mind. That valuation will not go a bit further in the future than will be necessary to carry on the business side of the unified society in a proper manner. It will not deal with things which it is not necessary to deal with. No valuer, I take it, would do that?—My point is that you do not require a valuer at all, that all you require is an auditor. That is a different proposition. The Act provides for auditors in addition to the valuer. If our funds have increased to £3,500,000 in 20 years, in the same ratio they would be £7,000,000 in another 20 years. They have gone up half a million in four years.
577. What comment would you make on the evidence submitted to us to-day, that, as things are going under the present scheme of national health insurance, we are facing up to a collapse?—I should say that the valuation is tight and is putting things in a very safe position. If they changed the valuation from 3½ per cent. to 4 per cent., it might save all the societies. I have not gone into the difference between the two figures exactly.
558. Mr. Dowdall.—Do you mean 4 per cent. on the £3,500,000 as against 3½ per cent. on the £3,500,000?—No. Assume the benefits are a certain sum. If you discount them at 3½ per cent. instead of 4 per cent. you require more money to meet them. Some life assurance companies take the valuation at 2½ per cent. The premiums with interest earned at 2½ per cent. will meet the liabilities, with the big reserve funds they have. But many societies could not do that.
559. Chairman.—Would not that be a simple way of eliminating these dangers of a collapse?—That would be one way out. That has been followed repeatedly by friendly societies. When they found themselves with a deficiency, they changed the percentage.
560. We shall go into this matter as fully as possible and shall get expert advice on it?—I had a statement written, not for this Committee but for my own committee, and, if I read it now, it will sum up the position. It is as follows:—
The references here are to the Bill “as amended in Committee.” Section 25 (1), (2), (3). I would delete (2) and (3) and add to (1) “or of the unified society.”
The reasons for this suggestion are: That valuations were devised for individual societies only and not for the entire group of insured members in a State. This is obvious. Small units, called societies, are composed of individuals of all ages without any fixed relation or ratio of ages one to the other. A society may have begun in 1912 with 100 members and, since then, very few, if any, new members brought in, and consequently the ages of the members are increasing. It was, therefore, necessary to fix and grant reserve values beginning in value at age 18 with a few shillings and increasing to about age 55, and then diminishing to age 69 last birthday. Upon a valuation, these reserve values are necessary to meet the theory and to find out the financial position of each society—and more particularly the financial relation or comparison of one society to another. If the Irish Free State had been in existence prior to 1912 and only one society had been brought into being there would not have been any necessity for reserve values, because the ages of the members would not be increasing. Having all the insured members in one unit, their ages would always bear the same ratio. This is proven by comparing the census statistics of 1881 and 1926, which show that the number of persons living at age 16 was practically in the same ratio to those living at age 70—although 45 years had elapsed. It therefore follows that the ages of the members in the entire group of the 65 societies have not increased between 1912 and the present time, and when these societies have been brought into a unified society, there will be no further necessity for reserve values or for a valuation under Section 36 of the Act of 1911—because the ratios of the ages of this group are going to remain the same for ever.
In 1912, the societies began without any cash, and if the unified society were to begin to-day, it could also begin without cash. Therefore, the entire funds invested by or on behalf of the societies, amounting to about £3,500,000 form a surplus instead of a small deficiency, which deficiency is only brought about by a theory based on extreme safety. If the same valuation theory prevailed for another 20 years, there would likely be £7,000,000 and so on, heaping up cash for future generations. Even as it is, there is a sum of £8 for each insured person—and yet there is an estimated deficiency—although there was no deficiency in 1912 when there was no money whatever.
The position to-day is better than in 1912, because there is now a permanent income by way of interest from the accumulated funds. When the present Bill is passed, this will be the position:—
(a) There will be no further necessity for reserve values, and the State will save the 3 per cent. interest on these paper credits. The saving to the State will probably be £50,000 or more. (I do not know exactly the total amount of the reserve values in force).
(b) There will not be any necessity for a valuation under Section 36 of 1911, because all that will be required is to make the annual income from contributions, interest and State grants cover the expenditure on benefits and administration. (The funds are increasing annually—therefore, income is greater than expenditure).
(c) The funds of about £3,500,000 form a surplus out of which you can easily guarantee additional benefits for all insured persons on 5th July, 1936, who have been continually in insurance from the 31st December, 1933, and of those of five years’ membership who become insured after 31st December, 1933—in fact, the profit on each year’s working will meet these benefits without drawing on the £3,500,000. If, in 1932, the increase in the funds amounted to £155,000, then the payment of additional benefits of from £60,000 to £80,000 could easily be met out of each year’s increase. This concession would partly overcome the chief objection to unification, and give many members additional benefits which they have not at present.
(d) The financial position of the unified society can be found one month after the end of each year—instead of waiting two or three years for the result, as at present.
(e) There will be an immense saving of time in not having to write reserve value cards, terminations and alterations, and also obviate all the voluminous calculations now necessary in the department.
(f) The unified society will not, therefore, have to contribute about 1½d out of each contribution towards the redemption of reserve values—(no reserve values, no redemption). I have read all the official reports on the Bill, and there seems to me to be nothing but pessimism in the debates, whereas, there are £3,500,000 and nothing to do with it. It is useful to bring in interest, but, otherwise, the benefits under the Act may never encroach on it.
The great objection to the Bill in the Dáil was that members of the societies were going to lose additional benefits. My argument is that if this scheme were adopted, every member would get decent benefit because, under this scheme, there will be £155,000 a year available for benefits.
The witness withdrew.
The Committee adjourned.