APPENDIX 4

INDUSTRIAL RELATIONS

The Board has a good record in industrial relations.

Apart from a minor dispute, involving an inter-departmental transfer, in 1976, which was resolved by the Labour Court in the Board’s favour, there has been no disruption of work arising from industrial disharmony, since the Board’s establishment. The vast majority of the clerical staff and supervisors are members of the Association of Scientific Technical and Managerial Staffs Association.

RECRUITMENT POLICY

The Board’s policy is to recruit school leavers and to promote from within, if at all possible. Exceptions to this arrangement may occur in the computer field, for example, or with specialised Managerial jobs.

Section 3

DEVELOPMENT OF SCHEME

The Board commenced its operations in 1957, by offering three schemes of health insurance to the public, with fixed benefits and fixed subscriptions to defray the expenses arising from treatment in a public ward, a semi-private ward and a private room. In the early 1960’s this arrangement proved to be too inflexible to meet the requirements of subscribers in the situation at that time of rapidly rising hospital costs, a situation which seemed likely to continue and which did, in fact, continue. A further feature was that about one-third of the members were persons who had limited eligibility for health services under the Health Acts and who, therefore, had quite different health insurance requirements to those of other members. Accordingly, in December 1962, the Board introduced a Unit System of insurance, so as to enable subscribers to select an insurance package to suit their own needs and, also, to allow them to adjust their insurance readily from time to time, in line with rising costs or changes in their health eligibility situation. Under this system, a subscriber could take as many extra units at each renewal date as were appropriate to the situation at the time.

The Unit System operated satisfactorily for many years, but was found to have some inherent weaknesses. One of these was, for example, that considerable stress was placed on the need for individual members to review their cover level from time to time. If they failed to do so, they took the risk of inadequate cover in the event of an illness and, also, tended to pay less than their fair share of the scheme’s administrative costs. During the past couple of years, the Board has been examining possible alternatives to the Unit System which, it was felt, had outlived its usefulness.

In 1979, when the Government extended the health service to provide maintenance in public wards, to the entire population, without direct charge, the Board decided to discontinue the Unit System and offered, instead, a new range of options to subscribers. These are fully described in the attached brochure. For the first time, the Board is now providing an indemnity scheme which guarantees total cover against hospital bills, provided the patient remains within the accommodation level at which he has opted to insure. New benefits were, also, introduced, to cover, for the first time, maternity treatment including miscarriages, peri-natal disease, convalescence, ambulance charges and scheduled surgical and medical procedures performed on an out-patient basis. Subscriptions will be revised from time to time, as necessary, in order to continue the total cover guarantee, despite fluctuations in hospital charges.

GROWTH OF MEMBERSHIP

The following table shows the total membership at the end of each year and the growth in that year:—

During the current year, public reaction to the Board’s new Plans has been extremely favourable. Already, in the first six months of the year, the total number of new members enrolled considerably exceeds last year’s record growth total.

Section 4

FINANCE

As already indicated, Sections 16 and 17 of the Voluntary Health Insurance Act, 1957 permitted the payment of loans to the Board during its first five years of existence, to cater for establishment expenses and possible losses during that period. Apart from the initial loan of £13,200 which was repaid within the first full operational year, no other payments were made under these sections of the Act and the sections are, of course, no longer operative. The Board, therefore, receives no financial assistance from the State.

Section 18 of the Voluntary Health Insurance Act, 1957 enables the Board to borrow, temporarily, by arrangement with bankers, such sums as it may require for the purpose of providing for current expenditure. In practice, it has not been necessary to avail of this provision.

The Board’s income derives solely from the members’ subscriptions and from investment. The following table shows the subscription income, investment income and administration ratio for each year since the Board’s establishment:—

RESERVES

Section 4 of the Voluntary Health Insurance Act, 1957 requires the Board to so fix subscriptions that, taking one year with another and making such allowance as it thinks proper for reserves, depreciation and other like purposes, the Scheme shall incur neither a profit or a loss. Reserves in health insurance are mainly required to eliminate the need for precipitate action following fluctuation in hospital admission rates or illness patterns. Illness trends require careful study over an extended period of time, to ensure that permanent patterns, rather than temporary variations, are involved. The Board’s accumulated reserve at year ending 28th February, 1979 is estimated at £3.7 million. Separate provision is, of course, made for outstanding claims.

TAXATION

Subscribers who pay income tax are entitled to deduct their full subscription from income before assessment. During the early years of the Scheme, the Board was required to pay income tax on investment income, but this obligation no longer applies and the Board is not now liable for income tax.

Section 5

FUTURE PLANS

The Board is, at present, in the course of introducing its new insurance plans, in conjunction with the changes in health eligibility, effective since the 6th April, 1979. Although many subscribers have opted to change to the new Plans, the full conversion will not be effective until the 1st April, 1980. It will then be about 2 years before the results arising from payment of the new benefits can be evaluated, with a view to accurate forward projections. In these circumstances, it is unlikely that any major change in benefit structure will take place within that period. Changes in subscriptions may, however, be required, particularly if the rapid rate of inflation in hospital costs continues.

The Board’s main preoccupation over the next few years will be in the areas of technology and marketing. The Board owns its own computer, which is used to carry out virtually all accounting, statistical and record functions. Work is now at an advanced stage on the preparation of programmes for claim assessment and it is anticipated that these systems will be running live by the end of the current year.

For some time past, the Board has been aware that many patients entering private hospitals for treatment have had no health insurance. Furthermore, many manual workers who, hitherto, had full health eligibility, must now pay their medical fees, if their income exceeds the ceiling set by the Minister for Health. In these circumstances, the Board has embarked, for the first time, on a significant advertising campaign, which includes press, radio and television. This campaign actually commenced earlier this year, but was postponed because of the lengthy postal dispute. It will be revived in mid-September.

Section 6

GENERAL

As a non-profit mutual health insurance organisation, the Board’s philosophy is, and has always been, to deal with subscribers as efficiently and humanely as possible. Advice and information on Health Service entitlements is given to members and non-members alike. Particular stress is laid on prompt payment of claims.

As membership increases and additional funds become available, the Board endeavours to extend the range of benefits available and to remove restrictions which had been required, for economic reasons. Gradually, for example, the period of cover has been extended for 10 weeks per year, when the Scheme was introduced, to an unlimited period. Similarly, rules regarding admission to the Scheme, on medical grounds, have been ameliorated. It is now possible to become a member, regardless of past medical history, subject to the provision that pre-existing ailments are not covered until after the fifth year of membership. The age loading of 15% which, hitherto, applied to members over 60 has now been discontinued. Benefit levels are constantly reviewed to ensure that they are kept in line with the requirements of members.

GROUP SCHEMES

About 75% of the total membership of the Scheme is enrolled through Group Schemes. These are, mainly, organised by employers, who grant facilities for deduction of subscriptions from wages and salary, but also occur in other organisations and trade associations through which it is possible for their members to pay their subscriptions in bulk. As a result, the members receive a discount of 10% on the standard rate of subscription. Each group is organised by a Group Secretary, who acts on a voluntary basis. Group Secretary meetings are arranged, from time to time, in different parts of the country, so that this voluntary effort on the part of Group Secretaries may be acknowledged and they may be kept up-to-date on current developments.

CONSULTATION

The following is a list of the main bodies with which the Board normally has consultation:—

Department of Health

Area Health Boards

All Hospitals

Private Hospitals’ Association

Irish Medical Association

Medical Union

Irish Dental Association

Trade Associations

10 September 1979