Minister for Health Speech at Seanad 2nd stage of the HSE (Financial Matters) Bill 2013

Check against delivery

A Cathaoirleach,   I am pleased to have this opportunity to introduce the Health Service Executive (Financial Matters) Bill 2013 to the House.  The Bill provides for the disestablishment of the Vote of the Health Service Executive and the funding of the Executive through the Vote of the Office of the Minister for Health.

It also provides for a new statutory financial and service plan governance framework which will align with the new Vote arrangements.

This Government is reforming the health services. This Bill is part of that Reform Programme. The reforms are of unprecedented breadth and depth. They are radical and will ultimately see the introduction of Universal Health Insurance.

In November 2012, I set out the building blocks for these reforms in Future Health. Many of the initiatives – like the eventual replacement of the HSE – will require further and other legislative changes. This Bill is therefore a transitional measure, building on earlier changes provided for in the Health Service Executive (Governance) Act, which was passed last year and which provides the basis for the implementation of the rest of the Reform Programme.

The Health Act 2004 provided that the HSE had its own Vote and that the Minister for Health had no legal role in setting its budget. The House will understand that the intention then was to give the HSE greater operational autonomy from what at the time was characterised as a politicised decision-making system. However in my view, it crucially weakened the accountability of the HSE to the Minister for Health and the Department of Health.

This Bill establishes that, in the future, funding of the HSE will be through the Vote Office of the Minister for Health and thus re-establishing appropriate and proper accountability for the HSE to the Government.

It is also, as I have said, another step on the reform journey, including the dissolution of the HSE, the establishment of a Health Commissioning Agency, new community care structures and the establishment of Hospital Trusts.

This is a step on the way to establishing Universal Health Insurance and Senators will be aware of the progress that we are making in achieving that objective which is one of the key targets set out in the Reform Programme since the publication of Future Health.

The aim of the reform programme for the health system is to deliver a single-tier health service, supported by universal health insurance (UHI), where there is fair access to services based on need, not on ability to pay. Under UHI, everyone will have a choice of health insurer and access to a standard package of health services. In addition, a system of financial protection will ensure affordability by paying or subsidising UHI premiums for those who qualify.

The White Paper on Universal Health Insurance was published in April. It provides substantial detail on the UHI model for Ireland, the process for determining the future health basket, including the standard package of services covered under UHI, funding mechanisms and the key stages of the journey to UHI.

Since publication of the White Paper, work has been carried out on a number of the following to advance UHI.

A wide-ranging public consultation on the overall policy set out in the White Paper was carried out. Over 130 submissions were received and these will be subject to an independent thematic analysis, the report of which will be completed by the end of September.

Ongoing preparatory work to establish an Expert Commission which will consult widely and make recommendations in relation to the scope and composition of the future health basket is being carried out.

The Joint Oireachtas Committee on Health and Children has been invited to develop a Values Framework which will help inform the work of the Expert Commission in making recommendations on the services for inclusion in the future health basket. Officials from my Department have held discussions with the Committee and it is hoped that it will be in a position to commence hearings with stakeholders in the coming months.

On the issue of the cost of UHI, I have initiated a major costing exercise to estimate the likely cost of UHI both for the State and individuals and households. This a complex exercise which requires expert analytical support and input from a number of State agencies. I expect to have initial results from this exercise early in 2015.

My Department has commenced a baseline examination of the current financial support systems in the health sector. This will be followed by policy proposals on the financial subsidy system for UHI.

My aim is to have all necessary preparatory work for UHI in place by early 2016 with a view to full implementation of UHI by 2019.

Overview of the Bill

I would now like to address the details of the Bill.

The Bill provides for the disestablishment of the Vote of the Health Service Executive from January 2015 and from that date the funding of the Executive will be mainly through the Vote of the Office of the Minister for Health by way of grants paid to the Executive.

The Executive will itself continue to collect the income it generates through statutory charges, superannuation contributions and other miscellaneous income.

The Director-General of the HSE will become an accountable person rather than an Accounting Officer and the Bill sets out an alternative statutory framework to govern the funding of the HSE and ensure that proper controls, in relation to its expenditure, are exercised by the Director-General. The Bill also makes consequential changes to the Service Plan process to align it with the new budgetary arrangements

Provisions of the Bill

The Bill is divided into 3 Parts.

Part 1 has 3 sections which are standard technical provisions covering matters such as the title of the bill, commencement, definitions and repeals.

Part 2 contains the body of the Bill which is designed to amend the 2004 Act, as amended by the Governance legislation, to put in place the new statutory framework. It amends a number of sections and inserts a number of additional sections. Section 4 amends Section 5A of the 2004 Act. Section 5A provides that expenses incurred by the Executive are payable out of moneys provided by the Oireachtas subject to the approval of the Minister for Health and the sanction of the Minister of Public Expenditure and Reform. The amendment limits the application of this provision up to 1st January 2015. This is because the provision is being replaced by a new provision, section 33A, which is being inserted by Section 11, which I will outline shortly.

Section 5 amends section 16G which was inserted by the Health Service Executive (Governance) Act 2013. Section 16G sets out the general functions of the Director-General. The section specifically provides that the Director-General is responsible to the Directorate, as the governing body, for the performance of his or her functions, except where he or she is acting as chairperson of the Directorate. The amendment provides an additional exception where the Director-General is required to report to the Minister for Health if he or she is of the view that the actions of the Executive are likely to lead to a breach of its budget limits, which is provided for in section 34A as inserted by section 12 of this Bill.

Section 6 amends section 28 of the 2004 Act which provides specific definitions for Part 7 of that Act. Part 7 sets out the Accountability framework for the Executive. This Section adds further definitions which are required arising from the other provisions of the Bill.

Section 7 inserts a new section, section 30A, enabling the Minister to determine a net budget for the HSE and sets out the process for doing so. Essentially the Minister is required to notify the HSE of its budget no later than 21 days after the publication of the Estimates for the Public Services, more commonly known as the Abridged Estimates Volume or AEV. In practice it is likely that the Net Determinations will be issued on the day the AEV is published or the next day. The section also allows the Minister to adjust a Net Determination for the HSE in the course of the year.

Sections 8 and 9 make consequential amendments to the Service Plan provisions of the 2004 Act, arising from the new Vote and budget setting arrangements.

Section 10 inserts a replacement section for the existing section 33, which requires the HSE to manage services in a manner that is in accordance with the approved Service Plan. The section is being expanded to require the Executive to manage the services within the Net Determination notified to it by the Minister. Subsection (2) reintroduces the concept of first charge principle. Under this principle if the HSE exceeds its budget in one year that deficit is a first charge against the following year’s approved budget. If the Executive has a surplus it would be allowed to carry over the surplus into the following year, subject to the approval of the Minister for Health with the consent of the Minister for Public Expenditure and Reform. These constraints in the carryover of a surplus are necessary so as to ensure compliance with the provisions of the Ministers and Secretaries (Amendment) Act 2013 which puts the principle of Ministerial expenditure ceilings on a statutory basis.

Section 11 inserts 2 new sections. Section 33A is a technical provision allowing the Minister to issue grants to the Executive, with the agreement of the Minister for Public Expenditure and Reform. This effectively replaces section 5A as I already mentioned. Section 33B is also inserted by this Section. It provides for a separate process for approving a Capital Plan and provides for the governance arrangements regarding the approval of such a Plan.

Section 12 inserts 2 new sections regarding the functions of the Director-General of the HSE. The new section 34A gives the Director-General the statutory responsibility to ensure that the HSE operates within its budget, both in respect of capital and non-capital expenditure. It also obliges the Director-General to notify the Minister if actions being undertaken by the Executive are likely to lead to it breaching its financial limits. A new section 34B provides that the Director-General shall be accountable to the PAC in respect of the HSE’s annual financial statements and any other reports made by the Comptroller and Auditor-General. This provision is required as section 40G of the Governance legislation making the Director-General the Accounting Officer of the HSE is being amended so that he or she ceases to be the Accounting Officer with effect from 1st January 2015.

Section 13 amends section 40G and makes the Director-General the Accounting Officer for the HSE for the years 2005 to 2014. This means that the Director-General is still accountable for the Appropriation Accounts for those years and that the HSE has to produce Appropriation Accounts for 2014.

Section 14 amends section 40I, as inserted by the 2013 Act which sets out the functions of the Audit Committee of the HSE. These functions relate to advising the Director-General and the Directorate of the HSE on financial matters. The existing subsection (3) (b) reflects the current statutory position of the Director-General as being the Accounting Officer. It is being amended to delete that reference and replace it with an obligation on the Audit Committee to advise on matters relating to the Executive’s and the Director-General’s obligations in respect of the implementation of the Service Plan in accordance with the new funding arrangements.

Part 3 provides for the transitional arrangements to enable the change over from the current system to the new funding arrangements.

Section 15 provides that the HSE’s Vote shall be abolished on 1st January 2015 and that funding will be arranged through the Vote of the Minister for Health in 2015. It also provides funds in the Vote of the Minister for Health for 2015, so as to enable the Department to provide grants to the HSE pending Dail approval of the Minister’s Vote. The provision will cease to have effect when the Dail approves the Estimate for the Minister for Health for 2015.

Section 16 is a technical amendment to the Valuation Act, designed to ensure that the buildings of the Health Service Executive continue to remain exempt from rates.

As I have outlined, this Bill is another step on the reform journey, the ultimate destination being UHI. The central aim of the Health Reform Programme is to improve equity and access to services. This Bill is an essential, if technical, part of that goal. Transparency and accountability around service delivery are fundamental tenets of the health reform programme. I believe that this Bill, together with the other changes I am making, will help ensure more accountability during the time the HSE continues in existence.

I commend the Bill to this House.

Closing Remarks

A Cathaoirleach, I would like to thank all the Senators who contributed to the debate on this Bill today. As I said at the outset, this Bill is part of the wider Health Reform Programme which has been undertaken by this Government since we took office. The ultimate aim of the reform programme is a single tier health service supported by Universal Health Insurance in which access to services is based on need, not income as set out in the White Paper on UHI which I published in April.

The purpose of the reforms in the Health Services is to achieve greater effectiveness and equity in the system.  As I said, in my opening speech, the Programme for Government and Future Health have as their objective that the HSE will eventually be replaced as its functions are transferred to other bodies under the health reform programme.   This will take careful planning and sequencing and further legislation. This Bill is therefore as a transitional measure, building on earlier changes provided for in the Health Service Executive (Governance) Act, which was passed last year and is designed to help prepare the health system for the changes ahead.

This Bill, as I said is a prelude to a much wider piece of legislation which will provide for the dissolution of the HSE and the establishment of a Health Commissioning Agency, new community care structures and the basis for the establishment of Hospital Trusts.

In conclusion I wish again to thank the members of the House who contributed to the Debate. I also wish to re-emphasise that this Government is committed to the Health Reform Programme as set out in the Programme for Government. This Bill will implement one of the commitments contained in that Programme. While it is largely a technical piece of legislation, it is part of the process of reform which is designed to give the Irish people the health service they deserve – a single tier service in which they will have access to services based on their need and not on their ability to pay, which will be fair, where all those treated will feel safe and all those working in it will be proud to be part of.

I commend the Bill to the House.