NATIONAL HEALTH INSURANCE BILL. (Hansard, 12 July 1922)

THE EARL OF ONSLOW

My Lords, at this late stage of the sitting I will be as brief as possible in explaining this Bill, the Second Beading of which I beg to move. It is the outcome of the recommendations of the Geddes Committee to effect economies of expenditure. The payments made by the State, in addition to the statutory grant of two-ninths of all sums paid out in benefits, consist of certain special grants which amount approximately to £2,150,000 per annum and are made up as follows: £1,700,000 is the State's supplementary contribution towards the cost of medical benefit; £100,000 is the expenditure incurred for the regional medical officers and the Index Clearance Branch; and £350,000 is the amount of the State grant to the Women's Equalization Fund.

It was suggested that these State grants should be discontinued, and that the necessary funds to meet them should be 414 provided by increasing the contributions in respect of insured persons by one penny per week—one halfpenny subscribed by the insured person, and one halfpenny by the employers. This recommendation of the Geddes Committee the Government were prepared to accept, and, indeed, I think a Bill embodying it was actually drafted by my right honourable friend the Minister of Health. But the Consultative Council of the Approved Societies went into the matter very carefully, and came to the conclusion—a conclusion which was shared by His Majesty's Government, and, I think, by everyone else who addressed their minds to this problem—that it would be in the highest degree undesirable, in the present state of industrial depression, to increase the contributions to be made, by the employers and the employed. The Consultative Council, in consequence, drafted an alternative scheme which is embodied in this Bill. By that alternative scheme a saving is effected by drawing on the other funds of the Societies.

There are three funds by which contributions are levied to finance the scheme of this Bill. First, there are the Benefit Funds of the Approved Societies. These funds, in addition to the ordinary receipts to meet current claims, also contain £8,000,000 in undistributed surpluses from the last valuation, and £6,000,000 in contingency funds, or a total surplus of £14,000,000 over liabilities. This £14,000,000 is in addition to the sums distributed at the last valuation among the Societies for schemes of additional benefit. The Societies, therefore, had in reserve at the last valuation a sum of £14,000,000, and it is proposed to meet, from April 1, 1922, up to the end of 1923, the charges of £1,700,000 and £100,000 per annum out of these funds. Taking the whole of Great Britain, the charges for the year and nine months will amount to £3,400,000.

I now come to the second fund which will be called upon to bear a certain amount of this expenditure. The Benefit Funds will not have to bear the whole £3,400,000, because one-third will come out of the Central Fund, which amounts to a sum of over £2,000,000. I should explain that the Central Fund is a fund which is allocated mainly for the assistance of those smaller Societies who, through no fault of their own, are in financial difficulties. It is really a reinsurance fund which is levied by a flat rate on all contributions. The larger 415 Societies, of course, are not likely to want the assistance of this fund, but it is a valuable insurance for those smaller Societies who, as I say, by bad luck and not bad management, may find themselves in difficulties. This Central Fund would pay one-third of the total £3,400,000, less two-ninths represented by the State grant to the Benefit Funds.

If your Lordships will look at Clause 1, subsection (3), you will see that the whole of the payments by the Societies are made out of the Benefit Funds without recourse to the ordinary two-ninths grant from the Exchequer. The Benefit Funds pay their own share entirely, and also pay two-ninths of the share of the Central Fund. When the next valuation comes, and when the money in the Benefit Funds would have been otherwise allocated to members for additional benefits, the State will then, as it is bound to do on benefits, hand over to the Societies their two-ninths, but until that time comes and the benefits will be due, the Benefit Funds will bear the cost of the Exchequer contribution.

Before I pass to the next point of the Bill, I would like to call your Lordships' attention to the White Paper which lies on the Table of the House. It is, you will see, in the form of a letter from the Government actuary on the finance of the Bill. Sir Alfred Watson sets forward in detail the figures which I venture to give briefly to your Lordships, and gives his opinion that the charges can be safely borne by the Societies for the limited time—that is to say, until the end of 1923—which it is proposed that they shall operate.

I now come to the Women's Equalisation Fund. This fund was instituted to meet the extra cost which is entailed by the higher incidence of sickness among married women. It is proposed to meet this charge out of the reserve value or sinking fund. This is a fund which is held by the Ministry of Health to equalise the risk of sickness among the different Societies. When the Insurance scheme was started, of course some Societies had a higher average of age among the members than others, and that higher average carried a higher sickness liability. The average age of those insured in each Society is taken, and the liability to sickness owing to the variations in the average ages of the members is equalised from this reserve fund. Now, in dealing with the Women's Equalisation Fund it is ' simply proposed to add the increased 416 sickness liability of married women to that of age and the money necessary to equalise among Societies the payments due on account of married women will be met by this fund. These are the changes in the insurance law which are embodied in Clauses 1 and 2, and are designed to give effect to the recommendations of the Geddes Committee.

But we have taken advantage of this Bill to make provision, in Clause 3, for a difficulty which, owing to the prolonged conditions of unemployment, will confront the Societies this autumn. As your Lordships know, under the financial scheme of the Insurance Act, an insured person's cash benefits are in proportion to the number of contributions paid in respect of that benefit during any contribution year. When less than 26 contributions have been credited in a contribution year, an insured person is not entitled to any cash benefits in the following benefit year. Now, in view of the prolonged unemployment, it is obvious that a considerable number of persons will be in this position in the current contribution year, and as a consequence these persons will not be entitled to any cash benefits during this year. Therefore, by Clause 3, we propose to vary, until December 31 next, the provisions of the Act of 1918 as to the disposal of unclaimed balances.

Under Section 29 of the Act of 1918, nine-tenths of the available unclaimed contributions are carried to the Central Fund which I have already explained. The other one-tenth is carried to a special fund for merchant seamen. We propose to utilise a sufficient sum, which I believe will be about £250,000, drawn from these unclaimed balances to enable the Approved Societies to pay minimum cash benefits to insured persons who would otherwise be suspended from benefits owing to prolonged unemployment. The Central Fund, as I have already stated consists of £2,000,000, and can easily afford to spare the reduction which the different allocation of unclaimed balances will entail.