Report on Nursing Home Subventions

The purpose of this chapter is to examine the influences, considerations and consultations which led to the making of the subvention regulations in July 1993. The Regulations were commenced on 1 September 1993. The Health (Nursing Homes) Act was passed in July 1990, so the Department had three years in which to prepare the various regulations (including the subvention regulations) necessary for the effective commencement of the Act. Amongst the areas examined in this chapter are: the role of the Dáil and Seanad, the Department's consultations with interested parties and the Department's own internal consultative process, including the seeking of legal advice.

Dáil Debates on Health (Nursing Homes) Bill - Eric Byrne TD, 21 November 1989

Dáil and Seanad

When the Oireachtas delegates to a Minister, or to some other authority, the power to make regulations, the delegation given is very specific. What is being delegated is the authority to fill in the details where the main lines have already been spelt out. Such regulations should not contain anything that is not clearly envisaged in the parent Act. In this sense, regulation making (or secondary legislation as it sometimes known) is an exercise in realising the intentions of the Oireachtas. It is not an exercise in realising the intentions of the Minister or other authority to which the delegated powers have been given. Anything in a regulation which is not demonstrably in line with the intentions of the Oireachtas is likely to result in the regulation being deemed ultra vires and struck down in the event of a legal challenge in the High Court.

The 1990 Act was the subject of quite detailed debate in both the Dáil and Seanad during 1989/1990. However, the focus of this debate was primarily on issues to do with the definition of a nursing home, the licencing or registration of nursing homes, the setting of standards for, and the inspection of, nursing homes. There was only limited debate on issues to do with the payment of subventions. Perhaps this is not all that surprising as subventions are the subject of but one section in an Act of 17 sections.

In the context of subventions there was a recognition all around that the then existing arrangements for nursing home subventions, under Section 54 of the Health Act, 1970, were very unsatisfactory. There was no explicit articulation in the Oireachtas debates that a nursing home service, being the equivalent of "in-patient" services, was something to which the entire population had an entitlement under the Health Act, 1970.

Several Oireachtas contributors referred to the issue of regulation making in the course of debating the Act. Unease was expressed by these contributors at the possibility that important provisions would be introduced by way of regulation and that the Oireachtas would have no effective mechanism for the consideration of such provisions.

There were two overlapping concerns in the comments of Oireachtas members regarding regulations. There was a very specific concern, in relation to the particular Bill, that the Oireachtas needed hard information in order to understand the consequences of what was in the Bill. On a more general but related level, concern was expressed about the absence of adequate mechanisms to enable the Oireachtas effectively to monitor secondary legislation made under its delegated authority.

On the specific level, the view was expressed that far too much was being left to be done by way of regulation and that, without a knowledge of what was proposed in certain areas, the Oireachtas was effectively operating in the dark. Questions were raised as to the level of finance to be provided, the details of establishing different levels of dependency and the rates of subvention. One Deputy observed that the Oireachtas would need to know what would be contained in the relevant regulations in order to judge the overall merit of the legislation.

On a more general level, several Deputies and Senators spoke of the need to ensure that important decisions were made by the Oireachtas rather than by the Department. A view was expressed that the current standard approach in relation to Oireachtas "vetting" of regulations is inadequate. The standard arrangement is that a regulation, when made, is laid before the two Houses of the Oireachtas and a period of 21 sitting days is provided within which it may be annulled by resolution of either of the Houses. This arrangement does not require positive approval of a regulation by the Oireachtas; rather, the regulation stands unless a negative resolution is carried. Over the years Oireachtas members have frequently pointed out, generally when in opposition, that as the Government parties effectively control Oireachtas business, there is little real opportunity to table resolutions on regulations.

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Deputy Brendan Howlin expressed views on this at the Committee Stage of the Bill in June 1990. He put the issue as follows:

"I am always concerned when sections in any Bill are broad enabling sections which devolve to a Minister power to take actions which are of a legislative nature. ... as a matter of principle, all regulations should be brought before the House to be copperfastened. My amendment ... will enable the House, if it sees fit, to express a view on a regulation.

... as a matter of fundamental principle, on all matters the final decision should be in the hands of the elected Members of the House. Motions should not be allowed through by stealth. It is impossible for Members to follow the huge number of statutory instruments that pour out of all Government Departments."

Dáil Debates, 6 June 1990

Dáil Debates on Health

(Nursing Homes) Bill -

Ivan Yates TD, 6 June 1990

However a number of amendments, which would have had the effect of requiring positive "vetting" of regulations under the Act, did not succeed. The Minister for Health argued that the current standard arrangements for regulations (as outlined above) contained sufficient safeguards: "I am satisfied that the traditional method in this House is a sufficient safeguard to ensure that the legislation is in accordance with the wishes of the Members of this House and the people." Dáil Debates, 6 June 1990

Clearly, any decision on the nature and extent of the subvention scheme necessarily involved competing social and financial considerations. Such a decision would certainly have benefited from a political input. With the benefit of hindsight, it would have been better had there been an effective mechanism in place whereby the 1993 subvention Regulations could have been actively considered by the Oireachtas.

On 4 May 1993 the Minister replied to a series of Dáil questions regarding the content of proposed subvention Regulations. The format of Dáil Question Time is not such as to provide a forum for debate on policy issues, although policy issues do arise. Question Time is essentially a mechanism for eliciting information from the particular Minister.1 Accordingly, though the possibility of a family assessment arrangement was aired, it cannot be said that the issue was discussed in the sense that issues are discussed in the context of draft legislation. Nor was a resolution on the matter put before the Oireachtas to be voted on. (The Regulations, when made, did not require to be validated by a positive motion of either the Dáil or the Seanad. (See Chapter Eight for comment on the role of the Oireachtas in relation to secondary legislation.) In the light of what subsequently transpired in the implementation of the Regulations, this Dáil episode is of interest. The Minister clarified that there were proposals to take account of the income of sons and daughters. But such a family assessment would be relevant only in deciding how much subvention would be paid after eligibility had been established by reference to the claimant's own means. What was being considered then was a two stranded approach: the income of sons and daughters would not count in establishing eligibility (only the claimant's means would count); but once eligibility was established, the income of sons and daughters could be taken into account in deciding how much subvention to pay.

The Minister's Dáil statement on 4 May 1993 did not clarify whether the income of sons and daughters could have the effect of leaving an otherwise eligible claimant with a nil rate of subvention. However, the suggestion seems to have been that an otherwise eligible claimant would receive some minimal rate of subvention where sons and daughters' income was being taken into account. As has been shown in Chapter 4, the distinction drawn between determining eligibility, on the one hand, and the rate of subvention, on the other hand, proved unreal when the scheme was actually put into operation.

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Dáil Debates on Health (Nursing Homes) Bill-

Brendan Howlin TD, 6 June 1990

Seanad Debates on Health (Nursing Homes) Bill-

Senator Patrick Kennedy, 10 July 1990

Consulting Interest Groups

In replying to Dáil questions on 4 May 1993 the Minister mentioned that, in drafting the subvention regulations, his Department had consulted widely with "those organisations with an interest in the nursing home sector and in the welfare of the elderly". Among the organisations consulted were the Irish Private Nursing Homes Association (IPNHA), the Federation of Catholic Voluntary Nursing Homes (FCVNH), the National Council for the Elderly, the Alzheimer's Association and the Irish Association of Older People.

In the case of the IPNHA, it raised concerns in relation to issues which subsequently became contentious when the Regulations were put into operation. At a meeting with the Department in April 1993 to discuss a draft of the Regulations, the IPNHA raised the issue of the assessment of "circumstances" and the payment of family contributions. The IPNHA feared that its members, the nursing home proprietors, could become caught in the middle where a family claimed it could no longer contribute to a parent's nursing home fees. From the context, this scenario would most likely apply to patients already in a nursing home on the commencement of the new subvention scheme. The IPNHA asked whether a subvention would be paid in such cases. If a subvention were to be refused in such a case, the IPNHA feared that the nursing home operator would be left with a patient who might not be able to pay the fees and where the family and the health board declined to accept responsibility for the situation.

At a subsequent meeting, in May 1993, the IPNHA returned to the issue of family assessment. Specifically, the question was raised of what would happen in the event of information on the incomes of sons and daughters not being provided. The IPNHA asked whether a subvention would be paid where such information was not provided. The IPNHA also made the point that the maximum rates of subventions would not be sufficient to cover the costs of care of people whose sole means were the old age pension and who had no family members to subsidise their nursing home costs. The Department agreed to consider these points.

This last point, regarding the inadequacy of the subvention rates for a person with only old age pension level of income, did cause the Department to reflect seriously on the rates of subvention being proposed. This was the subject of an internal minute shortly after the meeting with the IPNHA in May 1993. The minute noted that the subvention system had been designed "on the basis that a dependent person with no more money than the OAP could just about pay for nursing home care". Since all old people should, by definition, have income equivalent to the NCOAP rate, this suggests the Department intended that virtually all old people would, with the help of a subvention if necessary, be able to afford private nursing home care. Arising from the comments of the IPNHA and of others, the Department now saw that one of the fundamental features of the scheme, its universal application, could not be realised with the subvention rates proposed.

On the other hand, the Department felt there were particular reasons not to increase the subvention rates. Apart from the inherent difficulty in securing Department of Finance agreement to increased rates, the Department felt the health boards themselves would not favour increasing the proposed subvention rates. Health board spending on subventions would be demand led and would leave boards with little effective discretion. Keeping the subvention rates at a low level would appear to allow boards more control in the use of funds. In the event, the subvention rates proposed in the draft Regulations were not increased; nor have they been increased in the intervening seven years.2

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The Department also met with the FCVNH in May 1993 to discuss the draft Regulations. The FCVNH was unhappy with the proposal that a person entering a nursing home, without having first applied for a subvention, would be debarred from so applying for a period of three years. The IPHNA had also expressed unhappiness with this proposal. Both organisations felt the three year exclusion was unreasonable. The Department pointed out that the three year exclusion was not absolute and that the proposed regulations allowed the health board CEO to accept an application before the expiry of three years. When it came to making the Regulations, the Department reduced the three year exclusion to a two year exclusion.

The FCVNH, like the IPNHA, also referred to the plight of families already subsidising parents in nursing homes because of the absence of any subvention or of a realistic subvention. Under the Department's proposals, such families would be expected to continue subsidising at the level prevailing when the new subvention scheme would be introduced. The new scheme would do nothing to ease the burden on such families. The minutes of the meeting record the FCVNH as expressing the view that many such family members were "at present very hard pressed and it therefore seemed unfair to take fully into account contributions currently being paid." The minutes record the official side responded by explaining that "the new subvention scheme could not substitute for all contributions being paid by family members at present." It is not recorded whether the arbitrary difference in treatment as between new patients (to be treated more favourably) and existing nursing home patients (to be treated less favourably) was discussed. When the Regulations were eventually made, the impugned provision was retained unaltered.

Subsequently, both the FCVNH and the IPNHA, along with the National Council for the Elderly, were invited to participate along with health board and Departmental representatives on the Implementation Group on the Health (Nursing Homes) Act which monitored the implementation of the scheme.

Pádraig O'Móráin, Irish Times,

7 April 1993

Minister for Health, Question Time, Dáil Éireann, 4 May 1993

Department's Internal Deliberations

Shortly after the passing of the Act, the Department established a Working Group on Subvention Regulations which had members from a number of sections of the Department itself as well as from some of the health boards. This Group served as a sounding board for subvention proposals being developed within the Department and looked critically at the draft Regulations as they evolved. Because they had funding implications, the Department also consulted with the Department of Finance in relation to the Regulations. The account given below concentrates primarily on those issues which have been the main focus of this present report i.e. the "pocket money" issue and the assessment of family members.

The "Pocket Money" Issue

Much has already been said in Chapter Five regarding the Department's advice to the health boards on the "pocket money" issue. The Ombudsman takes the view that the Department's interpretation of Article 8.2 of the Regulations, which effectively negatived the "pocket money" provision, was never even arguable let alone well-founded. The internal Departmental discussions on this issue show that the Department fully understood from the outset what Article 8.2 was intended to achieve. Nevertheless, until December 1996 the Department clung to the position that Article 8.2 was unclear and that its interpretation was a reasonable one. The Department's actions in this regard appear to have been directly related to the financial implications of allowing subvention claimants retain approximately �11 per week for their own personal needs.

The Department's initial subvention proposals did not provide for the claimant to be allowed retain any amount of income for personal use. All of the claimant's income would be included in the subvention means test. The Department did look carefully at a proposal to allow the claimant to retain, for personal use, an amount equivalent to one fifth of the NCOAP, or about �11 per week in 1992/3. However, this was not a simple issue of an income disregard in the means test giving rise to increased subvention expenditure; it impacted also on the arrangements for long-stay patients in health board homes. The Department anticipated that an arrangement which allowed subvented patients in private nursing homes to retain �11 per week as "pocket money" would inevitably result in demands that similar arrangements apply in the case of elderly long-stay patients in health board homes.

The Department had data which showed that the practice in health board homes in relation to "pocket money" varied. Some boards allowed long-stay patients retain one fifth of their income but others did not. If all health board long-stay patients were to retain �11 per week for personal use, this would cost an additional �1m per year in 1992 terms. The Department estimated that the costs of allowing all private nursing home subvention recipients retain �11 per week would run to an additional �2.7m in 1992 terms. Accordingly, when the Department discussed the implementation of the subvention scheme with the Department of Finance, it was on the basis that a claimant's full income would be assessed.

The Minister for Health, however, was committed to an arrangement which allowed claimants retain one fifth of the NCOAP rate for personal use. Accordingly, the Department amended its proposals and provided for this by way of what became Article 8.2 of the Regulations. This sub-article read:

"A health board in assessing the means of an applicant for a subvention under these Regulations shall disregard income equivalent to one-fifth of the [NCOAP] payable at the time, such sum to be retained by the person for his or her own personal use."

In the light of the information above, there can be absolutely no doubt as to what Article 8.2 was intended to achieve. Nevertheless, from the commencement of the scheme in September 1993 the Department advised the health boards to apply Article 8.2 in a way which totally negatived its intended purpose. From the viewpoint of good administration, this raises very serious questions for the Department.

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The Family Assessment Issue

The issue of including family members in the subvention means test was the subject of considerable internal discussion during 1992/3. Various proposals were considered and legal advice was sought in relation to them. The overall thrust of the legal advice was that any inclusion in the means test of family members, other than a spouse, was legally unsound. However, the Department was in the position that only limited funding would be available for the subvention scheme and it felt it necessary to make choices as to how that funding would be used. The Department explained to the Ombudsman that its objective was "to ensure that the limited expenditure available was targeted at those most in need, i.e. those who needed but could not afford to pay for nursing home care." In this context, the Department was particularly anxious to retain the contributions already being made by the family members of elderly people already in nursing homes.3 The instrument chosen by the Department to facilitate this was the term "circumstances", referred to in Section 7 of the Act as one of the criteria by which the Minister might specify amounts of subvention payable (see Chapter Three). The Department decided to define the "circumstances" of the claimant as meaning the capacity of adult sons or daughters, living in this jurisdiction, to contribute to a parent's nursing home costs. This amounted to family assessment by the back door.

On 28 July 1992 the Department consulted its own legal advisor regarding its intention to define "circumstances" as including the income of a child of a person applying for a nursing home subvention. The Department's minute of that consultation records:

"[The Legal Advisor] said that he did not consider that there was a sufficient basis for defining 'circumstances' in this way. I said that I had discussed this point with the Secretary and that he felt that we should define 'circumstances' in this way. The financial implications of not taking children's income into account for the new nursing home subvention system were serious. We would have to approach the problem in this way. The Legal Advisor accepted that we were in a difficult position but repeated his concern about defining 'circumstances' in this manner."

On the following day, 29 July 1992, the Legal Advisor rang one of the officials involved "on the question of taking children's income into account in determining the amount of subvention payable to a dependent person in a nursing home." The official recorded the Legal Advisor's position as follows:

"His opinion was that the explicit reference to the income of any child of the person in the definition of 'circumstances' in the subvention regulation would invite a legal challenge which was likely to succeed. He suggested that the explicit reference to family members be dropped in favour of a more general wording allowing for all sources of contributions to be taken into account. In practice contributions could be sought from family members under this provision and if there were a legal challenge it would be to the actual practice rather than the explicit provisions of the subvention regulations."

On 4 August 1992 an Assistant Secretary in the Department read the draft memorandum to Government on the implementation of the 1990 Act. The Assistant Secretary noted just one concern:

"I think the notion of formally taking account of a family's financial responsibility could lead to an early court challenge, perhaps on constitutional grounds. I presume this has been considered?"

Despite the fact that such a serious concern had been expressed at a senior level, the Department pressed ahead with its plans. On 14 September 1992 it sent the Legal Advisor a draft schedule to the Regulations dealing with the assessment of family members. This draft did not reflect the Legal Advisor's suggestion for "a more general wording allowing for all sources of contributions to be taken into account." On the following day, 15 September 1992, the Legal Advisor rang one of the officials involved to discuss the draft. The Legal Advisor reported that he had discussed the family assessment proposals with a senior official in the Attorney General's Office. The Departmental official's note of this telephone discussion records:

"[The senior AG official] is of the opinion that there is no primary legislation which would oblige children or issue of a person to make financial contributions upon his/her behalf. [The senior AG official] advised that secondary legislation such as regulations under the Health (Nursing Homes) Act, 1990 would be insufficient to make such a provision legally valid."

Clearly, the Legal Advisor was concerned with the direction of the Department's proposals. The officials involved, however, appeared not to be unduly perturbed. An annotation on the record of the Legal Advisor's telephone call reads:

"We are not obliging anybody to pay anything. We are simply allowing the [health boards] to take family circumstances into account in determining the amount of subvention to be paid."

Minutes of Meeting of Department/Health Board Working Group on Subvention Regulations, 18 December 1991

What this meant was that while health boards could not require family members to contribute to a parent's nursing home costs, a health board could decide the level of subvention to be paid (if any) as if the family were making that level of contribution. And, of course, this is precisely what did happen in practice. The Department's formula had the practical consequence of requiring family contributions if the elderly parent was to be provided with nursing home care.

When a new Minister came to examine the draft Regulations4, which seems to have been in April 1993, he is reported to have been concerned about the family assessment provisions.5 An official noted that the Minister "is not happy that children can be assessed by the Boards except perhaps in very tightly defined circumstances." Perhaps in response to this, though the timing is not quite clear, the Department developed the distinction that children's income would not figure in determining whether a claimant qualified for subvention; but children's income would be taken into account in deciding how much subvention would be paid to a qualified claimant. This distinction, as noted earlier, transpired not to have any practical value from a claimant's point of view.

In the event, and irrespective of the legal advice received, the Department proceeded to make regulations which had the practical consequence of including children in the means test. Clearly, financial pressures played a large part in the decision eventually made. Nevertheless, the conclusion is unavoidable that the Department made a regulation in the knowledge that it was almost certainly invalid (ultra vires) or, at least, highly unlikely to survive a legal challenge.6 One must have sympathy for the Department's predicament, and one must assume that its actions were well-intentioned. However, this cannot excuse the decisions actually taken in July 1993 when the Regulations were made.

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Letter of 3 September 1996 from Southern Health Board to Ombudsman