Finance is key to realisation of healthcare reform

The much-anticipated report of the Committee on the Future of Healthcare has now been published. Some question whether it will be just another dust-gatherer, but I hope that this will be different. One reason for optimism is that this report has been developed by a cross-party group, which means there should be continuity of approach to health across numerous governments of various political hues, which will be particularly important in the era of “new politics”.

Among the key recommendations of the report are the separation of public and private hospital activity, increased reliance on primary and community care, the introduction of free (at the point of use) GP care for all, wider entitlements to other primary care services, reduced or abolished fees on other healthcare services such as prescriptions and hospital charges, and new (shorter) waiting time targets for hospital-based treatment. If achieved, this will certainly represent an improvement on the existing system, but key to its success will be the provision of sufficient funding to make it a reality.

Ireland’s health system has a number of peculiar features in an international context. One of those is the degree of overlap between public and private funding and delivery of services. Phasing out private care in public hospitals will help to disentangle this. The committee proposes that public hospitals be used to treat public patients, with private patients being treated in private hospitals. This will require renegotiation of contracts for those consultants who have private practice rights in public hospitals.

Emergency departments

It should be remembered, however, that everyone has a right to be treated in a public hospital irrespective of whether they have private health insurance. About three-quarters of patients admitted to public hospitals are admitted via emergency departments and, since the changes to bed designation in 2014, insurers have pointed out that many private patients admitted via emergency departments are not getting any benefits from their health insurance, despite their insurers being charged. These patients will therefore receive the same treatment as they do now, but the insurers will not be paying for it, which should reduce costs to insurers. The private patients who will be most affected by this move are those treated on an elective basis in public hospitals, but this is a relatively small number – only about 6 per cent of total patients in public hospitals.

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We have heard before about the introduction of free GP care for all. This was promised in 2011, but five years later it had only been implemented for those aged under six. The success of the proposal this time around will depend on the negotiation of a new GP contract, which may take time. It will also require significant investment in capacity if we are to avoid a significant lengthening of waiting times. There is also the concern about moral hazard (the propensity for people, when given free GP care, to overuse services). This could be addressed by limiting the number of free visits – to, say, five a year – which would remove the financial barrier to accessing GP services but also incentivise people to make judicious use of such services. This could be combined with a sliding scale of charges, based on incomes, after the free visits have been exhausted.

Drug payments scheme

The reductions in some out-of-pocket charges faced by those who do not have medical cards is a welcome step. During the recession, these charges were increased significantly. For example, the drug payments scheme threshold rose from €85 a month in 2007 to €144 a month, the emergency department charge (without a GP referral) rose from €60 to €100, and the statutory bed charge increased from €60 a night to €80, while the prescription charge for medical card holders was introduced in 2010 and subsequently increased. This rise in out-of-pocket charges was one contributory factor (though there were others, including a sharp increase in private health insurance premiums) to an increase in the proportion of health funding coming from private sources from 21 per cent in 2008 to 31 per cent in 2014. Reversing these measures will unwind some of the burden of cost-shifting and reduce or remove regressive charges.

This is where the funding issue comes in. Total healthcare spending in Ireland in 2014 was €19.1 billion, of which nearly €6 billion came from private funding mechanisms. The committee's proposals will require a significant increase in public funding, but this should be partly offset by a reduction in private funding.

The report talks about transitional funding of €3 billion over six years, which includes €1.23 billion under the heading of “Renovation and Hospital Bed Capacity”. A hospital bed capacity review is under way, but €1.23 billion might not yield a sufficient increase in capacity, particularly when one considers that the new National Children’s Hospital is expected to cost about €1 billion.

A further €2.8 billion over 10 years is earmarked to build up capacity, increase entitlements to primary and social care, and reduce out-of-pocket payments. This represents an average of €280 million a year over the next decade, which again sounds perhaps a little bit optimistic, particularly in the context of out-of-pocket spending of almost €3 billion in 2014.

In summary, I welcome this report, and I commend the committee on its work, but the hard work is only now beginning. Implementing – and paying for – the proposals will be the true test which, if passed, will get the health system to a better place in 10 years’ time.

Brian Turner is a health economist at UCC