Every time there's a story about an unfortunate public patient stuck on a waiting list for basic medical treatment, the staff in the VHI Healthcare and BUPA Ireland call centres brace themselves for a busy day. In an inequitable healthcare system, the biggest selling point for private medical insurance is queue- jumping.

While the Department of Health and Children claims great progress in reducing waiting lists, many of those relying on the public system still have to wait months for a consultant's appointment or in-patient treatment.

Recent figures released by the Minister for Health and Children Mr Martin showed that 26,382 people were on hospital waiting lists at the end of March 2001. That was a 23 per cent decline on the numbers waiting a year earlier but it didn't stop 80,000 people signing up with VHI in the year to the end of February 2001.

Those who have the means have voted with their wallets and 45 per cent of the population is now covered by private medical insurance. This level of private cover is exceptional by international standards.

Typically consumers take out private medical insurance cover to ensure more rapid access to and choice of consultant, as well as high-spec accommodation and facilities in private hospitals and private beds in public hospitals.

VHI Healthcare's most recent patient satisfaction research showed that 78 per cent of members surveyed were hospitalised within four to five weeks of seeking admission and more than 90 per cent of patients were satisfied with this.

With satisfied private patients on one side and dissatisfied public patients on the other, should we be aiming for even higher private medical insurance coverage?

Prof Ray Kinsella, director of the Centre for Insurance Studies at UCD, thinks we should. He argues that an expanded private medical insurance sector would almost certainly encourage additional investment in infrastructure, relieving pressure on the over-stretched public system.

It would also contribute to a more sustainable public/private mix of healthcare funding and provision, according to Prof Kinsella.

He speaks of an affordability crisis developing in the private medical insurance market and believes compulsory private cover is needed to ensure stability.

So what is Government thinking on the future of healthcare funding and provision? We're about to find out. Work has been under way since the beginning of this year on a new Health Strategy 2001 and it's expected to be published next month.

This will replace the last strategy document, which dates back to 1994, and is intended "to provide improved health status and the development, reform and modernisation of the health and personal social services" over the next five to seven years. An extensive consultative process has been taking place since January.

According to the Department, the guiding principles underpinning the new strategy are likely to emphasise a more people-centred, consumer-oriented system and there will be a strong focus on equity.

The World Health Organisation published a report last year on international healthcare systems. It examined different aspects of the systems, including levels of responsiveness, fairness in financial contribution and overall goal attainment and then attempted to rank each country. The Republic came seventh under fairness of contribution, while our overall health performance was 19th.

The Working Group on Funding, part of the consultative forum for the Health Strategy 2001, concluded that it was not the method of funding that was pivotal, but the lack of capacity, both in terms of beds and manpower, which had resulted in the problems in the health services.

Public spending on health has doubled in the past decade to £4 billion (€5.1 billion), but clearly there has not been a proportionate increase in the level and extent of healthcare provision.

On the private side, the main complaint at present is the 9 per cent increase in VHI premiums beginning next month, but this could be small potatoes compared to what's in store.

With an ageing population, high medical inflation, the increasing costs of technology and the religious orders bowing out, healthcare costs can only go up.

The insurance providers, VHI Healthcare and BUPA Ireland, have been making a lot of noise recently about the issue of risk equalisation.

In a nutshell, risk equalisation is a means whereby an insurer with more younger customers and therefore a lower risk profile pays into a fund that compensates insurers with more older customers and a higher risk profile.

The risk equalisation debate is not particularly riveting to those not involved in the BUPA/VHI relationship in some way. But it is linked to community rating, a principle to which everyone can relate.

The principle of community rating, whereby all subscribers pay the same premium regardless of health or age, was enshrined in law in 1994. Every provider is now obliged to abide by community rating and to operate open enrolment and lifetime cover.