The cost of extending free medical cover to everyone in the State over the age of 70 was underestimated by the Department of Finance by more than €50 million, the report found.
The reason, it discovered, was partly that the Department of Finance told the Department of Health only "a few days prior to Budget day in December 2000" of its decision to extend medical card eligibility to all over-70s, regardless of their income.
"Informal oral contacts took place between officials of both departments in relation to the cost implications of this initiative.
"The Department (of Health) supplied such data as was readily available to it in the extremely short time involved in order to assist the Department of Finance in determining the likely cost of implementing the scheme in 2001," the report said.
The Comptroller and Auditor General said the Department of Health had also pointed out to the Department of Finance that implementation of the scheme would require the agreement of the Irish Medical Organisation and the Irish Pharmaceutical Union and this would drive up its cost.
The initiative was originally forecast to cost €19 million. This figure was based on an estimate that 39,000 extra people over 70 years would get medical cards under the scheme.
However, the databases on which the original estimate of 39,000 persons was based were "inaccurate and not up to date". The correct number of people concerned was over 70,000.
"By April 2002 it was estimated that the additional annual cost would be in the region of €51 million," said the report.
In a separate investigation, he found that while Central Statistics Office figures suggested there were 299,000 persons over 70 in the State in 2001, the General Medical Services (Payments) Board (GMS) had over 327,000 over-70s on its register in February this year.
The health board/GMS list was found, on examination, to be inflated by duplicated names and the names of people who had died but had not been deleted. A so-called cleansing exercise recently removed 14,100 names.
Before this exercise, however, the lengthy list had been used to pay doctors and pharmacists an annual fee for giving free treatment to each person named. As a result, it is estimated by the Comptroller and Auditor General that they could have been overpaid by €12 million annually.
The report also found a replacement for the Drug Refund Scheme and the Drugs Cost Subsidisation Scheme was introduced nine months before regulations permitted.
A delay in making regulations to give legal authority to the new Drugs Payment Scheme resulted in both the overpayment and underpayment of subsidies to people who availed of the scheme.
It is estimated people were underpaid by in the region of €18 million but, as the report put it, "the accounting officer pointed out that in accordance with an informal Government decision dated 17th July 2002, it was not intended to make refunds".
The amount of overpayments is not known. "The Department has not asked the GMS Payments Board to devote the resources needed to calculate this amount in light of the legal advice received from the office of the Attorney General in April 2002 that the Department cannot recover (these)overpayments".