The provision of effective health services is not helped by the monopoly relationship between the Government and the VHI, argues James Sheehan
Increased prosperity in the last decade has resulted in an increase in the numbers subscribing for private health insurance, from 33 per cent to 46 per cent. The main insurer is the VHI, with approximately 85 per cent of private insurance customers.
The recent Government health strategy emphasises the need for more acute hospital beds. The shortage of beds is the result of a significant reduction in bed capacity in the early 80s. A simple count of bed numbers does not indicate whether that hospital and hospital bed can cope with acute modern care. Many major procedures are cancelled daily in our acute hospitals due to lack of intensive care facilities.
The more complex the procedures undertaken, the more the need for intensive care beds. Acute general hospitals in Ireland have very limited numbers of such highly serviced beds.
Modern American facilities, such as the Mayo Clinic in the US, have 50 per cent of their beds designated for intensive care. The level of intensive care administered in modern American facilities allows patients to survive severe illness to which they would otherwise succumb.
Apart from the lack of intensive care, many of our hospitals are poorly serviced and should not feature as acute hospitals. Many of these hospitals have closed over the past decade, including the private wing of St Michael's in Dún Laoghaire, the Bon Secours in Tuam, and St Gabriel's in Cabinteely, Co Dublin.
The last independently funded beds were built 16 years ago in the Blackrock Clinic and the Mater Private Hospital. Both of these hospitals were designed to cater for up-to-date medical and surgical care which was not available in privately funded facilities. Why have no beds been added since then?
The reality is that the VHI has effectively blocked the development of all private beds for 15 years. The VHI is a semi-State body controlled by the Department of Health.
The policy of the Department of Health for many years has been to convert public beds in State-funded hospitals and redesignate them as private beds. The cost of these beds to the VHI is not the true cost but less than 50 per cent of the true cost, and the subsidy is borne by the State.
This minimises the cost to the VHI and in turn to the subscriber. This monopoly situation has resulted in a diminished investment in the independent health sector, as no hospitals have been able to develop due to lack of recognition of a new facility by the VHI.
This is a gross abuse of the insurers' powers. Private hospitals have also for many years had a cap put on their earning capacity. This effectively means that once a certain number of patients are treated in the hospital in a particular year, any further patients have to be treated largely at the hospital's expense. The equivalent of this in the motor industry would be a situation where people who had accidents after October or November would have to pay for their own repairs.
Despite the recent publicity, the VHI still does not recognise that there is a shortage of independent beds. A new facility proposed for the west of Ireland has not yet been sanctioned despite negotiations for two years. The last private bed built in the west of Ireland was half a century ago.
Last year 40 private beds closed in the Bon Secours Hospital in Tuam. The VHI is undertaking a study - which will go on for many months - to see whether the needs for privately insured patients are adequate.
People taking out private insurance have to depend largely on reverting into the public system to receive care because the private facilities are inadequate for the numbers insured. The increase in subscribers in the last decade has not been matched by a single additional bed. The conversion of public beds into semi-private beds in the public hospitals has contributed to our two-tier system where those paying private insurance get preferential treatment in the public hospital. This position is not sustainable.
If a viable independent sector is to remain then it must be taken out of the control of the insurer. Insurance in any other area is a means of covering individuals against major expenses. In Ireland, health insurance is synonymous with regulating the provision of private services.
Modern scans are frequently not covered by the insurer. Coverage for many common conditions has been eliminated, while patients are insured in the event of rarer conditions.
The new facility of PET scanning which has recently become available will revolutionise the treatment of cancer. But for a cancer patient to be authorised by the VHI to have a PET scan, a lengthy negotiating process is involved, and a significant number of patients have been rejected. Is this what we seek when we purchase private insurance?
How can this situation be remedied? The VHI board is a well-motivated group working against impossible odds. The insurance premiums are regulated by the Department of Health and for many years have been set at too low a level to adequately finance the needs of modern health care.
The same pertained in the public system, which has been grossly under-funded for two decades. Premium increases for private insurance have not matched the rate of medical inflation and now fall behind the true cost of delivering a moderate healthcare service.
The majority of subscribers, i.e., 70 per cent, are covered under Plan B of the VHI. The cost of this plan is approximately 10 per cent of the cost of car insurance for 20- to 25-year-old males. When annual increases are proposed by the VHI, they are invariably rejected.
As recently as two years ago, no increase was allowed, despite significant increases in inflation, particularly in nursing costs. The private hospitals have thus been under-resourced for years and many procedures are undertaken at a significant loss.
Daycare surgery in many instances costs twice as much to deliver as the allowance given. It is imperative that individuals can insure themselves for a level that they feel is appropriate to the needs of modern healthcare delivery, and not set by the insurance company.
If private hospitals are to survive in the future they must be adequately remunerated and, ideally, if these hospitals are run as "not for profit" ventures, then any surplus can be re-invested to ensure that the hospital remains up to date.
The system of community rating, where an increased premium is not charged with increasing age, is not viable in its present form. Patients in their 50s pay the same rate as those insured at birth.
The greatest expense for medical care occurs in the latter part of life. We are thus looking at the situation similar to a pension policy whereby people who have paid into a pension policy from birth are being given the same pension as those who make payments only from the age of 50 onwards.
If community rating remains it has to take account of people taking out policies in their later years and making a substantial contribution for the years when they did not contribute.
The inadequacy of current VHI premiums is clearly illustrated in their brochure, listing the additional cover required to travel for extended periods in Europe or worldwide. In order to receive comprehensive health cover in Europe at the age of 50, with full cover, an additional annual premium of €1,498 is required; where the US and Canada are included, this rises to €4,558.
This illustrates the current under- insurance, because health costs in Europe are similar with those in Ireland. The addition of a threefold increase in the premium for insurance in the US and Canada is in keeping with the high cost of the delivery of services in both of these countries.
All other insurance companies by and large follow the rates of the VHI, or otherwise they themselves are uncompetitive. The VHI has abused its power for many decades to the detriment of its subscribers who will have to continue to revert to the public system in increasing numbers to obtain modern health care.
I am not advocating a high increase in health insurance premiums, but a more realistic approach to developing a viable independent health sector which will serve the needs of the subscribers and complement the currently struggling State-funded services.
James Sheehan is an orthopaedic surgeon and a founder of the Blackrock Clinic in Dublin