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Q&A: What’s the problem with the health service budget?

Stephen Donnelly has admitted the sector will require additional money before end of next year

A week after the budget outlined an additional €14 billion in spending for next year, the Government is mired in a controversy over health spending. What’s going on?

There has been a furious reaction among elements of the health service and the people who lead it to what they see as the inadequate budget increase for health last week. Minister for Health Stephen Donnelly has made his disappointment clear, telling The Irish Times last week, on the day after the budget, that there would be a shortfall in the health budget next year, citing “healthcare inflation and patient demand”. In other words, Donnelly was admitting that the budget he had just approved as a member of the Cabinet would be insufficient, and, therefore, the health service would require additional money before the end of next year. Over the weekend, Health Service Executive (HSE) chief executive Bernard Gloster, in an interview with RTÉ’s This Week programme, said much the same thing. “We do not,” he said, “have enough funding to continue doing what we are currently doing.” Health chiefs always believe they are underfunded, but it is unprecedented for them to be so public about it, especially so soon after the budget.

How much are they short?

Quite a bit. In pre-budget negotiations, it is understood that Donnelly sought considerably in excess of €2 billion more than this year’s €21 billion budget. This was what he said was needed to cover the increased costs of providing healthcare and cope with additional demand, which has surged since the end of the pandemic. Part of that included the shortfall for this year, estimated at somewhere between €1.1 billion and €1.5 billion. He got just over €800 million extra, of which just €100 million was for new, though previously advertised, services. So having looked for more than €2 billion – likely closer to €2.5 billion – to keep doing next year what the health service is doing, he got just €700 million.

Won’t that lead to a big shortfall next year?

Exactly. The exchequer will pay for the shortfall this year, and pay for the shortfall next year, by means of a supplementary estimate, basically a bailout voted for by the Dáil at the end of the year to meet the bills of the health service. It is generally expected that the supplementary estimate of €1.1 billion to €1.5 billion which the Government will provide this year will be incorporated into a revised estimate for health. But that will be the subject of further negotiations. Insiders say that keeping health on a tight budgetary leash should help limit the overspend. But it means that everyone knows the health budget is not the actual health budget, which doesn’t do wonders for the credibility of the system.

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So who’s right?

The problem is they both have a point. Healthcare inflation and extra demand on services have pushed up the cost of the public system. But clearly the health budget – or any other budget – cannot be allowed to rise infinitely. Health got to keep nearly all the extra funding from the pandemic period – but that has been swallowed up and now the department is looking for an extra €2 billion every year. That puts intense strain on budgets right across Government.

What happens now?

The Government is likely to be taken to task by the Opposition in the Dáil. In the meantime, relations between sections of the Government have soured, with each side briefing fiercely against the other.