The new Minister for Health and Children, Ms Harney, has done well to secure significant additional resources of €1 billion for the health sector, which now accounts for almost one-third of public expenditure, writes Ray Kinsella
Abundant research testifies to the need for an increase in investment for frontline services and for capacity - in both physical and diagnostic equipment terms. Indeed, there is a serious latent problem over replacement of medical equipment.
There are a number of areas where measures set out in the health Estimates are simply wrong. More specifically, they lack any economic rationale and/or are socially regressive. They run directly counter to indications the Minister has given to date on what the new healthcare strategy will be. The strategy will have to run until the next general election in 2½ years; it will have to be consistent with a longer-term one that will be financially sustainable and address real failings in the system.
One area relates to the proposed 25 per cent increase in the charge for private beds in public hospitals. Ostensibly, the Government's policy is to move towards what is euphemistically called the "full economic cost" for private beds in public hospitals.
It is important to be clear about this. The 25 per cent increase has nothing whatever to do with economics. It is, quite simply, an arbitrary cost increase, imposed by the Government - a monopolist par excellence in healthcare - on all public hospitals.
Of course, if it did have anything to do with full economic cost, it would presuppose the existence of a market or - at the very least - the ability of individual public hospitals to negotiate the scale of the increase of bed charges with one of the three health insurers. There are no negotiations. It should be increasingly apparent that this is a major failing in the system.
After all, in a healthcare system based on the idea of a "public/private" mix, one would expect some flexibility and autonomy. Moreover, it is now finally being acknowledged that what really matters, from the patients' perspective, is the total bed capacity of the system.
To increase that total capacity you need incentives for the private sector to develop capacity and make that available to those using the public component of the acute system. The propensity of Government to impose random charges by fiat undermines the capacity of the system to develop in this way. It is like a policy-virus dropped into the system - it just messes things up.
Equally, if the system was being moved towards full economic cost, the Government - as monopoly owner, funder and service provider of the public hospitals system - would also be moving towards, for example, the provision of customer service agreements with the insurers, on behalf of their patients/customers. That, after all, is what economics is about. There is no evidence of such a move.
But stop and ask yourself, why people, who have private health insurance - close to 60 per cent of the population - and already pay for a bed in the acute system, should have to pay the full economic cost of a bed in a public hospital in the first place. They are, after all, voluntarily giving up their entitlement to a "free bed". And, by the same token, they are making a bed available for someone who either cannot afford health insurance or who chooses to rely solely on a public system.
We know all too well that the acute system is already overstretched and that the public is highly disillusioned with waiting lists and with the difficulties of gaining access to public beds via A&E departments in public hospitals.
Rather than progressively increasing the cost of private beds in public hospitals, there is a strong case for providing the 60 per cent of the population. who feel impelled to take out insurance cover, with a rebate. This could be calculated on the difference between the cost of the bed to which the patient is entitled and what he or she is paying by way of private health insurance premiums.
The increase of 25 per cent in bed charges will feed through to an increase in private health insurance premiums. In the case of the VHI - where premium rises have to be approved by Government - this is likely to push the total increases to well over 40 per cent since 2001.
The Government dominates both the public system - in terms of, for example, the supply of beds as well as bed charges - and the private health insurance "market". There is little or nothing that VHI or BUPA Ireland or Vivas (the new entrant) can do to mitigate a significant further rise in private health insurance premiums in the near future.
So, by pushing up bed charges, the Government is simultaneously loading 60 per cent of the population further, a section which is already subsidising an inadequate public/acute system (the very same people who, incidentally, will be impacted by the continued rise in threshold for the drug payment scheme). It will also make private health insurance less affordable for those on lower incomes who want, any which way, to have more secure access to the acute system. This is regressive. It turns economics on its head. It subverts the development of the private health insurance market, and, at least as important, an insurance market for long-term care.
The initiatives that the Minister has taken, in such areas as eligibility for medical cards, disability and A&E, are welcome and important. But their contribution to a more responsive and equitable healthcare system is neutralised by the lack of economic or social logic in the imposition of monopoly-based charges.
Prof Ray Kinsella is on the faculty of the Smurfit Graduate School of Business and is editor of Acute Healthcare In Ireland: Cutbacks, Changes and Challenges (Oak Tree Press) 2004