Inequity of for-profit healthcare

When it comes to the formation of a government, one issue matters more than all the others. It is a policy most closely associated with the Progressive Democrats.

That party's unique selling point was the provision of massive public subsidies for the building of private, for-profit hospitals on the grounds of public hospitals. The PDs got 800 votes in Clare, 193 votes in Dublin Central, 749 votes in Dublin North-East, 474 votes in Dublin South-Central, 296 votes in Mayo, 634 votes in Tipperary North, 364 votes in Tipperary South.

It can be argued, with some justice, that subsidising for-profit hospitals is also a policy of Fianna Fáil, which did reasonably well in the election. But one of the most interesting things voters learned in the last days of the campaign was that the Fianna Fáil leadership had paid no attention to the issue.

We got three different figures for the annual cost of the tax subsidies involved from Brian Cowen, Mary Hanafin and Bertie Ahern. Neither Séamus Brennan nor Dermot Ahern was able to say what the figure was, and a back-room adviser, Colin Hunt, had to be wheeled out to rescue them from their obvious embarrassment. So, yes, Fianna Fáil is committed to the policy, but it has no idea what its real implications will be.

As it happens, there is a vast open-air laboratory in which to test those implications. It is called the United States. The US leads the world in turning healthcare into a business like any other.

According to the right-wing ideology that holds it as axiomatic that the profit motive inevitably breeds efficient delivery of goods and services, healthcare in the US should be the most cost-effective in the world. It is, in fact, the precise opposite. Americans spend vastly more on healthcare than anyone in the world and get back, on the whole, vastly less.

The American system is phenomenally expensive. The US spends 16 per cent of its gross domestic product on health, compared to a typical figure in the other most-developed nations of 8 to 10 per cent.

Health insurance is now the fastest-growing cost incurred by American business and these costs are projected to outstrip profits by 2008. Yet, in return for all this money, Americans do not even get a basic health service for all. There are currently 47 million people in the US without any health insurance, either private or public. The profit-driven system has proved itself both costly, placing huge burdens on workers and employers, and grotesquely unjust.

There is no great mystery about why this should be. Steffie Woolhandler and David U. Himmelstein, of the Harvard Medical School, have estimated that payments for care in for-profit hospitals are on average almost 20 per cent higher than in not-for-profit hospitals.

This is because "investor-owned hospitals are profit-maximisers, not cost-minimisers". These hospitals employ fewer nurses, but far more managers, making for much higher overheads. Those managers are given incentives (by huge salaries) to extract as much profit as possible for their shareholders. They do

this by pressurising doctors - who are now company employees, not patient-centred professionals - to order unnecessary tests and opt for the most expensive treatments.

This is the system that, in spite of her party's drubbing, Mary Harney is being brought back to implement. Many people shrug their shoulders at this and say "sure, we've always had private hospitals". But this is to miss the point completely. What we are getting are not private hospitals in the old sense, but investor-owned, for-profit hospitals.

And, in some ways, our system will be even more crazed than the American one. For, as well as having an expensive American-style profit-driven system, we are also going to have an expensive European-style public system. Every citizen in the State will remain entitled, in theory, to a bed in a public hospital. So we will be paying through our taxes for public hospitals and subsidies to the new for-profit hospitals, and through private health insurance for the profits of the latter. It is hard to imagine a more inefficient use of resources.

Even on the outgoing Government's own figures - and we have discovered how arbitrary those are - the co-location plan costs a lot of money. The tax breaks will cost between €400 million and €500 million over seven years.

The income lost to public hospitals, which will have to be made good by the exchequer, will be about €100 million a year. That makes a public cost over seven years of at least €1.1 billion, even without counting the loss of land for future development of public hospitals. On top of this, health insurance costs will rise sharply to provide the investors with their returns. And the for-profit ethic will fuel general health-cost inflation, making all healthcare more expensive.

For a plan which would make Ireland a more decent society, this might be a price worth paying. For one that explicitly endorses an apartheid system in matters of life and death, it is an outrageous folly.