Irish health spending is out of control. But there are reasons why controlling it is difficult

If health spending were an organism, it would be a flesh-eating bug, consuming all before it and threatening to gobble up any spare resources available to Government.

Despite record budgets over each of the last five years, the health service has been unable to live anywhere within its means. Supplementary budgets have been needed for eight out of the last 10 years, and this year threatens to be one of the biggest.

Various numbers have been thrown around – the truth being that no one really knows how much money the sector is burning through – but the latest estimate foresees a deficit of up to €1.5 billion. This year’s supplementary budget is expected to come in at €1.1 billion, the second-highest after the €1.4 billion recorded in 2022, which was a direct result of the ravages of Covid-19.

Whatever extra money is needed this year will also be required to fund the same services next year and into the future. That means next year’s budget will have to grow by €2-3 billion just to do the things the health service is already doing. Any new initiatives will have to be funded on top of this.

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The Health Service Executive (HSE), while unable to contain the problem, has at least called out its true size. It warned the Department of Health that last year’s allocation was over €2 billion shy of what has needed, yet was told to remove any explicit mention of this shortfall in its 2023 service plan. Not surprisingly, that prompted an exodus from the audit and risk committee of the HSE board.

The Department consistently downplayed the overspend, with secretary general Robert Watt forecasting earlier this year that it would amount to no more than €500 million. By last week’s Oireachtas health committee, Mr Watt had changed his tune, now agreeing that the system was under “enormous pressure” and that there is a problem with funding for existing levels of service.

The usual warnings have been issued by the usual figures – from Minister for Public Expenditure Paschal Donohoe to HSE chief executive Bernard Gloster. Mr Gloster has attempted to rein in costs in some areas – such as the outsize growth in the number of senior managers in the health service – but this will have only a small impact on the deficit.

Overspending in the HSE remains a runaway train. Why would anyone in the health service try to balance their budget when there is no sanction for failing to do so? Year after year, the Government shores up overspending because it is politically unfeasible to contemplate any action that could impact on services. The response of one health union this week to a belated attempt to stem the bloat in HSE upper management was to start industrial action.

The HSE’s control over much of its spending is tenuous, in any case. Aside from a woeful lack of real-time financial information and up-to-date IT systems, one-third of the hospitals it funds and many community services are voluntary institutions not under its direct control. The Comptroller and Auditor General has previously queried the adequacy of controls over the billions of euro spent in this sector.

The counter to the above analysis is the claim that Ireland’s health service is relatively underfunded compared to other countries. According to the OECD, Ireland ranks ninth of 33 countries in health funding per capita; above the average but below many of our neighbours in western Europe.

Yet Irish health spending has been rising faster than elsewhere, according to the Irish Fiscal Advisory Council. “This is despite Ireland having had relatively favourable demographics over this time, with an old-age dependency ratio well below the median country,” it points out.

The other argument for spending more money stems is that more patients are seeking care. Each year, the population increases by about 65,000 people. Though most of this is driven by immigration, the fastest growing group comprises over-70s – those most likely to need medical assistance.

Health budgets everywhere threaten to consume all available State funds unless properly controlled

As a consequence, hospital emergency departments are busier than ever – attendances of over-75s are up 21 per cent and admissions are up 15 per cent since before the pandemic. The number of people joining hospital waiting lists has jumped by one-fifth, so even though more appointments and operations are taking place, the lists remain stubbornly high.

There is also an element of catch-up for the 700,000 or so patient consultation that should have taken place during the Covid-19 pandemic but didn’t.

All of this is true – though many of the demographic changes are entirely predictable. The problem is that so much of the overspending is unplanned. Across the health service money is used ineffectively to plug gaps or deal with emergencies. Currently, for example, there is a €330 million budget for more expensive agency workers but this year’s spend likely to be around €1 billion.

There is a wider challenge faced by all developed countries and their ageing populations. Modern medicine can achieve fantastic results but often at fantastic expense. Health budgets everywhere threaten to consume all available State funds unless properly controlled.

In Ireland, more than one-quarter of all State spending goes toward health. How much more do we want this to increase? At the expense of what other areas of society?

The answer lies in a more planned budgetary process, a stricter adherence to budgets when set, a proper commitment to reform and cost-saving across the system and informed decisions about people’s entitlements to health services across their lifespan.