Extra €500m prescription for health is no magic pill for bad policy choices

Posted in Articles by saraburke on June 26, 2014

THE €500m supplementary health budget finally admitted to by the Taoiseach yesterday in the Dail was always inevitable and a direct result of shoddy political decisions made by his own government. See below for analysis from Irish Independent on 26 June 2014. 

The controversy around the unrealistic €113m savings from medical card probity announced in Budget 2014 has been well rehearsed. The Department of Public Expenditure and Reform ‘magiced up’ these figures from an out of date consultancy report.

They were strongly advised that this sum could never be met by health officials. The health officials were ignored, the ‘savings’ included in the budget, and although subsequently negotiated down, they were never plausible. A supplementary budget was needed the day those non-existent savings were decided on the Sunday before Budget 2014 was announced last October.

Another budgetary measure which planned to restrict access to medical cards for the long-term unemployed who were returning to work was not just unwise but also probably illegal.

Up to then, people who are long term unemployed, ie out of work for more than one year, were allowed to retain their medical cards for three years after taking up employment. This was to ensure that losing their medical card did not act as a disincentive to entering the workforce.

The Budget 2014 measure would have meant that those who returned to work would lose their medical card and get a much less valuable GP-only card. For the first three years of employment, they would have to pay up to €144 for essential medication, for hospital charges, as well as dental and community health services. This was meant to save €11m.

When cabinet discussed the reinstatement of 15,000 medical cards nine days ago, they were also informed of the legal implications of taking away medical cards from long-term unemployed returning to work. Cabinet was warned that this other budget ‘saving’ measure would require time consuming primary legislation and was likely to be open to legal challenge.

Instead the Attorney General’s office proposed that current recipients keep their medical cards for three years and that in the future those returning to work would keep their cards for a full year, after which time they can reapply for a medical card as everyone else does. Not one cent of that €11m ‘saving’ will be achieved in 2014.

Both these measures are a perfect example of poor, last-minute, reactive decision making brought about by the unexpected additional €300m budget cut imposed on health.

While Ministers Howlin, Quinn and Burton schemed more money for Education and Social Protection, Minister James Reilly’s own colleagues failed to back him up on the health budget. Reilly was not just shafted by his Labour colleagues, he was also let down by the Fine Gael team in the Economic Monetary Council – the Taoiseach and Minister Noonan.

But James Reilly does not come out of this unscathed, his inability to negotiate an adequate health budget meant the supplementary budget was always certain.

And his own careless decision making has contributed to the over-spend.

Take the issue of cuts to consultant pay. The Programme for Government stated ‘under a new consultants’ contract, hospital consultants’ remuneration will be reduced.’

James Reilly made his promise to cut consultants pay, a populist pre-election issue, but when he took over the health ministry he bottled it when it came to taking on his doctor colleagues. Instead, he cut the pay of new entry consultants by 30pc.

As a direct result of this measure, the HSE has been unable to fill crucial consultant and even junior doctor posts that in the past were hugely competitive and sought after. Their inability to fill these posts is directly contributing to the over dependency on locums and agency staff which in turn is directly increasing the deficit.

Only March figures are publicly available, but these show that three quarters of the health deficit then was from the hospital sector and that agency staff alone contributed to 22pc of the hospital overspend.

The HSE is now seeking a total or large restoration of the 30pc cut to new consultants so that essential posts can be filled.

Restoring new consultants’ pay to near or the same as those currently in posts will not be popular, but it is necessary right now. It will probably be cost neutral and potentially cost saving.

This government said it would make the health system politically accountable again.

These three topical examples show the real downside of political interference in health, where bad health policy choices were made by our political leaders.

Not only were they unwise, they have cost the State more than they planned to save, and in the case of the long-term unemployed, the policy was potentially illegal.

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