Government’s health insurance model is a textbook case of flawed policy making
Analysis in the Irish Independent on 18 November 2015
This Government promised universal healthcare its 2011 Programme for Government. It said everybody would have free GP care by 2016, and compulsory universal health insurance would start in 2016 and be completed by 2019.
The 2014 White Paper on Universal Health Insurance stated that this system would not cost more than the current system.
New costings by the ESRI show that the model of universal health insurance, as proposed by Government, would cost between €666m and €2bn more than we currently pay for healthcare.
These figures are not new, they were published on the pages of this paper last July. What is new is that they have been officially published six months after the dated copy seen by this author. And a memo went to Cabinet on them yesterday.
This Government’s universal health insurance model was based on competing private insurers increasing health system efficiency, which in turn was meant to drive down healthcare costs.
The ESRI finds no basis for this assumption. Its research reiterates other well-known international research – that countries which finance their healthcare through health insurance systems are more expensive. The ESRI costings conclude that the major driver of the additional cost is the model of “multiple, competing insurers” and that private health insurers’ margins are driving those costs. In 2013, private health insurers’ margins were €300m.
Obviously, insuring more people for more services would further drive up the total of health insurance margins in Ireland.
The ESRI research also states that under the Government’s proposed model, 70pc of healthcare expenditure would remain tax-funded. Currently, 74pc of Irish healthcare is tax-funded. So it wouldn’t really be a health insurance system at all.
And not everything would be covered. For example, under the most generous range of services assessed by the ESRI, people would still pay on average €379 out-of-pocket per year for essential healthcare.
The Government’s insurance model of competing private insurers was a win-win for Fine Gael. It enabled the party to promise what no government had done before – universal healthcare for all – as well as maintaining and increasing the profits of private health insurance companies.
Once again, Irish health policy has provided a textbook case on how not to make public policy. In the run up to the 2014 election, Fine Gael decided to adopt the Dutch model of healthcare. The Dutch system was then and still is ranked the best in the world by a private company consumer index. However, years after implementing this model of universal health insurance, costs have rocketed and increasingly services are rationed.
Remember, the pre-election YouTube clips of Enda Kenny and his loyal supporter James Reilly touring empty Dutch hospital corridors with no trolleys.
However, it turned out that Fine Gael had spent 14 years in the long grass of opposition politics without working out any of the detail of its new big idea. To add insult to injury, it then spent the first three years of government continuing to avoid the detail.
When the Government eventually published its ‘White Paper on Universal Health Insurance’ on April 1, 2014, quite extraordinarily, it had no costings or no decision as to what services were to be included under its universal health insurance system. The Coalition then commissioned the ESRI to do these costings.
The ESRI costings research cautiously recommends the current model to be reviewed and further research to be carried out.
However, the only conclusion one can reasonably make from the ESRI’s work is that the model of universal health insurance as proposed is not viable, and that it is overly expensive, largely because of profitable insurance companies’ margins.
Interestingly, it also finds that addressing unmet need would cost less than delivering that model.
There are huge amounts of unmet need in Ireland due to long waiting times for services, the high costs which act as a barrier to accessing care and the sheer unavailability of some aspects of essential care for significant parts of the population. Much of this is driven by the two-tier nature of healthcare in Ireland which favours those with money over those without.
There is no question that universal healthcare for all will cost more, because more care will have to be provided to those who do not currently get it.
However, Ireland remains the only European country without universal primary care and one of the very few OECD countries without universal healthcare. Many countries who spend the same or less than us have universal access.
In January of this year, Health Minister Leo Varadkar stated his health priorities. One of them was to “complete the costings analysis (of universal health insurance) and revert to Government with a roadmap for next steps”.
Speaking recently at the Institute of Chartered Accountants, the minister admitted that the costs of the Government’s original model of universal health insurance outweigh the benefits, that it would have been wrong to introduce it during the financial crisis, and “that neither the Exchequer nor families would have been able to bear the considerable additional cost in terms of subsidies or increased insurance premia”.
He went on to say the “delivery of universal healthcare is no easy challenge but it is achievable. It is surely the greatest goal we have yet to achieve in our efforts to build a just society”.
The universal health insurance model adopted by this Government was the wrong one. But its intention of universal healthcare was right.
The challenge now is for the next government, whatever its make-up, to work out the best way to achieve universal healthcare – is it through a one-tiered, tax-funded system or a single-payer insurance model?
In the meantime, the least the Government could do is admit that its flawed model of universal health insurance is a shambles and tell us its plan B for achieving its 2011 promise of universal healthcare