A €50 million healthcare windfall

Wed, Feb 12, 2014, 01:01

Financial surpluses have for successive governments in recent years proved all too rare occurrences – particularly in the area of health spending. The State has just received a windfall of more than €50 million from unexpected savings on a health insurance measure – the temporary risk-equalisation scheme in place from 2009 to 2012. These savings leave the Government with choices to make: how best to use that money. The Cabinet has yet to decide.

First, it must await the outcome of talks between the departments of health and finance. The money saved could be returned to the insurers that operated the scheme during the three-year period. And on that basis VHI – State-owned and the largest private insurer – would receive more than half the sum. This financial injection would boost VHI reserves, strengthen its balance sheet, and help it meet the solvency levels that the European Commission requires. In December, the Government sought a 12-month extension to the year-end deadline set for VHI compliance. Certainly, there is no shortage of ideas on how the savings can be spent.

However, the finances of the health service remain in deep crisis. Last year the Health Service Executive (HSE) struggled to produce its service plan for 2014, in a health budget that requires €666 million in cuts this year. And last month, the Oireachtas Health Committee heard that €108 million in savings still remain “unspecified”. The Government could decide to use the surplus to deal with any HSE deficit this year. Or, it could use part of this windfall to reverse a broken promise, to spend €35 million annually to modernise mental health services. Last year the Government cut the promised allocation for 2014 by more than 40 per cent. Successive governments have treated mental health in a cavalier manner, first raising public expectations of major change and later failing to deliver on commitments made. The Government should take this opportunity to make amends, and to honour its promise.