Income tax and employers’ PRSI may rise to fund health system

Income tax rates and employers’ PRSI could be increased to fund improvements in the health service, according to the Dáil committee planning its future over the next decade.

Increasing the basic 20 per cent income tax rate by 1 per cent could raise €576 million a year for a new national health fund, the committee says, while increasing the higher 40 per cent rate by 1 per cent would raise €280 million.

Changing PRSI rates for employers from 10.75 per cent to 11.75 per cent would yield more than €600 million for the fund, although it may have “adverse effects” on employment levels, according to the latest draft of the committee’s report.

The committee says an additional €500 million a year is needed to pay for the continued expansion of the health budget, growth in population and rising cost of medical technology.

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By combining different options around tax, earmarked funds and general budget expansion, it should be “entirely possible” to fund expanded entitlement as proposed in the report, the committee says.

One-tier system

As reported previously, the committee is recommending the abolition or reduction of many health charges and an end to private care in public hospitals as part of a move to a single-tier system.

The latest draft report says members considered five approaches to the existing subsidy for private health insurance, including leaving it untouched, abolition and phasing it out in time, as waiting lists decline or as the number of subscribers fall. A final decision has been deferred to meeting later this month.

On funding options, the report appears to reject a mandatory, competitive private health insurance system, as was proposed by the previous government. Such systems tend to be more expensive, lack transparency and involve complex reforms, and Ireland’s population is not large enough to sustain more than one efficient insurer, it says.

The report says hospital consultants who currently work privately in public hospitals should be paid more in compensation for the ending of private practice, and rewarded better for elective work in the public sector.

The charge for public access to public hospital care (up to €800 a year) would be eliminated, the prescription charge for medical card holders reduced from €2.50 to 50 cent and the threshold for drug reimbursement from €144-€100 a month.