The cost of health care

Mon, Mar 25, 2013, 06:11

That the State’s health costs remain high is an undeniable fact. But to blame this largely on the high pay of healthcare workers here, as International Monetary Fund economist Benedict Clements did at a conference last week, is simplistic. Health professionals in the Republic were well renumerated in the past, and the legacy of this will take some time to disappear. For example, some €2.6 million in allowances was paid to 31 hospital consultants who retired in 2011 in lieu of rest days. However, a series of pay cuts across the service, and in the case of newly appointed hospital consultants a significant paring back of salaries to a level below that enjoyed by their peers in the UK, means this is no longer the case. If the changes envisaged in Croke Park II are implemented, payroll costs in the health service are likely to be further reduced.

Mr Clements is on more solid ground when criticising the low usage of generic drugs in Ireland compared with other countries. Generics account for 18 per cent of the medicines dispensed in Ireland, compared with 80 per cent in the UK. The health service here is paying up to 24 times as much as the National Health Service in Britain for the same generic drugs; in spite of a recent deal with generics manufacturers, many branded drugs marketed here are cheaper than their generic equivalents. But despite assurances made as far back as the tenure of former minister for health, Mary Harney, a system of mandatory substitution of a cheaper generic equivalent for a prescription of a branded alternative has only recently been put in place.

The IMF official will no doubt have noted the report of the Dáil Committee of Public Accounts which strongly criticised the Health Service Executive (HSE) for not collecting up to €74 million in claims from private insurers. The committee said the Department of Health should review the HSE’s budgeting model and issued a demand for the executive to examine whether there is scope to publish the names of hospital consultants who, by not signing documents in a timely manner, are holding up the collection of income from insurers. It is clearly unacceptable for the HSE to have failed to put in place an effective system to collect this income.

Mr Clements told the National Healthcare Conference there are a number of ways of restricting health spending. They include increased competition, the imposition of budget caps and placing a restriction on the number of hospitals and medical students as a means of restricting inputs into the system. But he acknowledged the importance of protecting access for the poor and those with chronic disease. The HSE remains a bloated organisation, with a record of stasis rather than evolution. A future IMF analysis on how to tackle its inefficiency would be welcome.