Universal health care will be cheaper and better

The Government has embarked upon one of the most comprehensive programmes of healthcare reform since the establishment of the UK’s National Health Service (NHS) in 1948.

We want to build a fair, efficient and high-quality system of universal health insurance (UHI) in Ireland, where all citizens are treated equally. The only way we can achieve this is through radical reform. A White Paper on UHI will be published shortly and will allow for full consultation with the public on the basket of services to be provided under UHI. I believe that people must have their say during such massive change and I encourage everyone to be involved.

Major progress has certainly been made over the last three years in improving productivity. There has been a 33 per cent decrease in the number of trolleys since 2011, a 99 per cent decline in inpatients waiting over eight months, and a 95 per cent fall in people waiting for an outpatient appointment for over a year. All of this despite a 20 per cent decrease in the health budget and a 14,000 decrease in staff numbers.

However, while further productivity improvements within the existing system must be made, it is clear we need to go further and change the way in which the whole health service works.

The programme for government commits us to merging the public and private systems into one universal service which is financed through a combination of taxes, insurance premiums and co-payments. Under UHI, every person will have insurance and the ability to choose between competing insurance companies, including the State-owned VHI.

The State will pay for or subsidise the less well-off, and care will be delivered on the basis of need rather than income. Everyone who has a medical card will retain their entitlements.

Separating purchaser from provider
It is envisaged the move to UHI will be accomplished in two stages. First, a purchaser/provider split will be established in the public health system, where separate organisations are responsible for purchasing and providing services for patients.

At the moment, the Health Service Executive performs both functions, reducing both efficiency and accountability. Legislation this year will replace the HSE with a Healthcare Commissioning Agency, which will act as purchaser of services in the health system. Legislation next year will create new, autonomous provider organisations including a series of hospital trusts. A new “Money Follows the Patient” financing system will pay providers on the basis of their outcomes and performance.

Second, full UHI will be introduced during the next Government’s term of office. Some of the functions of the HCA will be taken over by the insurance companies, who will act as agents of the State. This system of managed competition, which underpins many UHI systems across the globe, recognises that monopolies in health tend to be inefficient and inflexible.

Even though administrative costs in the HSE, for instance, have fallen over the last three years, they are still about 10.5 per cent of revenue. This compares to an average of 7.6 per cent in Ireland’s private health insurance sector. However, the managed competition model also recognises that a free market approach to healthcare simply cannot work. Thus, UHI in Ireland will be heavily regulated, with the State continuing to play a key role in setting standards and controlling costs.

Questions have been raised as to whether UHI will be affordable in Ireland. My response is simple. It is the current system that is unaffordable. The model of healthcare which Micheál Martin established with the creation of the HSE has failed completely to create value for money and has let patients down.

An OECD analysis of 2009 data shows that Ireland had the highest hospital prices in the OECD – more than twice the average.

This helps explain why the system continued to produce long waiting lists even as health spending quadrupled from 1997 to 2007. Too much of the extra money went into higher prices instead of more and better treatments for patients.

It is certainly true that many health systems with UHI spend more than us. But a report from the independent think tank, Public Policy, shows that this is mainly because their populations are older than ours. When you take this into account, Ireland actually had the most expensive public health system in the OECD in 2010, while its total spending on health (public and private) was the third most expensive.

It was 3 per cent more expensive that the Dutch UHI system, as a proportion of national income, and a massive 6.5 per cent higher than the German UHI system.

A leap forward
If we want sustainably lower costs in Ireland the lesson is clear: we need to move towards the model of healthcare which these and most other high-performing countries use. Continuing to cut costs in the current system is certainly necessary. But real, long-lasting efficiency will only be delivered by a very different type of health service.

The forthcoming White Paper on UHI will contain a comprehensive set of proposals on how we can deliver such a system with robust cost control. It would clearly not be acceptable for UHI to be more expensive than the system it replaces. Therefore, I believe it makes sense to have a cap on public healthcare expenditure so it doesn’t rise above a certain level of national income.

I am confident our proposed model of UHI will deliver, over the longer term, a health service that is not alone more cost-effective and more patient-centred but also of a higher quality.

Dr James Reilly is Minister for Health