Universal health insurance will drive up costs for many

Universal health insurance may involve certain issues that would not arise in a tax-funded system

Minister for Health Dr James Reilly. Photograph: The Irish Times

Minister for Health Dr James Reilly. Photograph: The Irish Times

Mon, Feb 24, 2014, 07:28

The rift between Minister for Health Dr James Reilly and Minister for Public Expenditure Brendan Howlin over universal health insurance as detailed in this newspaper highlights a deeply dysfunctional relationship at the heart of government, a matter which must be of great concern.

However, the reports of the bickering also raised serious questions about the move to universal, or compulsory, health insurance which is the fundamental health policy objective of this government.

Last year, my party commissioned and published an independent analysis of what compulsory health insurance might mean for the Irish people. The report was authored by Dr Brian Turner, health economist at University College Cork.

The Government’s proposed reforms envisage a continuation of taxation as the main funding source for our health services, but supported by universal health insurance. This would represent a major change to the nature of health insurance in Ireland.

Furthermore, it is a major change that could be deeply problematic as universal health insurance may involve certain issues that would not arise in a tax-funded system.

Under Government plans, it would be mandatory to purchase health insurance, for the purposes of hospital and some primary care cover.

It is anticipated providers will compete to provide value for money to purchasers, with insurers permitted to engage in selective contracting – in other words not being obliged to cover all providers.

Public hospitals are to become independent trusts or organised into groups. That reorganisation of the public hospital system is under way and these trusts or groups will be in competition with private hospitals or groups.

The basic premise is that competition between insurers will keep premiums under control for consumers.

That is the theory. However, it has to be pointed out that, to date, competition in the Irish private health insurance market has not kept premiums under any sort of control. This is not to say that competition is responsible for the premium hikes, but nor does it follow that competition will keep costs under control.


Affordability
Another issue that arises in relation to the affordability of universal health insurance cover is that section of the population that currently has neither a medical card nor private health insurance. Central Statistics Office figures indicate that this cohort accounted for 23 per cent of the adult population in 2010.

If these people do not have a medical card then it is unlikely that they would fall into the 40 per cent of the population for whom universal health insurance premiums would be paid for in full by the State. Therefore, they will have to pay some or all of their premiums themselves.

However, given that they do not currently have private health insurance, the obligation to pay premiums for universal health insurance would represent an extra financial burden.

Figures from the Health Insurance Authority show that the average premium paid per person in 2012 was €1,048. This has not gone down since then.

So even if payment is subsidised to a certain extent, paying for universal health insurance could be beyond the capacity of many of those not currently paying for private health insurance.

On top of this, if premium inflation is not brought under control then big increases in exchequer funding will be required year on year to continue paying for these premiums.

The knock-on effect of this is that the Government would need to either raise additional tax revenue or reduce spending in other areas to compensate.

Bear in mind that universal health insurance with multiple purchasers of care means the State surrendering some control over the overall level of resources devoted to health.

It gives responsibility for the purchasing of healthcare to private insurers. Now healthcare is rationed in every country as there is no country that has the resources to deliver all of the healthcare needs of its citizens when they require them. Universal health insurance means insurance companies will be in charge of the rations and it is not clear at this point how they will carry this out.

Furthermore, there must be concern about the cost of such a system. Insurance-based systems tend to have higher spending on health than those funded primarily from taxation.


Dutch model
The Dutch system, on which Fine Gael based much of its proposals, introduced universal private health insurance with managed competition in 2006. Health care spending per capita increased by 46 per cent between 2005 and 2010.

This system is based on competing insurers, with consumers obliged to purchase insurance, and is similar to what the Government wants to bring in here.

Last year, when we published our report, it was estimated those with no public or private health cover may have to pay over €1,000 a year in universal health insurance premiums,

If Howlin’s department is right, that may have been an understatement. They maintain that people with GP-visit cards or those with no medical card or private health insurance could pay up to €1,672 – €32 per week – for the standard package of benefits under universal health insurance.

Before the last election Reilly told us that “no one will pay more than they pay now”. It is increasingly clear that this was just untrue.


Billy Kelleher is a TD for Cork North-Central and the Fianna Fáil spokesperson on health

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