Howlin blames Reilly for €360m health service overrun

Minister says extra funding required last year due to ‘delays’ in sourcing cheaper drugs and charging insurance companies for private patients in public hospitals

James Reilly: planned savings not realised. Photo: David Sleator

James Reilly: planned savings not realised. Photo: David Sleator


Minister for Public Expenditure and Reform Brendan Howlin has blamed Minister for Health James Reilly, in part, for the Government having to provide more than €300 million in additional funding for the health service last year.

In a report to the Dáil Public Accounts Committee, Mr Howlin pointed to Dr Reilly’s failure to deliver on plans to generate extra revenue from insurance companies for subscribers treated in public facilities as one reason behind the cost overrun in the health service budget. Last November, the Government agreed to provide supplementary funding of about €360 million to address a financial deficit in the health service – despite saying for months no further money would be available.

HSE budget model
In March, the Dáil’s spending watchdog, the Public Accounts Committee, urged in a report that the Department of Public Expenditure and Reform should review the model used to determine the budget allocation to the Health Service Executive last year, given that some of the anticipated savings failed to materialise.

In a response to the report, sent to the Public Accounts Committee at the end of June, Mr Howlin said he did not accept this recommendation. He said a central plank of the HSE’s service plan and the budget which underpinned it last year – as approved by the Minister for Health – was the achievement of savings in a range of areas to ensure adequate funding to sustain services to the greatest extent possible.

“It is clear delays in the agreement with the pharmaceutical industry [on reducing the cost of drugs], the decision by the Minister for Health not to proceed with the legislation in relation to private patients [on charging health insurance subscribers treated in public hospital beds] and pressure on services, particularly on the medical card and hospital sector, resulted in the requirement for a supplementary estimate in 2012.”

Dr Reilly did not introduce the legislation regarding payment for private patients treated in public hospitals as planned last year. Instead, he secured advance payment of about €125 million from insurers. The financial position in the HSE this year does not, at this stage, appear as acute as in 2012. However, there are concerns it could deteriorate later in the year.

A critical issue will be the amount actually saved by measures set out in the new Haddington Road agreement. The budget for the year is based on €150 million in savings being realised in this area. At the end of April, the HSE had overrun its budget by €25 million.

However, last week The Irish Times reported that the health service would have to find an additional €30 million due to a shortfall in the amount scheduled to be generated this year through cuts in fees to GPs and pharmacists. The Department of Health had originally estimated that €70 million would be realised as a result of the cuts, which were permitted under the Government’s financial emergency legislation.

Year’s midpoint
However, only €40 million will be saved this year, as the cuts were only announced last week, over halfway through the year.

In his response to the Public Accounts Committee, Mr Howlin said he accepted a separate recommendation that where a financial estimate presented to the Dáil was predicated on the outcome of future negotiations, the relevant Minister should be required to inform an Oireachtas committee of the timescale envisaged and to give progress reports at regular intervals.