Planned cuts far deeper than measures revealed last week

Thu, Sep 6, 2012, 01:00

ANALYSIS:Up to €1 billion will have to be taken off health spending next year to bridge the deficit

CUTS STILL to be made to the health budget in the remaining months of this year and into next year will dwarf what was announced by the Health Service Executive last week.

According to one estimate, up to €1 billion will have to be taken off health spending next year in order to bridge the deficit and meet the demands of the troika funding Ireland’s bailout.

That’s the equivalent of €3 million in cuts every day, out of a total budget of about €13 billion. Changes of this order cannot be made by just tinkering around the edges, and are likely to have a massive impact on the delivery of services. However, before the arithmetic is completed for next December’s budget, the rest of the HSE’s €260 million shortfall has still to be bridged. Only half of this is covered by the cuts announced last week.

Minister for Health James Reilly had promised to reveal his plans to close the rest of the deficit this week, but the outcry over the cuts affecting the disabled and older people threw this strategy off course.

When he does finally show his hand, it is likely to include a once-off early payment from private insurers and the payment of €45 million from the Medical Defence Union. Capital spending will be slashed and there is talk of “time-related savings” on plans for primary care centres and mental health services – ie, simply not spending the money which had been allocated. Some €45 million spent on a greater than expected uptake on the early retirement scheme this year will be recouped from the exchequer, but is still a cost to the taxpayer.

The problem is that many of these items are once-offs which will have to come off the figures next year, on top of whatever new cuts are agreed. That means a €750 million cut, as proposed in last year’s budget, may require total cuts of up to €1 billion to make the books balance.

The pre-budget planning process is already under way in the Department of Health and the HSE, with the troika keeping a watchful eye. The review of Ireland’s bailout released by the European Commission last week gives an indication of what might be on the cuts menu. It says a reform of medical card eligibility is being considered and refers to the possible introduction of “new work models” to drive greater staff efficiency, though this would be achieved on the terms within the Croke Park agreement.

A huge factor behind the deficit in the health service is the failure to introduce charging for all private patients in public hospital beds as planned this year. This will now happen in 2013.

Delays have been experienced in cutting the cost of drugs: talks with the pharmaceutical companies took a long time to start and have achieved nothing so far. Legislation to allow for generic substitution and new pricing mechanisms that would drive down the cost of medicines has yet to be debated in the Dáil.

REVERSAL: ON PA HOURS:

Minister for Health James Reilly has reversed planned cuts to personal assistant hours, but the rest of the savings announced last week by the HSE are going ahead.

The most controversial cut is a €10.8 million reduction in spending on home helps. Some 600,000 home help hours are being cut, on top of a 500,000-hour cut imposed earlier this year.

In addition, 200 homecare packages are being reduced, out of the total of 5,300 packages provided annually. This will save €1.7 million.

The removal of certain supplements and specialist foods from medical card schemes has already taken effect and will save €6 million.

The items which will no longer be reimbursed are Glucosamine, Orlistat, Omega-3-Triglycerides and gluten-free products.

The biggest single cut is the 50 per cent reduction in agency staff and the 10 per cent reduction in overtime. This will save €35 million but is likely to lead to bed closures and other disruption within the hospital system.

The HSE says it will achieve the balance of the €130 million it intends to save through stock and cash management, greater efficiencies and reduced spending.

Some €37 million is being saved through cash and stock management initiatives, €26.5 million through savings in medical equipment, furniture, education, training, travel and subsistence, and €2 million through savings in the procurement of medical equipment.

Finally, although the €10 million cut in personal assistant hours is not now going ahead, the money will still be cut from the disability budget, most likely through a percentage deduction from the grants to groups active in the sector. PAUL CULLEN