Universal health insurance, based on competition, may not be the best option for Ireland
Opinion: The principles on which the British NHS were founded are still an inspiration
Minister for Health James Reilly has outlined the merits of competition-based universal health insurance (UHI) to achieve universal health entitlements for Irish citizens ( Irish Times , February 18th, 2014).
However, a national debate has yet to take place on the differing ways of achieving a sustainable universal service.
UHI systems are premised on a belief that competition between insurers and providers will promote efficiency and equity. The German system, termed the Bismarck model, has developed over 130 years and is characterised by a predominance of mandatory social health insurance (SHI) with multiple competing sickness funds and a public/ private mix of providers. The Dutch and German models undoubtedly have benefits, especially in terms of equity. But UHI is not without problems and in the case of Holland it has proved complex to comprehend and implement.
Such systems are normally more expensive than other universal arrangements. The percentage of GDP spent on healthcare is typically above 11 per cent across all UHI systems – the cost of healthcare has risen in Holland and is now more than 12 per cent.
This cost contrasts
with tax-funded systems such as that of the UK, that typically spend under 10 per cent of GDP on healthcare. When demand increases in a healthcare market, supply can also rise. A supplier-induced demand can be created that can increase healthcare utilisation and cost.
Therefore a valid concern with a competition-based model of the universal system is not just the expense, but the potential for overdiagnosis. This can occur in all healthcare systems, with patients being harmed through excessive diagnostic testing and procedures of dubious benefit. But a competition-based model of UHI, despite regulation, could incentivise the phenomenon more than a tax-based system would.
If the competition-based version of UHI was the only mechanism to achieve equity in healthcare there would be no debate, but there are alternative avenues to deliver universality. First, universal entitlement to GP care can be provided without UHI. The Adelaide Hospital Society, in its 2008 document Social Health Insurance: Further Options for Ireland , reported that the funding gap to provide medical cards to the entire population would be €217 million. The transfer of chronic disease management to the community would require more resources and negotiation with representative organisations, yet it is clear that progressive taxation measures alone could allow this to happen.
The second great inequity in the current Irish system is the access barrier to secondary care. The Government’s solution of a payer-provider split is effectively a privatisation (for profit) of the entire Irish hospital system. While this could prove progressive and equitable, there may well be better options.
Many universal systems adopt single-payer models that do not involve a competitive insurance market which then purchases public or private services. One successful example is Canada. The 2010 report from the Adelaide society argued that “extreme caution is required when considering introducing competition between social health insurance funds in a SHI system”. It proposed a single health insurance fund, separate from the exchequer, regulated by a social health insurance authority. Such a system operates successfully in Taiwan – and it may well represent the best option here.
But do we need to look that far? The founding principles of the British NHS are solidarity and fairness. This contrasts with Ireland, where almost 50 per cent of the population buys private insurance to access a duplicate system, enabling them to jump queues. The private system cherrypicks lucrative, less risky elective care, reflected in its low contribution to overall health expenditure. We cannot square the circle of inequity within the status quo. This problem was caused by successive governmental support of the private insurance market. Currently 70 per cent of the Irish health services are funded through taxation and 15 per cent through private insurance. Paying for hospital services almost exclusively through taxation and minimising our current private system is not an unrealistic proposal. It could be achieved through accepting higher progressive taxation and reducing incentives to private healthcare to incentivise the uptake of private services into the under-resourced public system.
I admire Dr Reilly’s desire to achieve universality, but there are several ways of getting there. A national debate is needed on how we achieve this shared aim.