Government told HSE overspend could be €300m

The Health Service Executive has told the Government that in a worst-case scenario its financial deficit for this year could be close to €300 million, significantly higher than previously stated.

The director general of the HSE, Tony O'Brien, warned the Department of Health and the Department of Public Expenditure and Reform last month that its latest cash forecasts were indicating a net revenue deficit for the year of about €286 million.

In official correspondence, seen by The Irish Times, he also said this figure could rise as it assumed that funding outside the HSE's control, such as the receipt of income from the British authorities for citizens treated in Ireland, would come in on target.

The correspondence said that in September receipts from the British department of health were €25 million behind expected levels.

Some Government sources maintained that the potential €286 million deficit did not take into account any additional savings that could be generated before the end of the year or any reduction in the rate of spending in the health service.

Minister for Health James Reilly had forecast after the budget last month that the HSE deficit could be about €150 million this year.

Financial projections
A spokesman for Dr Reilly last night declined to comment on the HSE's financial projections on its potential deficit for the year.

One key element in determining ultimately whether the HSE deficit for the year will be close to the €286 million worst-case scenario or nearer the Minister’s estimate will be whether €104 million in accelerated cash receipts earmarked from health insurers actually materialises.

Over recent weeks there has in effect been a stand-off between the health insurance industry and the Department of Health over this issue.

The industry has linked the issue of the €100 million in accelerated receipts to reforms for charging insurers for private patients treated in public hospitals, which the Minister wants to introduce from January.

Fee structure
The Minister said a new fee structure he is seeking to put in place was aimed at generating €30 million in revenue.

Insurers have contended the new fees would realise far more for the Government and have maintained that independent assessments on the issue, which the Minister had sought, had validated their position.

The representative body for the sector, Insurance Ireland Health Insurance Council, yesterday said the current proposed rates would raise an additional €130 million for the HSE rather than the €30 million announced by the Minister.

The council said this represented an additional €100 million over and above the amount planned for and was completely unacceptable.

“These charges come into effect on January 1st, 2014, and if left unchanged they will result in private health insurance customers again having to pay more for their health insurance,” it said.

The exact level of supplementary funding to be provided by the Government to the HSE is likely to be decided formally over the coming week or so and will be debated in the Oireachtas in December.

The Department of Health is considering the HSE’s service plan for next year, which was scheduled to produce cuts of between €666 million and €1 billion.