Taxpayers who cannot afford private healthcare may end up taking the financial risk for private hospitals, writes Fintan O'Toole.
WITH LAST week's Supreme Court ruling on private health insurance, it must be obvious to even the most obtuse and ideological observer that the Government's policy of Americanising our health system is in deep trouble. The ruling exposes a simple contradiction. Government policy on health insurance has been based on the belief that it is possible to impose fairness and social solidarity on a system whose whole attraction is that it allows people with money to purchase advantages over those that don't.
Unpleasant as the immediate implications of its ruling may be, the Supreme Court has done us a big favour by showing how hard it is in practice to marry so-called free-market principles ("competition", "consumer choice") to the idea of healthcare as a basic human necessity in which everyone's life should have the same value.
There was always a hypocrisy inherent in the notion that one could have real "community rating" in a system from which half the population is excluded because they can't afford the insurance. Why should profit-driven companies be expected to treat the weak in the same way as they treat the strong, when the State itself is actually working to enshrine a two-tier system through its morally obnoxious co-location policy?
In a sane political system, in which policy-makers actually responded to evidence, it would be blindingly obvious that we need a radical change of direction. Even in narrow economic terms, the co-location of private hospitals with public hospitals is looking increasingly dodgy. For a start, its impact on the cost of medical insurance now has to be factored in to the new instability in that market. One of the things Mary Harney has never come clean about is the reality that co-location will, in and of itself, significantly increase the cost of health insurance.
You don't have to take my word for this. One of the main players in the private hospital business, the Beacon Medical Group, which has the contracts to build co-located hospitals at Cork University, Limerick Regional and Beaumont in Dublin, has been admirably clear about this. Its chief executive Michael Cullen explained to the Sunday Tribunea while ago that insurers' costs are currently artificially depressed because many of their clients actually occupy designated public beds, for which the HSE cannot charge. So for every €25 million the HSE spends on the care of private patients, it gets just €10 million back from the insurers.
Under co-location, those patients will be transferred to the new, very expensive, for-profit hospitals, which will charge the full cost of their care to the VHI, Quinn Healthcare or Hibernian. These insurers will in turn pass these costs on to their customers. So, co-location alone will probably increase the cost of health insurance by about 20 per cent. This is additional to medical inflation of at least 10 per cent a year, and the likely increase in costs for more elderly and vulnerable patients as a result of the Supreme Court ruling. There have to be real doubts about whether such a large proportion of the population can continue to afford this insurance, especially in much tougher times.
This may be part of the reason for the other obvious difficulty with the co-location plans - funding. In the midst of the credit crunch, banks are taking a hard look at the economics of Mary Harney's flagship scheme. They are not at all sure that they want to commit €1.5 billion to building the seven proposed hospitals. What they're looking for - and this is the thing to watch - is a guarantee from the State that it will effectively underwrite the operation of the private companies involved by protecting the banks' interests if those companies collapse.
The banks have a strong hand in making these demands - they know that the Government would be in deep trouble if the whole scheme, which is already highly unlikely to provide the planned new beds within the expected five-year timeframe, is pushed back even further. But, if they succeed, we could end up with the grotesque situation where the State (including all those taxpayers who can't afford health insurance) effectively takes the financial risk for supposedly privatised healthcare.
Let's remember, too, that apart from the rising cost of insurance, there is another factor that could completely undermine the economics of co-location: a real improvement in the public healthcare system. The rise in private health insurance cover in Ireland is driven by the utterly justified fears of ordinary people that, without it, they, their children or their parents, will simply not get access to the treatment they need. If the Government is not lying, and the public system is actually going to provide that treatment, many people will not pay money they can ill afford.
Instead of tinkering with the health insurance market and digging itself deeper into the co-location hole, the Government needs to do the kind of U-turn it has already executed in relation to Mary Harney's other grand scheme, the HSE. It should use the Supreme Court ruling as cover for a rapid retreat, and move instead to a system of universal health insurance.