Challenging Path Towards Universal Health Insurance By Oliver O’Connor Former Special Adviser to the Minister for Health and Children 5 April 2011 The Programme for Government makes an ambitious promise to introduce an entirely new system of Universal Health Insurance less than six years from now. A huge amount of work needs to be done to achieve the scale of the changes involved. There are separate tasks involving economic, legal, industrial relations, administrative, governance and financial change. Even sequencing and co-‐ordinating these tasks would be challenging over any timeframe, but especially in less than six years. First, a great deal of clarification of what will actually be involved will be needed for all concerned – for patients and taxpayers, for 2,200 consultants and 2,500 GPs, for over 100,000 public health service staff, for 52 acute public hospitals and 19 private hospitals, for primary care providers, and, critically, for the health insurers who are supposed to have a pivotal role in the whole system. Most international experience cautions against vast system change in health services, if only because health services have to be kept going while change happens. In health, there’s no option like shutting a train line each weekend while signaling is upgraded. It’s not surprising that the Government says the first step is to produce a White Paper on universal health insurance, guided by a universal health insurance commission. It will take some time itself to write a coherent White Paper. There are some unavoidable decisions that will have to be made. For patients, the questions will be, what health care benefits will they get? And what limitations will there be? For example, free GP care for all is promised by 2015. Will this mean a right to unlimited visits, day and night, to a GP? Will it mean free physiotherapy, counseling, dietary advice, podiatry and all the associated primary care services, not to mention drugs? Hardly, but that’s still unclear. What sort of hospital care will be provided in the insurance package in 2016? The Programme for Government says it will mean ‘guaranteed access to care for all in public and private hospitals on the same basis as the privately-‐insured have now’. But even now, the privately-‐insured do not have the same access to all private hospitals. There are many different plans offering many different levels of cover and deductibles or co-‐payments. The Minister for Health has indicated that the hospital benefits package will
probably be akin to the traditional VHI Plan B. People will want to know how much it will cost them. But they will also ask if traditional Plans C, D, and E will also be available or permitted by Government. In most countries with compulsory health insurance, people are free to buy add-‐on insurance, giving access either to additional hospital facilities or services, or choice and level of doctor/consultant. So, while philosophically people approve of a ‘one-‐tier’ health system, they will be keenly interested to know if the Government is to allow choice and control over which doctors and hospitals they can use, and how much health benefits they can freely pay for on top of the essential State package. In a purist sense, a one-‐tier health system would provide no freedom for people to purchase any of the benefits in the State package from outside the State system, or to purchase benefits beyond the State package. This may or may not be what the Government intends. The consequences and limitations of the declaration of principle about a one-‐tier system have yet to be spelled out. For example, the Programme for Government states, ‘Insurers will not be allowed to sell insurance giving faster access to procedures covered by the UHI package’. Insurers may not sell faster access explicitly, but will they be allowed sell a plan giving access to certain hospitals, or for some new treatments, that may not be covered by the basic State package? Would that be a one-‐tier system? People will also be concerned about costs. If there are new benefits on offer to some people – e.g. faster treatment in more hospitals – there will be new costs. For sure, these costs may be funded by some savings elsewhere, but many people doubt that the extent of eventual new benefits can be funded by the scale of cost savings achievable. Meantime, the health service has to extract big cash savings just to lower public expenditure, not to pay for new benefits. Either the new benefits will be very limited, or some people will pay more, through tax or compulsory insurance. We don’t know yet. Cost savings come from someone’s pocket. There is a promise to pay both GPs and consultants less. How much less? What remuneration will GPs accept for no longer earning fees from non-‐medical card patients? Will the cost, which Labour put at €389m, replace or reduce what GPs currently earn in fees? GPs are already saying they are stretched and have to charge medical card patients for blood tests. Consultants, as a group, are probably earning €400 -‐ €500m from private insurance and consultation fees, on top of the State bill of €500m for their pay and pensions. How much of that will they give up? Whatever the amount is, and however justifiable, it will not be conceded easily or quickly. Crucially, the White Paper is going to have to clarify the exact role for health insurers. One of the most potent statements in the Programme for Government is the declaration, taken from the Labour Party health document, that ‘the Universal
Health Insurance system will not be subject to European or national competition law’. The European Court states that competition law does not apply to bodies that are “entrusted with the management of statutory health insurance and old-‐age insurance schemes which pursue an exclusively social objective and do not engage in economic activity”. No commercial insurer would see itself as fitting this definition. For them, engaging in economic activity is their entire purpose. A Dutch legal academic, Johan W van de Gronden, has commented that a health system based on solidarity would exempt managing bodies or insurers from EU competition law, only so long as they did not offer additional health care policies. Health insurers with one policy: is this the future in Ireland? Without competition law, it’s not a market, it’s a social scheme. It is not the Dutch private insurance system, where profit and competition on benefits is allowed. The Programme for Government scenario of customers being offered competing insurance products, but with no EU competition law applying, raises more questions than answers. Alongside the declaration that the VHI is to be kept in State ownership, we could end up with no commercial insurers. Meantime, the Government will have to deal urgently with the question of the capitalisation and authorisation of the VHI, as the European Commission presses its position at the European Court that the continued exemption for VHI from normal solvency and reserve requirements is illegal. A State injection of capital of perhaps several hundred million euro into the VHI may seem small compared to the banks, but it will still have to be justified for the EU. Commercial insurers are still likely to object. How this is handled will give a clear indication of the direction of policy for the whole health insurance market. It would be an even greater step if the system is designed to exempt all providers of publicly-‐financed healthcare – hospitals, primary care providers, diagnostic services, nursing homes -‐ from competition law. The ‘money follows the patient’ payment system (which will be budget-‐limited money following the patient) relies on there being a range of competing health providers to offer services. It is very difficult to see how a true mix of private and public providers will be sustained if competition law does not apply and if there is a high degree of State control over pricing, policies and services, and implicit subsidies for State entities. If this is what the Government wants, this is what it will get. Clearly, it has the right to decide. But patients, staff and providers are entitled to clarity, too. Finally, as practicality hits, the concept of universalism needs clarity. Universal cover
does not require insurance. Healthcare financed by compulsory pay-‐related contributions sounds like an income tax-‐funded system – even if it is called social insurance. In 2005, pre-‐crash, the National Economic and Social Council published The Developmental Welfare State, where it argued in favour of what it called ‘tailored universalism’. The role of the State was ‘to ensure services are available to all members of society, at high standards and in ways that are equitable, but tailored to people’s circumstances (including their ability to pay) rather than uniform.’ It also supported a mix of public and private provision. The new Fair Deal nursing home scheme is consistent with this approach. One could do worse than dust down some of the thinking that was developed in the now-‐maligned social partnership era under previous Governments. Not everything was wrong then, and not all the solutions are in a totally new health system design. Universal health care does not, and will not, mean unlimited health services, free at the point of use for everyone, irrespective of income. This is unaffordable, whether insurance or tax-‐financed, especially in current financial circumstances. A universal framework for GP care, with tiered contributions according to means, was recommended last year, and is achievable, if phased in. Greater equity in access to hospital care is also achievable, with money following the patient. Both can be done, step by step, with or without the complexity of moving to compulsory health insurance. ENDS