Ireland - Healthcare insurance for all offers best remedy

International Journal of Health Care Quality Assurance

ISSN: 0952-6862

Publication date: 1 May 2009



(2009), "Ireland - Healthcare insurance for all offers best remedy", International Journal of Health Care Quality Assurance, Vol. 22 No. 3.

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Emerald Group Publishing Limited

Copyright © 2009, Emerald Group Publishing Limited

Ireland - Healthcare insurance for all offers best remedy

Article Type: News and views From: International Journal of Health Care Quality Assurance, Volume 22, Issue 3

Keywords: Healthcare resourcing, Public/private healthcare, Healthcare access equality, Quality healthcare provision

Given the recent rise in private health insurance premiums by VHI and Quinn Healthcare, and the Government’s response to subsidize older people for their risk-rated insurance premiums in the context of the failure of our risk-equalization scheme, it is surely time for a review of private health insurance (PHI) as a means of financing healthcare.

PHI has undoubted advantages in that it provides for increased coverage for healthcare costs such as hospital and GP charges, funds innovation in the private sector such as diagnostic scanning, finances private hospital care, provides additional income for doctors, increases choice for patients and, critically, enhances access to care.

Unfortunately, because it is part of a dual funding system for healthcare in Ireland, it has major disadvantages: healthcare cost increases are fuelled by a combination of increasing demand for healthcare by the insured and increased utilization of medical procedures in hospitals; a reduced availability of doctors in public hospitals; limits in the shift of demand from the public to private sector – for example, long waiting lists remain in public hospitals; and a failure to significantly reduce cost pressures in the public system. Importantly, because PHI is not based on income and enhances queue jumping, it reduces the amount of care based on need, and it increases care based on ability to pay out of pocket or via PHI. A frightening example of this, which many readers will remember, was the case of Susie Long in Kilkenny, the public patient who had a test for bowel cancer after nine months, while a patient with PHI that Susie met during her treatment had the same test within a matter of days.

The OECD has confirmed such inequity in Irish healthcare. Professor Eddy Van Doorslaer of the OECD’s Health Equity Research Group published research on income-related inequality in access to healthcare in 2004, and showed that PHI in Ireland is the greatest contributor to inequity in access to hospital care. Miriam Wiley and Brian Nolan of the ESRI found similar findings in their study of admissions to public hospitals in Ireland. An OECD report on PHI in Ireland in 2004 also expressed concern at the inequity driven by PHI and stated “this will remain a policy concern”, as the inequity is driven by the financial incentives for consultants through PHI.

Until our funding system is unified, this will always be the case. As economist Robert Evans of the University of British Columbia in Vancouver points out in relation to PHI in general: “the opportunities for enhanced income through private charges can progressively undermine access in the public system. The higher returns in the private system lead doctors to limit their time and effort in the public system, thus increasing pressure on patients to opt for private care and payment.”

I must stress that it is not the doctors’ inherent tendency to treat individuals in an inequitable way; it is the financing system that creates the perverse incentives that lull doctors into such practice. It is politicians who have created this financing system and they are the only people who can change it.

Another inequity is the annual €300 million subsidization of PHI premiums by all taxpayers, including those who cannot afford PHI. Prof Adam Wagstaff of the London School of Economics has found that, because PHI in Ireland is not income based and is subsidised, our health financing system is regressive: that is, higher income groups pay proportionally less of their income for healthcare than middle-income individuals. The recent additional levy of €160 per insured member will further increase this inequity, as the levy itself is not income based. Such tax subsidization of PHI is termed “covert” taxation, as it is not as readily apparent to the taxpayer as an increase in direct taxation.

PHI subsidies are also an inefficient use of taxpayers’ money, as shown by Stephen Duckett of La Trobe University in Melbourne and John Duckett of the Australian National University. The centre-right wing government of John Howard spent $2.1 billion on their PHI tax rebate and only managed to shift Aus$700 million healthcare cost on to the private sector.

Research in Canada in 2004 by Professor Carolyn Hughes Tuohy shows waiting lists for public patients respond to infusions of public finance, not private finance.

This is exemplified in the Irish context by the fact that cuts in public patient waiting lists had not occurred despite high levels of PHI in Ireland and had to await the arrival of the taxpayer-funded National Treatment Purchase Fund. In Australia, the additional purchase of PHI by consumers resulted in an increase of 16 per cent in private patient discharges from Australian hospitals, but public patient discharges rose by only 1 per cent.

The expected shift in demand does not occur.

If we are serious about quality in healthcare as defined by the Institute of Medicine in the USA, then I believe we will have to modify our system of financing. The institute defines quality in healthcare as safe, effective, timely, efficient, patient-centered and equitable.

PHI-driven healthcare can hardly be deemed either economically efficient or equitable, and there are also question marks over safety, as exemplified by the Health Information and Quality Authority’s report on the Barrington’s hospital breast cancer report.

Government-controlled systems, such as our own, do not provide a system as safe, timely or efficient as we would wish either, unless a large proportion of GDP is spent on healthcare, as in France and Canada. Even Canada, with a government-controlled health insurance system, had waiting list problems in the nineties and earlier this decade.

So PHI has more disadvantages than advantages, if equity and quality are key principles of healthcare systems. But PHI systems can be encouraged to drive such principles if governments decide such principles are a key policy requirement in PHI markets.

One European government that has successfully driven such principles in the PHI market is Holland.

The government in Holland has developed a system of insurance that has unified the public and private insurance systems into a private social health insurance system, whereby all individuals must purchase income-related health insurance.

The differential between the private and public patient has been abolished.

The best prospect is a unified insurance-funded system, such as that which operates in The Netherlands, with a plurality of providers, including autonomous state-owned institutions, private non-profit institutions and a limited for-profit private sector, under a strict government regulatory framework that specifically promotes quality in healthcare.

We may then achieve the desire of many people in this country to truly have “the best healthcare system in the world”.

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