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