Can Ire­land have na­tional health with­out an NHS?

Irish Independent - Business Week - - Brendan Keenan -

HOW very odd. There was a huge fuss and to-do in Bri­tain re­cently for – not a wed­ding, or a fu­neral, or a birth­day – but the an­niver­sary of the Na­tional Health Ser­vice. Does any other coun­try have a na­tional com­mem­o­ra­tion for the cre­ation of its health sys­tem?

But then, the NHS is odd. First of all it was a gen­uine act of cre­ation, largely by the re­mark­able Labour min­is­ter Aneurin ‘Nye’ Be­van. Most health ser­vices were long in ges­ta­tion. He was also min­is­ter for hous­ing in war-dam­aged Bri­tain and went a long way to­wards fix­ing that too. They cer­tainly don’t seem to make them like that any­more.

The health rev­o­lu­tion which fol­lowed made the NHS the near­est thing Bri­tain has to a na­tional em­blem, roy­alty apart. It is also re­garded by the pub­lic as the best in the world.

That may have been true for a while, but hardly stands up any longer. Even so, one of the most ef­fec­tive lies in the men­da­cious Brexit cam­paign was that EU mem­ber­ship was bad for the NHS.

One might per­haps have ex­pected the an­niver­sary to be marked a bit more here. The NHS is some­thing of a touch­stone for Ir­ish health pol­icy wonks, be­cause it is ‘free’ to the pa­tients, with the money com­ing al­most en­tirely from tax­a­tion.

A wist­ful re­gard for this method runs through the Oireach­tas com­mit­tee Sláin­te­care re­port whose im­ple­men­ta­tion, we were told last week, is about to com­mence. The com­mit­tee chair­woman, So­cial Demo­crat co-leader Róisín Shor­tall TD, de­scribed it as Ire­land’s ver­sion of the NHS.

That raises a lot more ques­tions than just hav­ing ser­vices free to the pa­tient. The com­mence­ment seemed more about plans, boards and re­ports than health­care. That’s a bit out­side this col­umn’s re­mit, but as Ms Shor­tall, an eco­nom­ics grad­u­ate her­self, said; it’s all about the fund­ing.

In­deed it is, and that is about as big an eco­nomic is­sue as one could find. The con­fu­sions over the Ir­ish health ser­vice – such as what ex­actly is it do­ing, how many work for it and can a fifth of the youngest pop­u­la­tion in Europe re­ally be wait­ing for med­i­cal treat­ment? – is matched by ob­fus­ca­tion over the eco­nom­ics.

A re­cur­ring theme in the dis­cus­sions has been that the fund­ing of the Ir­ish sys­tem is re­ally odd and the ob­jec­tive is to make the ser­vice like that of a nor­mal EU coun­try. There is, in fact, no such thing as a ‘nor­mal’ Euro­pean health ser­vice. The NHS is not in the least nor­mal – quite ex­cep­tional in fact, and not al­ways in a good way.

The in­valu­able source for the eco­nom­ics of health sys­tems is the OECD ‘Health at a Glance’ pub­li­ca­tion – a cor­nu­copia of sta­tis­tics. Luck­ily, the eco­nom­ics is a bit more straight­for­ward than day care treat­ments or wait­ing times for cataract op­er­a­tions, but the dif­fer­ences between the sys­tems still makes com­par­i­son tricky.

The com­mit­tee is right that health in­sur­ance plays al­most no role in the UK sys­tem. It rec­om­mended that Ire­land move to­wards that model, but it is not the norm. In the OECD, only Ice­land, Latvia, Mex­ico and Turkey have sim­i­lar sys­tems, where in­sur­ance makes up 10pc or less of health spend­ing.

In­sur­ance sys­tems are the norm, not the ex­cep­tion, but they vary a great deal in kind. Sup­ple­men­tary in­sur­ance, to buy ex­tra ben­e­fits, is com­mon. Around 80pc of the pop­u­la­tion in the Nether­lands has such in­sur­ance. More com­mon still is com­ple­men­tary in­sur­ance, which meets any ad­di­tional costs not cov­ered by the gen­eral sys­tem. Al­most ev­ery­one in France has such in­sur­ance.

Ire­land, though, has “du­pli­cate in­sur­ance,” de­fined as cov­er­ing care which is al­ready free. This is where we are ab­nor­mal. At 45pc of the pop­u­la­tion, Ire­land has the high­est pro­por­tion of such in­sur­ance, fol­lowed by New Zealand at 29pc.

We all know the rea­sons – the abil­ity to jump the queue – but it misses the point by a coun­try mile to sug­gest that the Ir­ish prob­lem can be solved by re­plac­ing in­sur­ance de­signed to cir­cum­vent short­ages while be­ing un­able to do any­thing about the short­ages.

Wait­ing lists and high costs. This the fund­ing is­sues which no one is will­ing to dis­cuss and which will doom all these grand plans be­fore they be­gin – if they ever be­gin.

The OECD uses three mea­sures on health spend­ing (at least) – as per­cent­age of GDP, of dol­lars per per­son ad­justed for pur­chas­ing power, and as a per­cent­age of govern­ment rev­enues.

The true level of Ir­ish spend­ing was hid­den by an ex­ag­ger­ated GDP but this has now grown so grotesque that no-one dare de­fend it, al­though it is still the OECD method. The best mea­sure now is GNI* (ad­justed na­tional in­come). Ir­ish health spend­ing on this ba­sis is over 11pc, which is just about the high­est in the en­tire OECD.

The ad­justed dol­lars mean they buy the same amount in each coun­try, which re­moves the ef­fect of high prices in Ire­land. On that ba­sis, the youngest pop­u­la­tion in Europe spends $5,500 per per­son per year. The British spend $4,200.

The share of govern­ment rev­enue, at just over 18pc, tells a tale. It is about the same as the UK, which is an in­di­ca­tion of how much less rev­enue the British govern­ment col­lects, with grow­ing ev­i­dence that it does not col­lect enough. Were the NHS spend­ing at the Ir­ish level, it would have an ex­tra €80bn a year to play with.

Looked the other way, the Ir­ish sys­tem would have to cost €1bn less than it does to be a “nor­mal” Euro­pean coun­try, and €2bn less to reach the NHS level. That is what hap­pens when the money all comes from eter­nally stretched pub­lic funds.

This is the ele­phant from which ev­ery­one care­fully averts one’s eye. It is sim­ply not pos­si­ble to fund the kind of ex­tra spend­ing which the ex­ist­ing sys­tem would need to match the best ser­vices in Europe and the rise in de­mand for ser­vices which comes from an age­ing pop­u­la­tion.

Sim­ple bud­get cuts will not do it. All health ser­vices need an an­nual in­crease just to main­tain stan­dards. The ef­fects can be seen from the freeze on spend­ing in Ire­land after the crash and ac­tual cuts in the UK.

Nor is it any good pre­tend­ing that the sys­tem can be im­proved sim­ply by adding more ser­vices with vague, or even non-ex­is­tent, cost­ings. A sim­ple ques­tion: how many staff will be re­lo­cated or be­come re­dun­dant and how many fa­cil­i­ties closed be­cause of the switch to pri­mary care? An­swers on a post­card please.

The com­mit­tee is right about one thing. With the Govern­ment own­ing most of the hospi­tal sys­tem, a switch to Euro­pean-style in­sur­ance would not work; as the Labour party found out and Fine Gael, who seem not to have read the doc­u­men­ta­tion, found out again.

The­o­ret­i­cally it would be eas­ier to go to a purely pub­lic NHS sys­tem but the ex­ist­ing pro­hib­i­tive costs will make it po­lit­i­cally and fi­nan­cially im­pos­si­ble. The loss of their du­pli­cate in­sur­ance would be ac­com­pa­nied by sub­stan­tially higher taxes for those who have such in­sur­ance, since these are the peo­ple who pay the bulk of in­come tax.

Yet no-one asks why the costs are pro­hib­i­tive or why only the bizarre Amer­i­can sys­tem will soon be more ex­pen­sive and what can be done about it. That is prob­a­bly be­cause they sus­pect they know what the an­swers would be.

Costs will doom all these grand plans be­fore they be­gin – if they ever be­gin.

It is not pos­si­ble to fund the kind of ex­tra spend­ing the ex­ist­ing sys­tem would need to match the best ser­vices in Europe

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