Appealing headlines but are the reforms just too ambitious?

THE Labour Party proposals for reform of the health system were released yesterday and reaffirm the party’s long-standing commitment to universal health insurance.

There are some similarities with Fine Gael’s proposals but also some significant differences. The reforms planned are ambitious and would require a second term in government to be fully implemented.

The headlines are appealing — an end to the two-tier system of hospital care, no more out-of-pocket fees for GP services or prescription drugs, improved access and greater efficiency. However, the proposals involve significant changes in reimbursement for many healthcare providers.

In the primary care setting Labour proposes the removal of charges which are currently faced by a majority of the population for GP visits and prescription drugs. This would be a positive development as it wouldencourage people to seek treatment at an earlier stage of disease, thereby reducing the long-term cost of care.

The proposals include universal primary care insurance, which would cover all residents, and mandatory registration with a family doctor. Primary care teams would deliver more than just GP services, and practice nurses would have an increased role in primary care delivery.

The cost of providing “free” GP care (it will have to be paid for via increased contributions rather than payment at the point of delivery), abolishing the prescription charge for medical card patients and expanding community and long-term care is estimated at €490m. This will be met by savings on drugs costs, the removal of the need for tax relief on GP fees and savings from hospital consultants’ pay and the HSE.

On the hospital side, the current public/private divide will be eliminated and universal hospital care insurance will be introduced. Hospitals will become independent and compete, with money following the patient. A standardised benefit package will be specified, while insurers would be free to provide supplementary insurance above this level.

Under Labour’s proposals, a public insurer will be created, combining the National Treatment Purchase Fund and the part of the HSE that currently funds public hospitals. Individuals will be free to choose between this insurer, VHI (which will not be privatised) and other private insurers.

The state will pay premiums on behalf of those on lower incomes and subsidise premiums for those on middle incomes. The document is not explicit about whether premiums will be income related or community rated, but it would suggest the former, which would be more progressive than Fine Gael’s community rating proposal.

The cost of universal hospital care insurance will largely be met by increased efficiency savings. However, this is based on an assumption that all Irish hospitals will operate to the efficiency levels of the best international ones, which may not be realistic. Increased reliance on primary care will help but is unlikely to go far enough. Furthermore, the costs are based on semi-private accommodation, although it is unclear whether public wards will be scrapped.

Two of the more interesting proposals are contained in an appendix. One involves dramatically cutting the solvency reserves that insurers are required to hold, while the other requires a cash injection of €410m to the new public insurer, although it is unclear where this will come from.

However, the most controversial elements of the proposals are likely to be the significant changes to the reimbursement of GPs and hospital consultants (numbers of which will be increased). Currently, most receive a combination of capitation/salary and fee-for-service payments for public and private patients respectively. Under these proposals, GPs would be paid entirely by capitation. Hospital consultants would be paid in the same manner for all of their patients. Consultants will also be required to work exclusively for one hospital or hospital group. These proposals should make for some very interesting negotiations with medical representative bodies.

Dr Brian Turner is a lecturer and member of the Health Economics Group in the Department of Economics at University College Cork