Universal Health Insurance: UHI would see 11% spending increase in health sector

Introducing universal health insurance (UHI) as proposed by Government would drive up healthcare expenditure by up to 11%, a new report reveals.

‘An Examination of the Potential Costs of Universal Health Insurance (UHI) in Ireland’, published today by the Economic and Social Research Institute (ESRI), said some of the increase would be attributable to delivering more services to address unmet needs.

However, a major driver would be the additional cost that arises from financing healthcare through multiple, competing insurers who require market margins.

“We find that the insurers’ margin is, on most assumptions, the greater contributor to increased healthcare expenditure,” the report’s authors said.

The research also found that even with the introduction of UHI, taxation would continue to finance up to 70% of healthcare expenditure through tax subsidies for insurance premia for people on low incomes and through funding for the components of healthcare services which are not included in the UHI-financed baskets (a specified list of benefits).

About 77% of total health financing was from taxation in 2013.

The research looked at cost implications of providing UHI through insurers for alternative baskets of health services, including: one to cover hospital care, mental health care and GP care; a second to also cover other primary care services, and a third to cover all these services and further cover prescribed medications.

It estimated the average per capita cost of the three UHI-covered baskets to range between:

• €1,600 to €1,758 for hospital, mental health and GP care;
• €1,837 to €2,013 if UHI also covers primary care services;
• €2,288 to €2,509 if UHI also covers prescribed medication.

It also found individuals would continue to pay for healthcare by taxation and out-of-pocket payments, in addition to UHI, contributing the following estimated amounts:

• Mean per capita taxation (to pay for healthcare services outside the UHI basket and for the tax subsidy on UHI premia):
• €2,889 to €2,957 if UHI covers hospital, mental health and GP care;
• €2,828 to €2,904 if UHI additionally covers primary care services;
• €2,662 to €2,757 if UHI additionally covers prescribed medication.

Dr Maev-Ann Wren, senior research officer at the ESRI and lead author of the report, said the Government’s proposed UHI funding model “should be reviewed in light of the findings about the potential cost implications”.

She said the Department of Health had been advised its proposed model would be subject to competition law and that any alternative “should be reviewed in light of this limitation”.

Dr Wren said more research was needed to see if the proposed model was “feasible in an Irish context”.