Fine Gael Health Plan

Having been critical of Fine Gael’s “stimulus” plan a few weeks ago, I thought I’d be fair and note that FG’s new health plan — with Dutch-style universal private health insurance as its centrepiece — strikes me as a useful contribution.

With increasing funds for the health service simply not possible over the next few years, we need to figure out how to run our health system in a far more efficient way, and this proposal suggests one way of going about this.  Then again, I’m not at all an expert in health economics.  I’d be interested to hear from those who are about what they think of this plan.

18 thoughts on “Fine Gael Health Plan”

  1. Haven’t had a chance to read up on it yet, but judging from Twitter and Facebook, there doesn’t appear to be a dissenting voice yet… remarkable!

  2. Health Insurance models of this type (mandatory insurance for everyone, insurance premia subsidised for low income households and competition between private and public suppliers of services) seem to work well in Northern Europe and have been advocated by Irish political parties in the past I think (I may be mistaken but I think the Labour Party have advocated a model which is similar in many respects to the Dutch model). When working propoerly they ensure that everyone should have access to health care while retaining an element of choice and competition for the consumer. However, its worth noting that the Dutch model was only adopted 20 years after the relevant committee submitted its report as there was a host of supporting structures and details that had to be put in place first! So there would be a lot of detail to be got through and a heck of a lot of negotiation with interested parties before this model could be up and running – and bear in mind that in the past Irish governments have not proved to be particularly good at securing value-for-money deals from medical interest groups.

    An article by Alain Enthoven (a distinguished health economist who was one of the original brains behind this scheme) in the 2007 New England Journal of Medicine (sorry I can’t give the link) gives the gist of the model. Community rating and a functioning Risk Equalisation Fund is central but Enthoven points out that the mandatory insurance premium can give rise to quite high marginal tax rates.

    But I don’t want this comment to appear unduly negative. I don’t think any health economist in Ireland regards the current system as desirable or sustainable and my impression is that most would favour a move towards a system close to, if not exactly the same as, the Dutch system. So whatever debate this Fine Gael proposal stimulates is to be welcomed.

  3. The current method of health service budgetting does not make sense. While a fixed annual budget might be OK for the Department of Administrative Affairs (or somesuch), where they can predict the number of paper clips and treasury tags they need in a year (and if they run out, what harm). But the health service must be able to meet all health needs that occur. Aine Lawlor, on Morning Ireland last, make a Freudian slip in saying, as a question, that “the function of the HSE is to live within it’s budget”. It’s not. It’s to meet the health needs of the Irish population and an insurance based system would be a means of doing that.

  4. I like the sound of this, but I’m curious about one detail. How would the payments to hospitals be calculated?

    Presumably different treatments administered would earn different revenues? E.g. poking a dead body with a stick vs. a heart bypass.

    My concern is that by rewarding expensive treatments we will incentivise their over-utilisation. Thus treatments which are conceivably appropriate will be carried out even in situations where they weren’t strictly necessary.

    Hospital management are likely to seek to ‘grow’ their hospital, which in turn will increase their salaries/status. How do the Dutch counteract this tendency?

  5. Ah I just realised what I missed. The insurance companies are still in the mix and are likely to be a bit better at restraining this sort of thing. Nevermind so 🙂

  6. I’ve often wondered about the feasibility of taking VHI out of the “private” healthcare market and making it the vehicle of universal insurance. VHI, less a semi-state than a State Agency now, would provide medically necessary services with government as single payer, with elective procedures and the like handled through BUPA et al.

    That would at least remove the ridiculous argument over VHI’s position vis a vis the other private entrants and remove any incentive to take money from VHI premiums and give it to the private entrants.

  7. It’s a fresh approach, one with some merit internationally. What do our current government offer? I don’t really care if its a FG or Lab idea, I’m gone beyond party politics….it’s time for national unity

  8. We no longer have the social cohesion we once thought, or said to each other that we had. I think that the Great BIFFO deserves some praise for ensuring that we all took haircuts. We will have to take many more but he and the other Brian are now acting. I have no doubt that there will be a national government as the pain piles up and the political system, ie jobs for the barely washed, is in jeopardy.

    I am setting this down for a reason. We are forced to consider harsh choices. Taxation alone will not suffice. We can no longer afford luxuries. By writing the unthinkable, I am hoping to reset our parameters of policy. We are facing an international crisis brought on by overspending. This stops now. We must explore all the options especially those considered extreme and we must bear them in mind for the duration. It seems that I have become comfortable with fascism as I age and decline. Oh tempores…..

    Payment systems for universal health are just another way of creating useless jobs. The US system shows how to achieve third world universal coverage at first world prices. The Cuban system shows how to achieve good results with less cost. Let those whop want to. spend wherever they wish on wrinkleless foreheads and MRI scans. Concentrating on women’s and children’s health is more effective than cancer scans with equipment that is guaranteed to raise the probability of cancer. Emergency care is usually necessary for road “accidents”. Limit all but police etc cars to 130kph as part of the NCT. Do not treat, at public expense, those who tamper with the limiter or drink/drive say over 0.10.

    Consider the schooling/child care system. Pay parents to not send their children to school. Retain the exam system and ensure that the payments are tied to achievement. Proper assessment using full measurement will ensure that resources are not mis allocated. Imprisoning children in school because their parents do not care for them should stop. With a fast internet system they can educate them selves at home with the aid off tutors at school buildings as required. Sell off excess schools. They cause traffic chaos and attract teachers. Dietary needs should be taught and examined to avoid excess health consequences.

    What should happen is ruthless. Both my parents were terminated by deliberate neglect in Irish hospitals. What debate about euthenasia? This was not yesterday either! One by pneumonia, suffering from glioma, the other from blood poisoning caused by an aspirin overdose. The medical staff did not ask me, nor present it as a suggestion. It was clear that I would have to create a mighty fuss to get active treatment for them. We all die, get used to it. Say whatever prayers you can remember, now, “while you still can and it is tax free”!

    Hospitals will offer only those treatments that can be afforded. This will depend on the staff available. The dreadful ruthless decision to terminate care for cystic fibrosis is an example. All life has a price. We should never run out of compassion but asking to prolong life is a political question that has cost implications.

    We cannot afford prisons. We have uninhabited islands. We have building materials. We cannot afford prison guards. There must now be a triage system, whereby those who know the weasel decide where s/he is to be caged. There is going to be a crime wave. It is unstoppable. But we can and must ensure the offenders know that conditions inside the prison system are worse than outside of it. Otherwise we will merely warehouse the neglected and vicious together. Vice will spread. What a human waste.

    We should consider the taxation and official supply of all drugs now declared illegal. Our young, for the past 40 years, many therefore not so young, now know that there is no way to stop drugs being supplied, at ever cheaper prices, to be funded by petty and not so petty crime. The incentive to supply is the illegality effectively a monopoly open only to those who can kill.

    CAB has failed, except as a sop to those who think that taking some of criminals’ assets will stop crime. Treatment of addicts and heavy users should stop. Let them slowly suicide, if their so called loved ones no longer care. No needles necessary: fit them with a central line at hospital. Issue antibiotics if needed. There will need to be charity, but it can no longer be funded by the state for these as there is no evidence that it works as anything except a jobs scheme for those who want to care for strangers. The taxes should be very high in view of the increased quality and the excise on alcohol and tobacco should increase. The transport of such goods from/to abroad by private persons should stop altogether and this should be part of EU law. Veto everything until this is passed. Vote against Lisbon federalization until then.
    Just think of the tourism…..

    Passport fee is now 1,000euro.

    This is not what anyone desires. But circumstances now force us to consider radical solutions for the wasteful spending of the past. Please do not support all of these solutions. But if we do not organize for them now we will fall into them later. Big Brother loves you!

    Remember Iceland

  9. lets get one thing clear

    WE ARE NOT DUTCH!!!!!

    This model will not work in Ireland the dutch are a much more liberal country than Ireland and they have a much greater sense of community and spirit

    Will not can not work in this country

  10. So universalised health insurance is introduced and all the ‘passengers’ are placed on the same health train. Now, how do you prevent some passengers paying more so as to occupy the first class carraiges, others paying into schemes to qualify for second class, still others in third class seeking to upgrade when they feel the need for greater comfort and so on until you get to those who are hanging off the roof? Eventually, you will end up replicating the system which we’ve got already except that it is camoflagued under an umbrella of universal insurance.

    Unless FG are prepared to fundamentally reform the system, including the role of our overpaid professionals, especially hospital consultants, there’s little point in superimposing a universal health insurance model on top of something that is fundamentally flawed and manifestly doesn’t work in either the interests of those relying on its services or the taxpayer who’s forking out for the cost. THe FG plan sounds good – for electoral purposes only.

  11. “the dutch are a much more liberal country than Ireland and they have a much greater sense of community and spirit”

    Not sure about this, nor even how relevant it is. It is interesting how pessimistic people are becoming about Irish political culture – this “we’re not Dutch” argument corresponds to the “we are not Swedish” line on bank nationalisation.

  12. An argument frequently posed to restrict the GMS to the indigent and elderly is cost and what that would do to taxation. One thing to consider is that having universal health insurance reduces costs to employers who choose to give broader health coverage to workers.

    Canadian manufacturers have long been able to offset some of their currency and taxation differentials with US plants from the same firm, by virtue of the need to merely provide dental and certain other services, whereas their US counterparts have to pay for full spectrum health coverage. It’s by no means a perfect system but we have the opportunity to learn from them and the Dutch (although we had the opportunity to learn about how to handle immigration policy too and look how that turned out).

    In any case, in a system where basic health needs are met, the necessity to give tax relief to those individuals and companies who purchase “first class” care is far less – and we’ve slaughtered a similar sacred cow with mortgage relief anyway.

  13. Veronica: this is an important point. Many of these models (e.g. Canada) limit the number and type of procedures which people can purchase with supplementary insurance. Thus for core or essential treatments everyone is on a level playing field with their universal insurance premium. But for non-essential treatment you can go for more expensive options if you purchase supplementary health insurance. Of course there will be some treatments where it may be very difficult to decide if they are essential or non-essential.

    But there is no doubt that actually implementing a scheme like this will lead to a lot of intensive negotiations between the different medical interests (consultants, GPs etc), insurance companies and Government. Will the consumers interests be adequately protected by Government/Regulator or will we see further examples of regulatory capture?

  14. Is there an issue of critical mass and market structure to contemplate here? I don’t know if Ireland is big enough to sustain imperfect competition in the health insurance market. The WSJ comments that a “considerable consolidation has taken place in the market” and that this has “already considerably limited the extent of price competition”. Remember that de Nederlands is 2.5 times the size of Ireland in population terms…

    What happens if this health insurance market fails, and we end up with one monopolist VHI or whatever? An unregulated monopoly, some knee-jerk legislation and we’d be back to…the current situation!

    But the key change to the health market in Ireland should surely be the privatisation of health care providers, with public provision of services.
    So we have private hospitals that privately employ contract agents (doctors and nurses) at market wages and these fine folks deliver services to (publically or privately) insured patients who pay according to their means.

    UHI has to potential to deliver this, but let’s be clear about this, the first step is the dismantlement of the HSE and the current staff contracts. That is where things will get nasty…

  15. This is an interesting thread, an economicsa based discussion on an important (potential) initiative.

    I have the following questions for the healh economists –

    1. What effect will the size of our population have on the proposal vis a vis, say, the NL? i.e how much do they pay and how much will we pay for the ‘basic’ contribution? as a secondary, how can NZ with the same population as ours manage to spend only around half of what we spend?
    2. In the circumstances where we have just agreed a pay scale for consultants, can we afford a universal scheme? i.e. are we not already an order of magnitude above the scales applicable in other countries.
    3. In management terms how will the present HSE, which, as has been pointed out, works on fixed budgets, be metamorphosed into a system where resources are allocated on a needs basis? Who will wield the big stick?
    4. Which of the universal healthcare models should we follow? NL, Canada, NZ, other?

    Thanks, Barry

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