Sláintehealth and the public/private relationship

UCC economics lecturer Brian Turner outlines the potential transformation of the relationship between public/private funding and delivery mechanisms for healthcare and, more specifically, the impact on private health insurance under the vision contained within the Sláintecare report.

In May, the cross-party Oireachtas Committee on the Future of Healthcare launched the Sláintecare report, which sets out a 10-year vision for the Irish health service and is designed to ensure that successive governments will continue on an agreed path rather than change direction based on political ideology – an increasingly important feature given the likely continuation of so-called ‘new politics’.

One of the Committee’s terms of reference was a recognition of “the need to establish a universal single tier service where patients are treated on the basis of health need rather than on ability to pay.” This implicitly acknowledges the current multi-tier nature of the Irish system, where certain categories of patients may have advantages in terms of access over other categories.

The latest System of Health Accounts figures from the CSO show that, in 2015, private sources accounted for 30 per cent of funding for health services here, up from 21 per cent in 2008. This increase reflects rising private health insurance premiums over the period and increased cost-shifting in successive budgets during the economic downturn, which included significant rises in the statutory bed charge, the Accident & Emergency charge (for those without a GP referral) and the Drug Payment Scheme threshold, along with the introduction of, and increase in, prescription charges for medical card holders. Ireland now has the third highest proportion of private funding among the EU-15 countries, with only Greece and Portugal having higher proportions, and Spain’s proportion is just below Ireland’s (interestingly, four of the five PIIGS countries).

While most developed countries have a mixture of public and private funding and delivery mechanisms for healthcare, Ireland is unusual in the degree of overlap between the two. An example of this is the treatment of public patients in private settings under the National Treatment Purchase Fund, while private patients are treated in public hospitals, partly subsidised by the State through tax relief on private health insurance premiums.

Among the key recommendations of the Sláintecare report are the removal of private practice from public hospitals, the widening of access entitlements to GP care free at the point of use, and the reduction or removal of the aforementioned charges for public health services. These recommendations, if implemented, would certainly reduce the public/private overlaps and ameliorate some of the anomalies arising from the multi-tier nature of the system. A private system would still exist alongside the public system, but there would be greater separation between the two.

The removal of private practice from public hospitals, which is proposed to take place on a phased basis between years two and six of the plan, would represent a radical departure from the current situation. It would remove one source of income from these hospitals, which would need to be replaced by State funding. The Sláintecare report costs this at €649 million per annum once fully achieved. The move would also have a number of effects on different cohorts.

Firstly, it would free up some capacity in public hospitals for public patients. However, it should be borne in mind that around three quarters of admissions to public hospitals occur on an emergency basis, via accident and emergency departments, where private patients do not gain an advantage in terms of timeliness of care. Of the patients admitted on an elective basis, over three quarters are public patients. Therefore, private elective patients account for fewer than 6 per cent of public hospital admissions, so the additional capacity that would be freed up would be limited, although it would certainly lead to more public elective patients being admitted.

The second impact would be on private patients. If they no longer have the option of having private elective treatment in public hospitals (although they would still be entitled to public hospital treatment as public patients, on an elective or emergency basis) then they would be reliant on the private hospital sector for such treatment. While the private hospital sector has spare capacity, it remains to be seen whether private patients would face longer waiting times than they currently do.

The removal of private care from public hospitals would also have an impact on consultants. Currently, many public hospital consultants also have private practice entitlements, in most cases in the public hospitals themselves. This will no longer be an option under the proposals. This will require a renegotiation of the consultant contract, which may not be straightforward, as previous experience suggests. Furthermore, consultants will have to choose between public or private practice, unless any renegotiated contract allows public consultants to have off-site private practice, although the scope for this was significantly limited under the current contract options.

Another area to be impacted by this separation would be the private health insurance market. A direct impact would be that, if patients with private health insurance are admitted to public hospitals on an emergency basis, their insurer will not be charged. This would be in contract to the current situation – arising from the removal of the bed designation in 2014 – whereby it has been suggested that insurers are being charged even when the insured patients do not receive any benefit from their insurance (the three typical benefits of supplementary health insurance, which is the main purpose of health insurance in Ireland, are faster access, superior accommodation or choice of provider). This would reduce average claim costs, all other things being equal.

“If there is a significant improvement in the public hospital system, particularly in terms of access, then this would remove one of the main drivers of demand for private health insurance.”

On a broader level, these reforms should lead to shorter waiting times for public patients, while, as mentioned above, the effect on waiting times for private patients is uncertain. If waiting times were to converge, private health insurance would then be essentially offering choice of provider and (possibly) better accommodation. This may have an impact on demand for private health insurance.

Allied to this, if there is a significant improvement in the public hospital system, particularly in terms of access, then this would remove one of the main drivers of demand for private health insurance. Successive consumer surveys commissioned by The Health Insurance Authority have shown that concerns about standards of, and access to, public hospital services are among the main reasons people take out health insurance.

Although it is unclear at this stage whether, or to what extent, the Sláintecare proposals will be implemented – and indeed some concern has been expressed after Budget 2018 that funding has not been made available on the scale envisaged – there still appears to be some appetite for the reforms suggested, and indeed the Minister has announced an impact study on private care in public hospitals. This space will be watched intently by payers, providers and, most importantly, patients.

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