Sunday 28 December 2014

Eilis O'Hanlon: State will pick up tab in end as more quit health policies

Noonan shows a lack of joined-up thinking as targeting insurance places extra burden on HSE

Eilis O'Hanlon

Published 20/10/2013 | 05:00

It could have been worse. Previous ones have been worse. Some of the rhetoric since Michael Noonan rose to speak on Budget Day may have made it sound as if Christmas had come early, in the wrong way, with the Minister for Finance standing in for Scrooge; but the fact is that we're broke, and about to be going it alone again, and the public spending levels that we maintained during the Celtic Tiger era are unsustainable and have to be tackled.

That's one of the strangest aspects of the current debate amongst left-wing critics of "austerity". They accept that the boom was built on unreal money, but resent when the fantasy cash is taken away. It's like getting involved in a pyramid scheme, then, when the pyramid collapses, expecting your income level to remain unaffected. There are still many areas where spending could and should and inevitably will be trimmed further.

Still that niggling doubt remains. Minister Noonan calls it a budget for growth, for jobs, for enterprise, but it's hard to look at the measures in the round and see any grand over-arching, inspiring, zestful plan for economic renaissance. It's all finicky fiddling. Turn a knob here, push a button there, pull out a few wires somewhere else, and then hope somehow that the economic machine starts whirring into action again.

It should all be about joined-up thinking, with every small measure working towards the greater good, but such is the lack of co-ordination here that the Finance Minister apparently didn't even warn Minister for Health, James Reilly, about the changes to health insurance premiums that were about to hit customers between the eyes – or possibly somewhere even more sensitive.

Noonan claimed that restricting the cap on which tax relief is available for insurance premiums to €1,000 for an adult and €500 for a child would affect only "gold-plated" policies. In fact, the Health Insurance Authority quickly revealed that it would affect nine out of 10 customers – 1.4 million of them in total. Insurers such as VHI and Aviva were forced to immediately adjust all their pricing plans in response. Depending on the level of cover, the changes will mean an increase of between 1 and 20 per cent for each customer, and families will now have to pay up to €360 a year extra to continue to enjoy the same level of health insurance.

A few hundred euro might not sound much to a government minister earning thousands every week, but if you haven't got it, then the only way to find it is to slash from somewhere else in a household budget already squeezed to the bone by other expenses, including previous heavy hikes in health insurance.

There goes the joined-up thinking. Every reduction in disposable income has knock-on effects in the broader economy. Nearly one-and-a-half-million people with a few hundred euro each less to spend blasts a significant hole in the retail economy. As we have less money to spend, there are fewer jobs being created, recovery is slower.

Of course, the same could be said of the reduction in benefit to €100 a week for jobless under-26 year olds. Every penny of that money goes straight back into the economy. The unemployed don't have enough to save, so it's more like a direct infusion of money into the local economy rather than social welfare. But targeting health insurance feels like a particularly low blow to middle-income families who are trying hard to live within their means whilst still taking responsibility for their families' needs.

In a way, I shouldn't worry. This change doesn't affect me. I got rid of my Sky TV package; I don't eat out; don't go out much at all really; the car forgets sometimes what it feels like to be driven; in winter, the fire is lit in only one room, and the rest of the house resembles a cold day in Siberia. Not having a medical card, visits to the doctor are strictly an option of last resort too. It's at that stage where you almost hope you've picked up a properly serious infection so at least you'll know the money wasn't wasted.

I'm not complaining – well, I am, but it's only meant as an illustration of how middle-income Ireland lives, though its problems are much less sexy to the phone-in shows that those on benefits who shout the loudest. The point is that I kept cutting and cutting as my income shrank, until there was nothing else for it. The health insurance had to go. My family and I joined the 240,000 people who have given up health insurance since 2008. If I fall sick now, someone else will be paying for it.

Every person who stops paying for health insurance is a potential money pit that the country will have to fill. There goes that joined-up thinking again. Ultimately, it's no saving at all.

If we want to have a system where healthcare is provided as of right, to every citizen, free of charge, tickety boo. As a Northerner, I'm familiar with that system, and moving to one where health was purchased like breakfast rolls in Centra was a shock to the system.

So far, though, no one has ever come up with a workable plan to do it. Therefore, if it's going to be the case that citizens for the foreseeable future will need private health insurance in order to be covered for medical needs, it follows that everything should be directed towards making it more, rather than less, likely that they can afford to keep up the premiums. They need to be encouraged, not penalised, when they're doing the right thing. Am I missing something, minister?

Sunday Independent

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