Wednesday 26 November 2014

Playing Russian roulette on medical cards, a risk too far

Published 09/06/2014 | 02:30

Picture posed. Thinkstock
Picture posed. Thinkstock

The past few weeks have seen much controversy over the removal of discretionary medical cards from children with disabilities and long-term medical conditions, culminating with last week's suspension of the review of medical cards.

However, the savings that would have been achieved from such a move would not appear to justify the inevitable political fallout that ensued.

Last October, one of the health-related measures announced in Budget 2014 was medical card 'probity', which involved a review of medical cards to ensure that people who were no longer entitled to medical cards did not retain them. The initial savings target from this measure was €113m, but this was later reduced to €23m.

This target included savings gleaned from removing medical cards from those who had them on income grounds as well as those who had discretionary medical cards.

Of the 1.8 million people who held medical cards as at March 2014, less than 50,000 of these had them on a discretionary basis, representing less than 2.8pc of those with medical cards.

If the proportion of the €23m savings target were the same as this then removing discretionary cards would have saved only around €634,000.

However, this likely underestimates the true level of savings as many of those who have medical cards on discretionary grounds have serious illnesses and would therefore have more intensive use of health services than the average medical card holder.

Nonetheless, the savings generated would be unlikely to rise above single-digit millions, which, while significant in absolute terms, is minuscule in the context of an overall health budget of over €13bn.

The Government's decision to suspend the review of medical cards was probably eased by two sources of savings on medical cards.

The first is the reduction in the number of people with medical cards, of 65,000 in the year to March, which may reflect some of the review begun after the Budget but more likely reflects the upturn in employment, which would take some people out of the income bracket that would qualify them for a medical card.

As the economy continues to improve, this reduction in medical card numbers is likely to be maintained.

The second is the likely delay (at best) in the rollout of free-at-the-point-of-use GP care to children aged under six.

The Government had budgeted €37m for this measure this year, but given the level of opposition from GPs, this measure may well not now be in place by the end of the year.

This also raises a fundamental issue about the basis of eligibility for medical cards.

To date, they have primarily been granted on the basis of means-testing, with a relatively small number of discretionary cards granted.

This may change in the future with eligibility based on medical need. While this makes sense from an equity point of view, medical need may be more difficult to assess than financial means so this may lead to some interesting legal discussions. It is also unclear how this sits with the plans to roll out free-at-the-point-of-use GP care for all by 2016, which looks increasingly challenging. Furthermore, if universal GP services without out-of-pocket payments come at the expense of medical cards being taken off those with serious illnesses, then this policy looks less palatable, particularly as what someone with a serious illnesses loses if a medical card is removed from them far outweighs what a healthy person would gain by getting the equivalent of a GP-visit card.

In terms of universality, it was also interesting in recent weeks to hear of medical cards being taken from children with disabilities and serious illnesses on the basis that their parents had exceeded an income threshold, while in recent years the Government has refused to means-test child benefit payments, with one of the arguments being that the benefit is for the child. Child benefit payments take the form of a cash grant, which parents may or may not spend on the child, but a medical card for a sick child can only benefit the child.

The political fallout from the review of discretionary medical cards may be concentrated on the Department of Health, but it should be remembered that the health estimates last year were overseen by the Department of Finance and the Department of Public Expenditure and Reform. It should also be borne in mind that the Government is under pressure from the European Commission (reiterated as recently as last week) to reduce spending on health. However, greater consideration and analysis needs to be applied to future spending proposals in order to avoid a repeat of a policy reversal that may cost more in political terms than in monetary terms.

Dr Brian Turner is an economist at UCC

Irish Independent

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