Business Irish

Tuesday 25 September 2018

Brendan Keenan: Can Ireland have national health without an NHS?

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Brendan Keenan

Brendan Keenan

HOW very odd. There was a huge fuss and to-do in Britain recently for - not a wedding, or a funeral, or a birthday - but the anniversary of the National Health Service. Does any other country have a national commemoration for the creation of its health system?

But then, the NHS is odd. First of all it was a genuine act of creation, largely by the remarkable Labour minister Aneurin 'Nye' Bevan. Most health services were long in gestation. He was also minister for housing in war-damaged Britain and went a long way towards fixing that too. They certainly don't seem to make them like that anymore.

The health revolution which followed made the NHS the nearest thing Britain has to a national emblem, royalty apart. It is also regarded by the public as the best in the world.

That may have been true for a while, but hardly stands up any longer. Even so, one of the most effective lies in the mendacious Brexit campaign was that EU membership was bad for the NHS.

One might perhaps have expected the anniversary to be marked a bit more here. The NHS is something of a touchstone for Irish health policy wonks, because it is 'free' to the patients, with the money coming almost entirely from taxation.

A wistful regard for this method runs through the Oireachtas committee Sláintecare report whose implementation, we were told last week, is about to commence. The committee chairwoman, Social Democrat co-leader Róisín Shortall TD, described it as Ireland's version of the NHS.

That raises a lot more questions than just having services free to the patient. The commencement seemed more about plans, boards and reports than healthcare. That's a bit outside this column's remit, but as Ms Shortall, an economics graduate herself, said; it's all about the funding.

Indeed it is, and that is about as big an economic issue as one could find. The confusions over the Irish health service - such as what exactly is it doing, how many work for it and can a fifth of the youngest population in Europe really be waiting for medical treatment? - is matched by obfuscation over the economics.

A recurring theme in the discussions has been that the funding of the Irish system is really odd and the objective is to make the service like that of a normal EU country. There is, in fact, no such thing as a 'normal' European health service. The NHS is not in the least normal - quite exceptional in fact, and not always in a good way.

The invaluable source for the economics of health systems is the OECD 'Health at a Glance' publication - a cornucopia of statistics. Luckily, the economics is a bit more straightforward than day care treatments or waiting times for cataract operations, but the differences between the systems still makes comparison tricky.

The committee is right that health insurance plays almost no role in the UK system. It recommended that Ireland move towards that model, but it is not the norm. In the OECD, only Iceland, Latvia, Mexico and Turkey have similar systems, where insurance makes up 10pc or less of health spending.

Insurance systems are the norm, not the exception, but they vary a great deal in kind. Supplementary insurance, to buy extra benefits, is common. Around 80pc of the population in the Netherlands has such insurance. More common still is complementary insurance, which meets any additional costs not covered by the general system. Almost everyone in France has such insurance.

Ireland, though, has "duplicate insurance," defined as covering care which is already free. This is where we are abnormal. At 45pc of the population, Ireland has the highest proportion of such insurance, followed by New Zealand at 29pc.

We all know the reasons - the ability to jump the queue - but it misses the point by a country mile to suggest that the Irish problem can be solved by replacing insurance designed to circumvent shortages while being unable to do anything about the shortages.

Waiting lists and high costs. This the funding issues which no one is willing to discuss and which will doom all these grand plans before they begin - if they ever begin.

The OECD uses three measures on health spending (at least) - as percentage of GDP, of dollars per person adjusted for purchasing power, and as a percentage of government revenues.

The true level of Irish spending was hidden by an exaggerated GDP but this has now grown so grotesque that no-one dare defend it, although it is still the OECD method. The best measure now is GNI* (adjusted national income). Irish health spending on this basis is over 11pc, which is just about the highest in the entire OECD.

The adjusted dollars mean they buy the same amount in each country, which removes the effect of high prices in Ireland. On that basis, the youngest population in Europe spends $5,500 per person per year. The British spend $4,200.

The share of government revenue, at just over 18pc, tells a tale. It is about the same as the UK, which is an indication of how much less revenue the British government collects, with growing evidence that it does not collect enough. Were the NHS spending at the Irish level, it would have an extra €80bn a year to play with.

Looked the other way, the Irish system would have to cost €1bn less than it does to be a "normal" European country, and €2bn less to reach the NHS level. That is what happens when the money all comes from eternally stretched public funds.

This is the elephant from which everyone carefully averts one's eye. It is simply not possible to fund the kind of extra spending which the existing system would need to match the best services in Europe and the rise in demand for services which comes from an ageing population.

Simple budget cuts will not do it. All health services need an annual increase just to maintain standards. The effects can be seen from the freeze on spending in Ireland after the crash and actual cuts in the UK.

Nor is it any good pretending that the system can be improved simply by adding more services with vague, or even non-existent, costings. A simple question: how many staff will be relocated or become redundant and how many facilities closed because of the switch to primary care? Answers on a postcard please.

The committee is right about one thing. With the Government owning most of the hospital system, a switch to European-style insurance would not work; as the Labour party found out and Fine Gael, who seem not to have read the documentation, found out again.

Theoretically it would be easier to go to a purely public NHS system but the existing prohibitive costs will make it politically and financially impossible. The loss of their duplicate insurance would be accompanied by substantially higher taxes for those who have such insurance, since these are the people who pay the bulk of income tax.

Yet no-one asks why the costs are prohibitive or why only the bizarre American system will soon be more expensive and what can be done about it. That is probably because they suspect they know what the answers would be.

Costs will doom all these grand plans before they begin - if they ever begin.

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