Health spending black hole threatens Budget giveaway
Overspend in health to 'limit pot' for Budget
The public's expectation of a 'giveaway' Budget has been dashed by a €600m black hole in spending by the Department of Health.
The increasingly ineffective Health Minister Simon Harris is receiving a furious backlash from his Cabinet colleagues as he fails to manage his department’s finances.
Despite the overspend, a record number of patients – 514,000 – are now on hospital waiting lists.
Finance Minister Paschal Donohoe could even be forced to introduce a raft of revenue-raising measures to counteract the health deficit.
The 9pc Vat rate could be increased, along with hikes in carbon and gambling taxes. The growing gap in the country’s finances also means long-promised tax cuts for middle-income families are under threat.
At Wednesday’s Cabinet meeting, Independent ministers reacted angrily to news they would have to curb their spending demands due to the overrun in health.
Children’s Minister Katherine Zappone is understood to have told Mr Donohoe she expects to receive funding for childcare. And Disability Minister Finian McGrath insisted on his demands being met.
Fine Gael ministers are becoming increasingly frustrated with Mr Harris over his inadequate handling of the health service.
In previous years, the deficit in health was filled by a surplus in the Department of Social Protection due to a rapid drop in unemployment.
However, the social welfare budget is coming in on target and there will be no additional revenue to plug the hole in health’s finances.
Yesterday, the Independent Alliance demanded at a meeting with Mr Harris to discuss the overrun in health spending. Junior Minister Kevin 'Boxer' Moran said: "We cannot keep throwing money at health and not getting the response for the people of this country."
Transport Minister Shane Ross - who is still pushing for the introduction of a 'granny grant' for relatives providing childcare - warned the overspend will "limit the pot".
"Of course it's going to affect everyone's demands, it's going to limit what's available in the pot so I think the constraints and the warnings that have been issued by the Minister for Finance should be heeded," he said.
Mr Donohoe insisted he was "determined" to introduce tax relief and a social welfare package despite expenditure pressures in health.
However, he refused to answer questions on the cause of the massive hole in the Department' of Health's budget.
The health service is haemorrhaging funding particularly in the acute hospital area, which has suffered record overcrowding and a summer trolley crisis.
A source familiar with the Budget negotiations said the health spend is overshadowing the entire process.
"Ministers are going around talking about spending €100m here and €200m there when, in reality, the money will all be needed for health. It's the elephant in the room," a Coalition source said.
Even before 2018, the former HSE chief Tony O'Brien warned that the deficit could be as high as €800m this year.
By the end of last February, hospitals were in the red for €45m and it has continued to escalate.
A particular pressure is the rise in patients over 75 years of age, who need hospital care and longer stays.
The income from private patients is also not meeting targets.
The health service will account for a quarter of total gross Government spending at €15.3bn this year, with almost a third of total health spend, €4.7bn, going to hospitals.
There are also spending overruns in the community, with unexpected demands such as the allocation of a medical card to CervicalCheck victims and their families.
An expenses package, involving reimbursement for illness-related costs, was also not budgeted for.
Pressure is also on levels of recruitment in the health service - running at 371 staff per month - as well as the ongoing cost of pay deals, overtime and agency staff and new drugs.
Spending on agency staff has been "consistently out of line" with actual spending, ranging from €52m to €154m above projected levels from 2015 to 2017.
In 2019, money for pay and beds will be a major financial headache.
The Government will have to find a significant slice of the €120m to pay GPs to return fees to pre-recession levels. This will be done on a phased basis.
It also needs to pay the first tranche of the €200m in back pay to consultants.
It is also facing demands for €34m from staff in Section 9 HSE-funded agencies who want salaries to be benchmarked at public service rates.
Mr Harris needs more than €40m for a winter initiative and will be under pressure to deliver on additional beds to avoid another record number on trolleys.
The health service received an extra €685m in current and capital funding in last October's Budget and will be wanting to top that next month, particularly to kickstart Sláintecare - which is the blueprint for the future of the health service.