UHI...universally high insurance?

  • Niall Hunter, Editor


For your consideration:

Minister James Reilly, speaking in the Dail on Tuesday, April 1 2014:

"I am concerned that in the past there has been a history of passing on increases to the customer. There was an acceptance, or even a resignation, that medical inflation runs at 9% yet in some years we have seen health insurance costs for consumers increase by up to 25%...Why are we still paying the same rate for procedures that used to take two hours but which now take 20 minutes using modern technology?...The whole point of having a number of insurers is to create competition in the market-place. So far, however, this has not led to the sort of changes we would like to see..."

And then, here are excerpts from Government press release, as Minister Reilly the following day launched his plans to wake us from this nightmare through Universal Health Insurance (UHI):

"The Minister for Health is committed to implementing the most cost effective system of UHI possible which will be fully compliant with Government expenditure targets... the Minister is committed to showing demonstrable evidence of lower costs and improved productivity as a result of initiatives to be introduced over the coming years...The Government is determined to control costs under this model and is committed to staying within agreed public expenditure limits..."

So why the above juxtaposition?

Well, while the Minister must be given credit for at least trying to reform an inequitable, bottom-line obsessed, poor value-for-money and largely inefficient system, the danger lies in the fact that he intends to replace it with what could turn out to be more of the same, or perhaps worse.

This is because the people essentially running the UHI system will be...er, health insurance companies.

Yes, those very same entities with the less than admirable record in terms of cost control and squeezing subscribers, mentioned by James Reilly in the Dail, appropriately enough, on April 1.

It's no wonder, therefore, that however well-intentioned and detailed Minister Reilly's UHI plans are, they come with a severe health warning.

For without an effective system of regulation and oversight (and let's face it, the State's record in this area hasn't been great in recent years, or perhaps ever) our blighted health service could be turned over to the type of untrammeled financial profligacy that caused such damage to this country in various spheres in the recent past.

The basic aim of UHI is admirable - finally giving everyone equal access to the care they need and ending the  iniquitous 'rich man/poor man' public/private divide, which essentially has acted as a perverse incentive to drive up waiting lists and line some people's pockets.

The idea of having an insurance model, whereby everyone pays an insurance premium, or has it paid or subsidised by the Government with a quid pro quo of getting a better service, has its merits.

However, there are different types of insurance models, including other forms of social health insurance that do not have competing health insurers at their core. There are also NHS-type taxation-based schemes.

All schemes have their advantages and disadvantages of course, and good healthcare doesn't come very cheaply whatever system you use, but the Government appears to be taking quite a leap of faith with its UHI model.

In 2010, the Adelaide Hospital Society, in a policy paper, warned against using a competing insurer-based system as a form of UHI in the Irish context, and suggested a single-payer system through a social health insurance fund.

It warned that the evidence to date was that having multiple private insurers in such systems does not lend itself to greater efficiency and cost control.

The Government may have opted for the most potentially risky model, by handing over the purchase and a fair deal of the oversight of care to commercial entities, which to be fair to them, have to have some type of profit motive in order to survive.

Many would query the inherent contradiction in the Government perpetuating market forces in healthcare in order to make the system more equitable.

The Minister himself has admitted that health insurance companies in Ireland in recent years have tended to pass on premium increases  to consumers far in excess of what could be expected to compensate for 'medical inflation', in order to protect their profit margins.

He also admitted at the UHI launch that the private health cover system was currently falling apart in terms of cost control and rising premia.

Is this 'law of the jungle' going to change radically with UHI, even with greater regulation?

The international evidence suggests that the competing insurers-based system, as is planned for Ireland, tends to have a spiralling effect on healthcare costs and a potentially adverse effect on health outcomes.

This is perhaps not surprising, given that insurance companies would have a major say in running the system and would, potentially, get to ration who gets covered for what type of care if costs start to get out of control.

And there are other aspects of the UHI scheme, such as 'money follows the patient' that could incentivise hospitals to carry out a raft of unnecessary treatments and tests, unless it is properly controlled.

The Government has indicated that that insurance premia under UHI, if it were introduced today with all the attendant regulation and controls, would be less than the average individual payout under existing health insurance policies, which is €920.

This presumably means that UHI, when it is introduced in 2019, will cost considerably less than what insurance premia would be at that stage under the current system.

It's not clear how the Government can make such confident predictions, as it admits that the precise costings of the scheme, to both the State and the individual, have not yet been worked out, and since no-one can accurately predict what the economic, healthcare and political landscape will be five years hence.

Many people's gut feeling at this stage, given the hollowness of successive Government pledges to control health costs, would be that premia under UHI will be considerably higher than 900-odd euro a year.

And while those who currently don't have medical cards and don't have insurance are to have their premia subsidised under the new system, this means that many of them will still have to fork out out money they don't have at the moment for cover under UHI. Perhaps the Government is counting on the ecomomic recovery continuing and putting more disposable income into people's pockets.

Many people might not mind paying a bit more for a better system, particularly if the economy continues to improve, but a better system cannot be guaranteed if there is any danger of healthcare rationing under 'Reillycare'.

Many would fear that we could be moving towards a US style-health system, at least that which pertained prior to 'Obamacare', and which to a certain extent already exists in Ireland on a smaller scale. This model primarily benefits the pockets of healthcare providers, insurance companies and other vested interests over the needs of the patient.

It should be remembered that the US has had the highest per capita healthcare costs in the developed world, while being one of the less impressive performers in terms of health outcomes.

Any new system in this country will be hard pressed enough to cope with the rising resource cost of looking after an ageing and sicker population without trying keep a lid on excessive profiteering.

However, while many people might have qualms about the Government's ambitious UHI scheme, it is essentially the only show in town at present when it comes to real healthcare reform and who knows, it may succeed, if it is regulated and controlled properly.

That, however, is a big 'if', and it will require a quantum leap from the type of laissez-faire regulation we have come to know and loathe in this country.

Strict cost control in new UHI system

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