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Paying for our health services

25 Oct 2013

Lloyd Mudiwa

Are the Government’s health policies, including the deconstruction of the HSE, to blame for the loss of budgetary control in the Irish health service, ponders Lloyd Mudiwa.

About €1 billion in health spending cuts is needed in Budget 2014, a figure of about €350 million more than the ominous €666 million announced in Budget 2014, if maternity reforms and other planned initiatives such as the EWTD in relation to NCHDs’ working hours are to be implemented, it emerged over last weekend.

Of the €666 million earmarked for health savings in 2014, according to the announcement, €113 million is supposed to be generated by means of “probity” measures in relation to the medical card scheme.

But it is now clear that while the €113 million the Department of Health is expected to save in a review of medical cards was not necessarily ‘plucked out of the air’, it was not exactly ‘forensic’ either.

There is also deepening concern about the impact of the Government’s controversial move to reduce tax relief on health insurance subscriptions, which it is feared will affect up to 90 per cent of private health insurance customers.

This could destabilise the private health insurance market and pile additional pressure on the public health system.

This is being proposed against the backdrop of budget overruns in the last few years.

The Comptroller and Auditor General (C&AG) Report on the Accounts of the Public Services 2012, which has expressed concern over the “effectiveness” of the HSE’s budget planning and management, shows an additional €360 million was last year granted to the Executive — an increase of 3 per cent on the original voted Exchequer contribution for the year.

The HSE received a total budget allocation of €13.714 billion for 2012 and the outturn for the year was €13.987 billion, or around 2 per cent more. The net requirement was for an additional €273 million in spending. Combined with a net shortfall on the receipts side of €64 million, there was a requirement for provision of an additional €337 million in Exchequer funds.

So far this year, the HSE is in danger of exceeding its budget by more than €100 million.

It is hard to believe but true — as the founding CEO of the HSE Prof Brendan Drumm reminded us recently — that the Executive operated within its budget between 2005 and 2010.

The annual accounts of the HSE, which are audited by the C&AG, do confirm that during Prof Drumm’s tenure of office the HSE operated within its budget.

All supplementary budgets during the period 2005 to 2010 were not related to budgetary control, nor were they meant to bail out the HSE.

Rather, they were provided by the Government, for example, to fund new initiatives that it announced during a particular year.

The HSE had continued to operate within budget between 2008 and 2010, despite very significant changes in funding following the onset of the economic crisis.

This was, however, achieved through major cost reductions totalling more than €1 billion in many areas, including the cost of pharmaceuticals and by centralising procurement, said Prof Drumm, who was accounting officer responsible to Government for balancing the HSE budget.

This five-year phase of budgetary control followed three decades during which overspending and the requirement for supplementary budgets to fund day-to-day services was a regular feature of the Irish health service.

Fast-forward to today: I think the questions that Prof Drumm has posed (why such control was possible, why it did not exist prior to the HSE and why it has been lost in recent years as the HSE is deconstructed?) do deserve to be answered.

One could be easily persuaded to further enquire, is there a case for retaining the HSE, maybe with Prof Drumm back at the helm?

Either way, serious questions around the health budget deficit, changes in the way discretionary medical cards are allocated, and funding for the free GP care for children aged five years and under remain.

A full assessment and validation of proposed budget 2014 savings in the health service should be carried out, as the Minister for Health Dr James Reilly has pledged.

It is likely that additional measures to the Budget and any legislative changes  announced will be introduced in the forthcoming Finance Bill.

It is incumbent therefore that any questions around the figures are satisfactorily resolved prior to the passing of the Bill, and answers and explanation provided about where exactly this costing came from and who, if anyone, is going to be hit, if we are to prevent the pushing through of “flawed and dangerous health estimates”. This would do “immense damage” to the health system, as claimed by Fianna Fáil leader and a former Minister for Health Micheál Martin, while addressing the recent annual commemoration of the brave Father of Irish Republicanism Theobald Wolfe Tone, who chose the manner of his death by suicide in prison following the rebellion of 1798.

If the already under-strain HSE bases its National Service Plan 2014 on anything but forensic figures, I am afraid to say it will literally be taking a blade to its own throat and cutting a swathe of red.

25 October 2013

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