I move: "That the Bill be now read a Second Time."
This Bill has been introduced because of the urgent need to find another source of income besides rates and taxes to finance the heavy and growing burden of health costs. The means proposed is a scheme of reasonable contributions towards the cost of the health services by those who are eligible for them and who can be regarded as able to pay such contributions without undue hardship.
The persons concerned are those classed by the Health Act, 1970, as having limited eligibility for health services, that is, broadly speaking, eligibility for all the hospital, maternity and preventive services but not for family doctor services. They are those people outside the "full eligibility" category—that is, those with medical cards—who have social welfare insurance, are farmers of £60 valuation or less or, otherwise, are persons with means under £1,200 per annum. I intend to bring before the House shortly a draft of regulations to raise this £1,200 limit to £1,600, to keep in line with the recent increase in the limit for social welfare insurance. The total number of people, including dependants, with limited eligibility, is estimated at about 1¾ million, or 60 per cent of the population.
I will try to sketch briefly the background against which the proposals in the Bill are put forward. I make no apology for once again referring to the galloping cost of maintaining our national health. In 1951-52 the total cost to public funds of the health services was £10 million. In 1961-62, this had increased to £19 million. The estimated cost in the current year is £76 million approximately, or an average of about £25 per head per year, collected out of rates and taxes in proportion to personal incomes. This rate of increase is markedly out of proportion to the growth of national production. Indeed, over a period of ten years the volume of expenditure, that is expenditure at constant prices, on health services doubled. Ireland is not unique in this regard. It may be some consolation to observe that there is a similar trend elsewhere. It seems to be a general phenomenon that the proportion of national expenditure devoted to health tends to increase with economic and social development. There are various reasons for this. It is partly due to the relative lack of productivity increases in health services since they are such heavy users of direct and expensive labour. Other factors are the astounding expansion of medical technology especially in surgery, and the increasing life span of the average man in modern times. The World Health Organisation published a report by Professor Abel Smith in 1967 entitled " An International Study of Health Expenditure" which showed that in the early sixties some countries were spending over 6 per cent of their national product on health. If that trend continues, health services by 1980 would take over 8 per cent of national resources in developed countries and, by the end of the century, perhaps 10 per cent or more.
Problems in financing and organising health care are currently causing worry in many countries. In the United States of America, which has traditionally leaned towards reliance on private finance and organisation, there is increasing recognition that these on their own are inadequate and several Bills to increase public participation in the financing and organisation of health services are awaiting consideration by Congress.
In Britain the cost of the national health services continues to cause concern and proposals have been under consideration for increasing the revenue from charges on patients for prescriptions. In the EEC countries also, considerable examination is being given to the financing of health care. In these countries this is based largely on contributions from employers and workers, with substantial aid from State funds. The report of the EEC Commission on the social situation in the community in 1970 refers specifically to financial problems in that field in most of the EEC countries and in Belgium, Luxembourg and the Netherlands special bodies have been set up to examine these problems. I am aware that in Denmark also a special committee have recently examined the financing of the health services.
I refer to those foreign examples so that the House will realise that we are not alone in facing problems in the financing of the health services. In this country one in every ten of the population spends some period annually, short or long, in an acute care hospital, excluding mental hospitals. The numbers of patients in this category are rising by 3 per cent or 4 per cent per annum. There are similar statistical analyses in other developed countries. Perhaps what I have said also makes the point that we can find no complete answer to our problems in another country. What we have done is to look at systems in other countries and come up with a proposal which has regard to our own background and social structure.
One of the main objectives of the Health Act, 1970, was to reorganise the administrative structure of the local health services in a way that would ensure the fullest possible return for the huge sums being spent. It will continue to be an important function of my Department to give special attention to economy and efficiency in the health services. Nonetheless, we have to face up to the inevitability that health costs as a proportion of national product will continue to grow, as it is unthinkable that we can neglect to apply the benefits of new techniques in the field of community or individual medical care. At the same time, there are many competing demands on national resources for other services —in education and social welfare for example—not to speak of the need for maintaining investment in directly productive spheres so that the basic capacity of the economy is strengthened and developed. The proportion of the Budget which goes to meet health costs has risen from 7 per cent in 1961-62 to 9 per cent in the current year. I need not remind the House that the increasing contribution from the rates has also caused concern.
Since I became Minister for Health this constant and growing problem of constraint on financial resources has confronted me. On the one hand I need additional funds. On the other hand I am under continuous pressure to relieve the growing burden of local taxation. In this House and at local authority meetings throughout the country there has been an increasing volume of protest from public representatives about what the rates are being asked to bear. I sympathise with these protests. I am personally satisfied that, where the local rates are concerned, we have reached the stage where this particular cow has been almost milked dry.
It is thus clear that the traditional sources for health finance must be supplemented in some other way, and preferably in a way which can be shown to be directly related to the services concerned. This is the means which is proposed by the Health Contributions Bill. It is not an original idea. Some form of national insurance or contributory scheme for sharing the cost of health services is common in European countries, and in countries which are more prosperous than ours.
The Bill I am now asking the House to approve provides for an introductory scheme based for employees on a modest rate of contribution of 15p per week—less than the cost of one pint of beer of half a gallon of petrol. It would be collected in conjunction with the social welfare contribution for insured workers. Farmers and other self-employed persons would contribute at an annual rate of £7. This is rather less than the total amount which an insured person stamping a card for 52 weeks would pay—£7.80— and is justified by the fact that insured persons are automatically exempted from the contribution during periods off work through illness and unemployment because of Social Welfare procedure for credited contributions. Farmers will pay their contributions to the local health board and the contributions of other self-employed persons will be collected through the machinery of the Revenue Commissioners. All the money collected will be paid over to me and disposed of in accordance with regulations which I shall make with the consent of the Minister for Finance.
Where it is difficult for a farmer to pay his contribution in one sum to the health board I have under consideration the possibility of enabling him to pay in easy stages by stamping a card or by some other method.
All medical card holders would, of course, be exempted from making these contributions and there is provision for exempting other specific categories where this is thought desirable. In particular, it is intended that agricultural labourers and female domestics will be exempted. Because the employees' contributions will be collected as part of the social welfare stamp, it is not, however, practicable to exempt classes for which there is not a separate denomination of stamp. Hence, employers of most lower income group workers will, in stamping the cards for social welfare purposes, have to include the element for health services. There is no practicable way of avoiding this so that in these cases there will be a liability on employers to meet the cost of contributions. Medical card holders will of course pay no contributions.
I think it would be hard to argue that 15p per week is an unreasonable price to ask people to pay who are getting full protection for themselves and dependants. When the scheme starts hospital services will be completely free to contributors: the present charge of up to 50p per day will be abolished. Charges for out-patient services have already been lifted since April last. In addition, on the introduction of the scheme, the present arrangements under which drugs are available to all diabetic patients irrespective of their means will be extended to other specified long-term ailments, in accordance with regulations under the Health Act, 1970. Other benefits are also foreshadowed in that Act and will be brought into operation at a later date, for example, assistance with heavy chemists' bills and a home help service to keep people from having to get institutional care. I should also refer particularly to the important reorganisation of the child health services which is now operating successfully.
This introductory scheme is expected to yield a gross £5 million in a full year—not a very large sum in relation to the total current costs of health services but a valuable contribution in our present very difficult economic circumstances. From this will have to be deducted the revenue we receive from hospital charges—about £700,000 a year—leaving a net addition to income of about £4.3 million.
Ideally, a scheme of contributions of this sort should be graded to take account of the varying capacity of different people to pay and it would have been my preference that, from the begining, the scheme of contributions should be so designed. However, at this stage it is not possible to implement a graduated scheme since it has many complicated aspects and calls for a good deal of organisation which the Revenue Commissioners, on whose administrative machinery we must depend, will not be in a position to complete for some time. The Bill makes provision for a changeover to this more sophisticated kind of scheme when we are ready for it and a high-level working party has been set up by the Revenue Commissioners to plan the changeover. The rates of contribution which would apply in such a scheme will be fixed by regulations which the House will be asked to approve in draft form.
Draft regulations will be introduced in this session providing standard norms of income for medical card holders with the hardship clause maintained and this will prevent anomalies arising in relation to the rights of persons who are in the lowest income category in the limited eligibility category.
I should make it clear to the House that the impact of taxation in all forms upon the taxpayer has not been the subject of any notable research in this country or in the case of our neighbouring States.
We are reasonably certain that the tax measures in force, taken together with social welfare payments, are progressive in character and based on income levels. We are quite sure of one fact, namely, that there is no large wealthy class of persons earning from £3,000 to £5,000 net of tax and that the distribution of taxation is such that every section contributes proportionately to their total incomes.
The introduction of this scheme of insurance contributions cannot be said to impose a contribution for hospital services that is out of proportion to either the income less taxation and rates paid.
In the 1966 urban household budget inquiry the amount spent by the average household in the limited eligibility group each week on medical expenses was shown as about six shillings; the amount spent on drink and tobacco was 32s 6d. The people of this country devoted 11.14 per cent of their personal expenditure for goods and services on alcoholic drinks and soft drinks. The 15p weekly contribution is a very reasonable insurance premium. The limited eligibility group again I feel can make this contribution and as incomes rise the contribution can be markedly increased.
I would ask the House to support the adoption of this new principle in our health services and recommend the Bill for a Second Reading.