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Dáil Éireann debate -
Wednesday, 20 Feb 2002

Vol. 549 No. 1

Written Answers. - Health Insurance.

Brendan McGahon

Question:

93 Mr. McGahon asked the Minister for Health and Children his views on a universal health insurance scheme for secondary care. [5832/02]

The current funding system together with alternative funding mechanisms were examined in the context of the value for money, VFM, audit of the health services carried out by consultants, Deloitte & Touche. The consultants, working with the Department of Finance and the Department of Health and Children, carried out inten sive consultations with health boards, voluntary hospitals, staff organisations, etc.

As part of the audit, a detailed examination was carried out of the funding of health care internationally, the methods of raising revenue and the effect on different parts of the health care system. The consultants found that in insurance based systems, demand is not well managed and expenditure is not well contained and concluded that:

A new financing mechanism may address certain deficiencies, but create others. Changing the financing mechanism does not, in itself, necessarily improve health service delivery. Change should only be undertaken when the complex interrelationships between financing, cost access and delivery are assessed in detail.

The work of the consultants informed the considerations given to the new health strategy. It was seen as one of the key documents supporting the work on that strategy together with the primary care model and the review of bed capacity.

The health strategy notes that throughout the world, there is a variety of methods used for raising and allocating the funds required by health systems. In many cases, what appear to be simple models can in fact be much more complicated, with items such as co-payments not being immediately obvious. Similarly, systems have generally evolved over a considerable period and reflect distinct administrative, political and economic traditions. This said, there are some common factors which can be seen in all systems, such as the presence of an element of private finance. Similarly, there are some problems, such as waiting lists, which can occur across widely different systems.

During the preparation of the health strategy, considerable analysis was carried out on the most appropriate method of funding the Irish health system. In particular, the relative merits of social insurance, private insurance and tax based systems were carefully examined. In social insurance systems, the bulk of health care funding is financed separately from general taxation. Contributions are made into a sickness fund or set of competing funds, usually by employers and employees, with the government sometimes topping up contributions. Those who advocate such systems claim that they give stability through ring-fencing funding and promote both equitable access and responsiveness. In response, the critique of such systems is that they undermine reasonable cost control, involve significantly higher administrative and transaction costs and prevent integrated service planning. The strategy also noted that many social insurance systems require top-up payments from the Exchequer and are not in fact separate from general taxation. Therefore, they may not achieve the objective of stability through ring-fencing funding.

The health strategy concluded that "the present centrally funded tax-based system of funding, complemented as at present by private health insurance will be retained".
Question No. 94 answered with Question No. 40.
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