I move: "That the Bill be now read a Second Time."
The maintenance of health services is a priority in 2013 for the Government despite the need for significant and difficult financial savings in the health area. It has been our intention that front-line health services would be protected to the greatest extent possible. As part of budget 2013, over €13.6 billion in current funding has been made available to the Health Service Executive for the provision of services. This amount represented an increase of €150 million over the original expenditure targets for 2013, as set out in the comprehensive expenditure review published in 2011. However, despite the extra funding provided, just over €750 billion in savings must be made during 2013. This represents a major challenge for the health services.
The budget strategy has been to achieve savings through efficiencies and reorganisation under the public service agreement, curtailing the growing cost of pharmaceuticals and increasing income generation. The aim of this budgetary strategy is as far as possible to cut the cost of the services and not the services themselves. By way of example, significant savings have been targeted in the cost of prescribed drugs and medicines.
Last year's agreement with the Irish Pharmaceutical Healthcare Association, IPHA, will provide savings in excess of €400 million over a three-year period. The agreement also means significant reductions for patients in the costs of drugs, as well as a reduction in the drugs bill to the State. Separate legislation aimed at reducing the costs of drugs is making its way through the Oireachtas at present - it passed Committee Stage yesterday - and it will introduce a system of reference pricing and generic substitution which will deliver further significant savings in the costs of medicines for the health service.
Budget 2013 set out a wide range of savings that were required, which are made up of a €323 million reduction in the cost of primary care schemes; €308 million pay-related savings; €65 million in increased generation of income by public hospitals; €60 million in net savings on the Department's Vote; €20 million savings on procurement; and €5 million in other savings. Nonetheless, the achievement of €781 million in savings in 2013 remains difficult. The majority of savings have been designed not to impact on front-line activity. However, we have previously acknowledged that it has been necessary to take a number of difficult measures to ensure that the most vulnerable are protected.
The General Medical Services scheme comprises the GP service and prescription drugs, as well as some other services, where such services are provided to holders of medical cards or GP visit cards. Over recent years, there has been a significant expansion in the GMS scheme. At the end of 2007, there were 1.28 million medical cardholders, while by the end of 2012, there were 1.85 million medical cards in circulation, an increase of almost 600,000 cards, or approximately 45%, over a five year period.
The total cost of the GMS scheme is about €2 billion per year. At the end of 2012, there were approximatelt 1.986 million qualifying people under the GMS. Medical cards make up the majority of this number, amounting to about 93% of the total. Medical cards for persons aged 70 years and over account for about 360,000 individuals, or about 20% of all medical cards. The total cost of services provided to over-70s medical cardholders is approximately €750 million per year, which represents about 38% of the total cost of the GMS scheme.
Under the Health Act 2008, special eligibility rules applying to persons aged over 70 years were put in place which are more generous than those applying to the standard means-test medical cards. Under the 2008 framework, a single person over 70 years old with a gross income of up to €700 per week, equivalent to about €36,000 per year, qualifies for a medical card. A couple over 70 years old with a gross income of up to €1,400 per week, equivalent to about €72,000 per annum, also qualifies for a medical card. There are approximately 370,000 people aged over 70 years in the State. Given that there are currently about 360,000 medical cards issued to people aged over 70, medical card coverage of the over 70s population is about 97%. In comparison, the medical card coverage of the under 70s population is about 35%.
In the recent budget, two interrelated changes to the over 70s eligibility arrangements were announced to deliver €12 million in savings during 2013 from the €750 million expenditure on over-70s medical cards. The income limit for an over-70s medical card is to be reduced and people who no longer qualify for a medical card will continue to receive a free GP service. In addition, they will qualify under the drug payments scheme to have some of the cost of their prescription drugs met by the HSE. More specifically, the income limit for an over-70s medical card is to be reduced to €600 per week, equivalent to about €31,000 per year, for a single person. For a couple, the income limit for the over-70s medical card is to be reduced to €1,200 per week, equivalent to gross income of about €62,000 per year.
As I stated, those who no longer qualify for an over-70s medical card will qualify for an over-70s GP visit card. A single person over 70 years old with a gross income of up to €700 per week, equivalent to about €36,000 per year, qualifies for a GP visit card. A couple over 70 years old with a gross income of up to €1,400 per week, equivalent to about €72,000 per year, also qualify for a GP visit card. In addition, under the drug payments scheme, the HSE will meet the prescription drug costs of these people in excess of the DPS threshold of €144 per month. It is estimated that about 20,000 people will have their medical card replaced with a GP visit card under the new income rules. Therefore, it is important to note that about 95% of the over-70s population will not be affected by these new rules; 92% of over-70s that qualified for a medical card will continue to have a medical card; 3% of over-70s that did not qualify for a medical will continue not to have either a medical card or a GP visit card; and 5% of over-70s that did qualify for a medical card will now qualify for a GP visit card instead.
The new legislation is specific in that it is only meant to affect a small number of people aged over 70 years of age: single individuals earning more than €31,000 per year or couples earning more than €62,000 per year. The new income limit for a single person of €600 per week is, for comparison, more than two-and-a-half times the single person's basic State pension of €230 per week. The new income limit for a couple of €1,200 per week is, for comparison, more than two-and-three-quarter times the basic State pension for a married couple of €436 per week.
The Civil Partnership and Certain Rights and Obligations of Cohabitants Act was enacted in 2010 to introduce certain rights and obligations for civil partners and cohabitants. It is important that these rights and obligations are also reflected in the legislation relating to the over-70s medical cards and the new over-70s GP visit cards. The necessary amendments to achieve this are also included in this Bill to ensure that spouses, civil partners and cohabitants are treated in a similar manner.
A primary objective of public service reform is to integrate services with a view to providing better service to citizens and greater efficiency for the State. Co-operation between public bodies at national and local level is one of the key pillars to the achievement of this objective. In this context, the Department will continue to support the HSE in its exploration of opportunities to exchange data with public bodies with a view to ensuring that public services are delivered as efficiently as possible to those who have an entitlement to such services.
One of our intentions under the new over-70s arrangements was to avoid having to unnecessarily contact as many over-70s individuals as possible. Contacting all over-70s would be a very wasteful and time-consuming task, as well as disturbing for the individuals themselves, given that 95% of the over-70s population are unaffected by the new rules. One of the benefits of greater co-operation between the HSE and the Revenue Commissioners is that the HSE will be able to prioritise contacts with higher-income over-70s medical cardholders.
However, the exchange of personal information is more general than just the changes to the over-70s arrangements. The prevention of fraud and abuse of the health service is a very important element of the work of the HSE, even more so in the time of severely limited resources. One of the most effective and efficient ways of targeting cases for review is to electronically match data from other relevant Government Departments and public bodies against the HSE's computer systems. The purpose of this is to identify people who may be holding a medical card to which they are not entitled. In carrying out these data matching exercises, the HSE is obliged to be mindful of its responsibilities to protect the rights and privacy of individuals in accordance with the Data Protection Acts 1988 and 2003.
As I stated at the outset, it is a Government priority during 2013 that health services are to be maintained despite the need for significant and difficult financial savings in the health area. The majority of savings have been designed not to impact on front-line activity. However, it has been necessary to take a number of targeted measures, such as this proposal, to ensure that the most vulnerable continue to be protected.
I commend this Bill to the House and look forward to hearing the views of Deputies.