The purpose of the Bill is to ease the serious burden of health costs on the Exchequer and rates through the introduction of a scheme of regular contributions towards the cost of hospital and other services by those who are eligible for the services and who may be regarded as able to bear the contribution proposed without hardship. These are persons in the category described in the Health Act, 1970, as having limited eligibility for health services, that is, persons and their dependants without medical cards who are insured under the Social Welfare Acts, or who are farmers of £60 valuation or less, or who are other persons with means of less than £1,200 per annum. I might mention that I shall be seeking the approval of the House in the present session to regulations which would raise this limit to £1,600.
The description "limited eligibility" may possibly suggest to some people that the range of services open to this category is not very wide. In fact the services in which they share directly account for no less than 85 per cent of the total running costs of the health services, which are estimated at some £76 million in the current year. The principal item in this bill is hospitals, which account for £57 million.
I do not want to confuse the House with too many statistics but I think a few salient statistical facts are necessary to put the size of the contribution yield into proper perspective. The yield from the scheme at the initial rate of contribution will be £5 million in a full year, but since, at the same time, it is intended to do away with the present hospital charges of up to 50p per day on persons with limited eligibility, the net annual income will be something over £4 million. I hope to have the scheme in operation for the second half of this financial year—hence the reference in the last Budget Speech of the Minister for Finance to a return of £2 million this year when he announced the proposal to introduce the scheme. £2 million will meet less than 3 per cent of the total estimated expenditure this year.
Central taxes and the rates will continue therefore to bear what may, perhaps dubiously, be described as the lion's share of health costs. I do not foresee any radical change in this pattern of financing. The total expenditure is so high, and is growing at such a rate, that it would be unacceptable to attempt a large-scale redistribution of responsibility as between the various sources from which money is found for health at present. Most public debate on this subject tends to emphasise the heavy demands on the ratepayers. I agree that the rates' share is substantial and I fully appreciate the dissatisfaction so often voiced on behalf of ratepayers. At the same time, the demand for removal of health charges from rates begs a very big question. Where would we find the large sum at present contributed from this quarter if we were to relieve the rates of the liability? The Exchequer's share of the cost is £46 million in the current year, about 9 per cent of the total Budget. It is quite unrealistic to expect that central funds can be diverted from the many other pressing and competing public needs to the extent necessary to make any appreciable difference in the burden on the ratepayers. It is important also to remember that the Exchequer relieves farmers substantially from rates by the operation of the agricultural grant, to such an extent that, over the country as a whole, the rates pay for only about 25 per cent of the cost of health services.
We have a problem to find money for our health services, but let me emphasise that we are not exceptional in that regard. Finding resources for their health services has become, for many countries, one of the major dilemmas facing governments. In Britain and other Western European countries there have been considerable difficulties in recent years and growing attention has had to be given to this question. As far as I am aware, no country has discovered a financial panacea for its health problems. The picture which emerges from the information available to me suggests that the health services in Western European countries in general tend to be financed by an amalgam of sources incorporating taxation, insurance contributions and charges on the patient.
Senators who attended a lecture given here recently by Mr. Walter Mc-Nerney, President of the Blue Cross Organisation, which is the biggest voluntary health insurance organisation in the United States, will have heard him say that the question of financing the American health services was now a major problem and that next year would be the major national problem. Indeed, the President of the United States has described his country's health services as "a system in crisis." Professor Abel Smith, a prominent British commentator on social matters, in a report published by the World Health Organisation in 1967 revealed that some countries were, in the early sixties, 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 as much as 10 per cent.
There is no reason to believe that there will be any change in that trend. The bill for health is going to go on increasing and we must accept the situation as unavoidable. The remarkable advances of medical science and the growing specialisation which arises from these developments add increasingly to the costs with which we are now faced. In America there are now up to 200 different categories of specialist involved in the provision of hospital care. On top of this we have more and more people living into old age, into that stage of life where illness or infirmity is more frequent or of longer duration. These are some of the underlying causes of the almost insatiable demand for resources to support health services. It explains to some extent one of the great paradoxes of our times, namely, that despite improved social conditions, better food and improved housing standards, the cost of maintaining our national health goes on growing.
What I have said so far provides the background to the introduction of this Bill. The Government is satisfied 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.
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 or half a gallon of petrol. Where insured workers are concerned it would be collected in conjunction with their social welfare contribution. 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.
I would hope that since the contribution is a small one the farmer would pay it in one annual sum, but to avoid any hardship for him 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. There is no question of asking medical card holders themselves to pay.
I would suggest to you that 15p per week is not an unreasonable price to ask people to pay who are getting so wide a measure of protection for themseves 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.
As I said earlier, 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.
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 beginning, 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.
The House will, naturally, be concerned about whether an obligatory health contributions of the sort proposed will give rise to any disequilibrium in our taxation system. The impact of taxation on the various income categories has not been the subject of close analysis here or in neighbouring countries. We are, nevertheless, reasonably certain that the tax measures in force are progressive in character and related to income levels. We are quite sure of once 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 contributions cannot be said to impose a charge that is out of proportion to the income of the contributor.
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 30p; the amount spent on drink and tobacco was 162½p. The people of this country devoted 11.14 per cent of their personal expenditure for goods and services to the purchase of alcoholic drinks and soft drinks. I am sure you will agree that, in the light of these figures, the 15p weekly contribution is a very reasonable insurance premium. It can be easily borne by the limited eligibility group and can be increased as incomes increase.
I would ask the House to support the adoption of this new principle in our health services and I recommend the Bill for a Second Reading.