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Ireland is still paying more than the EU average for health – but the benefits of this are less than obvious
By Economics Correspondent Sean Whelan
One of the things regretted by senior officials in the Department of Finance is that they didn’t include reform of Health spending in the Troika bailout programme from day one.
Instead it crept into the programme around half way through, so a lot of the impetus for taking hard decisions was lost.
The consequences of that loss of impetus were laid out in an EU report this week.
The European Commission assessment of the economies of each of the 29 member state’s economies lists the healthcare system as one of the structural challenges facing the Irish economy for three reasons – demographics, finance and structure. And it notes a marked slowing down in the rate of reform in a number of key areas of the health system.
The first thing it notes is that Ireland’s healthcare system is “atypical among EU member states”. This is because health insurance and the delivery of healthcare are organised under a two tiered system of public and private systems.
The second general point they make is that public spending on healthcare is comparatively high in Ireland – 8.7% of Gross National Income (2012) compared with an EU average of 7.3%. And this ratio was down from a peak of 10% of GNI in 2010.
Despite this higher-than-average level of spending, health outcomes – i.e. sick people getting better – are “comparable” to those in the rest of the EU. It says health status indicator such as life expectancy and infant mortality are by and large no better than the rest of the EU.
So we are paying above average prices for a public good – healthcare – that is only classed as average.
And while we are spending above the EU average, the report notes that the number of hospital beds and doctors per resident is comparatively low. Prompting the question – if it’s not going on beds and doctors, where is the money going?
Pharmaceuticals is one of the answers.
The report notes that while recent reforms to bring down prices from very high levels have worked, public spending on pharmaceuticals remains well above the EU average. And it looks like they may stay that way for a while.
The 2012 agreement on drug costs was supposed to have a mid-term review, starting last summer. But it was delayed, putting, the commission says, “the achievement of any further significant savings in 2015 at significant risk”.
On generic drugs it says the introduction of “interchangeable groups” is almost complete, with generics now accounting for some 70% of the volume of publicly-covered outpatient use, which has resulted in “substantial cost savings”. Which is good news but means, according to the Commission, that there may only be limited scope for further savings from generics.
The big hope for further value-for-money gains is in “cost effective prescribing behaviour” by doctors.
But while there has been some progress on the cost of drugs, other structural changes seem to be slowing down, in the commissions view. This is most apparent in the transition towards universal health insurance. The aim of completing the reform by 2019 has been abandoned, and no new target date set.
Other building blocks of the strategy are going ahead at various paces.
These include the “money follows the patient” activity based funding model for hospitals, a reform of the accounting system used by hospitals and the HSE, and the e-health strategy – the integration of all information and knowledge sources involved in the delivery of healthcare via IT systems.
This includes patients and their records, caregivers and their systems, monitoring devices and sensors, management and administrative functions. In other words, the mother of all IT jobs. Not surprisingly, it’s behind schedule.
This is a problems, because at its core is a system of “health identifiers” that help track patient health and the money spent to achieve outcomes. They are a pretty critical component of the overhaul of the hospital accounting system that is being – slowly – phased in, so that all hospitals use the same accounting system (for once), making it easier to measure and manage spending centrally.
The report says that while a trial of activity-based funding has started, it will take “some years” to roll out to all hospitals. So the delays are piling up and negatively impacting on each other.
And as if all that wasn’t enough, the report notes that demographics are – inexorably – moving against the reforms.
Ireland has one of the youngest demographics in the EU right now, which should mean healthcare is less of a drain on the public purse. But remember, we are already spending more than the average on healthcare and getting less of an outcome. And the demographics in Ireland are moving into line with the European average, which means an ageing population, which will put more strain on the system in the decades to come.
Clearly throwing more money at the existing system is not going to work.