NERI seminar" Unwinding the state subsidy of private health insurance"

Brendan Burgess

Brendan Burgess

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Seminar postponed. New date to be advised.



I have heard Brian Turner a few times and I would expect this to be a very good presentation.

[broken link removed]

22 June 2016
The Nevin Economic Research Institute (NERI) will hold a seminar on Wednesday 22nd June, 2016. The details are as follows:

Topic: Unwinding the State subsidisation of private health insurance

Speaker: Dr Brian Turner, UCC

Date: 22nd June, 2016

Time: Tea and coffee from 15:50. The seminar will commence at 16:00

Abstract

Ireland’s private health insurance market provides primarily supplementary health insurance for hospital services, operating alongside a public hospital system to which residents have universal access entitlements, subject to some copayments for those without a medical card. The State subsidises the purchase of private health insurance through measures including tax relief on premiums and not charging the full economic cost for private beds in public hospitals. Furthermore, privately insured patients occupying public beds in public hospitals did not, until 2014, incur charges for such accommodation, apart from modest statutory charges. In the Budget in October 2013, two measures were announced that began to unwind these subsidies – a cap on premiums subject to tax relief and the charging of insurers for any accommodation in public hospitals. Although it was initially feared that these measures would add to health insurance premium inflation, leading in turn to further discontinuation of health insurance, the evidence suggests that premium inflation eased and take-up stabilised after their introduction, although this may have been at least partly due to the introduction of lifetime community rating in May 2015. Nevertheless, it would appear that the restriction on the subsidisation of private health insurance did not have a significant adverse effect on the market, while it reduced an inequitable cross-subsidy. Future policy options in this regard are also explored.

The paper can be found at [broken link removed] .
 
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I can't read the full paper as it seems to be behind a paywall.

I am initially sceptical of the line "the evidence suggests that premium inflation eased" and I think any such claim should be closely scrutinised.

People responded to the unsustainable price hikes of recent years by switching to plans offering less cover and reduced benefits.
Compare a policy from 2012 against a policy from 2016 and look at the list of co-payments, and excesses, cancellation charges etc etc.
As far as I'm concerned, a 25% reduction in benefits is the same from a premium inflation perspective as a 25% increase in price.
 
Completely agree odyssey.

Laya's recently announced price increase of over 10% on the majority of plans leave me very sceptical of the effects Lifetime Community Rating.
 
Brendan Burgess said:
Ireland’s private health insurance market provides primarily supplementary health insurance for hospital services, operating alongside a public hospital system to which residents have universal access entitlements,
Click to expand...

Do private hospitals not take the pressure off public hospitals?

If I need medical treatment tomorrow, I can join the queue for a public hospital or pay my own way in St Vincent's Private or the Blackrock Clinic. By taking the private option, am I not shortening the queue for the public hospital?

If someone with a medical card goes to a public hospital, the taxpayer will pay for their treatment in full.
If I go to the Blackrock Clinic, the taxpayer will pay a maximum of 20% of the cost - the bit covered by private health insurance.

If I understand it correctly, the state will sometimes send public patients to the private hospitals where there is too long a queue in the public hospitals. So the state pays 100% of the cost of public patients while I pay for at least 80% of the cost as a private patient.

It seems to me that the state should encourage private hospitals and not discourage them.

The counterargument might be that the private hospitals attract doctors and nurses away from the public hospitals. I don't know if that is true or not. I hear doctors and nurses saying that they don't want to work in the Irish public hospital system due to the chaos.

Brendan
 
I don't think that the private patients should be able to skip the queue in public hospitals.

As a citizen, I should have a right to be treated in a public hospital on the basis of any other citizen.

I should not be able to skip the public hospital queue just because I can afford to pay something.

I gather that there are two queues - the general queue and the consultants' private queue. Or has that been done away with?

I presume that a cash starved public hospital would prefer a patient who pays €800 a night than a patient who pays nothing.
 
Come to think of it, why should the state provide medical care for free to every citizen?

Why not charge everyone for their medical care? The state should only pay when the person can't afford it.

I suppose because if people had to pay for tests and to see consultants, they would be less likely to do so.

Brendan
 
The two queues for surgery in public hospitals have been done away with since Jan 2014( general queue and consultants' private queue).
Just one queue exists in public hospital now, regardless of having health insurance or not. So basic public cover plans are practically useless, the main benefit is avoiding the % loading for a few years for the over 34s.

Private patients skip the initial queue by paying to see the consultant privately. This initial queue could be 1-2 years depending on the condition. This option is open to anyone, with or without health insurance to speed up the process of getting a diagnosis. After that its a case of joining the public queue or consider other private hospital options available for surgery or treatment.

So by taking the private option you would be shortening the queue in the public system.

Snowyb
 
snowy

That is great thanks.

So apart from skipping the initial queue for the consultant, is there any practical advantage? I know we all join the same queue, but could my consultant mark me as more urgent on medical grounds? He shouldn't do this, but could he?

The public hospitals presumably are delighted to treat insured payments as they get more money.

If private insurance reduces, then the hospitals will get less money?

There used to be "private beds" in public hospitals. Are they all gone now?

Brendan
 
The 'private beds ie. room on your own' or 'semi-private - 2 to 4 sharing' are still there.
The difference is in relation to bed charges for the health insurance provider.
If a person using health insurance is admitted to a public ward, the cost to the provider is 813 per night.
The semi-private room also costs 813 per night. While the single room costs 1000+ approx per night.

So, yes the public hospitals are delighted to admit private patients to get more money.
Strictly speaking, you shouldn't sign the form for using health insurance unless you are being admitted to a semi-private or private room.
The alternative is a cost of 75 euro per night capped at 750 for 10+ nights if you are admitted to a public ward. The health insurer will cover this bill if you choose not to sign the form.
Its easier said than done, depending on the circumstances. I'm thinking after 2 nights on a trolley being offered a bed at 7am on day 3.

This 'bed re-designation' is explained very well on the following link; Introduction of Bed Re-designation
[broken link removed]

As regards a consultant marking you as more urgent, technically they could but realistically I think that day is gone - unless you were a chronic
case. They can do that with their private list in the hi-tech or private hospital if you need prompt attention, so in a way there's no need to when
an alternative option is open.
With a 2 year waiting time the norm in public hospitals for surgery, after waiting 1 year I'd say a lot of patients on the list would be close to chronic,
with another year of waiting to go. It would be unethical to say the least.

Regards, Snowyb
 
Hi Snowy

So the type of bed I get has nothing to do with the surgery queues?

I am a private patient and take my place in the queue for a hip operation. There are empty private beds in the hospital in the meantime, but that does not affect my place in the queue.

When I get to the top of the queue for the operation, I get the nice private or semi-private room.

Mad stuff. Why would anyone pay for this? I pay so that I don't have to join the queue. If I need treatment, I will get it in a private hospital.

Would it be better just to abolish all private beds in public hospitals?

Brendan
 
Brendan,

I don't think there is ever a situation where ' there are empty private beds in the hospital', there's an A + E dept full of patients on a daily basis
ready to fill these beds, including private patients.

The private hospitals don't have emergency depts to deal with, so they can organise routine surgery schedules on a weekly basis with little disruption.
All beds in public hospitals are also private beds since bed re-designation. If all private beds were abolished in public hospitals, I'd say they would run out of funding fairly quickly. Private patients subsidise the annual budget.

I read a very interesting article in the Sunday Independent recently by Stephen Donnelly TD, giving an insight into the public system and the sheer
dysfunctional, waste of money on a daily basis. Link as follows;
http://www.independent.ie/opinion/comment/twoyear-hip-op-wait-is-unacceptable-34793003.html

Snowyb
 
My instincts here are that this 'state subsidy' epitomises the static, zero sum game of the civil service mentality.
There is some fixed pool of resources and services to be distributed.
No conception of how to reduce the cost of delivering services, or to increase capacity in the system as a whole.
A land grab mentality and nothing more.
 
On reflection, the question should not be: "Should we subsidise private health insurance?" . The question should be "Should we subsidise private hospitals?".

The insurance issue just complicates the more fundamental question. I have spent a lot of time trying to understand, public vs. private beds, community rating, risk equalisation etc. That time would be better spent understanding private vs. public hospitals.

Here is my current thinking...

We need a public hospital system.
The private hospitals take a huge amount of pressure off the public hospitals.
If we were to ban private hospitals, then the queues in the public hospitals would just get longer.

So should we subsidise private hospitals?

I think that we should. The state will pay almost 100% of the cost of treating me in a public hospital. They will pay 20% of the cost of treating me in a private hospital - either through tax relief on medical expenses or through tax relief on health insurance.

That seems like a fair enough balance.

As a taxpayer, I am paying for 80% of the cost of my medical treatment and 100% of the cost of treating others. :)

But I think that public hospitals should be exclusively public hospitals. There shouldn't be private beds in public hospitals.

But then, it seems that this is just a way of getting suckers to pay for something they would get for free anyway. These suckers are funding the public hospitals which would be in even bigger trouble without this funding.
 
Brendan Burgess said:
We need a public hospital system.
The private hospitals take a huge amount of pressure off the public hospitals.
If we were to ban private hospitals, then the queues in the public hospitals would just get longer.
Click to expand...


If we moved away from the current 2-tier system to a single tier system, these current private hosps won't disappear.

If there are 50 public hosps and 30 for-profit hosps now, then there would still be 80 hosps after the reforms.

The capacity / supply /beds in these private hosps would not disappear overnight.

Any reforms would not "ban" private hosps surely? Any reforms should allow all patients to access all hosps in my opinion.
 
Surely, in a true republic, money/income should not allow anybody to access care quicker?

What I suggest is a 1-tier system, universal health care.

Everybody insured, or else a single-payer NHS style system.

So all hosps would be paid to treat all patients.

The public/private distinction should be abolished.

There should be just "patients" and there should be just "hosps".

100% of the pop should be able to be referred to 100% of the hosps.
 
Protocol said:
Surely access to care should be totally dependent on medical need, not money/income?
Click to expand...
I think it stands to reason that access to acute/urgent care should be based on medical need in the public hospital system. For those who can afford it there should be the alternative of retaining a level of insurance cover to allow them access to private hospitals. This is not being any way elitist as we are a democracy and not a socialist society.
I feel that Brendan B has made the point well that the 20% state subsidy towards the cost of medical insurance is currently merited on the basis that the insurance companies currently heavily subsidise the overall costs of the public hospitals and the access to private hospitals for those with medical insurance frees up beds in public hospitals for those without insurance cover.
In the unlikely event that the PH's get to a scenario where they are no longer reliant on subsidies from private patients then there may be a case to rethink a tax subsidy towards health insurance. i.e. we would need to be in a situation where the only reason to hold medical insurance is to avail of private rooms and queue jump for elective procedures only.
Currently I see medical insurance as being a necessity rather than a luxury. It is extremely annoying to hear some politicians castigating those on health insurance as "queue jumping" rich people taking up beds in PH's when the truth is so different.
 
Protocol said:
Surely, in a true republic, money/income should not allow anybody to access care quicker?
Click to expand...

In a free society, why shouldn't some people be free to allocate more of their resources to a particular service?
We shouldn't forget that in the long run, there are advantages accruing to all members of society from this.
The advanced treatments of today that may only be accessible by people on high medical plans, will be the standard care of tomorrow.

The problem in Ireland isn't the benefits that some people get from private medical insurance, it's that the public service is so dysfunctional. Look at A&E.
 
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Brendan Burgess said:
Why?
Click to expand...

I might agree with a system that lets you get faster care if other patients don't suffer.

But they do suffer.

The consultant has a financial incentive to not treat public patients, and has an incentive to treat private patients faster.

If they delay treating public patients, some of those patients will choose to pay cash to get treated privately.

Or, the National Treatment Purchase Fund will pay the same consultant to treat the patients privately.

If you think about it, it is in the interest of the consultant that waiting lists exist.
 
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