Head over to our T
Are FG’s FairCare Proposals a Boon for Private Health Insurance?
Read more about: Features, Fine Gael, Health, Labour Party, Sinn Féin 
After Fine Gael announced its recent FairCare proposals for health service reform I contacted ILR contributor Dr. Gerry Burke, consultant obstetrician & gynaecologist in Limerick’s Regional and Maternity Hospitals and a vociferous campaigner against co-location to see what he thought of the proposals. I first asked him if the proposals would help improve patient outcomes and then about the current status of co-location, which the IMO recently called on the government to officially scrap.
While I am concerned about some aspects of Fine Gael’s FairCare proposals for health service reform I welcome the fact that they remain committed to universal health care. The idea that primary care will be free is particularly welcome. Replicating the Dutch model in Ireland, however, will be very difficult. The Dutch model depends heavily on risk equalisation and strong regulation – our record on both has been dismal.
My major concern is that the Fine Gael method effectively hands health care over to the private insurance industry. After all that has happened with the banks and the building industry, one has to ask “Is it really wise to hand the nation’s health care over to Seán Quinn and other profit driven insurance companies?”
Richard Nixon handed over US health care to the private insurance industry in the seventies and we can now see the results: despite a massive 17% of GDP spend on health, outcomes, such as infant mortality, are decidedly mediocre and lag far behind most European countries. Sickness has become the major cause of personal bankruptcy.
Dr John Barton was one of those involved in the Fine Gael proposals – my interpretation of his writings on the matter is that he considers private insurance to have more disadvantages than advantages, so I am a little surprised at the FG plan (see here and here).
Labour is very committed to universal health care with free primary care. It is considering the model at present. My hope is that Labour will decide on a social insurance single-payer (the State) model. In the single-payer model (as in Canada), you buy your health insurance from the State rather from the private insurance industry but you can use it in all approved health care facilities. I think this would the quickest method to transform the health care system we have into a single tier system. Furthermore, it would be more likely to be capable of controlling costs than a system that involves the investor owned private insurance industry. I see no role for Seán Quinn or any other middle-man in health care. My colleagues and I have written about this in the Irish Times (here and here).
With regard to the co-location, of course it is dead – it just hasn’t yet been declared dead! The recent assertion by Beacon Medical Group (BMG) that this socially repugnant idea of segregating sick people according to their financial means will go still ahead shows that they are considerably out of touch with reality. Even the most casual acquaintance with the facts suggests that co-location is a dead duck.
Even if the co-location managed to escape the abolition of tax-breaks for private hospitals contained in the recent Budget (and it may not), it is very doubtful that private hospital developers will be able to secure funding for the eight planned co-location hospital projects. Banks will be extremely circumspect about supporting a large expansion in the private hospital sector at this time. Fewer families will be in a position to afford private health care and many of the country’s current large complement of forty or so private hospitals are experiencing difficulty. It is already accepted that a 25% increase in private insurance premiums will be required to support co-location. Private investors (the usual ‘high net worth’ individuals targeted by such tax-incentivized schemes) have become both cautious and scarce. It is known that at least one major local investor has walked away from the project in Limerick.
Both Labour and Fine Gael are opposed to co-location. Sinn Féin opposes it. The Green Party opposed it before the last election and are probably not committed to it. Fianna Fáil itself has been noticeably silent on co-location since November last. If there is a change of government any time soon, it is extremely likely that the policy will be abandoned. Jan O’Sullivan has stated repeatedly that Labour remains vehemently opposed to co-location. Labour in government will be far more concerned with rapidly implementing its vision for an equitable health care system and in improving the public services. In that scenario, the fate of wealthy investors’ money, ploughed into tax-break driven projects like co-location, is not likely to be a new government’s first priority. Potential investors would be well advised to be very wary.
The government should now clarify the position. It is time to admit that the co-location policy has been a financial, political and philosophical failure and to finally put an end to its miserable existence. Instead, the Government should proceed with its plan to raise funds for major infrastructural projects through the issuing of bonds. A ring-fenced bond issue for public hospitals would allow us to rationalise and modernise our acute hospitals quickly, while creating employment in the building industry.
Dr Gerry Burke, FRCOG, is a consultant obstetrician & gynaecologist in Limerick’s Regional and Maternity Hospitals. He is also a member of the Labour Party.
“Labour is very committed to universal health care with free primary care. It is considering the model at present. My hope is that Labour will decide on a social insurance single-payer (the State) model. In the single-payer model (as in Canada), you buy your health insurance from the State rather from the private insurance industry but you can use it in all approved health care facilities. I think this would the quickest method to transform the health care system we have into a single tier system. Furthermore, it would be more likely to be capable of controlling costs than a system that involves the investor owned private insurance industry. I see no role for Seán Quinn or any other middle-man in health care. My colleagues and I have written about this in the Irish Times (here and here).”
My understanding is that Labour favours an insurance-market with around 4 players. I emailed Labour on the FG proposals and Dermot Lacey replied:
“Thank you for your email to the Labour Party regarding Labour Health policy.
The Labour Party has supported the introduction of a Universal Health Service Policy for many years and welcome Fine Gaels movement in that direction.
Rather than taking up a large amount of space on your email file can I suggest that you visit our website http://www.labour.ie and simply type in Universal Health Service and you will be able to access a range of policy papers on this.
Hoping this is satisfactory.”
Where do I stand on this? I support competition between private-sector health-insurers, and favour the eventual privatisation of the VHI. Without competition, there will be no brake on the rise of insurance premia. I don’t regard your comparisons with the American system as fair. Most important to remember is that in the States, there is no universal coverage, whereas FG is proposing that the state would subsidise it for the poor. I have heard of premia of $800 a month over there, but it is not comparing like with like. A better comparison would be the one “FairCare” is based on – namely the Dutch health-service, which the WHO regards as the best in the world.
On the question of hospital colocation, I again disagree with you. My reasons for supporting it are twofold. Firstly, to free up 2,000 private-beds in public hospitals, and secondly to break the power of the unions to hold a gun to our heads every few months. Private-hospitals like the Beacon are run in the interest of the patient rather than the staff. The public health-service is largely run by the unions, who have extorted benchmarking out of the government without requisite fains in efficiency. This reality is embodied in an unpublished HSE report showing that health-service employees lost a staggering 100,000 sickdays in one month – yes month – costing the HSE €150 million for replacement-staff. The absentee-rate for support staff including porters, caterers and cleaners was 8% (and 6.82% of all health-service employees) – more than double that of the private-sector. The private-sector is often demonised for its profit-motive, but in reality it is that which incentivises it to provide a superior service to its market. There is no incentive beyond the goodness of their hearts for IMPACT, SIPTU or the PNA in the public-sector to do the same. It is the lack of profit-motive which has bequeathed to the Irish people the 11th best health-service in the EU (WHO). If hospitals were earning money from the insurance companies to treating all patients, they would soon have an incentive to become more efficient and productive. Finally, we would be nearer to a health-service whose primary focus is the interest of its patients rather than those of its employees.
“Firstly, to free up 2,000 private-beds in public hospitals, and secondly to break the power of the unions to hold a gun to our heads every few months. Private-hospitals like the Beacon are run in the interest of the patient rather than the staff.”
This uninformed and prejudiced nonsense, based on an utterly fallacious belief in the wonders of the free market. It is a failed ideology, rooted in the mentality of the bazaar. The market justice model of health care provision has manifestly failed in the United States.
The co-location plan, which the Labour has shown will cost the State €1.3 billion between the tax breaks to investors and loss of private income to public hospitals, aimed to free 1000 public beds and not 2000. General hospital beds cost about €1 million per bed, so there is an immediate waste of €300 million.
Secondly, private hospitals most certainly do not operate in the interest of patients: they operate in the interests of investors. Profit is the primary motive, not clinical outcomes. There is a large body of scientific evidence demonstrating the poor value and worse outcomes in for-profit hospitals. For an overview of the research to date, read the work of Woolhandler and Himmelstein in the Canadian Medical Association Journal (CMAJ) and in the British Medical Journal (BMJ), who have described the situation eloquently: ‘Behind false claims of efficiency lies a much uglier truth. Investor-owned care embodies a new value system that severs the community roots and Samaritan tradition of hospitals, makes physicians and nurses into instruments of investors and views patients as commodities. Investor ownership marks the triumph of greed.’
I summarized some of these studies in the Irish Times last year: “In high quality studies and meticulously performed meta-analyses involving very large numbers of patients and hospitals, it has been shown that mortality is 2 per cent higher in for-profit hospitals (a study involving some 36 million patients); that mortality is over 8 per cent higher in for-profit dialysis units – an excess of some 2,500 annual deaths in the US; that payments to for-profit hospitals are 19 per cent higher (350,000 patients); that Medicare payments are higher in areas of the US served by for-profit hospitals; that five different measures of quality of care for three acute medical conditions were consistently worse in for-profit hospitals (a study involving some 4,000 hospitals); and that for-profit hospitals spend less on nurses and more on managers.”
Precisely the same arguments apply to the private medical insurance industry. There is no evidence that European private insurance corporations are any less greedy and predatory than their American counterparts. There might be some hope with insurance schemes owned by members and operated in their interest (mutuals), but handing the entire system over to the private insurance sector is, frankly, something only a dunce would do.
Finally, the world’s best outcomes (which is what patients are really interested in) are being achieved in the Nordic countries, which have long traditions of social democratic government, where health care is virtually fully publicly funded, and where expenditure is generally less than in Germany and the Netherlands. Germany and the Netherlands have complicated systems involving private insurers. Germany’s expensive system delivers good access but disappointing outcomes.
Comparisons with the Dutch system are more relevant in the Irish context, especially given the lax ethics-legislation in the US and the more laissez-faire ethos over there (even now). The WHO says the Dutch health-service is the best on the planet. I say we emulate it.
We might be able emulate the Dutch model were it not for our strong tendencies towards politico-corporate cronyism and loophole legislation. One can just imagine the usual Seánies and Ulicks rubbing their hands in anticipation of yet another windfall gift from the nation. Even with mutuals, there is huge potential for abuse (just think of Irish Nationwide).
Finally, according to the OECD Health Survey, the Netherlands spends 9.3% of their substantial GDP on health, compared with a 7.5% spend in Ireland: that is why the Dutch have a better system.