Ireland's Minister for health James O'Reilly

I don't have to tell all of you over there that the health service in a country can be one of the most contentious policy areas for a government.  Just look at the reaction to Obamacare! 

From a European perspective Obamacare is a fairly modest attempt to provide a modest universal health care system that is regarded as normal for a civilized country on this side of the Atlantic.  Yet on your side of the pond many people see it as so radical and outrageous that it resulted in the shutdown of the entire U.S. government. 

Of course the inept rollout of the plan is not helping, but it's far too early to say whether Obamacare is going to be workable and beneficial for most Americans -- especially lower income Americans -- or whether it's going to be the total disaster the Republicans predict.

Mind you, none of us here in Ireland can afford to sneer at the shenanigans that are going in the U.S. over Obamacare.  The health service here is a financial mess and has, not for the first time, turned out to be the hot potato of the annual budget. 

The budget for 2014 unveiled last week was another cost cutting exercise as we battle to get the state finances under control and reduce the deficit between state spending and revenue.  And since the second biggest item in the budget every year (after social welfare) is health spending, there are severe cutbacks on the way again. 

The cost to the state of the health service in Ireland peaked at a massive €15.5 billion at the height of the boom in 2008, and by last year this had been cut to around €14billion.  But it's still far more than we can now afford and it needs to be reduced further.  It is one of the areas identified by the IMF and the EU for action in the program of deficit reduction that followed the bailout.

Despite the reduction since the 2008 peak there was a substantial overrun in the budgeted health spending last year, and this year looks like being no different. This is not completely the fault of the Minister for Health, Dr. James Reilly.  Sticking to the spending plans is very difficult because the service is demand led -- it expands to meet the needs of patients.  

Because of the overrun last year and the expected overrun this year, it has now emerged that health spending in 2014 will have to be cut by €1 billion, not the €666 million that was announced in the budget last week (and led to lots of devil worship jokes).  That scale of reduction is going to be incredibly difficult to accomplish, especially for a minister already seen as being under the most pressure in the government with regular opposition calls for his resignation. 

But Dr Reilly -- and he is a medical doctor -- is no pushover, and he is determined that he will preserve the public health service even as he cuts costs.  He means well, but there are major question marks over his ability to deliver. 

One of those calling for his resignation last weekend because of the confusion over health spending was the present leader of Fianna Fail, Michael Martin. This is an extreme case of the pot calling the kettle black since Martin was minister for health when some of the most disastrous decisions about our health service were taken.  One of those decisions at the end of 2004 was the setting up of the Health Service Executive (HSE), a new independent body to run health services in Ireland. 

Up to then, although funded by central government and supposedly guided by the Department of Health, services were run by around 10 local health boards which had local politicians and community leaders on them, and which ran hospitals where the treatment you got and when you got it sometimes depended on who you knew.  

Different criteria were used in different areas.  In some areas the bishops had more influence on boards than was healthy for anyone.  And keeping to budgets was always a problem. 

The staff they hired as administrators and managers often had no qualifications in health, and there was a strong element of jobs for the boys and political connections at play.  Pay was good and expenses even better!  

All told, the health boards seemed to typify all that was wrong in the country at the time, especially after years of Fianna Fail cronyism, and no one was sorry to see them getting the chop.  

So the new HSE seemed like a good idea at the time, an independent body to run a national health service on a professional basis.  By January 2005, when the HSE started, Mary Harney was minister for health and she set about the task with energy.   

But problems soon emerged.  Part of the changeover included a government decision (to keep the unions happy) that the existing health board staffs would simply transfer to the HSE so that no one would have to lose their job.

The trouble with that decision was that many of them were not competent to work in the new organization. But since this was the boom time in Ireland nobody cared and the HSE simply started recruiting professional people to work alongside the existing staff. 

As one doctor pointed out recently, in 1997 there were approximately 6,000 administrative staff in the old health boards system, but today there are more than 15,000 administrative staff in the HSE that replaced them.  And of course all these people have guaranteed jobs for life and generous guaranteed pensions.

In spite of the numbers, the administration of the HSE always seems to be a mess, with money unaccounted for, budget overruns, hospital services suddenly cancelled towards the end of the year when annual funds run out and so on.  The number of frontline staff in the HSE actually providing services used to be over 85,000 (this includes agency staff paid by the HSE) but that number has fallen by around 10,000 since Reilly took on the job some three years ago.   

And as part of the budget, Reilly said that another 1,000 staff would have to go over the coming year. The reason is that about 70 percent of the total health spend by the state goes on pay and pensions, so real savings requires staff cuts.  

Reilly's mantra is that he is leading a change in the HSE where everyone will have to do more with less; more services at lower cost, at a time when the population is growing and there is more demand than ever on health services.  It's not easy, but so far he seems confident that he can deliver even though it's the worst time in the history of the state to be minister for health.

To be fair to him, he has accomplished certain things in his three years in office.  He has cut the staff numbers by 10,000 and (if you allow for inflation and other factors) cut spending by around €3 billion. He has managed to do this at a time when the population has increased and hospital admissions have grown.  

One of the biggest challenges Reilly faces is what to do about the medical card system, under which people can get free health care, medicines and other services.  The system was originally designed to give poor people access to health care.  

The problem is that although the income limit for a medical card is low, there are allowances for family size and circumstances (things like rent payments or travel costs) which were widened during the boom years.  And of course we now have close to half a million people out of work (the medical card income limit is close to the individual welfare payment level), and they are all entitled to cards.
 Discretionary cards are given to those above the income limits (usually people with chronic diseases), but that is open to abuse.

The result is that almost half the population now have medical cards.  In the four years after the boom turned to bust the HSE had to increase the number of medical cards by almost 40 percent.  

No one wants to deny health care to the poor.  But there is no doubt that there is considerable waste in the system, as there inevitably is in any system which is free. 

The HSE estimates that the average person with a medical card now costs the service around €280 a year for visits to the doctor, and over €800 a year in drugs charges.   That's the AVERAGE -- and remember half the population has a medical card.

That's over €1,000 each a year, which is an awful lot of money, far more than many people who have to pay for their own health care will clock up in a year.  

Despite efforts to control the cost -- some cards are general doctor-only cards, there is now a minimal charge when a prescription is filled, there is now a reduced income limit for the over-70s who can get a card --  the bill to the state for all of this is enormous.

What about the other half of the population?  They used to be mainly looked after by the Voluntary Health Insurance (VHI) organization, a state sponsored body set up years ago to enable the middle class to pay for their own health care through affordable health insurance.

The trouble is it's no longer affordable, and the government has made it even more expensive as it reduces incentives for those in the middle class to pay for their own health insurance either through the VHI or other companies.

Tax deductions have been slashed, beds in public hospitals are now more expensive for those with private insurance, and other steps have been taken to squeeze the barely coping classes as the middle class here are now called. 

The irony is that tens of thousands of people in the middle class here have dropped their health insurance as a result, and they will now be an extra burden on the public health system.  Faced with high bills for energy and many other things, they have opted to drop their soaring health insurance.

One of the most contentious health cuts in this budget was the lower income limits for medical cards for the over-70s.  This is now down to €600 a week for an individual, and it is estimated that this will reduce the number of over-70s qualifying by 10 percent.  This follows a similar reduction last year.

It may still seem high, but the problem is that medical costs for old folk can be very expensive, especially for those with ongoing conditions, so that paying the medical bills may mean there isn't enough left to pay for adequate heat or food.

All told, it's a half and half mess -- a public service that is costing far more than it should, and a private system that is becoming unaffordable.  And no one seems to have the right medicine for our health problem.