Press Release

Health Estimates for 2009

•Extra €454m for HSE to support services, including designated cancer centres, therapists for children, Fair Deal nursing home scheme.

•Means testing for all medical cards, including for persons aged 70 and over.

•New €400 / €800 Health Support Payment for qualifying people aged 70 and over.

•New HSE initiative on 200 Primary Care Centres.

The Minister for Health and Children, Mary Harney, T.D., today (Tuesday, 14th October 2008) announced details of the 2009 Estimates for the health services. The Minister said, “Faced with the very serious deterioration in the public finances, the Government has taken corrective action in relation to public spending.

“Health accounts for nearly 30% of total gross expenditure. Growth in health spending in Ireland has been 8.8% in real terms between 2000 and 2006 – the second fastest among all OECD countries. The base of public health spending is now very substantial.

“It is appropriate, and particularly necessary in the current climate, that growth in new health spending is brought to a sustainable level.

“Yet we know that the cost pressures in health are very great. Left unchecked, this could have led to spending of an extra billion or more euro next year.

“Against this background, the Government have decided that the priority is to protect services and to support people who are most in need of help.

“In order to achieve this, my colleagues and I in Government have had to make very difficult decisions, including introducing means testing for medical cards for all persons currently aged 70 and over.

“Even in these circumstances, total current funding for the HSE next year will be €14.791bn, an increase of €454m.

“The Government took the view that a lower allocation would have led to reductions in core hospital services and essential community supports. There would also have been a need to place significant new burdens on those who could least afford to pay.

“With this budget, and rigorously implementing the changes it requires, we can avoid those scenarios.

“In short, we are providing responsible and fair increases in health spending, rather than cutting the cash amount, as happened in the 1980s.

“I am confident we can continue to deliver services with innovation and reform, efficiency improvements and targeted additional funding. For example:

•we are providing €120m to provide services for a growing and ageing population;

•the cancer control programme will continue and expand with €15m additional funding;

•€55m is being provided to implement the Fair Deal and we have protected the home help and home care services;

•€10m will support expanded therapy services for children including suicide prevention initiatives, with 125 new posts created;

•a new innovative programme of financing the development of 200 primary care centres has been brought forward by the HSE and has received our strong backing for implementation. These will see GPs, therapists and all HSE community services staff coming together in locations that are convenient for the public. The initiative will build up integrated services in the community meeting most of our health needs. The programme aims to have all sites identified by the middle of next year, with the first group of 50 to open by the end of 2010 and the full complement to open in the course of 2011. The programme equates to an investment of over €1.5bn.”

Means testing of medical card for people aged 70 and over

“From 1st January next, we are ending the current automatic entitlement, which is irrespective of means, to a medical card for persons aged 70 and over. This will affect people currently aged 70 and over and those turning 70 in future.

“Alongside means testing, we are introducing a new Health Support Payment of €400 for a single person, €800 for a couple for qualifying persons.

“The Government have taken the view that the fair approach is to provide a range of means-tested supports for people in this age group. From January onwards, most people aged 70 and over will qualify either for a medical card, a GP Visit card or the new annual Health Support Payment.

“This was given very detailed consideration by the Government and we are satisfied that well over 90% of people aged 70 and over will receive support for their health care costs under the new arrangements.

“The Health Support Payment will be available to those currently aged 70 and over who do not qualify for a medical card or a GP Visit card and whose gross weekly income is less than €650 for a single person or €1,300 for a couple.

“It will be paid annually on application. Healthcare expense receipts will not be required. It will not be taxable.

“In order to bring in the change from 1st January, the HSE will shortly write to everyone who currently has an automatic medical card, inviting them to apply for support with a single means test to assess the level of support available to them. In the meantime, the existing medical card benefits will apply.”

“Means testing is fair, equitable and sustainable.

“Since 2004, we have made the means test for medical cards and GP Visit cards much easier. Income limits were increased by 29%. And it is now assessed on income after expenses like mortgage payments, rent and on-going medical expenses, such the cost of GP visits, medicines and appliances.

“The cost of the automatic entitlement to a medical card for persons aged 70 and over has been much greater than envisaged. GPs are now paid €640 for a person qualifying by virtue of age, while they are paid more than three times less for a person who qualified before they were 70 on means grounds. This difference has been widely criticised as inequitable. It has meant, for example, that GPs in better-off areas are paid much more for patients aged 70 and over than GPs in less well-off areas.

“In tougher times, we can’t ask the community, particularly low income taxpayers, to provide the substantial benefit of a full medical card to everyone over a particular age, even to some of the wealthiest in our society.”

Other changes

“Maintaining funding for services means that increases in health charges are needed.

“Private and semi-private bed charges in public hospitals are being increased by 20% to bring them closer to the economic value. The threshold for the Drug Payments Scheme is also being increased to €100 per month. The public hospital A&E charge for people without medical cards will be €100. However, this does not apply if people see their GP first. Statutory bed night charges in hospitals are also being increased by 20%.

“Long stay charges in public nursing homes are limited to 80% of the Non-Contributory Old Age Pension. To reflect recent increases in pensions, these charges are being increased now by 28%. However, people in long stay places will still retain 20% of their income.

“The HSE has also to find €115m in savings by reducing its overheads, administration and management costs.”

Health policy context, globally and nationally

The Minister added, “Health services the world over face enormous pressures due to a growing aging population, chronic diseases, lifestyle related risk factors, rising costs, changing expectations, and major developments in science, treatment, technology and information.

“This is not something that has arisen because of the “credit crunch” or the economic slowdown but current economic conditions require us to face up to the implications of these issues. The challenge of creating sustainable health services is a global one.

“The challenge we face as a society is how to deliver a health service that is all the things we want it to be for ourselves and our loved ones – accessible, high quality and equitable – while delivering it at a price that we are willing to pay, either directly or indirectly, as a society as a whole.”

“We must promote wellness and disease prevention to allow people to live healthily and independently. We must ensure that if people need a service, it is provided in their own homes and communities through primary care.

“We must ensure that people who need hospital care can access it but that we avoid inappropriate hospital admissions and unnecessarily long lengths of stay.

“This system of care must be efficient in how it is delivered – supported by modern work practices, good technology, reliable information and good management and governance. This makes sound medical, social and economic sense.

“As in all health systems, the cost and volume of drugs prescribed is leading to serious cost escalation as well as inappropriate prescribing and excessive consumption in some instances. This is an area I will be asking my officials to examine and I hope to bring forward initiatives to limit both excessive, inappropriate prescribing and cost escalation. The operation of a variety of schemes is already being reviewed with this in mind.

“I believe the difficult decisions which had to be taken to live within the Government’s overall expenditure limits are based on sound values for our health system such as sustainability, equity and need.

“Our decisions continue to prepare the ground for a more secure, sustainable, modern and appropriate health system into the future.”

HSE Service Plan

As is normal, the Minister will be writing to the Chairman of the HSE asking him and his board to prepare a service plan for 2009. She will be emphasising in that context the need for the HSE to meet the targets for efficiency savings set by the Government, to protect services, to deliver maximum operational efficiency, to engage with her Department on a multi-annual Value for Money programme and to start planning now for 2010.

Estimates 2009

Health Current

The gross current allocation for the HSE is €14,791m, an increase of €454m or 3.2% on the 2008 REV provision. When account is taken of the long-stay repayments scheme, the increase in underlying expenditure is €580m or 4.1%.

The gross current allocation for the Department of Health & Children and the Office of the Minister for Children & Youth Affairs is €1,004m, a decrease of €99m or 9%.

These figures do not include any provision for the cost of the new pay agreement negotiated recently.

Health capital

The gross capital allocation for the Health Vote Group is €540m, a reduction of 25% on 2008. The breakdown across the three Votes is as follows:

•Vote 39 (Department): €15m (25% reduction)

•Vote 40 (HSE):€465m (22% reduction)

•Vote 41 (Office of Minister for Children):€60m (41% reduction)

However, the HSE is to initiate a programme for the development and construction by the private sector over the next two years of 200 primary care centres on the basis of the HSE agreeing, subject to certain conditions, to lease the accommodation for its staff at competitive rates. The HSE current allocation includes:

•€340m for pay rate increases;

•€450m for demand led schemes (including the impact of the recent High Court case);

•€100m for non-pay inflation and the full year cost of developments commenced in 2008

•€120m to meet the needs of a growing and ageing population;

•€55m to implement the Fair Deal scheme;

•€15m for the Cancer Control Programme;

•€10m for therapy services for children of school going age;

•less €212m in one-off savings from the long-stay repayments scheme and the non-implementation of the Fair Deal in 2008; and

•less €420m in efficiencies and savings.”

Efficiency/policy savings measures (€420m)

The HSE is to deliver economy savings of some €115m in total. These include:

•savings of some €65m in travel and subsistence, consultancy services, insurance, legal costs, advertising and improved procurement arrangements in the HSE and the voluntary hospitals;

•a 3% reduction in management/administrative payroll costs in the HSE and the voluntary hospitals;

•a 1% reduction in the allocations to voluntary disability providers;

•a reduction in nurse training expenditure; and

•establishing a national drugs formulary comprising a common exclusive list of the drugs and medicines to be used in public hospitals.

Details of the savings to be achieved under each heading are to be agreed with the Department of Health & Children.

Additional income as a result of which some €32m extra will accrue to voluntary hospitals/agencies (they will also increase the Appropriations-in-Aid by €68m) will be generated as a result of:

•increases in long stay charges of €33.25 a week for Class 1 and €24.95 a week for Class 2: the increase of 27.7% is in line with the pre-Budget increases in the State Pension (Non-Contributory) since 2005 and will restore the original relationship between the charges and the State Pension;

•increases of 20% in private and semi private bed charges in public hospitals in 2009, in line with the policy of full economic charging for such services, as well as improved collection of charges from private health insurance companies; and

•an increase from €66 to €100 in the A&E charge for non medical card holders who attend A&E departments without a letter from their GP; and an increase in the public hospital statutory in-patient charge from €66 to €75.

All of these increases will take effect from 1 January 2009.

Expenditure on the medical card, drug payment and other demand led schemes is approximately €2.6 billion and represents 18% of HSE current expenditure. The average annual increase in expenditure in recent years has been 13%. This rate of increase cannot be sustained. It has been decided to introduce a range of measures to slow the rate of increase in these schemes/generate savings of €175m in 2009. These include: •the introduction of limits on total expenditure under the discretionary medical card and hardship schemes;

•an increase in the threshold for the Drug Payment Scheme from €90 to €100 a month;

•new guidelines on the prescribing of nutritional supplements; and

•other measures to reduce drug costs.

The automatic entitlement to medical cards for people aged 70 and over is being ended. This will affect those currently in receipt of such cards and those reaching age 70 in future. With effect from 1 January 2009, those aged 70 and over will be assessed for medical cards or GP visit cards in accordance with the normal income criteria. An annual cash grant of €400 will be paid to people aged 70 and over who do not qualify for a medical card or a GP visit card and whose gross weekly income is below €650 for a single person and €1,300 for a couple. These measures are expected to save €100m.

Service enhancements

An additional €120m is being allocated to meet services for a growing and ageing population.

An additional €55m is being provided to implement the Fair Deal scheme to provide a more equitable system of residential care for very dependent elderly people.

An additional €58m is being provided for other service developments, broken down as follows:

•€12m to cover the agreed full-year costs of the recent extension of the Childhood Immunisation Programme started in 2008;

•€21m for the agreed 2009 costs of the innovative service delivery fund started in 2008 (the allocation of this funding is to be agreed with the Department and, in line with the existing rules of the scheme, would be on the understanding that projects approved become self-funding within a maximum of two years);

•€15m for the Cancer Control Programme; and

•€10m for therapy supports for children of school going age.

Cancer control programme: €15m is being allocated to the National Cancer Control Programme. This will allow the Programme to concentrate on developing high quality services to combat lung and prostate cancers; to develop services for pancreas and head and neck cancers; and to complete its objective of providing breast cancer services in eight designated cancer centres

Disability/mental health: €20m is being allocated to the health and education sectors – €10m to the Department of Education & Science and €10m to the HSE – to enable the services provided to children with special educational needs to be enhanced and strengthened. In the case of health, the €10m comprises €7.2m in a full year for disability services and €2.8m in a full year for child & adolescent mental health services. This will fund additional speech & language therapists, occupational therapists, physiotherapists, clinical psychologists and social workers – 125 posts in all. It also includes an amount of €1.75m in 2009 for suicide prevention and to support greater service user involvement in mental health.

Multi-annual Value for Money programme

The Minister is asking her Department and the HSE to develop a multi-annual VFM programme with defined targets and timelines for each initiative, the results of which would be available to Government when it comes to consider the estimates for 2010 and 2011. While more work is required to identify/finalise suitable initiatives, initial proposals include areas such as:

Disability agencies: The Minister of State for Disability & Mental Health will establish a Group very shortly to examine and make recommendations regarding the scope for greater rationalisation of, and increased economy/efficiency within, the non-statutory disability service providers, including measures such as amalgamations, greater use of shared services, improved administrative efficiency and shared professional/clinical staffing structures, having particular regard to the need to maintain and improve the standard of front line services delivered to clients, and to submit a report to him on these matters by 1 June 2009.

Blood products: Ireland is a high user of blood and blood products compared to some countries. There is the potential to reduce use and wastage of blood and blood products by supporting the development of best practice in blood utilisation and blood stock management without impacting adversely on safety/quality. This could involve the adoption and implementation of national blood transfusion guidelines, and the development of robust local, regional and national transfusion committees to actively manage and monitor the clinical use of blood. It could also involve an IT system to support better blood stock management, stock transfers and traceability between hospitals.

Management of medical card, etc. schemes: The HSE is examining the scope for a centralised national processing centre for medical cards and other schemes.

Out-of-hours services: There is a need to review and rationalise the arrangements for/costs of call centres for emergency services and GP co-operatives.

Dental services: The scope for rationalising the Dental Treatment Service Scheme and the Dental Treatment Benefit Scheme, and the clinical effectiveness of the existing child dental services, will be considered in the context of the development of a new oral health policy which is already underway.

Laboratory services: The Teamwork review of laboratory medicine services indicated that a different system of service delivery (separating “hot” and “cold” work, having fewer laboratories and a smaller technical/support workforce) could provide much better, and more cost-effective, services for patients and clinicians. The HSE is developing proposed next steps and a process of engagement with staff/union representatives has been put in place.

Patient transport: The HSE spends an estimated €54m on non-emergency patient transport. This does not include other client transport services provided by voluntary disability and other organisations, and funded by the HSE. The HSE has already started to examine the scope for greater efficiencies under this heading. There may also be a case for a more fundamental cross-sectoral review which would involve the Departments of Transport, Education & Science (because of school transport), and Community, Rural & Gaeltacht Affairs.

Procurement: The adoption by the HSE of a category management approach to procurement is expected to yield €132m cumulative savings over the five years 2007 – 2011 but there may be scope for even greater savings.

Employment control

There is to be a 3% reduction in the number of management/administration grades employed across the public health system. This would underpin the 3% reduction in the payroll costs of those grades by end 2009 which forms part of the Budget package. It would equate to about 540 posts.

There is to be a significant reduction in the number of Non Consultant Hospital Doctors (NCHDs) employed in each of the years 2009, 2010 and 2011. This would generate savings that would be used to fund the recruitment of additional consultants.

Certain key front line professional posts (therapists, social workers, etc.) are to be protected by setting employment floors for those grades. Setting a floor for social work posts, for example, would facilitate the reform programme initiated by the Minister for Children & Youth Affairs and the putting in place of necessary changes to front line services to protect vulnerable children.

There will be a specific ring-fenced increase in the ceiling on foot of the development funding for disability and cancer which is included in the Budget.

A revised ceiling, with appropriate “sub-ceilings”, will be finalised shortly.