Health Estimates for 2010
Announcing today’s Estimates for Health for 2010, the Minister for Health & Children, Mary Harney, T.D. said: “The 2010 Estimates for Health reflect the imperative to achieve overall reductions in public expenditure, while providing essential and developing health services to patients and the public. Health represents 27% of total public current expenditure and is, therefore, of central importance in any strategy to achieve public expenditure savings.
“The Estimate today shows that we can achieve as much, and more, for Health with less cost, particularly in the drugs bill.”
“We have sought to bring costs into line with what we can afford, rather than reducing services. I am confident there is scope within our health system to achieve more through greater efficiency and concentration on services that contribute most to people’s health and well-being.
“There is no doubt that, following a period of rapid increase in funding, the health services are challenged to manage within much tighter resources. I am confident they can meet this challenge. It demands more reform, not less.
“The Government is ensuring that sufficient resources are made available to respond to priority demographic and other needs, particularly in services for older people and cancer, and to support ongoing reform of our public health services.”
The Budget provision includes €659m in pay savings and €400m in non-pay savings, made up of cost reductions (€283m), collection of outstanding income (€75m) and increased charges (€42m).
The pay savings of €659m take account of the Government decisions on public service pay reductions, including:
- general pay reductions, and higher reductions for those on higher pay on foot of the recent Report of the Review Body on Higher Remuneration;
- a proposed further reduction in the fees payable to certain health professionals;
- and savings associated with the moratorium on recruitment and promotion.
The non-pay savings of €400m are made up as follows:
Cost Reductions (€283m):
- Reduction in drugs costs (€141m)
- Dental treatment (€30m)
- HSE economies (€106m)
- Dept. of Health & Children economies (€3½m)
- National Childcare Investment Programme (€2½m in 2010 & €7½m full year)
Income Collection & Charges :
- Improved private income collection by public hospitals (€75m)
- Increase in Drug Payment Scheme threshold (€27m)
- Prescription Charges (€15m in 2010 & €25m in a full year)
The Estimate for 2010 includes:
- an additional €97m for the Fair Deal scheme which, with the €55m provided in 2009, brings the total additional allocation for this scheme to €152m; this will allow for growth in the number of people qualifying for the scheme in line with demographic needs;
- an additional €10m for more Home Care Packages, bringing the total provision for this scheme to €130m in 2010, again reflecting increased need;
- an extra €230m for demand-led schemes, including additional numbers of medical cards, bringing the total allocation for these schemes to over €3 billion in 2010;
- an additional €20m to continue implementation of the National Cancer Control Programme, in accordance with clinical priorities; this includes improvements in lung, prostate, rectal and pancreatic cancer and radiotherapy treatment as well as initiation of a colorectal cancer screening programme, further details about which will be made available in the coming days.
- €70m to address various other demographic service needs, the details of which will be finalised as part of the 2010 HSE Service Plan; and
- €17m to support suitable projects that demonstrate innovation in service delivery.
The Minister said “The significant investment next year in nursing home care underscores both my own and the wider Government’s deep commitment to the ongoing development of services for older people, at a time when the overall budgetary and economic position is so challenging. The year 2009 has been a time of fundamental change and reform within the nursing home sector. In addition to the introduction of the Nursing Homes Support Scheme, new Quality Standards and a system of independent inspection for all nursing homes have also been put in place.
The capital budget for health next year will be €484m, made up of
€437m for the HSE; €32m for the Office of the Minister for Children & Youth Affairs; €15m for agencies directly funded by the Department of Health and Children.
This is a €37m reduction on the 2009 provision but will still allow for the continuation of projects already underway and initiation of a small number of priority projects.
The Minister said: “The last decade has seen unprecedented levels of capital investment in the development and modernisation of health infrastructure. When combined with reductions in construction costs, the funding available next year allows for continued upgrading of health infrastructure in support of improved services and higher quality standards for patients.”
Control of cost of drugs
The Minister set out the level of savings being achieved on drugs: “The State drugs bill has increased rapidly in the past decade. The overall cost of supplying drugs and medicines under the GMS and community drugs schemes in 2008 was over €1.6 billion. This is an increase of over €400m on 2005, an increase of almost 40% in three years. This rate of increase is not sustainable and we must aim to deliver real and tangible value for the taxpayer, consistent with patient safety and security of supply. “
The agreement entered into with pharmaceutical manufacturers in 2006 will have delivered savings of €250 million by its expiry in September 2010.
The Minister has recently had discussions with the representative bodies of the drugs manufacturers to achieve further reductions in drugs prices. Planned reductions will save €141m on the drugs bill. These savings are in addition to the full year savings of €133 million introduced this year through reductions in community pharmacy fees, giving a total saving in the region of €274m on the State’s drugs bill.
The Minister added “Only by reducing costs can we continue to fund new developments generally, and new drug therapies in particular. I am pleased that discussions with manufacturers will result in these significant extra savings. In addition, I have established a working group in my Department to implement an appropriate model of reference pricing and generic substitution with the aim of achieving further ongoing savings. It is my intention to bring forward legislation on this subject during 2010 for the earliest possible implementation.”
The number of items dispensed under the GMS has increased from 35 million in 2004 to 48.21 million in 2008. To address rising costs in both the GMS and Long Term Illness schemes, and to influence to some degree demand and prescribing patterns, a 50 cent charge per prescription item is being introduced, subject to a monthly ceiling of €10 per family.
New legislation is required to give effect to this co-payment and the expected implementation date is 1st April 2010.
The charges are expected to raise €15m in 2010 and €25m in a full year.
There are to be no increases in the statutory charges for Accident & Emergency, day, inpatient and long stay services.
The Minister said she was particularly conscious of the impact which increases in these charges at this time would have on families who did not qualify for a medical card and who did not have private health insurance.
The charges for private beds in public hospitals are not being increased.
The Minister said: “It is Government policy to increase such charges to reflect the economic cost of treatment. However, I am conscious that any increase next year would impact on premium levels at a time when families are under financial pressure. Taking account of the importance of controlling inflation, where this is possible, and stability in the health insurance market, it has been decided, on an exceptional basis, not to increase private and semi private charges in 2010.”
While the acceleration in outstanding income collection meets the financial requirement for 2010, the Minister believes it will be necessary to revisit the level of charges in the context of the 2011 Budget.
Last year, in order to ensure health insurance remains affordable for older people, a scheme involving age-related tax credits and levies on health insurers was introduced. A minor updating of this scheme will be brought forward in the Finance Bill, with the aim of maintaining compensation for the cost of claims for older persons at 50% of additional cost. Details are subject to finalisation for the Finance Bill.
Explanation of Savings on pre-Budget Outlook:
The 2010 Estimate includes a gross current expenditure provision for health of €14.828bn, or some €1.013 billion below the Pre-Budget Outlook figure of €15.841bn, published by the Government on 12th November last.
The savings measures include €659m in pay savings and €400m in non-pay savings. The latter is made up of cost reductions (€283m), collection of outstanding income (€75m) and increased charges (€42m). Some €50m of the non-pay savings generate additional income which reduces the net expenditure figure but not the gross allocation.
Detailed Information on Non-Pay Expenditure Savings:
(i) Reduction in pharmaceutical costs (€141m)
Discussions are nearing completion with pharmaceutical manufacturers to achieve a significant reduction in the overall reimbursement cost to the State of drugs and medicines provided through the GMS and community drugs schemes.
(ii) Dental Treatment (€30m)
Under the Dental Treatment Services Scheme (DTSS), adult medical card holders may obtain dental services from dentists in private practice under contract to the HSE. In 2010, in the absence of any change, it was expected that the DTSS would cost in excess of €93m. Expenditure over the past five years rose by approximately 60%. It has been decided, as part of the measures required to reduce public expenditure, to limit DTSS expenditure next year to the 2008 level of €63m.
(iii) HSE Economies (€106m)
The HSE will be required to achieve further economies in non-pay expenditure. Areas which will be targeted next year include procurement, transport, insurance and other non-pay savings.
(iv) Department of Health & Children Economies (€3½m)
Further reductions on non-pay expenditure by the Department and its directly funded agencies will be achieved next year to a value of €3.5m.
(v) National Childcare Investment Programme (€2½m in 2010 & €7.5m in a full year)
Details to be outlined by the Minister for Children and Youth Affairs
(vi) Private income collection (€75m)
There are significant sums outstanding in respect of the treatment of private and semi-private patients by the HSE and its funded hospitals. The Comptroller & Auditor General in September identified that at the end of 2008 €164 million was due to be collected by the HSE and voluntary hospitals from private health insurers. Measures are being undertaken to speed up the billing and payment process in order to reduce these outstanding amounts. This will result in an increased level of income to the hospitals during 2010. Currently, the authorisation/verification of the primary treating consultant is required prior to the submission of valid claims by hospitals to health insurers. In order to expedite collection of the outstanding charges, the Minister for Health & Children will consider changing the requirement for advance consultant authorisation.
(vii) Increase in Drug Payment Scheme threshold (€27m)
The monthly threshold for the Drugs Payment Scheme is being increased from €100 to €120 with effect from 1 January 2010. The Scheme ensures that individuals or families do not have to pay more than the monthly threshold on approved prescribed drugs, medicines and certain appliances.
(viii) Prescription Charges for General Medical Service & Long Term Illness Schemes (€15m in 2010 & €25m in a full year)
The number of items dispensed under the GMS has increased from 35 million in 2004 to 48.21 million in 2008. To address rising costs in both the GMS and Long Term Illness schemes, and to influence to some degree demand and prescribing patterns, a 50 cent charge per prescription item is being introduced, subject to a monthly ceiling of €10 per family. New legislation is required to give effect to this co-payment and the expected implementation date is 1st April 2010.