What Is Universal Health Insurance (UHI)?

Big Business: behind Universal Health Insurance

What is Universal Health Insurance (UHI)?

UHI is touted as a 'one-tier' system that will give 'equal access based on need, not ability to pay':under it, everyone will be forced to buy health insurance from the insurer of their 'choice'.

Who will pay?

All residents will probably be legally obliged to purchase an insurance plan. The State will pay for those with medical cards and, possibly, children up to the age of 18, although this is far from certain. Lower income persons not qualifying for a medical card were initially promised an 'allowance' towards the cost of insurance, but whether this will materialise is unclear. Those unable or unwilling to pay will have the tax deducted at source from wages or welfare payments, according to a draft memo recently presented to the Cabinet.

What will UHI cost?

James Reilly's Department says this health insurance will cost €1,000, while Brendan Howlin's maintains it will cost almost €1,700. Actual costs may be higher. Fine Gael says UHI is based on the Dutch model. (Dutch politicians sold the new system as 'free market healthcare'.) The nominal premium paid by each resident in the Netherlands rose from €1,049 in 2008 to €1,226 in 2012 and this premium is augmented by (capped) payroll deductions, which rose to 6.9 per cent in 2011. The

Dutch Healthcare Authority reports that, in 2012, a Dutch family with two parents earning average incomes spent 25 per cent - more than €14,000 effectively - of the family income on healthcare premiums. Of this, over €11,000 came from payroll deductions.

What will citizens get in return?

A health system where charges apply to all services, including, apparently, hospital emergency services. Under UHI, citizens will be entitled to a specified basket of care as yet to be determined by the Government, covering selected items and services, some limited, in both hospitals and the community. Dutch citizens who can afford top up insurance purchase it, to shore up gaps in care. (Items not covered there include the contraceptive pill.) Here in Ireland, in a signal departure from the Dutch model, top up insurance will be risk rated, and this will enable insurers to charge the sick

and the elderly more than the healthy and the young for the same insurance cover.

Will the new system improve the health service?

The Netherlands introduced UHI in 2006: the Dutch experience suggests that there will be fall in equity, a drop in quality, and a hike in overall costs. UHI also resembles the system of 'managed care' in the United States: the US health system is the most expensive in the world and one of the worst in terms of equality of access.

Why will there be a fall in equity?

People living in Ireland will now be forced to pay for care that was formerly provided free of charge to all, such as hospital inpatient care, under the 1970 Health Act, with private companies, including private healthcare 'providers' reaping the profits. UHI is a mechanism for limiting the content of care that is currently available, including under the medical card system, free of charge. Current entitlements under the 1970 Health Act will be slashed, with care restricted to selected items and services. New limits, including time limits, will apply. Step down care, for example, will be available for a period of two weeks only, while rehabilitation care will be limited to 12 months.

All medical care will be bought and sold, so all services, diagnostics, drugs, aids and appliances will come with a price tag. The Department's draft memo acknowledges that uninsured people will 'occasionally' require emergency care and that a fund will be needed to meet this 'cost'. All care providers will be private. GPs are private practitioners, and Government plans to privatise public hospitals are well advanced. So, whether people without health insurance will be denied medical care unless they can afford to pay is unclear. The Dutch market is controlled by a small number of insurers who have exploited their monopoly by increasing prices and cutting benefits. Dutch commentators have even expressed fears that the power of insurers there could lead to the growth of cartels. (Health insurers in other countries have become providers of health care, with some owning private hospitals.) Commentators have

described the new system as an oligopoly, with a small group of insurers abusing their dominant position. Four companies there now control 90 percent of the market. 'Competition' has not led to a fall in price in their products. On the contrary, there have been allegations of price-fixing. The cost of premiums has risen by 40 per cent in four years. Under UHI, Ireland is likely to see a similar hike in prices and a paring of benefits. As in house insurance, there is an 'excess' in health insurance, a spend that cannot be recouped. That excess in the Netherlands has risen from an initial €150 to €360 in 2014. There is also the issue of 'co-payments' or user charges for items and services not covered by the basic basket. Co-payments account for 10 per cent of the health care spend in the Dutch system. Under UHI, Ireland's current 2-tier system will be replaced by a 3-tier system, the uninsured, the insured and the super-insured. Those on low incomes who are unable to buy insurance for whom the Government will not pay, those who fall out of the insurance net, because of sickness or unemployment, and those unwilling to buy (including conscientious objectors) will fall into the uninsured group. In the US, for example, there are or were 50 million people in this category. In the Netherlands, half a million citizens are either uninsured or in arrears: they are fined, heavily, for non-payment and the government now deducts at source from their wages and welfare payments. In Ireland, many will fall into UHI's second division: those covered by the basic basket who cannot afford top up insurance. (Top up insurance may be a necessity if the basic basket is inadequate to meet individual health needs.) The top tier will be occupied by the super-insured, some struggling to buy supplementary insurance, and others who can afford to buy whatever cover they please. The abolition of 'community rating', a long established principle in health insurance whereby old and young, sick and well, are charged the same for the same policy, will mean a steep drop in equity. While Dutch insurers there cherry pick to maximise profits, they are obliged to uphold community rating. Here, the Government's plan to allow insurers to charge on the basis of 'risk

rating' will enable them to discriminate against the old and the sick by charging them more for the same cover. Older people, who tend to need more care, will probably be forced to pay more for top up insurance, while those with pre-existing conditions, such as cancer, are also likely to be hit.

Why will there be a drop in the quality of healthcare?

Quality of care is expected to fall under UHI, as hospitals compete to offer insurers the cheapest care. Patient care is likely to take second place to turning a profit. Research shows that for profit health care is less safe: death rates are higher in for profit institutions, for example. Cost cutting is a major factor. The need to make a profit also leads to over testing and over treating: both increase the risks for patients. And UHI is a highly bureaucratic system: bureaucracy costs, leaving less to spend

on care. Irish general practitioners have said that, under UHI, waiting times will inevitably increase and GP consultations will be shorter. There may also be problems with hospital health care. Since the system was introduced in 2006, Dutch hospital waiting lists have grown and operations have been cancelled wholesale, at the last minute. As purchasers of care, insurance companies, some of them for profit, wield enormous power. Dutch commentators have even expressed fears that the power of insurers there could lead to the growth of cartels. Under UHI, these companies decide the content of care, as they do in the US. They have the power to decide which drugs to reimburse, overruling what doctors prescribe. Many elderly people, as a result, find their medication changed every three months. Managed competition has led to a system in the Netherlands that is bereft of meaningful choice, as insurers offer the same services under different names. Those who insist on seeing 'out-of-network providers' must pay the cost themselves or take out additional insurance, as in the US. 'Choice' of insurer dictates where an insured person may receive care, as only care providers in the insurer's 'network' is covered, those providers may only be contracted for certain services, and those services may only be covered in part.

Why will there be a hike in the cost of healthcare?

Health care will cost more, not less, because cost control is weak under UHI. The spend on health care in the Netherlands rose by 46 per cent from 2005 to 2010. This is likely to happen in Ireland. The service will be demand led, so there will be more medical activity, not less, and, with all health services set to be run for profit, directly or otherwise, some of this activity is likely to be unnecessary. And while taxpayers will continue to fund the health service to a significant degree, the government will no longer effectively be in control. Health services supplied on a commercial basis cost more. Marketing and billing, plus, in the case of for profit companies, shareholder dividends and profit margins, all must be factored into the prices providers charge. Overcharging is rampant in the US hospital industry: the mark up for surgery is 1,000 per cent, while the mark up for medical supplies rises to 5,000 per cent. UHI is likely to be a bonanza for the medical profession. Dutch GP salaries rose significantly after

the new system was introduced, while consultants' incomes increased by 50 per cent in one year alone, with some doubling or trebling their incomes. UHI is a system that needs an army of bureaucrats to make it work, partly because contracting in health care is complex. Until very recently, there were 40,000 different combinations of diagnostics and treatments to be costed in the Dutch system. Professor Allyson Pollock has calculated that in England and Wales where the privatisation of the NHS is well advanced, the 'transactional' or administrative costs of buying and selling health care amount to 35 per cent of the total spend.

So why is the Government introducing UHI?

UHI will be a goldmine for health insurance companies in Ireland, whose market share, collectively, is set to increase from under 40 per cent to near 100 per cent. Other winners, apart from medical practitioners and health care corporations, include pharmaceutical companies, medical device manufacturers and other corporate interests. (Hospitals, universities and corporations in Ireland have formed new alliances (termed 'academic medical centres') along American lines to drive

'innovation', with patients being used as guinea pigs, to test new pharmaceutical and biopharmaceutical products, medical devices and diagnostic tools. Corporate interests are well served by the absence of legislation designed to ensure patient safety by guarding against fraud or corruption: doctors who are shareholders in private healthcare corporations, for example, are free to use their patients as testers for company products.) The State's focus on chronic diseases will enable patients themselves to be sold, in effect, to the cheapest bidder. This focus has been driven by healthcare corporations, which have long reaped huge profits in niche markets, such as cancer care. Ireland's chronic disease 'strategy' is based on American 'models' of chronic disease management: cancer was chosen to spearhead the new

business approach. Under the banner of 'integrated care', contracts for services for heart and stroke patients and for asthma and diabetes sufferers, among others, will be given to private providers. These providers include American healthcare chains, such as UPMC, who, as private hospital owners and home care agents, will 'bundle' hospital and community services into packages to be bought by insurance companies. UHI is one of the main building blocks for the full privatisation of the health service. All public hospitals are being denationalised - cut adrift from the State - by being made into private 'trusts', slated to operate as (unaccountable) commercial companies and legally obliged to break even by ‘selling' their services. Under the mantra of 'Money Follows The Patient', hospital care will be priced and provided on a contract basis. UHI will enable all healthcare, including community

services, to be traded. All health care providers will be private, and health insurers, as purchasers of care, will control the supply of services.

Is there an alternative to UHI?

Yes. A national health service - not fuelled by vested interests - funded through general taxation.

Marie O'Connor

Health policy analyst and author

Further reading:

http://www.heritage.org/research/reports/2010/07/the-drawbacks-of-dutch-style-health-care-ruleslessons-

for-americans

http://www.nza.nl/104107/426385/Stand_van_de_Zorgmarkten-engelse_versie.pdf

http://www.irishhealth.com/article.html?id=19208

Marie O'Connor (2010) 'Big Business: behind the plan to close St Luke's.' In Enid O'Dowd (2010)

Cancer in a Cold Climate The shafting of St Luke's Hospital Dublin, Original Writing.

Marie O'Connor (2007) Emergency: Irish hospitals in chaos Dublin, Gill and Macmillan.