The Healthcare Funding and Delivery Challenge in Ireland
The Healthcare Funding and
1. Healthcare Expenditure Overview
2. Public Healthcare Expenditure 1990 – 2010
3. Economic Overview and Consequences for Healthcare Funding
4. Ageing of Population
5. Impact of Ageing on Healthcare Services
6. Sustainability of Current Funding Model
7. Sustainability of Current Delivery Model
• Total annual spend (including social/voluntary care) of €18.3 billion.
• Approximately 78% funded through taxation system.
• Significant growth in expenditure over last twenty years.
Healthcare Expenditure Overview
Funded by Exchequer €2.0 €4.8 €14.1
Health Insurance €0.2 €0.4 €1.6
Funded by Individuals €0.4 €0.9 €2.5
€2.6 €6.3 €18.3
Exchequer Funded Healthcare
Hospital Care 1.0 2.4 4.8
Primary Care Re-imbursement schemes 0.3 0.8 2.8
Care of Elderly N/A (1)
Disability Services 0.2 0.5 1.5
Mental Health Services 0.2 0.4 0.7
Other Services/Central Costs 0.3 0.7 3.0
2.0 4.8 14.1
Analysis of key healthcare areas funded by HSE
included in other services
• €15 billion fiscal adjustment by 2014.
• Likely to involve €7- €8 billion reduction in day to day expenditure,
€2 - €3 billion reduction of capital expenditure and €4 - €6 billion
increase in taxation.
• Healthcare expenditure currently accounts for circa 30% of gross
day to day expenditure.
• A total reduction in day to day expenditure of €7 - €8 billion implies
annual healthcare spend of €11.9 billion in 2014 – reduction of
€2.2 - €2.4 billion.
Economic Overview and Consequences for
• Population did not significantly age over last twenty years.
Ageing of Population
• Population will age significantly over next twenty years.
1990 2000 2010 Increase over
over age of 65
370,000 420,000 510,000 140,000
2010 2020 2030 Increase over
over age of 65 510,000 792,000 1,000,000 490,000
Ageing of Population
• 280,000 additional members of society over the age of sixty five in
next ten years.
• Greatest increase in % terms is in older members of society aged
Age Band 2010 2021 % Increase
65 – 74 305,000 438,000 43%
75 – 84 157,000 248,000 58%
85+ 48,000 106,000 120%
510,000 792,000 55%
• Provision of cancer care expected to grow at 7% per annum over
next 25 years – NCRS.
• The number of adults with chronic conditions will increase by 40%
by 2020 – DOHC.
- 50% increase in chronic heart disease
- 48% increase in strokes
- 62% increase in diabetes
• Individuals with chronic healthcare conditions are expected to live
twice as long with chronic conditions - Centre for Ageing Research
• 10% of patients admitted account for 50% of in-patient bed utilisation
within public hospitals.
• Typically they are older (60+) and have chronic health conditions.
• 50% of Vhi Healthcare’s healthcare expenditure is accounted for by
meeting the healthcare needs of its customers over the age of sixty.
• An increase of 280,000 members of society over the age of sixty five
over next ten years implies a very significant increase in demand for
hospital services under current healthcare delivery model.
• Increase in number of individuals with chronic conditions implies an
increase in demand for hospital services under current healthcare
Current and Future Impact of
Demographics/Chronic Conditions of
• Increase of 280,000 over the age of sixty five over next ten years
implies significant cost increase in future GMS funding under current
• Likely development of new high tech drugs implies future cost
increases in hi-tech drug schemes.
• Growth in chronic conditions implies further growth in long-term
Impact of Demographics / Chronic Conditions
• Current annual funding of €1.3 billion.
• Annual budget under fair deal nursing scheme set at €980m.
• Remainder of budget – Home care packages / home help packages /
• Significant future increase in demand for services:
- Ageing of population particularly in older age groups
- Reduction of number of family carers as population ages
Care of Elderly
• Demand for and utilisation of services continues to increase but
implied public healthcare expenditure is €11.9 billion in 2014.
• Issue is more complex than simply substituting a tax based annual
budget funding model with a UHI / fee per service model / money
follows the patient funding model.
• If utilisation of current hospital services / current primary care
services / care for elderly service etc. continues to grow at historic
levels it will be unfundable regardless of funding model.
• Resources are allocated on the basis of historic budget allocations /
current utilisation trends rather than on the basis of a valued based
health care delivery.
Sustainability of Current Funding Model
• Services delivery is currently fragmented.
• Limited integration of services.
• Limited focus on managing chronic conditions within community
• Current delivery model is not funded on the basis of a value based
healthcare delivery e.g. care of elderly.
• Home care / Home help programmes – annual spend €300m.
Sustainability of Current Delivery Model
Other costs of elderly care:
In-patient hospital care public €2,400m (est.)
Long-term care – fair deal €980m (est.)
Primary care re-imbursement schemes €1,200m (est.)
Private insurance in-patient care €700m (est.)
Total additional expenditure on care of elderly €5,280m
• Funding and care model needs to be fully integrated.
• Separate payor and providers.
• Set up separate entity – Irish Medicare as payor which would procure
all services for citizens over the age of sixty-five in Ireland.
• Irish Medicare would procure and pay for the relevant services from
the relevant providers.
• Primary care re-imbursement would be significantly restructured to
focus on funding care for the elderly with chronic conditions.
• Funding model combination of central funding from Exchequer and
% of income for defined services.
• Current funding model is unsustainable due to fiscal adjustment.
• Current delivery model is unsustainable due to fragmentation.
• Public resources will decline yet demand for services will continue
• Requirement to fully integrate funding and care delivery for most
significant users of services.
• Higher element of co-pay will be required in funding model.
• Payor / provider will have to be separated.