I am a great fan of universality. It binds people from all social constituencies through shared public provision. It pools risk on the insurance principle. It removes public goods and services from private markets and puts them where they belong: in public markets. And in the specific case of health services, free primary health redirects demand from expensive tertiary (hospital) care into more cost-efficient channels. In other words, all pretty good.
The trick is how to roll-out free universal benefit. This is made all the trickier when we are still in fiscal cutting mod. Resources are tight and there is a great demand for other services, income support and investment. In such a scenario the over-riding principle should be to
- Roll-out universality in a way that maximises social benefits and economic efficiency
On this basis, the Government’s strategy fails. For instance, the Government originally announced that the first stage of rolling-out free GP care would be to extend fee GP cards to all 60,000 patients suffering from long-term illnesses. This was a sensible approach. However, this seemed to hit a roadblock with the Attorney General claiming that extending free GP care on the basis of need rather than income would be open to legal challenge (this seems strange, especially as people with long-term illness get free prescription medicine). While legislation has been promised to rectify this, the Cabinet was told last May that it would be up to 10 months before legislation could be introduced. This probably accounts for the other delay – issuing free GP care to patients on the high-tech drugs scheme.
Ok, there’s a problem that will take time to rectify – though extending free GP care to children also requires legislation. What would be the next best step? Extending the benefit to everyone in a certain category (e.g. households with under-5s) regardless of income? I would argue there is a better course.
The means-tests medical card thresholds have not increased since 2006. This means that inflation has eroded the value of the threshold by a considerable amount. For instance, the threshold for a couple with one child is €15,834. This is gross, less income tax, USC and PRSI with some income exempt such as Child Benefit and Family Income Supplement. Nonetheless, it is quite low. That threshold was established in 2006. If it has been inflation-indexed, that threshold should be eight percent higher in 2014. This refers to the full medical cared – free GP visits and prescription medicine (minus the prescription charge).
As a first step these real cuts (after inflation) could have been reversed in Budget 2014. The great advantage here would be that the full medical care – including prescription medicine – would have been issued to tens of thousands of low-income households.
If the strategy is to issue GP visit cards only (patients would still have to purchase prescription medicine at market rates), then even more low-income earners would benefit. The thresholds for GP visit cards are higher than the full medical card. For instance, for the family with one child the full medical card threshold is €15,384. For the GP visit card, it is €23,764.
How many people would benefit if the cost of rolling out free GP care to under 5s (€37 million – though other estimates put the figure much higher) were redirected into raising the thresholds for GP visit cards? Difficult to say, but based on the cost of providing GP visit cards to patients with long-term illnesses, my own estimate is 150,000. The great advantage of this is that it would benefit low-income earners with children up to the age 16 and even older if they have no income or are in 3rd level education without grant support.
In fact, if the Government wanted to provide greater benefit for households with children (a reasonable policy) then they could have doubled the threshold for children. If this were done, then middle income households with one child (up to €33,000 a year) would have benefited – and benefited for all children, not just those under five years.
Raising the floor – or rolling out a universal benefit from the bottom-up – is far more equitable than the current Government policy. This could be a combination of raising income thresholds and extending the free benefit to those groups with high and long-term medical costs. It is also more economically efficient. If low-income households have their medical costs subsidised by the state, then the savings they make will more likely be spent in the consumer economy. For high income earners benefiting from the free under-5s – the subsidy could just go into savings or spent on import-dense goods and services.
But this wasn’t done. There is considerable scepticism regarding the Government’s new policy – not least, whether it will see the light of day. In particular, is the concern that it is being paid for by withdrawing medical cards from those who need it. And that it wasn’t agreed until the midnight hours a day before the budget – that doesn’t give people confidence, either.
This kind of thing gives universality a bad name.