THERE IS NO doubt that our healthcare system is in need of urgent reform. A two-tier system of health apartheid and inequality persists. Those who cannot afford private health insurance wait months and even years for vital medical procedures while those who can afford health insurance can access medical services that should be provided to everyone.

The Government’s plan to introduce Universal Health Insurance for everyone is very welcome. However we need a national debate about which model of Universal Health Insurance will deliver the best healthcare outcomes while making the most best use of limited resources.

Fine Gael in advance of the general election advocated a multi-payer model of competing private insurance companies based on the “Dutch” model. Labour in contrast advocated a single payer model.

‘The multi-payer model led to a sharp increase in costs’

During the negotiations for the Programme for Government, the Fine Gael approach based on competing private health insurance cover was adopted. So how did this reform work out in the Netherlands?

The introduction of the multi-payer model in the Netherlands has led to a sharp increase in costs. According to the OECD total expenditure on health as a percentage of GDP rose in the Netherlands from 9.8 per cent of GDP in 2005 before the multi-payer model was introduced in 2006. By 2010 this had risen dramatically to 12 per cent of GDP. The Netherlands now spends more on healthcare than any other country in the world except the U.S. which also relies on the costly private sector.

Competing private insurance companies

So why have costs risen so dramatically in the Netherlands?

The introduction of compulsory health insurance provided by competing private insurance companies has led to an incredible level of bureaucracy within the Dutch system. Every healthcare provider had to establish an individual contract with each insurance company for the provision of each medical procedure and consultation. This resulted in some 30,000 separate Diagnostic Treatment Combinations been established. Each of these 30,000 combinations had to be administered and regulated. Instead of driving down costs this resulted in a sharp increase of costs and the Dutch Government had to intervene to reduce the number of service level agreements.

With the introduction of competition there needs to be increased regulation, quality control assurance and information provision to ensure that basic standards of care are met. These are all useful to have within a healthcare system but become increasingly important once the profit motive is introduced. This leads directly to an increase in staff required for these functions and therefore an increase in costs.

Fears of a two-tier system

The Dutch model will drive costs upwards. In addition to increased bureaucracy, administration and regulation a margin of profit needs to be factored into health insurance policies under a for profit system. This further increases costs.

As costs increase under a private health insurance model, medical treatments and procedures are often de-listed and sometimes sections of the population are left without any cover or with heavily reduced cover.

We desperately need a debate on the direction of our health services. My fear is that the government’s plans will increase costs, and we may see a two tier system re-emerging or even worse a three tier system: one tier covered by state financed Universal Health Insurance covering only basic procedures, a second tier with no cover at all and a third-tier able to purchase sufficient insurance to cover all their medical needs.

Patrick Nulty is a TD for Dublin West.