Dr. Josep Figueras:

Let me spend a little time on the question that then leads us to the issue of the 10% of the population, which is circumvented by insurance companies. The typical figure, which I believe the Deputies have seen many times, shows the percentage of statutory funding - in this case it is coming from general government taxation - is 67% in this particular data. This data is for 2012, but it has not changed that much. I was looking through newer data - my research fellow did not send me the data from 2015 - but it is not that different now. The figure of 67% in relative terms is under the OECD figure. I apologise if I am confusing the committee. For some figures, I am using the relevant numbers from OECD data while for others, I am using the EU 28 data for 2017.

There are two interesting aspects of the situation in Ireland. One is that its level of funding from private health insurance is one of the highest in the OECD, at 12%. France has a very different funding model but Germany is at only 10%. Slovenia is interesting, and one to look at if Ireland wants to reform its private health insurance. We did an evaluation of Slovenia's reform and studied the role of private health insurance. The United States is not relevant for Ireland so I will not discuss its system.

I am not against, or in favour of, private health insurance but I ask members to read the book about it I have brought along to the meeting It is a very recent book and I can send electronic copies to members if they wish. No country has managed to use private health insurance appropriately and it is terribly difficult to do so. The companies select their markets and always work in the most profitable areas so they will not resolve sustainability issues. I do not say they do not play a role and they are often highly valued by the population. In one country, three Ministers lost their jobs trying to reform private health insurance. The population believed private health insurance was so important that it was a no-go area.

If a country has private health insurance it should make sure it is not subsidised by the public sector, though I am not talking about Ireland in this case. If private health insurers cover 10% of the total market they should pay the full cost to the hospitals, they should not benefit from special subsidies or prices or gain equity benefits from bypassing queues.

There are two issues. One is the issue of efficiency and the other is equity. In countries like Ireland, which have supplementary insurance enabling people to bypass the queues, there is a negative impact on equity. According to data I have, Ireland has among the largest supplementary insurance coverage in Europe. There is also an efficiency argument too, because if the funding is there one will want it to be used for a cost-effective package of services. An economist once said that financing the health service is taking something from one pocket and putting it back into the same pocket. It is a fallacy to say that private health insurance does not affect the treasury. I pay for it as a citizen, so why do we not have the same rigour for private health insurance as we have for general taxation? I pay my money to an intermediary, namely, the State to the social health insurer or the private health insurer. There is a consumer, an intermediary and a provider - that is what the economics of health care are. People want the citizen not to pay too much and the system to be as progressive as possible. They also want the intermediary to use the money and to get good results from the provider. Private health insurers have not been shown to be more cost-effective and they have higher administrative costs. They select markets, are more expensively administratively and tend to be less cost-effective when it comes to purchasing, as these studies show, and it is a fallacy to say otherwise.

I will summarise the general findings on health insurance from the book. There are concerns about financial protection for equity. One has to take account of the fact that tax discounts for private health insurance amount to paying them with public money. There are efficiency concerns and there is no evidence of superior efficiency in purchasing. This is the broader perspective on the 10% question. There have been many debates about this but it has not proved possible in any country to have a lot of competition in the private insurance sector for the 10% to whom Deputy O'Connell referred. The 10% in question are chronic diabetics and chronic patients in general. For the 10% one would need to have integration of services and a chain of services. One would want to pay providers by bundled payments. The mechanisms of private health insurance include shopping around and market competition but if one wanted to introduce market competition one should start with areas where there is a clear product to measure, such as surgery, where one can readily measure the quality and the cost. No private insurer is going to take the very expensive patients. We have information about what such patients spend and it is practically impossible to create premiums for them. The young will never join such schemes because there is no incentive to join a scheme where one has to pay for those patients. Am I answering the question?