James Reilly (Dublin North, Fine Gael)
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I am accompanied by Ms Bairbre Nic Aongusa, assistant secretary of the Department of Health, Mr. Tom Byrne, chief financial officer, Health Service Executive, Ms Nuala Prendergast, principal officer, Department of Health, and Ms Laverne McGuinness, chief operations officer, Health Service Executive.

I am pleased to have the opportunity to address the select committee on the Revised Estimates for 2013 for my Department, Vote 38, and for the Health Service Executive, HSE, Vote 39. Copies of the Revised Estimates for the health Votes and briefing documents by subhead on the two Votes have been provided to Deputies. The annual Estimates of each Vote are being reconfigured along programme lines to ensure greater transparency in Government expenditure. The Department of Health is working towards the development of programme budgeting and changing the structure of the health Votes to reflect this. However, due to the fact that financial systems in the HSE are set up to account on a regional basis, they will have to be adapted to allow for this which will take some time.

In the interim, the appendices to the Revised Estimates for the health Votes have been constructed along programme lines, based on the national service plan and operational plan of the HSE, to provide a high-level programme breakdown of health expenditure.

Before looking at the Estimates in detail, I will make several general observations about the overall budgetary situation facing the health sector and also update the committee on significant developments in the health services since I last attended. The Government is committed to tackling Ireland’s very serious deficit problem in accordance with the broad fiscal framework of the EU-IMF memorandum of understanding.

Health expenditure in 2013 accounts for 27% of gross current expenditure. This represents 37% of total tax receipts and 88% of income tax receipts, meaning that fiscal realignment must, of necessity, impact on health sector spending. The challenges currently facing the health system at a time of growing demand means that the Government must press ahead with major health sector reform.

As the committee will be aware, the Government is embarking on a major reform programme for the health system, the aim of which is to deliver a single-tier health service supported by universal health insurance where access is based on need, not income. Under universal health insurance, everyone will be insured and will have equal access to a standard package of primary and acute hospital services, including acute mental health services. A new insurance fund will subsidise or pay insurance premiums for those who qualify for a subsidy.

There are a number of important stepping stones along the way and each of these will play a critical role in improving our health service in advance of the introduction of universal health insurance. I am pleased to say that significant work is already under way in respect of these initiatives which include the strengthening of primary care services to deliver universal primary care with the removal of cost as a barrier to access for patients, the work of the special delivery unit in tackling waiting times and establishing hospital groups and the introduction of a more transparent and efficient "money follows the patient" funding mechanism for hospitals.

In May, I announced a reorganisation of public hospitals into more efficient and accountable hospital groups to deliver improved outcomes for patients. This Government decision was informed by two reports, The Establishment of Hospital Groups as a Transition to Independent Hospital Trusts and The Framework for Development - Securing the Future of Smaller Hospitals.

The reform of the health service, including the abolition of the HSE is a complex and sequential exercise. The Health Service Executive (Governance) Bill 2012 has now been enacted, which abolishes the current board and CEO structure and provides for the establishment of a new governance structure. As part of this reform programme, I am also proposing to change the funding arrangements for the health services. My Department has finalised proposals for legislation to disestablish the Vote of the Health Service Executive and fund the HSE from the Vote of the Office of the Minister for Health in future. As the committee can see, reforming our health system is extremely complex but I am pleased to say that we can demonstrate significant progress in a time of demonstrably reduced human and financial resources.

I would now like to address the Estimates for health in some detail. The Revised Estimate for 2013 for the Health Group of Votes provides for gross expenditure of €14.021 billion for health services. Of this amount, some €13.624 billion is for current funding and €397 million for capital funding.