Jim Daly (Cork South West, Fine Gael)
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I thank the select committee for the opportunity to bring this Supplementary Estimate for Vote 38 before it. The total additional funding sought for 2019 is €338.1 million, €90 million of which relates to decisions made subsequent to the national service plan, including pay agreements, escalation of no-deal Brexit planning, winter planning and CervicalCheck. The balance relates to the impact of the level of activity demand coming into 2019 and the continued growth in that demand during the year and the overrun in settlements by the State Claims Agency.

While the amount sought is significant in monetary terms it represents 2% of overall health expenditure in 2019. The level of funding sought represents a significant improvement on previous years and is indicative of significant efforts undertaken to balance the service challenges in health with the priority of Government to maintain fiscal stability. The enhanced focus on financial management in 2019 is particularly important given the uncertainties arising in regard to Brexit. Over the past five years, the majority of additional health funding has been allocated to pay cost pressures associated with Government pay policy and to maintain existing levels of service, taking account of demographic changes. These allocations are balanced with new developments, seeking to continuously improve the Irish health system. In addition, the growing costs arising from pensions and the State Claims Agency must also be addressed.

I will now set out the items which make-up this year's Supplementary Estimate. In March, the Government agreed to the establishment of an ex gratiascheme for those affected by the non-disclosure of the CervicalCheck audit. The scheme is designed to provide an alternative, non-adversarial and person-centred option for those affected by the CervicalCheck non-disclosure issue. To date, 161 of the 221 cohort identified have made applications and all have been paid. In addition, the CervicalCheck tribunal was set up in July to provide an alternative system for dealing with claims arising from CervicalCheck, reducing the adversarial nature of hearings for the women and families affected.

On pensions, for which €24 million is sought, the budget allocation to cover superannuation costs in the HSE for 2019 is €490 million, inclusive of the first charge from 2018 of €24 million. While expenditure on superannuation during 2018 has been broadly in line with expectation, there was no scope to offset the incoming first charge. On the winter programme, €26 million is sought for the 2019-20 winter plan, with additional funding for the 2020 impact included in the HSE's national service plan for 2020. This funding is crucial to reducing overcrowding pressures in our hospitals and will deliver additional home care packages, transitional care beds, necessary aids and appliances and will allow for the activation of winter action teams to manage unscheduled care performance through various initiatives. Demand for acute hospital services exceeded the resources available in 2018, resulting in the system entering 2019 at an expenditure level beyond the approved level of funding. This was to be addressed through achieving affordable levels of staffing and other savings outlined in the service plan. However, demand continued to grow in 2019 and this countered the impact of any targeted savings achieved and, along with the growth in costs associated with the management of antimicrobial resistance and infection control, contributed to the estimated funding shortfall by year end of €50 million.

A further €50 million is sought for disability services. The deficit within disability services arises from demand for emergency placements, an increase in the provision of home support hours to help alleviate the urgent demand for placements, the changing needs of clients in receipt of services and regulatory compliance. All such factors create significant pressures within disability services, resulting in considerable challenges in maintaining affordable levels of service.

A further €43 million is sought for the nursing agreement. It will assist with the recruitment and retention of nurses and midwives in the public health service. Significant funding will be provided for a range of tangible and specific enhanced nursing practice measures, including an enhanced practice role for nurses and midwives, increases in allowances and an extension of a range of allowances. The implementation of the framework on a safe staffing and skills mix is also a key to the agreement, and a €5 million investment will be made to continue its implementation. It is anticipated that the agreement will achieve savings through a reduction of agency spend where the framework is in place and through productivity measures in the new enhanced practice role. The HSE has a detailed implementation plan in place and a report on all aspects of the agreement, including savings, should be available in the new year.

A further €3 million is sought for the job evaluation scheme for support staff. The funding will ensure that the relevant grades of support staff are uplifted to the recommended pay bands using the methodology and timeframes set out in the Labour Court recommendations.

The State Claims Agency has a statutory responsibility to manage claims to ensure that the State's liability under the clinical indemnity and the general insurance schemes, with their associated legal and other expenses, is contained at the lowest achievable level. Its role also includes the successful recovery of costs from third parties. The agency has informed the Department that, in actuarial terms, the clinical indemnity scheme, established in 2003, has yet to reach maturity and is not expected to plateau in respect of volume and cost of clinical claims until 2020 at the earliest. We are informed that the increasing costs of the clinical indemnity scheme are not due to the increasing numbers of claims but rather to the increasing costs of awards and the high costs associated with catastrophic injury claims. In addition, payments relating to historical Medical Defence Union, MDU, have to be taken into consideration. Such payments arise due to an arrangement put in place in 2005 between the then Minister for Health and Children, the Irish Hospital Consultants Association and the Irish Medical Organisation to ensure that in the event of an adverse clinical incident involving medical negligence, no patient would be left uncompensated and no doctor who was a member of the MDU would be left without indemnity insurance cover in the event that the MDU refused to indemnify him or her. Under the arrangement, a consultant can request the assistance of the Minister in meeting the cost of damages arising from a claim. The State Claims Agency manages the claims. Subsequently, in settlement of litigation related to indemnity cover, the MDU paid the State €45 million. Due to a recent High Court action that was settled, relating to an MDU case, a final lump sum payment of €17.5 million will be paid out of the Department’s Vote in early December.

A further €13 million is sought for Brexit planning, In 2019, the Department and the agencies under its aegis, in particular the HSE, the Health Products Regulatory Authority and the Food Safety Authority of Ireland, were required to be proactive in preparing for a possible no-deal Brexit by ensuring that detailed contingency measures were in place.

A further €157 million is sought or the primary care reimbursement service, €77 million of which is to fund the 2018 first charge, with €80 million to fund the 2019 current deficit, which was primarily driven by overruns in the high-tech arrangement and the long-term illness scheme.

A further €45 million is sought for appropriations-in-aid. They are received by Ireland from the UK in respect of health services provided under EU regulations. Following discussions, a sum of €270 million was agreed for 2019, a surplus of €45 million over the 2018 Revised Estimates Volume, REV, amount. The surplus will offset the gross supplementary requirement of €383.1 million, resulting in a net Exchequer supplementary of €338.1 million.

In summary, the Supplementary Estimate seeks to address the funding requirement arising from decisions made subsequent to the national service plan, particularly central wage agreements and shortfalls arising from increases in eligible demand for medications, access to overseas treatments and the overrun in settlements by the State Claims Agency. The new leadership team in the HSE has succeeded in maintaining the additional pressures in the health sector at less than half the level of last year. In addition, the new HSE governance board is in the final stages of preparing a 2020 national service plan with improved health services for citizens, without carrying over a large financial overhang from this year. Since the Supplementary Estimate was presented to the Government, however, additional costs associated with the State Claims Agency and pensions have emerged. Both the Minister for Health and the Minister for Public Expenditure and Reform were conscious that this was a possibility, given the inherent forecasting risks associated with the demand-led areas. The additional costs arising in 2019 will result in a first charge in 2020, which is currently under discussion with the Department of Public Expenditure and Reform in the context of the 2020 REV to ensure there will be no impact on the service level set out in the HSE's national service plan.

The issue of sustainable health funding is a major challenge, not just in Ireland but internationally. Dealing with a growing and ageing population, more acute health and social care requirements, increased demand for new and existing drugs, and the increasing cost of health technology will continue to pose a financial challenge into the future. Sláintecare gives us a new roadmap to support the delivery of high-quality care to our citizens, improving the way services are organised and delivered, and reducing costs to maximise the ability of the health service to respond to growing needs must remain our focus. It is essential that those managing and delivering the service continue to demonstrate good practice by delivering the best healthcare within the significant level of resources made available by the Government for 2020.

I seek the committee's approval for the Supplementary Estimate.