Colm’s columns

Colm Rapple
Irish Mail on Sunday, 12th October 2009

The Government’s decision to divest the over 70s of their medical cards confirms, if confirmation is needed, that the PD philosophy is alive and well and that Mary Harney is still punching above her weight. Her ideal is clearly a market led health service with individuals paying their own way and the State’s role confined to providing a safety net for those at the bottom. The original decision to give out medical cards to the elderly irrespective of means was informed by an entirely different ideology.
Of course, taken in isolation, it doesn’t seem fair to provide free medical care to all over 70s irrespective of income. But it’s perfectly justifiable if seen as one small step towards achieving an ultimate objective of free medical care for all. That’s not an impossible dream. If a poor country like Cuba can do it, there’s no reason why we shouldn’t at least aspire to do likewise. And it has nothing to do with the political system.
It’s not an objective that could be achieved overnight and perhaps never. There would always be a need for some charges, if only to discourage waste and abuse, and the tax system used to fund the benefits would have to be accepted and seen as equitable. But, on the basis of the PD’s electoral support and the reaction to Mr Lenihan’s Budget day announcement, there’s a lot more support for a universal health care system than there is for the free market model. We should at least be trying to move in that direction.
Why shouldn’t medical care be free at the point of delivery. Much of it already is, just as many other State services are provided free of charge. Householders don’t have to pay for their water supply or their waste water disposal. You can walk down the street or enjoy a stroll in the local park without charge. Individuals don’t get electricity bills for their street lighting and free education is available to all irrespective of their incomes or wealth.
The notion that this draconian change was needed to save cash is simply not sustainable. The €100 million saving that it’s is supposed to yield in a full year could be raised in many different ways. It’s a relatively small sum in the context of the overall budget.
Capital Gains Tax has gone up from 20% to 22%. The change came into effect from midnight on Budget day. Brian Lenihan felt that he has to excuse the increase, justifying it as a quid pro quo for the stamp duty concession he had handed developers by cutting the top rate on commercial property transactions from 9% to 6%.  The stamp duty change will cost €180 million a year while the capital gains tax change will bring in €160 million.
The developers are going to gain more on the swings than the Exchequer gains on the roundabouts. So why didn’t Mr Lenihan go that little bit further. Raising the gains tax rate to 23% would yield an extra €80 million and the rate would still only be equal to the new rate of DIRT that even small savers will have to pay on their deposit interest. Putting it up to 24% would yield an extra €160 million, more than enough to make the medical card change unnecessary.
That would have been a simple and equitable option. But there are plenty of other alternatives. Putting an extra 1% on the top income tax rate would yield almost €300 million in a full year. That would only bring the top rate back to where it was in 2006. It was only reduced to 41% in January 2007.
And had he really wanted to catch those who gained most from the Celtic Tiger, Mr Lenihan would have introduced a new surtax rate of anywhere between 45% to 50% on  the top slice of high incomes. Combined, those changes could well have yielded enough additional funds to replace the inequitable levy on all income.
Indeed that would have the added benefit of clawing back some of the gains made by those doctors who have done so well from the medical card scheme over the years while also taking money off the high court judges, ex-ministers and property tycoons that Government spokesmen have been so anxious to take medical cards off.
If none of those alternatives suited, the easiest and least painful option would have been to deduct €100 million from the €1.7 billion contribution earmarked for the Pension Reserve Fund next year. Of course he’d have been better taking a contribution holiday and using all of that money to ease his budgetary problem.
In effect the €100 million that will be saved by taking medical cards off the over 70s will be given to the National Treasury Agency to be invested on the world’s stock markets and not touched until 2025.  At that stage it is more likely to be used to finance civil service pensions. Public sector pensioners will certainly have first call on it.
The €100 million certainly isn’t being used to extend medical card coverage to other more “deserving” medical card applicants. The means test thresholds for the under 70s are not being increased. They haven’t changed since July 2006, so those who were on the borderline at that time will now find themselves ineligible because of a small pay increase. So it’s not only the over 70s who will be losing their medical card entitlements.
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Colm Rapple
Irish Mail on Sunday 5th January 2008

“Scrappy, inconsistent and unfair” was how health minister, Mary Harney described the current system for financing nursing home care and, if anything, that’s an understatement. It was to be changed from January 1 but the necessary legislation hasn’t even been published and the HSE isn’t ready to administer the new scheme.

Ms Harney outlined her plan over a year ago labelling it “a fair deal”. On the face of it, it’s an improvement on the current wholly inadequate system. But she doesn’t get the detail right, the new could prove an iniquitous as the old.

There may still be a degree of means testing that could be used by the unscrupulous to encourage elderly people to dispose of their assets. The departments of health and social welfare are well aware of the potential for this form of financial abuse of the vulnerable but it still exists in many of our health and social welfare schemes.

There are also potential for inconsistency in the definition of assets and income that will be used to calculate the contribution that nursing home residents will have to make towards the cost of their care.

While change is to be welcomed and long overdue, it may be as well that Ms Harney is taking her time. Although the current inequities are nothing short of scandalous, it is equally scandalous that it has taken so long to bring about change. All of the anomalies in the current system were highlighted in a report presented to the Department of Health in 2001 by Professor Éamon O’Shea of UCG. It wasn’t published for two years and even then it was ignored.

It highlighted the inequity whereby someone who qualifies for a public bed is currently paying at most €120 a week while someone sharing the nursing home room can be paying as much as €1,000. Many “public” beds are in private nursing homes rented to the HSE.

This anomaly in the provision of State aid to those in need of nursing home care is only part of the problem. The current system also creates an incentive for those in need of such care to stay in hospital until a public nursing home bed becomes available. This has added greatly to hospital overcrowding in recent years.

Those not lucky or persistent enough to get a “public” bed, can qualify for a State subvention but it’s only €300 a week and nursing homes cost an average of €700 a week and as much as €1,000. The HSE can pay more than €300 but only in special circumstances and in all cases means, including the value of a home, are taken into account.

Many people have been forced to sell their homes to pay for their nursing home care.

That will no longer be necessary under the new scheme,. Those assessed as being in need of nursing home care will pay a maximum of 80% of their disposable income towards the cost and in addition up to 5% of their assets each year including the value of their home. So someone with a house worth €500,000 and savings of €100,000 would have to contribute up to €30,000 a year (5% of €600,000).

That contribution would be paid for at most 3 years so a maximum of 15% of the assets would go towards nursing home care. The payment will be deferred until the person and his/her spouse have died.

This new system will provide the elderly and their families with a degree of certainly that is not present in the current system. But it is open to some criticism.

Firstly it is not as generous as it may first seem. The vast majority of residents are in nursing homes for less than three years and in many cases the 5% of assets will cover the full cost of care. But Ms Harney hasn’t pretended that the new system is much more than a fairer reallocation of existing resources.

Others view the new charge as a tax on death that will bear heaviest on those with the most assets. But that’s hardly unfair although the IFA has been pushing to have farm assets excluded. The 5% is a maximum charge on the assets. Someone with a house worth €1 million, for instance, and no income could be subject to an annual charge of €50,000 – about as much as a nursing home is likely to cost. That same charge of €50,000 would equally apply to someone with assets worth €2 million.

In the case of a couple, both of whom are in nursing homes, the maximum charge will be 7.5% of asset value but in all cases the payment can be deferred until after death of both spouses and any other dependants living in the house. It’s not clear whether the value will be calculated at the time the care is given or at the time the due sum is paid.

To qualify a person will first have to be assessed as in need of nursing home care and Ms Harney has expressed the view that 20% of those currently in care would be better off at home. She’s undoubtedly right and has promised extra resources to help people maintain their independent. But there’s a danger that the assessment of nursing home need may be based on bed availability rather than on what’s best for the applicant.

Ms Harney has promised that entry to this new system will be optional. Some existing nursing home residents could benefit from a switch while others would lose out. Hopefully each case will be examined to ensure the best outcome for each individual.