Harney punches above her weight on medical cards
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.
Mail@ColmRapple.com