MY WIFE’S BROTHER, Gavin, is a fairly chilled-out sort of person. Our conversations are mostly about football or history podcasts. One of the family’s favourite anecdotes describes how, when Gavin was five years old, he was dismayed to be told that they were all going on a day trip: “ugh, no – you and Dad are just gonna talk about boring adult stuff.”

He made a disgusted face. “Like insurance.”

This is an article about insurance. If you are five, you can tune out now. Specifically, this is an article about health insurance – why health insurance premiums are going up for Irish customers, and why our mixed model of healthcare financing means they’re almost guaranteed to continue doing so.

Ireland’s health system is complex and highly unusual. We operate a mixed financing model, which combines State-funded services, out-of-pocket costs, and, for about half of the public, increasingly expensive private health insurance to supplement what we already pay for. We are used to this, but it is not the norm elsewhere. Put simply, most countries do it one way or the other: you pay tax, or you pay for insurance. I believe that our system combines the disadvantages of both with the advantages of neither. What we get in return is inefficient, unfair and unsustainable.

Differing models

In 1946, the constitution of the World Health Organization declared that “the highest attainable standard of health is one of the fundamental rights of every human being”. Most national health systems are based on the idea that healthcare is something everybody should have. There are different ways to achieve a universal health system. However, for any of them to work, you need to pick one and stick with it.

The United Kingdom and Scandinavian countries run their system on tax, often called the Beveridge Model, after the economist whose proposals formed the basis of the British welfare state. The deal is that the government keeps a chunk of your money, in tax, and in return, health services are free or close to free. Some people take out private health insurance, but most do not see the need.

The second main way to finance universal healthcare is universal health insurance, sometimes referred to as the Bismarck Model, after the German chancellor who introduced it in 1883. It is also seen in countries like the Netherlands and South Korea. It varies from place to place, but this system is essentially based on two crucial rules: everybody is required to have health insurance, and insurers are required to sell it to you. For the less well-off, insurance is subsidised or free. In some countries, the State itself is the main insurance provider. In this system, health services are mostly free.

A third option is simply to dispense with the notion of human rights and to leave healthcare to the market. In this scenario, you pay for insurance if you can. If you can’t afford it, or the insurer simply doesn’t fancy covering you, then you are on your own. The American system prior to the Obama Administration’s Affordable Care Act resembled this.

For what it’s worth, my opinion is that the result of this approach of reliance on the market is a system that is deeply inefficient and grotesquely unfair, making certain groups very rich while leaving most people to live in continual fear of falling ill.

Never-ending price increases

The problem is that healthcare is a peculiar thing: is it a right, or an item of charity, or an economic good? The health insurance market behaves especially strangely, for several reasons worth considering.

Firstly, to state the obvious, our health is very important. As a result, we regard healthcare for ourselves and our families as an absolute necessity. The reality is that insurers in Ireland could raise their premiums again and again, and many people will pay regardless. In economics, this is called demand inelasticity. For most things, if prices go up, our enthusiasm for buying them goes down. Health insurance is not like this.

Secondly, healthcare is subject to value judgements, to do with fairness and solidarity. Most people believe that healthcare is something everybody should have, even if they cannot afford to pay for it. That is why healthcare is political.

Thirdly – and probably the main reason why your insurance premium is going up – health and illness are inherently unpredictable. We do not know when we will get sick. Without insurance, citizens in some countries face the real prospect of financial ruin through out-of-pocket costs. In Ireland, our main fear is about long waits for care. This uncertainty is what brought the German system into being in the 19th century: groups of workers, in big mining and industrial towns, couldn’t know who was next to fall ill or injured. So, they formed ‘sickness funds’, where groups of workers decided to pool their risk – and pooling of risk is the definition of insurance.

However, the risk of illness isn’t the same for all of us. Older people use health services more than younger people. Some of us know we are at added risk of illness, due to underlying risk factors or health conditions. Some people are more likely than others to see the value of taking out insurance. Those who are young or fully healthy are less likely to do so.

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This is called adverse selection, and it is what is playing out in the Irish insurance market. Those who buy private health insurance, by and large, make more use of health services than those who do not. This means that the insurer is taking on more risk than if everybody had insurance. Covering that risk becomes more costly, causing the insurer to raise premiums. Insurers also do whatever they can to entice young people and families to take out private health insurance.

A flawed model

Private health insurance will not provide coverage to everybody; it can’t. The only way universal health insurance (UHI) works is if the State plays a powerful regulatory role, basically by setting the two rules mentioned above: everybody must buy insurance, and insurers must sell it to you. In 2011, the Irish government tried to implement UHI, under then-Minister Dr James Reilly. It didn’t work, partly because research suggested it would raise administrative costs without necessarily improving access to care.

In 2017, Sláintecare set a course for universal healthcare, largely based on the Beveridge Model. In my opinion, that model remains, by far, the most feasible option for Ireland to achieve universal healthcare.

So, when we see headlines about increasing premiums, we must keep the end-goal in mind: a world-class, tax-funded health system, based on fairness and better value for money, where people do not feel compelled by fear to take out private health insurance.

A few years ago, I, along with some colleagues, set up Doctors For Universal Healthcare. As the name suggests, we are a group of doctors who believe that a universal health system is something Ireland deserves. The question is whether we want it or not. It can be done, through sustained investment in publicly funded health services and – as laid out five years ago in the De Buitléir Report – the phased separation of our public and private hospital sectors. The public-only consultant contract introduced by the previous government was a major development in this regard.

Healthcare may be complex, and insurance may be boring. However, we have to talk about it, because the status quo is unsustainable.

Domhnall McGlacken-Byrne is a doctor specialising in public health and paediatrics.