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October 12, 2007


Aidan OSullivan

Great article.

‘low-tax, well-insured’ - I love it! :)

I saw first hand in the US how the Republican Congress used to always underfund public services, then say - "Look how your taxes are wasted on inefficient public services." And then pushed the privatization agenda for essential services.

This is what is happening in Ireland with the PDs. There is no doubt many of our public services are totally inadequate, but we need to build the trust in the 'public sphere' so we can make the case for real public funding and real reform.

Thanks for your insights into the social insurance model.

Conor McCabe

The government should set up a SWAT team to tackle management interests in the health service. It would save more lives.


Well done Michael, well presented. May I,as one voice, wholeheartedly support any work that might be taken to highlight the Adelaide report and to push by every and all available means to take this significant political step as a country. I would suggest taking this beyond this point and perhaps trying to have a get together some weekend for all interested parties.


"In effect, the Left would be arguing for a new 2% levy on taxpayers"

Well, no they wouldn't, they would be arguing for a new 4% levy on taxpayers. Just because the employer is paying the other 2% does not mean the employee avoids the burden of it. It will get passed on (eventually) in lower wages. The tax incidence of taxes on wages tends to fall on the workers.

"And this is only a start."
That's what we're afraid of.


Jim - I'm all for advancing the agenda in any way possible. Of course, Labour has a policy of universal health insurance (though I can' remember all the details and, in this area, the devil really is in the details). It was published back in 2002 I think. Maybe some Labour members could convince their party leaders to run with it in a vigorous manner.

Lorenzo, good to hear from you again. Ah, tax incidence. Actually, the theory of tax incidence doesn't suggest that an increase in payroll taxes will translate into lower wages. But first, let's not forget that many employers already pay a 'health levy' in the form of collectively agreed health insurance benefits. A universal health insurance could merely see a substitution effect (depending on the extent of the benefit) - to a greater or lesser degree. In this instance, initial and final incidence may be similar because there is little or no extra cost.

In any event, all the theory suggests is that tax incidence will be determined by a range of factors - including price and supply elasticity, workers bargaining power, the nature of competition, etc. For instance, a business may try to transfer higher costs to consumers but this may be difficult in a highly competitive market; or to workers but this may be difficult if they are organised, or the labour market is tight, or if employers' group can't negotiate it in 'social partnership'. In such cases, the employer may just absorb the cost because they are highly profitable and may see a competitive advantage if other companies do try to pass on the tax.

The advantage in a universal health insurance is that all employers are treated equally - and in this instance may benefit the 'high-road' employers who are already provide such benefits. The argument that it would make Irish business uncompetitive abroad is dubious in the extreme - especially as in most other EU countries, employers social security costs are much much higher.

In any event, a 2% health insurance levy would equal in the manufacturing sector about 0.12% of total turnover. So we should be careful not to overstate its potential effect.

But most importantly, Lorenzo, don't be afraid. The idea that everyone under a universal health insurance would be treated equally regardless of income or wealth is surely something to give us hope. Or a state earnings related pension so people can be guaranteed a decent living standard in retirement and not have to rely on unaccountable equity markets or the acumen of pension fund managers. Or year-long maternity leave with very high income replacement - so that children can benefit from being in a home environment (and drive down the price of crèches since demand would be reduced). There is nothing there to fear.


Fore politicians who tackle this issue Michael and others you just mentioned public opinion is one of two battles to be won. There is also difficulties with many selfish perspectives pervailing in these industries. The 'common good' may need to be fought for. Noel Browne felt that Consultants were as culpable in the Mother & Child scheme debacle as the hierarchy of the clergy, and he bemoaned why doctors could not like nurses work for a wage.


There is one issue that hasn't properly been addressed here. Imagine this scenario. The government takes on the above agenda - universal health insurance paid for by a levy of 2%. We'll assume for the moment that you have covered all the costs in your analsysis. Initially, waiting times and medical outcomes improve slightly. Then the progress halts. The minister is on the airwaves explaining away the temporary halt "Systems need to be adjusted etc etc" Another year passes and shock horror, the waiting lists are growing again. With expanded budgets health managers were less agressive in making efficiencies. With an increasing pie, health workers dug in for higher pay. Within 5 years the lists and outcomes are pretty much where they were. No substantial modernisation has taken place. And nightmare - we are now stuck with the 2% levy.

The fear of this catastrophe is surely a block against the risk of taking the plunge. And is it not a very real fear?


Thanks Tomaltach for your comments. Sounds like you're describing our current health care system sans a universal health insurance. I hope I made it clear that while social insurance is necessary it is not sufficient. If, for instance, we do not increase supply to meet demand - that is, if we don't have the beds, the wards, the machines and the staff - then capacity constraints as you suggested will arise. There are more problems than this (an ageing GP population for one, the rationalisation of small local hospitals which is always a political killer, is another). But the strength of social insurance is that it removes perversities in the system and starts from a base whereby everyone is treated equally. That premise, alone, is worth efficiency gains and popular support. That people are wary of such interventions merely shows the cynicism that has resulted from years of right-wing insprired ideologiacal experiments (co-location being one) and sops to private health care interests. I do not in any way underestimate the challenge this poses. Yes, there is real fear. But the best place to start undermining that fear is a platform of equity and social justice. You'd have to admit - it would be a novel starting place given where we are now.

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