15/6/2013: Irish Health Pricing Policy: Stupid, Short-Termist & Costly

Per Irish Times article, the Government is planning to impose a massive price hike on hospital beds, leading to health insurance prices hike of estimated 30%.

This Government has been disastrous when it comes to containing the costs of healthcare. Here are three charts showing:

1. That the within the category of Miscellaneous Goods and Services, to which Insurance Services belong, Insurance Connected with Health posted the highest price inflation since December 2011, with index of prices rising to 127.4 in May 2013 against the benchmark of 100 in December 2011. 
2. In last 12 months, through May 2013, health insurance costs rose 12.5%. This represents the highest rate of cumulated inflation over 17 months from January 1, 2012 through May 2013 for any non-food item of expenditure recorded by the CSO and the second highest rate of annual inflation for any non-food line of expenditure after a bizarre 21.2% price hike in 'Cultural admittance' costs.
3. Across all categories of consumer expenditure, Irish Government controlled or regulated prices (with controls exerted either via high incidence of specific goods and services taxation, where taxes imposed by the state account for over 1/2 of the product final cost; or via State regulation setting prices; or via semi-states dominance in the sector allowing monopoly power pricing, etc) dominate heaviest price increases categories.

The charts below are easy to read: in Yellow, I mark the State-dominated sectors, with blue bars marking other sectors. All price indices are through May 2013. All data is from CSO.

Charts above confirm the observations made in points (1)-(3).

This Government is clearly on an economic suicide course. Raising health insurance costs will multiply demand for public healthcare & increase the cost of this demand by forcing more patients into emergency rooms. Worse, the completely moronic (and I cannot find any other way of expressing this) system will create a cascading cost increase to public system.

Currently, an insured patient in a hospital yields: vat and other tax revenues to the State, and generates positive return per bed occupied. In addition, the patient is pre-screened for hospital admission by a private doctor 9also generating vat and other tax revenues to the state) thus avoiding emergency room admission.

Forcing this patient from insurance into public system removes all of the above tax revenues and leads to the patient going via emergency room into admission. This means higher emergency room costs, plus higher treatment costs, because by the time a patient goes through with emergency room their admitting point condition would be most likely worse than were they to go through more preventative care and monitoring with private doctor pre-screening.

The word for this policy on health costs inflation is idiocy. Pure and simple.