Update on the Economics of Child Benefit

Following on from my post yesterday on the economics of child benefit; I read today in the Irish Times that: "An advisory group established by (Joan Burton) earlier this year to examine ways of mean-testing or taxing the benefit has concluded in a preliminary indication that taxing the benefit is not possible. Its full report is not due out until March 2012."

For now, the preliminary indication from Burton's advisory group would seem to leave the medical card option (as suggested in yesterday's blog-post) as the only remaining possibility for reform (besides means-testing, self-declaration of income, or cross-referencing against tax records). As discussed yesterday, means-testing can have socially undesirable consequences. Furthermore, self-declaration of income (and voluntary abstention from claiming benefit) may be ineffective. Also, cross-referencing against tax records may be unsuitable for the Irish case: due to the preliminary indication from the group reporting to Burton. However, I would hope that cross-referencing against tax records is considered as a separate option to benefit taxation: in the report due out in March of next year.

Of course, the medical card option would have to involve a link between the computer-systems in the Health Service Executive and the systems in the Department of Social Protection. With respect to logistical IT concerns, Joe Carthy, from the UCD School of Computer Science and Informatics, was on NewsTalk radio before lunch-time today: suggesting that it is very much possible to make the computer-systems at Social Protection and Revenue "talk to each other". Carthy suggested that he could set this up easily himself, within a month. I wonder if he could set up a link between the systems in the HSE and Social Protection as easily? So that only medical card holders with children of a certain age would receive child benefit. Medical card holders are exempt from paying the income levy and the health levy; should they not also be (exclusively) entitled to child benefit?

Doctor, doctor! How's business?

Could always be better.

I don't find the Dr., dr., jokes very funny either, but their traditional popularity is difficult to contend with..

Here's the latest one :

What does this policy achieve?

(besides insulting everyone with the slightest intelligence)

The poorest 35% of the population already visit the GP for free in Ireland. The remaining 65% are able to claim tax relief on all their GP expenses.

What is behind this idea? I'm not aware of any evidence to suggest that it might improve health. In fact there is much more evidence to suggest that it will exacerbate problems in health care; for one, it amounts to "over-insurance" which is one of the main drivers of excessive medical inflation. I do expect there to be something more to this plan than the slogan, but at any rate, it seems like more of the unfortunate "here you go, vote for me"style of politics that we know served us poorly in the past. By applying the strategy to healthcare they are totally undermining their political credibility. Why don't they just be honest about it and hand out fifties - it would be cheaper and wouldn't lengthen queues and shorten examination times at the GP's clinic.

One obvious place to start is with the recommendations of the recent Competition Authority Report about GP practices.

Public Dental Services

The Dental Treatment Services Scheme has shown substantial growth in 2009. A staggering 399,262 (34%) more treatments were provided year to date in 2009 than was targeted. At the end of December 2009, the cumulative number of treatments 'above the line' (i.e., routine services, extractions, fillings) was 1.4 million (35% growth) and the number 'below the line' (i.e., specialties like root and gum treatments) was 144,000 (26% growth).

Amazing how resilient dentistry seems to be to the recession.

Of course one must consider that since the beginning of 2009 a lot more people were granted medical cards, due to the dire economic circumstances of the country. This is what the HSE suggested. But the actual increase in the number of people with medical cards over the year was 55,000; which was 4% above target. So by safely assuming these projections are meaningful and represent normal levels of demand in the system, the increase in supply should be attributed to the demand from new card holders; this is the HSE suggestion.

My rough calculations of this appealing hypothesis suggests some bizarre results: every new medical card recipient got about 8 fillings or extractions AND about 3 root canal treatments! Crazy right, but there's more to consider.. these new recipients were mostly the newly unemployed so as PSRI payers they previously had a very generous dental package (now cut) which included two free check-ups and cleanings per year and sizable reductions for most treatments.

To me, unless i'm missing something, the increase is now down to two possibilities: either the quality of existing medical card holders' teeth declined significantly or dentists started to be more sensitive to the dental "needs" of their medical card-holding clients. The former doesn't seem plausible (a 30% decline in dental health in one year!?) yet there is considerable reason to suspect the latter, given the possible fall-off in dentist services from purely private patients (note: general domestic demand for goods and services in Ireland contracted by about 10% in 2009) .

The phenomenon of 'supplier induced demand' (SID) has been empirically validated in many instances and across health professions; it is well documented in the health economics literature. It can also be controlled and managed and, at times like this, it's probably worth considering.

The raw figures are available from the most recent 2009 HSE Healthstats Report.

A Healthy Recovery

IT article today indicates that an additional 10,000 full medical (GMS) cards are being issued per month. I would estimate that the number of people with voluntary PHI is currently falling at a third of this rate, i.e., ~ 3,000 per month. It's worth taking stock of these numbers and the effect they will be having on service demand and quality.

All public sectors are facing considerable funding cuts next month but I would urge caution in what is done in the public health sector. It's vital to recognise that this current trend in GMS coverage when budgets and labour remain fixed means a heavier work-load for each individual public health worker. When labour is fixed and funding is falling, as is widely expected in the near future, the situation is exacerbated. We need to think carefully about what broad brush-stokes will really mean. In other public sectors we might expect an increase in demand - more people might choose to finish school, there might be an increase in theft and property crime. But public education and justice are fundamentally different; their services are both less labour-intensive and less sensitive to demand (there aren't an additional 10,000 criminals being reprimanded or school-aged kids showing up each month!). Forthcoming policy needs to consider these facts and design an appropriate response that will ensure quality of service to the patient and fair conditions for staff.

Along with considered measures it now makes increasing sense to seriously revisit the issue of average length of in-patient stay. According to the ESRI's most recent 2007 national report, GMS medical card holders were discharged after an average of 7 days; about 3 days longer than non-GMS discharges. Of course there are a number of reasons why this is the case but to date we have no evidence on the matter.