By Patrizio Sicari and Douglas Sutherland, OECD Economics Department

Overall, the quality of healthcare is generally good in Ireland, with life expectancy and the (self-assessed) health status of its population now among the best in the OECD. Even so, the country’s health system struggles in providing effective access to quality care for all, as it copes with rising demand due to rapid population growth and ageing.

Indeed, Ireland’s health system entered 2023 on the backdrop of nationwide bottlenecks in the flow of hospital admissions, particularly within emergency departments, with more than 900 patients waiting for a bed on trolleys – a historical high. More broadly, the number of patients waiting for over six months for outpatient, inpatient and day case appointments, after first referral, made up 46% of the total and accounted for 6% of the population (Figure 1).

These pressures, as highlighted in the 2022 OECD Economic Survey of Ireland, partly stem from a highly centralised health system, largely based on costly hospital services. Moreover, unique among European OECD peers, Ireland only provides a proxy for universal coverage of primary care to about 30-40% of the population, through a complex scheme of age-based and means-tested medical cards. Hence, the bulk of the remaining population purchases voluntary private insurance to finance private or semi-private care performed also in public hospitals. This has resulted in a de facto two-tier health system, in which better-off holders of private insurance gain quicker access to specialist consultations or diagnostics, while poorer patients remain stuck in waiting lists for longer, even if formally eligible for free care.

Figure 1. Waiting times for key healthcare services are substantial

Number of persons waiting for a scheduled date for outpatient, inpatient and day case appointments by waiting time, % of population¹

At the same time, past underinvestment following the global financial crisis, has weighed on the efficiency of healthcare delivery. The legacy of relatively outdated hospital infrastructure, low numbers of hospital beds, associated with markedly high bed occupancy rates (Figure 2), and weak intensive care units facilities put pressure on the health system at the outset of the pandemic. Increased resources and swift reorganisation of processes, coupled with strong containment measures and a successful vaccination campaign helped avoid the worse. Nevertheless, the COVID-19 crisis strained waiting lists for “regular” care services further and pushed public health spending up to about 1/5 of total public expenditure in 2020 (Figure 3). In this context, enhancing public spending efficiency will be paramount to the financial sustainability of Ireland’s health system.

Figure 2. Hospital capacity constraints were significant at the onset of the pandemic

2019 or latest year available

The government’s wide-ranging reform agenda, termed Sláintecare, aims to broaden the coverage of universal care and enhance the cost-efficiency of health services. The current system is overly centralized, complex and biased towards expensive hospital-based treatments. Hence, the goal to implement an effective integration across primary, community, long-term and social care services to move away from expensive hospital care is welcome. Accelerating the implementation of the Single Assessment Tool, a key IT-based needs assessment to support enhanced operational integration across all health and social long-term care providers, would enable large efficiency gains and the provision of more effective person-centred care services. Integrated services should reduce the number of visits to emergency departments as well as of hospital admissions, which can help address the challenge of long waiting lists.

Figure 3. Government health spending is high

Percent of total government spending, 2020 or latest

The creation of six new regional health areas, which will be responsible for the planning, management and delivery of integrated and patient-centric care based on local population needs, is an important step towards more decentralised integrated care. Their success will depend on a suitable funding system and data availability. The funding system is currently fragmented across care settings and lacks transparency, limiting the traceability of healthcare spending. The planned adoption of a population-based resource allocation funding model to ensure regional health areas’ annual budgets reflect the specificities of local care needs, should be prioritised. This can improve financial reporting and management via higher transparency, spending traceability and accountability, while strengthening incentives to improve corporate governance and equity in health outcomes.

Monitoring the health system and achieving efficiency gains will also require greater use of digitalisation and an improved digital infrastructure. Tracking of patients across care services is currently hampered by the lack of national electronic records, as key available healthcare datasets are not interlinked. The information potential of anonymised patients’ data is largely unexploited, partly because of insufficient institutional resources and technical skills. Accelerating the process towards the adoption of a unique health identifier could enhance the monitoring of cost-effective health service utilisation and enable better-informed decision making at all levels. Centralising the national governance data framework in a single independent body may be of further help. By taking on the responsibility to link available health-related data collections, protect data confidentiality and ensure its secured sharing, the new body would be key in fostering the general trust in digital solutions needed for patients to agree with the treatment of their personal data.

References

Sicari P. and D. Sutherland (2023), “Health sector performance and efficiency in Ireland”, OECD Economics Department Working Papers, No. 1750, OECD Publishing, Paris, https://doi.org/10.1787/6a000bf1-en.

OECD (2022), OECD Economic Surveys: Ireland 2022, OECD Publishing, Paris, https://doi.org/10.1787/46a6ea85-en.

By Douglas Sutherland, Patrizio Sicari and Müge Adalet McGowan, OECD Economics Department

In recent decades, Ireland made impressive strides in developing its economy and raising living standards. This progress has allowed it to weather the COVID-19 pandemic and cope effectively with the repercussions from Russia’s war of aggression against Ukraine. Exports from the multinational part of the economy, benefiting from strong demand for medical and information communication technology goods and services, continue to support growth (Figure 1). The domestic economy, while moderating, also remains relatively resilient, despite strong headwinds from high inflation.

Figure 1. Exports continue to support growth

Gross domestic product, volume

The 2022 OECD Economic Survey shows that the current Irish fiscal situation is favourable, with budget balance expected in 2022, in contrast to many European countries. This is partly driven by high tax revenues, especially corporate tax receipts, which have provided room for government support to households and businesses in the face of rising energy prices. As part of these tax receipts are potentially transitory, there is a need to ensure that expenditure policy is decoupled from windfall tax revenues, rather than facilitating an upward creep of permanent spending.

Two recent measures have improved the fiscal framework. First, EUR 6 billion of the windfall corporate tax gains have been put in the National Reserve Fund in 2022-23. Upside revenue surprises should continue to be saved in this Fund to help prepare for future shocks and long-term fiscal challenges, such as ageing. Second, a spending rule setting an annual cap of 5% on increases in the value of permanent spending (broadly the sum of trend growth of an underlying measure of economic activity assumed to be 3% and the 2% inflation target) over the medium term was introduced in 2021. However, the planned increase in spending to cushion households from high inflation is temporarily pushing outlays above the new rule. Ensuring adherence to the 5% rule as soon as possible will be important to move fiscal policy onto a more stable spending path and enable greater resilience to future shocks.

Ireland faces a number of challenges to sustain growth, improve well-being and ensure fiscal sustainability over the longer term. The 2022 OECD Economic Survey assesses the government’s plans to reform the pension system, overhaul the health system to improve quality of care and value for money, ensure affordable housing and achieve a just carbon transition. As various spending pressures materialise, reforms are needed to ensure debt sustainability. For example, the Irish population is expected to age more rapidly than in most OECD member countries. OECD simulations suggest that public health, including long-term care, and pension costs could rise by 5.7 percentage points of potential GDP by 2060 (Figure 2).

Figure 2. Population ageing will increase pressures on the government budget

Projected change in expenditures from 2021 to 2060

The government is investing to boost housing supply and reduce greenhouse gas emissions, but regulatory and legal hurdles should also be tackled to reduce uncertainty and high transaction costs. Planning and permitting delays coupled with judicial review concerning major investments constrain housing supply and slow the development of renewable energy capacity. Increased uncertainty deters investment and raises prices. The availability of construction workers may present an additional constraint on progress, given competing demands from residential construction, including for retrofitting the existing housing stock, and infrastructure projects. In this regard, working to lift supply by increasing the inflow of workers will be important.

The government has initiated a far-reaching overhaul of the health sector, which suffers from legacy issues, such as past underinvestment, centralised decision-making and long waiting lists. The latter, in particular, contributed to a de facto two-tier system, in which buyers of voluntary private health insurance enjoy a faster access to several public hospital services than low-income patients eligible for free care. In this context, Sláintecare reforms will reconfigure the sector by moving away from an expensive largely hospital-based system, which does not offer universal coverage of primary care, towards a better integrated primary, community and long-term care system to enhance access and efficiency. The plans to increase decentralisation, with the creation of Regional Health Areas, and improve data availability and governance as well as financial reporting and management should be prioritised. Effective implementation should remove the burden on expensive hospital care and create the conditions for streamlining the complex interactions between the private and public elements of the system.

References

OECD (2022), OECD Economic Surveys: Ireland 2022, OECD Publishing, Paris, https://doi.org/10.1787/19990324.