STATE HOSPITALS will lose €80 million in private health insurance payments once the first six private hospitals to be built on State lands are established, the Government has conceded, writes Mark Hennessy.
It said, however, some of the losses would be recouped.
The Government and Labour Party leader Eamon Gilmore last night clashed over Labour's charge that the plan to build private hospitals on public hospital grounds will cost the exchequer €1 billion in lost tax.
Under the plan, investors will be able to write off 41 per cent of the cost of building the first eight hospitals over seven years.
But the Government insisted that such tax breaks were available to all those investing in private hospitals, not just to ones built on State land.
"If we take an estimate of €250 million as the average cost of the proposed eight private clinics, it would mean that each developer would qualify over seven years for tax relief amounting to €102.5 million or a total cost to the taxpayer of over €800 million," said Mr Gilmore.
"To this must be added the loss of income that public hospitals will suffer as a result of the transfer of business from private health insurance companies, such as the Voluntary Health Insurance, to the new clinics," he said.
Refusing to accept the Government's estimate that public hospitals would lose out on €80 million worth of private health insurers' payments, Mr Gilmore said the public hospitals had put the potential losses at between €145 million and €200 million.
Taken together, the investors' tax breaks and health insurance payments cuts could cost the exchequer €1.3 billion over the seven years, said Mr Gilmore, who was given a briefing document by Taoiseach Brian Cowen this week.
"The information I have received from the Taoiseach has increased my concern about the wisdom of this scheme. The only people that appear to be driving this plan are the private developers and Minister Harney, with the support of the new Taoiseach," said Mr Gilmore.
Minister for Health and Children Mary Harney justified the co-location plan three years ago by saying that it would provide hospital beds quickly. But, said Mr Gilmore, "the reality is that three years on not a single bed has been created; not a single block has been laid for any of the new clinics; and neither the Taoiseach or Minister Harney can give any indication as to when the first patient will be accepted.
"Another issue that has been lost in the debate about this project is that private patients are going to be asked to pay the full economic cost of care in their co-located hospitals, which is likely to mean an increase of at least 40 per cent in the charges levied by VHI and other insurance companies," Mr Gilmore said.
