thus weakening the OECD argument. An earlier study by Schieber and Poullier found that
over the 1975-1987 period the elasticity of per capita health care expenditure relative to GDP
was 1.5 in Ireland, 1.3 in the OECD as a whole and 1.1 in the United Kingdom.
While a significant number of people have private health insurance their contribution
to the health service costs is less than a fifth of their share in the population. The benefits to
society as a whole from the policy are not obvious in the case of private benefits such as
comfort and peace of mind and open to question in the case of incentives to jump health
service queues.
VI COMPETITION IN HEALTH INSURANCE AND HEALTH SERVICE
EFFICIENCY.
The interaction between efficiency enhancing proposals such as those by Tussing and
deregulation of the health insurance market is an important one. Competition in health
insurance might increase total costs if it increased the administration and marketing burden.
There might be little impact if the present pattern of healthcare expenditure were financed by
two rather than one health insurance company. On the other hand competition in health
insurance might stimulate some improvements in resource allocation in the Irish healthcare
system. The reduction in hospitalisation rates and hospital unit costs, the substitution of
primary care for hospital care, the substitution of capitation payment of doctors for fee per
item payments, and incentives to patients to avoid the harm to health caused by factors such
as smoking, excess alcohol consumption, and disregard of safety at work, on the roads and in
the home, might be some of the results which would flow from the introduction of
competition if the insured persons shopped around for better value. The Commission on
Health Funding (1989) found that " the introduction of general insurance companies to the
private healthcare market in the United Kingdom since 1980, in competition with the long-
established provident associations, has led to innovations such as non-smoker discounts, no-
claims bonuses, discounts where the consumer pays a percentage or an initial amount of each
claim, and in one case, full cover for the use of approved preferred hospitals but only partial
cover for the use of other hospitals." (p.130)
The competition proposed by the White Paper is limited to the following areas:
10