THE GOVERNMENT will have to find nearly €400 million extra for the health service before the end of the year to meet a significant shortfall in funding which it had anticipated receiving from the British government.
The Government had set a budget for the Health Service Executive (HSE) for this year on the basis that it would receive about €450 million in funding from authorities in the UK for treating people in Irish hospitals who are covered by social insurance in Britain.
However, in recent times, the British side has objected to the amounts charged by the Irish Government and a review was carried out.
As a result of this review, the figure to be paid by the British exchequer for this year has now been scaled back to €100 million.
A spokesman for the Department of Finance confirmed that the Government would be introducing a supplementary estimate in the Dáil before Christmas to make up the €350 million shortfall in funding anticipated by the HSE in its budget.
In addition, the Government will provide additional funding - possibly of some €60 million - to the HSE to pay for the introduction of a new contract for hospital consultants this year and a number of other items.
The Department of Finance said that, overall, the supplementary estimate for the health service would be in excess of €400 million. The HSE has already received supplementary funding of €77 million this year to meet additional costs arising from the nursing home repayment scheme.
The money due from the UK authorities was to pay for the social and medical needs of Irish people who have returned to Ireland after working and paying social insurance for years in the UK, and for British people who have moved to live in Ireland.
In the last five years, the British have paid €2 billion to the Department of Finance.
However, for some time, the British have been concerned at the sums charged by the Irish Government.
In 2003, the British paid €310 million; in 2004 this rose to €348 million and in 2005 to €448 million. In 2006, the figure dropped to €397 million, but jumped again to €450 million last year. Faced with its own budgetary difficulties, the British government adopted the toughest line yet this year.
The British department of health told The Irish Times last month that negotiations had been under way with the Government over the last 18 months.
"As a result of new evidence around how much the UK and Ireland should pay each other under these rules, it has been agreed that payments the UK makes to Ireland will reduce significantly in future years," it said.
Privately, the British believed that there was ample evidence that the Irish bills had been for "higher than they should have been".
In July, the British failed to pay a demand for €125 million of the bill and senior Department of Health officials in recent months held talks on the payments issue with the British department of works and pensions.
The payments are based on a 1971 bilateral agreement, buttressed since by EU regulations.
Under EU rules, both countries reimburse each other for the cost of providing healthcare to each other's tourists, workers, pensioners and their dependants.
The annual sum due to Ireland from the UK is the net difference between the costs to Ireland of providing care to those with UK entitlements and the cost to the UK health services of providing services to those with Irish entitlements - a far smaller number.
One British source said last month: "There is also now robust data which challenges previous assumptions around the rate the UK should pay.
"The UK position is not about refusing to make payments: it is about reflecting the fact that evidence shows that payments in previous years were higher than they should have been," the source said.