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While current health spending is set to increase, the figures are more nuanced than they might at first appear
Budget 2026 was announced on 7 October, and had a very different feel compared with previous Budgets. Gone were the one-off cost-of-living supports and tax cuts designed to give as many people as possible a little something. In its place was a modest increase in spending (though numerous agencies, including the Irish Fiscal Advisory Council, the Central Bank and the Economic and Social Care Institute, all warned that it was expansionary at a time when the economy is already powering ahead) and more targeted measures.
This modesty was also reflected in the Budget allocation for health. So what are we likely to see in this area next year? Let’s start by looking at the overall numbers. The size of the overall financial package was €9.4 billion, comprising €8.1 billion in additional expenditure, and €1.3 billion in tax measures. Of the €8.1 billion additional expenditure, €6.1 billion will be on current expenditure and €2 billion on capital expenditure.
The current expenditure allocation for health for 2026 will be €25.793 billion. This accounts for just over 26 per cent of current Government expenditure, making health the second biggest allocation after the €28.914 billion – almost 30 per cent of the total – for social protection.
On the capital spending side, the health allocation will be €1.56 billion, or eight per cent of the total capital allocation.
The largest capital allocations were to housing and transport, which between them account for nearly 56 per cent of the capital budget for 2026.
Therefore, the total allocation to health was €27.353 billion.
Reflecting the regionalisation of health services, the current expenditure figures include regional allocations (see table), which together account for almost 60 per cent of the total allocation. The remainder will be allocated to ‘HSE other’ (€5.423 billion), the Primary Care Reimbursement Service (€4.374 billion) and the Department of Health and other agencies (€576 million).
Breakdown
The headline number was that current health spending will increase by €1.5 billion next year.
However, the reality is somewhat more nuanced. Of the €1.5 billion, €150 million represents an increase to the 2025 base (in other words, this year’s allocation is being retrospectively increased by €150 million).
Therefore, the actual increase in expenditure next year will be €1.35 billion, or 5.5 per cent compared with the 2025 figure.
Of that €1.35 billion, extra spending worth €230 million is taken up with carryover measures (extra spending on measures announced in previous Budgets), while €390 million relates to costs arising from the public sector pay agreement and a further €10 million to pensions.
Therefore, the amount set aside for an expansion of services is only €720 million. This amount, while welcome, will not allow for a significant expansion of services, so it is likely that the health system will largely tread water next year.
This amount, while welcome, will not allow for a significant expansion of services, so it is likely that the health system will largely tread water next year
Pay accounts for almost 44 per cent of the total allocation to health next year, reflecting the fact that providing health services is very labour intensive. Pensions account for a further 3.5 per cent, while the remainder is made up of non-pay expenditure (47 per cent) and capital spending (5.7 per cent).
In terms of the pay element of the Budget, the additional allocation will enable the HSE to recruit a further 3,300 whole-time equivalents (WTEs), bringing the total to 136,606 WTEs in the health service. To put this into perspective, this represents nearly 5 per cent of the entire workforce in Ireland. However, the expenditure report notes that, as staffing increases, reducing spending on agency staff will be a priority, which is likely to mean fewer agency staff. This will partially offset the increase in HSE WTEs in terms of overall staff numbers in the health service.
Bed capacity will also be increased, with the expenditure allocations providing for an additional 220-265 acute beds (excluding Children’s Health Ireland) and an additional 280-290 community beds. While this will go some way towards the increased bed capacity envisaged under Sláintecare, the increasing demands on the services from our growing and ageing population mean that pressure on beds is unlikely to reduce dramatically. Interestingly, acute services will be the largest area of spending, accounting for 41 per cent of the healthcare budget in 2026.
Other areas specifically targeted in the allocation include mental health and services for older people. The former area includes provision for increased staffing and expansion of services in areas including suicide prevention, Traveller mental health, eating disorders, and child and adolescent mental health services. The latter will see provision of an additional 1.7 million home support hours and an extra 500 Nursing Home Support Scheme places.
These initiatives are consistent with the Sláintecare vision of treating people closer to home and in the community wherever possible, rather than in hospital settings. Also consistent with this policy is the allocation for community and primary care, under which GP access to diagnostics will be improved, among other areas.
The capital budget, meanwhile, will be targeted at initiatives such as progressing the digitalisation of health records, progressing construction of the new National Maternity Hospital, and rolling out surgical hubs, as well as the aforementioned bed capacity expansion.
In return for the additional funding for health, ongoing reforms are expected in 2026. These include the continuing implementation of the health regions, further progress on the public-only consultant contract and 5/7 rostering and workforce planning, including an increase in training places.
While the main area of focus is on the health budget itself, it is worth noting that some expenditure in other Government departments will also have an impact on health.
In some cases, this will be through improving the social determinants of health. Initiatives like improvements and expansion in social housing and retrofitting, the Delivering Equality of Opportunity in Schools programme, expansion of disability supports, and additional supports for promoting sports participation will all contribute to reducing healthcare needs into the future. The increase in excise duty on cigarettes will also help to discourage smoking and improve health outcomes.
Overall, this health budget will not lead to a dramatic expansion in health services, but it should help to incrementally improve the system.
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