Health spending overruns have accounted for 40 percent of total overruns in recent years, according to an analysis by the Irish Fiscal Advisory Council (IFAC).
According to the fiscal watchdog, health spending accounted for 50 percent of the overrun in 2023 and 55 percent in 2024.
That figure fell to 14 percent in 2025.
Senior Economist at the IFAC Killian Carroll attributed the health service overspending in large part to poor budgeting, which he said has repeatedly been set “as if the previous year’s actual level of spending did not happen”.
Hospitals are the largest area of HSE spending, accounting for an average of 37 percent of total HSE spending over 2023-2025.
Over that same period, hospital spending overrun has been on average €1.2 billion per year.
“Part of this reflects bad budgeting,” wrote Mr Carroll, who went on to note that “in each year from 2023 to 2025, the budget for hospitals was set below the previous year’s actual level of spending”.
“For example, the 2024 budget for acute hospitals was set €0.6 billion below what was actually spent in 2023,” he said.
Mr Carroll said that this trend is “difficult to justify”.
“In the absence of policy changes, the cost of maintaining existing health services would normally be expected to rise from year to year. Staff pay increases, health sector inflation, demographic pressures, and growing demand all tend to push spending upwards.
“Setting the budget below the previous year’s actual spending therefore implies sizeable efficiency savings or big reductions in the level of service provided. But the persistent overruns suggest that these savings assumptions were unrealistic. In effect, savings that failed to materialise one year were assumed again the next,” he said.
The analysis additionally suggested a relationship between the size of the budgeting gap and the subsequent overrun, with data for 2024 indicating that that year saw the largest gap between the hospital budget and previous-year spending, as well as the largest overrun.
The same pattern held for the other years considered by the analysis, 2023 and 2025.
“This suggests that poor baseline budgeting has played a substantial role in health overruns,” Mr Carroll wrote, adding that the lower overrun in 2025 shows the “potential benefits of a more realistic, multiannual approach”.
In terms of the picture for 2026, while the hospital budget for the year is higher than the level of spending seen in 2025, the increase is described as “marginal” at just €6 million.
Expected price pressures alongside pay increases, demographic change and the demand for services mean that this is unlikely to be enough, as the cost of maintaining existing hospital services is likely to rise “substantially”.
“And that is before any new policy measures are implemented,” Mr Carroll said.
The IFAC economist referenced reports that the HSE is already €0.25 billion over budget in the first quarter of 2026, and said that an overrun is guaranteed, and that what remains to be seen is “how large the final overrun will be”.