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Re-examining health systems financial sustainability in Europe

Re-examining health systems financial sustainability in Europe. Utrecht, 25 th September 2007 Josep Figueras. Health Expenditure as % of GDP EU 15 plus selected countries (2004). Source:OECD Health Data (2006). Health Expenditure % GDP. Health Expenditure % GDP.

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Re-examining health systems financial sustainability in Europe

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  1. Re-examining health systems financial sustainability in Europe • Utrecht, 25th September 2007 • Josep Figueras

  2. Health Expenditure as % of GDP EU 15 plus selected countries (2004) Source:OECD Health Data (2006)

  3. Health Expenditure % GDP Health Expenditure % GDP Health system sustainability! A high spending sector! Cost containment! Source: OECD Health Data (2005)

  4. Sustainability against solidarity? The end of the welfare State?

  5. Addressing financial sustainability • Reforming the funding of health care • Reforming the supply (payment & provision) • Strengthening public health (reducing demand)

  6. Reforming the funding of health care • Reform statutory (insurance or tax) funding • Stability of main systems: Bismark & Beveridge • Increase in tax component in SHI countries • Shift costs to patients: privatisation of funding • Introducing insurance competition

  7. “In the longer term, America, like this adamantly pro-market newspaper, may have no choice other than to accept a more overtly European-stylesystem. In such a scheme, the government would pay for a mandate insurance system, but leave the provision of care to a mix of public and private providers.” The Economist, January 28th 2006

  8. “Rather than copying Europe’s distorting payroll taxes, the basic insurance package would be paid for directly by government, though that cash might be raised by a “hypothecated” tax which would make the cost of health care more evident” The Economist, January 28th 2006

  9. Public expenditure as a % of total EU 15 (2003) OECD Health Data, 2005

  10. Concentration of total health expenditures, France 2001 Source : CNAMTS/EPAS

  11. Insurance competitionIn Theory: it ought to work • Consumer freedom of choice • Market competition incentives: efficiency & quality • Insurers as ‘prudent buyers’ • Cost-effective purchasing • Selective contracting • Without negative impact on equity & quality • Risk adjustment formula, open enrolment,… Preconditions???

  12. Insurance competitionIn Practice: the evidence • Equity: risk selection • Efficiency; consider transaction costs • Efficiency; linked to active (strategic) purchasing • Implementation ability (regulatory, information,..)?

  13. “Although elegant in theory, the implementation of the managed competition model in practice appears to be complex because it is hard to fulfill the necessary preconditions” W Van de Ven (December 2006)

  14. Addressing financial sustainability • Reforming sources of funding • Reform main (SHI or tax) source of funding • Shift costs to patients: privatisation of funding • Introducing insurance competition • Reforming the supply (payment & provision) • Strengthening public health (reducing demand)

  15. Reforming the supply (payment) • From passive to active (strategic) purchasing? • Selective contracting / provider competition • Towards performance based payment systems • Case mix measures, DRGs

  16. Paying doctors “The only way to communicate with a doctor is to write it in the back of a cheque” Bob Evans

  17. Paying doctors “The only way to pay doctors is to change the system every three years, because by then they will have found ways to get round it to their own advantage” Bob Evans

  18. Reforming the supply (provision) • Health care substitution • Cost effective capital investment • Increasing consumer choice • Primary care at the driving seat • Setting priorities / limiting package of care • Evidence base medicine / HTA agencies

  19. Addressing financial sustainability • Reforming sources of funding • Reforming the supply (payment & provision) • Strengthening public health (reducing demand)

  20. Strengthening public health The ultimate demand reduction strategy • Prevention is (often) better than cure • Cost effectiveness of public health interventions • Stepping up public health policies in the EU • Health in All Policies: Finland presidency (2006) • Wanless reports (2002, 2004) in the UK • Public health bills: France (2003), Sweden (2002) Netherlands (2007?) • Smoking bans: Ireland, Spain, UK, Belgium…

  21. Re-examining financial sustainability • Sustainability as willingness to pay • Consider financial versus social sustainability • An ageing crisis? • “It’s the economy stupid” • The contribution of health to the economy • Investing in health: health systems and public health

  22. Solidarity vs sustainability • Solidarity: key in European policy • WHO, EU, Council of Europe • Health as a human right

  23. Sustainability as willingness to pay • Citizens may be willing to pay more through statutory sources particularly when earmarked for health? • Health expenditure as a luxury good? • Solidarity a central goal in European systems • Disconnect between population views & politicians?

  24. Financial (vs Social) sustainability • Health and social cohesion • Coverage of minority groups • Economic impact of reduced solidarity

  25. An ageing crisis? • Health expenditure incurred at the end of life • Longer (and healthier?) life expectancy • Compression of morbidity • Late retirement • Increasing labour market participation • Drawing less from the health services

  26. “It’s the economy stupid !!” • Health expenditure as percentage of GDP • Addressing sluggish economic (GDP) growth • The Lisbon agenda: global competitiveness • Emphasis on measures to increase productivity

  27. The contribution of health to the economy“Health is Wealth” Source: The Contribution of Health to the Economy Surke, Mckee et al 2005

  28. The contribution of health to the economy:The evidence • Cost of illness • Wages and earnings • Hours worked • Labour force participation • Early retirement • Labour supply by relatives of those in poor health • Personal investment in education • Propensity to save

  29. 6. Investing in health systems A conducting framework Health Systems Impact on the economy Impact on Health Economic growth Health Wealth WHO EURO Ministerial Conference Tallinn Summer 2008

  30. “However beautiful the strategy, you should occasionally look at the results” Winston Churchill

  31. 6. Investing in health systems A conducting framework Health Systems Performance • Transparency • Accountability Health Wealth WHO EURO Ministerial Conference Tallinn Summer 2008

  32. In sum…. • Limited scope of funding reforms • Increased emphasis on reform of supply • Cost effectiveness rather than cost containment • Strengthen public health measures • Increased willingness to pay • Investing in health systems (productive sector) leading to economic growth • But…. demonstrating performance

  33. www.observatory.dk

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