The Impact of the Economic Crisis on Health and the Health System in

Ireland

Anne Nolan (TCD, ESRI)Charles Normand (TCD)

Irish Economic Policy ConferenceDublin, 31st January 2014

2

Context

Substantial health system pressures in Ireland

Large, real declines in public expenditure

Total public health expenditure2000-2013

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 20130.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

nominal real (2000=1)

€bn

(cap

ital +

cur

rent

)

Sources: Department of Public Expenditure and Reform; CSO

4

Context Substantial health system pressures in Ireland

Large, real declines in public expenditure

External pressures: Demographic change (population growth; fertility)

Internal pressures: Limited capacity in some sectors Weak primary and community care Demand-led schemes High costs (salaries; pharmaceuticals) Programme for Government commitments

5

Approach Review responses and policy levers in three key areas:

Level and mix of statutory resources for health Health cover Health service efficiency

Examine impact of crisis, and health system responses, on population health Mortality Self-assessed health Health behaviours

Conclusions

6

1 Level and mix of statutory resources for health

Statutory resources, i.e., payments that are pre-paid and mandatory General taxation (direct/indirect) Payroll taxes/social health insurance Mandatory health insurance (e.g., Netherlands)

Principles: Adequate level Stability and predictability Fairness/equity Transparency Other (e.g., impact on labour costs)

7

Current situation in Ireland Public health expenditure as % of total health expenditure has

been falling Trend in contrast to OECD average Increasing reliance on out-of-pocket payments and PHI

Public health expenditure as % of total public expenditure has been relatively stable Initial pace of cuts could not be sustained

8

Public health expenditure as% total health expenditure, 2000-2011

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201150.0

55.0

60.0

65.0

70.0

75.0

80.0

Ireland OECD

% o

f tot

al h

ealth

exp

endi

ture

Source: OECD

9

Public health expenditure as % of total public expenditure, 2008-2012

2008 2009 2010 2011 201220.0

22.0

24.0

26.0

28.0

30.0

24.7 24.6 24.4 24.725.1

% o

f tot

al p

ublic

exp

endi

ture

Source: Department of Public Expenditure and Reform

10

Policy options Continue with budget reductions

‘Earmark’ resources for health (within existing funds)

Introduce a new source of statutory revenue, e.g., payroll tax But, off-setting reductions in general taxation Adequacy and stability (pro-cyclical fluctuations)

Introduce a new source of statutory revenue, e.g., tax on sugar-sweetened drinks (SSD) Primary objective is behavioural change HIA report on SSD tax published in May 2013

11

2 Health cover Three aspects of public health cover:

Breadth: who is covered? Scope: what is covered? Depth: how much is covered? Are there user fees?

Principles, i.e., role of coverage in: Alleviating/exacerbating fiscal pressure Strengthening health system performance Enhancing efficiency in allocation and use of statutory resources

12

Current situation in Ireland Complex system of public healthcare entitlements

Category I (full medical card) Category II

Also GP visit card (since 2005) Other entitlements: LTI, HTD, etc.

Role of private health insurance (PHI) Recent declines in cover

13

Population cover (%)19

90

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% Category I % GP Visit card % Category II

% o

f pop

ulati

on

Source: Thomson et al. (2012), Figure 4.2

14

Changes to statutory coverage Breadth

e.g., re-introduction of means test for over 70s in 2009, proposed extension of GP visit cards to all those 5 and under

Scope Reductions in dental, optical and aural entitlements

Depth Increases in user fees (e.g., public hospital charges; prescription

deductible for Category II) Introduction of new user fees (e.g., prescription fee-per-item for

Category I)

15

Policy options Breadth

International trend is towards increasing coverage Removing coverage increases role for PHI (fiscal pressure via tax relief)

Scope Role of HTA Streamlining the benefit package is often technically and politically

difficult to achieve

Depth Usual arguments for user fees do not hold in health care May conflict with Programme for Government objectives

16

3 Health system efficiency Concerned with purchasing arrangements

What to purchase? Who should purchase? From whom? At what price? Under what conditions?

Principles: Matching resources to need Reducing waste Ensuring quality Setting priorities

17

Current situation in Ireland Purchasing largely co-ordinated by HSE

Sometimes also plays a provider role

Paying for primary care

Paying for acute hospital care

Reforming delivery structures Primary care teams Hospital trusts/groups Working practices

18

Policy options Payment of providers

GPs: increasing capitation component Acute hospitals: increased use of DRGs, MFTP Specialists: salary levels

Reform of delivery structures Primary care teams Integration across primary, community and acute sectors Hospital autonomy

Input prices In particular, pharmaceuticals

Impact of economic crisis on health? Caveats

Availability of timely data Time lags in effects Establishing causality (crisis, response to crisis, something else?)

Large international literature on the impact of the macroeconomic cycle on population heath In general, mortality found to be procyclical (with exception of suicide) In general, poor physical health status found to be procyclical, while

poor mental health status found to be countercyclical In general, negative health behaviours found to be procyclical

Complex relationships (income, unemployment, leisure-time, stress, access to health care, etc.)

20

All- and cause-specific mortality2007-2010 (age standardised)

Note: Causes of death with rates below 10 are excludedSource: OECD

2007(per 100,000

pop)

2010(per 100,000

pop)

change

Cancer 246.8 227.3 Endocrine 22.8 19.5 Mental & behavioural 15.9 20.1 Nervous 28.9 29.4 Circulatory 322.6 272.0 Respiratory 110.1 95.6 Digestive 35.6 30.0 Genitourinary 22.3 19.6 External injury & poisoning

43.8 38.6

All causes 877.6 775.4

Mortality from ‘external causes of death’2007-2010

2007 2008 2009 20100

2

4

6

8

10

12

14

Transport Accidents Intentional Self-Harm

Deat

hs p

er 1

00,0

00 p

opul

ation

(sta

ndar

d-ise

d)

Source: OECD

Self-assessed health &subjective well-being, 2007-2012

% >= ‘good’ self assessed health

% ‘very’ satisfied with life

2007 84.2 332008 84.4 292009 83.4 292010 83.3 312011 83.4 292012 n/a 25Sources: OECD; Eurobarometer

Alcohol and tobacco consumption2000-2011

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110

2

4

6

8

10

12

14

16

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Alcohol consumption (litres per capita) Tobacco consumption (kgs per capita)

Litr

es p

er c

apita

Kilo

s per

cap

ita

Source: OECD

24

Summary Irish health system experiencing unprecedented cuts in

expenditure

Backdrop of external and internal pressures

So far, cuts achieved by cutting staff numbers and pay; increased activity; increased user fees

Ongoing concerns over ability to absorb further cuts (in context of rising demand and Programme for Government commitments)

Difficult to ascertain impact on health at this stage

25

Further Challenges Questions over feasibility of future cuts in required

timeframe

Programme for Government commitments are welcome, but will require extra resources and strong governance

Recognise the difficulty of improving efficiency in times of structural/organisational change

Important to maintain a focus on policy goals

Contact Dr Anne Nolan

Research Director, TILDAannolan@tcd.ie

Professor Charles NormandEdward Kennedy Professor of Health Policy and Management, TCDnormandc@tcd.ie