Financial Crisis in the EU countries

Health impact Health Systems Response

A framework for decision making

www.healthobservatory.eu

Lisbon, 11th January 2012

Josep Figueras

4

5

6

7

8

9

10

11

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

% G

DP

Austria

Belgium

Czech Republic

Denmark

Finland

France

Germany

Greece

Hungary

Ireland

Italy

Luxembourg

Netherlands

Poland

Portugal

Slovak Republic

Slovenia

Spain

Sweden

United Kingdom

Total Health Expenditure % GDP (1975-2010)

Source OECD HEALTH DATA 2010, October

Based on I. Kickbush

The European social modelThe Lifestyle Superpower

“Obama is a big-spending liberal. And he takes his political inspiration from Europe (…) Guess what? Europe isn't working in Europe. It's not going to work here”.

Mitt Romney 22 September 2011

Economic recession

“Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity -- myself especially -- are in a state of shocked disbelief” A. Greenspan

• Threat to health and health systems? – E.g. Indiscriminate cross cutting– E.g. Further ration health budgets

or• Opportunity to reform?

– E.g. Demonstrate the value of health on wealth– E.g. Reform health services– E.g. Prioritize interventions

Outline

• Impact on Health • Social protection response• Health services response

• Protect health budget• Health for economic productivity• Invest on health services as economic sector

• Reduce (or raise) statutory resources• Ration HS (coverage & private funding)• Prioritise / reallocate resources• Improve health systems performance

• Concluding remarks

Disaster? Blessing?

“Econocide to surge as recession bites” – BBC Mar 2009

“Recession is a lifestyle blessing in disguise” – Times Oct 2008

Health impact?

From Stuckler D. & McKee M.

Source: Hanley 1931 Life

Sources: NYT Oct 1930; AP 1932; WP 1930

Health impact? Lessons from previous crises

From Stuckler D. & McKee M.

Falling road deaths and increasing suicideHealth impact?

In short....Health impact?

• Contradictory evidence • Effects on alcohol, tobacco, diet?• Negative health impact of recovery?

• Increase in psychiatric disorders and suicide• Decrease in traffic accidents• Decrease in access / health service utilisation• Strengthen Social Protection

• Labour protection and unemployment policies• Family & housing benefits• Anti-poverty measures

• Foster Social Support Networks

Stuckler, Basu & McKee, BMJ 2010

Social Spending and Mortality

Health System ResponseIn short ....

• In majority of countries many new policies introduced e.g. Czech Republic, Greece, Ireland, Portugal.

• In few countries few policy changes e.g. Denmark, Finland, Germany, Norway, Poland.

• Pre 2008 reforms (continuation, acceleration, reversal)• Health budget

• Cuts in most e.g. Bulgaria, Czech Republic, Estonia, Ireland, Italy, Greece, Latvia, Romania, Portugal, Spain.

• Maintain e.g. ring fenced in the UK and Belgium• Increase in France and Denmark

Mladowsky, P, Srivastava, D Cylus J, KaranikolosM, Thompson S & McKee M Forthcoming, 2011

WealthHealth

Health Systems

SocietalWell-being

1. Protect the health budget Health Impact on Economic Productivity

Effects of ill health on economic growth

Direct contribution

to the economyDemonstrate performance!!!

Figueras J, McKee M 2011

• Component of stimulus packages: • Hospitals (France, Denmark) • Health employment• Retraining (Germany)

• But in most countries cuts in capital investment

1. Protect the health budget Invest on HS as component of economy

Mladowsky, P, Srivastava, D Cylus J, KaranikolosM, Thompson S & McKee M Forthcoming, 2011

2. Reduce (or raise) statutory resources

• How much to spend vs other sectors?• Decrease tax base in most countries• Increase tax base only Italy and Czech Republic.• Increased SHI contribution rates: Bulgaria, Czech

Republic, Greece, Portugal, Romania and Slovenia• Increase (tax based) unemployment contributions to SHI

e.g. Bulgaria, Czech Republic, Estonia, Hungary, Romania• Increase ‘sin’ taxes: alcohol, tobacco, fat.

E.g. Bulgaria, Czech Republic, Denmark, Greece, Hungary, Israel & Estonia

Mladowsky, P, Srivastava, D Cylus J, KaranikolosM, Thompson S & McKee M Forthcoming, 2011

16

R. Busse

3. Rationing Health ServicesCoverage dimensions

3. Rationing Health Services

• Reduce coverage • Population (breadth): no changes in most• Benefit package (scope): no changes, only small in

Ireland, Netherlands & Portugal• Services: e.g. Waiting times in many countries

• Increase private funding• Private voluntary health insurance• Cost-sharing / out of pocket: E.g. Czech Republic,

Denmark, Estonia, Finland, France, Greece, Ireland, Latvia, Netherlands, Portugal and Romania.

• Reduced cost-sharing: e.g. BelgiumMladowsky, P, Srivastava, D Cylus J, KaranikolosM, Thompson S & McKee M Forthcoming, 2011

Public-private mix in financing in the EU(Thomson, S. and E. Mossialos (2009). Private health insurance in the European Union.

Percent distribution of health system funding sources, 2007

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Cyp

rus

Bu

lgari

a

Latv

ia

Gre

ece

Po

lan

d

Lit

hu

an

ia

Po

rtu

gal

Slo

vakia

Hu

ng

ary

Sp

ain

Ro

man

ia

Belg

ium

Slo

ven

ia

Fin

lan

d

Au

str

ia

Germ

an

y

Italy

Malt

a

Esto

nia

Fra

nce

Irela

nd

Neth

erl

an

ds

Sw

ed

en

Den

mark

Un

ited

Kin

gd

om

Czech

Rep

ub

lic

Lu

xem

bo

urg

Public VHI OOP Other

50

3,4

10

2,5

10

4

10

6,9

5

5,6

5

8,8

5

15,6

5

53,2

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

% of population

% of expenditure

The well-known 20/80 distribution –actually the 5/50 or 10/70 problem

How can we predictwho these 5 or 10% are?

Where the cost of seeking care is lower, the reduction of utilization is also lower

Source: Lusardi et al. The economic crisis and medical care usage 2010. Harvard Business School

“Reductions in routine care today might lead to undetected illness tomorrow and reduced individual health and well-being in the more distant future.”

4. Prioritise / reallocate resources

– Target services to vulnerable populations and with highest health need: e.g. mental health services

– Cost effective interventions• Primary Health Care• Public Health / Rebalancing prevention and cure • Health in All Policies

– e.g Increasing long term unemployment coverage – e.g. Measures to combat poverty

Mladowsky, P, Srivastava, D Cylus J, KaranikolosM, Thompson S & McKee M Forthcoming, 2011

5. Improve performance

• Reforms in purchasing & payment systems– Purchasing leverage– Introduce case mix / payment for performance Austria, Hungary, Bulgaria, Czech Republic, England – Reduce/freeze prices paid to providers, reduction of

salaries of health professionals e.g. France, Greece, Spain Ireland, Lithuania, Romania, England, Portugal, Slovenia

• Rationalising hospital/specialist services e.g. Hospital mergers in several countries

Mladowsky, P, Srivastava, D Cylus J, KaranikolosM, Thompson S & McKee M Forthcoming, 2011

5. Improve performance

• Improve pharmaceutical / technology policies

Most EU27 strengthened policies to reduce the prices of medical goods or improve the rational use of drugs – Austria, Belgium, Czech Republic, France, Estonia, Greece,

Ireland, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia, Slovenia and Spain

• Wide variety of measures– generic substitution– Improve quality of prescribing– claw-back mechanisms– negotiations on prices

Mladowsky, P, Srivastava, D Cylus J, KaranikolosM, Thompson S & McKee M Forthcoming, 2011

5. Improve performance

• Eliminate ineffective / inappropriate services & cut the volume of least cost-effective services• Strengthened HTA but limited use in cuts• European Network for HTA – Improving evidence/base/medicine

• Enhancing integrated care • Skill mix optimisation• Market ‘like’ mechanisms / New public

management e.g Hospital Self Governance

In conclusion...

• Fiscal sustainability: constraint, not policy objective• Cost containment ≠ efficiency• (Extra) spending should demonstrate value• Be transparent & explicit about trade offs• Don’t forget the other sectors (social)!• Learn to communicate the case for Health & Wealth

In conclusion......

• Coverage (two dimensions) largely unaffected – Benefits package and population – Increase coverage targeted at low-income groups

• Increased user charges– If substantial: likely to decrease equity and efficiency

• Few public health policies: missed opportunity

In conclusion...

• Increases in performance: reducing costs through efficiency– Hospital reconfiguration– Improved purchasing– Drugs: rational use and pricing– Evidence base medicine

• Savings may not be inmediate: hospital restructuring• The short-term balancing acts are not sustainable on the

long run– Delaying investments and maintenance– Lowering salaries carries the risk of losing qualified staff

Short-term solutions are important to keep the system running during crisis, but…

…aim for sustainable efficiency gains!

www.healthobservatory.eu

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