Health system

responses to

economic crisis in

Europe

Sarah Thomson

Senior Health Financing Specialist

WHO Barcelona Office for Health Systems Strengthening

Senior Research Associate

European Observatory on Health Systems and Policies

OECD, Paris, 24 April 2014

What did we expect?

What did we find?

What lessons?

What did we expect?

Pathways to lower health outcomes and health system fiscal

pressure in an economic crisis: potentially vicious circles

Sourc

e: adapte

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987

Responses to fiscal pressure (not mutually exclusive)

cut spending to match revenue

get more out of available resources

find additional revenue to match commitments

Challenges

sustaining health system performance

uncertainty, time, information, capacity, politics

Health system fiscal pressure:

threat and opportunity

What did we find?

no country relied solely on cuts to address fiscal

pressure

most tried to get more out of available resources

many tried to maintain public funding for the health

system

but public spending on health has fallen

and access barriers have increased

Countries understood the fiscal

sustainability challenge…

Years of decline in real per capita public

spending on health, 2008-2012

Source: WHO NHA for EU28 and OECD countries in Europe

0

1

2

3

4

5

Bu

lgaria

Sw

itze

rla

nd

Austr

ia

Be

lgiu

m

Cypru

s

Czech

Re

pu

blic

De

nm

ark

Esto

nia

Ge

rma

ny

Hu

ng

ary

Isra

el

Ma

lta

No

rwa

y

Po

land

Ro

ma

nia

Slo

va

kia

Sw

ed

en

Tu

rke

y

Fin

lan

d

Fra

nce

Ita

ly

La

tvia

Lith

ua

nia

Luxem

bourg

Ne

the

rla

nd

s

Port

ugal

Slo

ve

nia

Spain

UK

Cro

atia

Gre

ece

Ice

lan

d

Ire

lan

d

Shading shows countries in which per capita public spending on

health was higher in 2012 than in 2008

X shows countries in which health spending fell as a

share of government spending, 2008-2011

Ye

ars

x

x x

x x

x

x x

x x

x x x

x

-3

-2

-1

0

1

2

3

Icela

nd

Ma

lta

UK

Bulg

aria

Ro

ma

nia

Czech

Re

pu

blic

Esto

nia

Ita

ly

Ne

the

rla

nd

s

Isra

el

Sw

ed

en

Eu

rop

ea

n R

eg

ion

Sw

itze

rla

nd

Be

lgiu

m

Cypru

s

Fra

nce

Lu

xe

mb

ou

rg

Hu

ng

ary

EU

27

Cro

atia

Tu

rke

y

Ge

rma

ny

Lith

ua

nia

Au

str

ia

De

nm

ark

Spain

Po

land

No

rwa

y

Fin

lan

d

Slo

ve

nia

Slo

va

kia

La

tvia

Po

rtu

ga

l

Gre

ece

Ire

lan

d

Change in public spending on health as % of

general government spending: 2008-2011

Public spending on health fell

disproportionately in some countries

Pe

rce

nta

ge

po

ints

Source: WHO NHA for EU28 and OECD countries in Europe

-100

-50

0

50

100

150

200

250

300

Fin

lan

d

Lith

ua

nia

Ge

rma

ny

Slo

ve

nia

Cro

atia

Bu

lgaria

Au

str

ia

Sw

ed

en

Ro

ma

nia

Sw

itze

rla

nd

De

nm

ark

EU

27

Czech

Re

pu

blic

Cypru

s

Fra

nce

Po

land

Ita

ly

La

tvia

Ma

lta

Po

rtu

ga

l

Ice

lan

d

Hu

ng

ary

Esto

nia

Lu

xe

mb

ou

rg

Gre

ece

Ire

lan

d

Ne

the

rla

nd

s

Slo

va

kia

UK

Be

lgiu

m

No

rwa

y

Spain

All income quintiles

Poorest quintile

Change in self-reported unmet

need (cost reasons), 2008-2012

Unmet need fell

Unmet need rose but the

poorest had some protection

Unmet need rose and

the poorest were not

sufficiently protected

Source: Eurostat EU-SILC data showing % change 2008-2012 in the % of the population perceiving an unmet need for medical treatment due to cost

%

It is possible to maintain public funding

levels, make funding fairer and promote

public health

Being ‘prepared’ is important:

having countercyclical mechanisms in place

But an effective response needs leadership:

commitment to public spending on health

being selective: targeting richer groups if necessary

enforcing collection

broadening the public revenue base

promoting public health taxes

The crisis was not good for coverage

Exclude people? NO

Increase user

charges? NO

Streamline benefits

package? YES

Policy options for coverage:

Coverage: policy responses

0

2

4

6

8

10

12

14

16

18

20

22

24

26

Reduceduser charges(or increasedprotection)

Ad hocreduction in

benefits

Increaseduser charges

Expandedpopulationentitlement

Restrictedpopulationentitlement

HTA-basedreduction in

benefits

Added newbenefits

Direct response Partial response

Source: Thomson et al 2014; results across 47 countries in Europe

Weak coverage policy is a source of fiscal pressure for

government and financial hardship for households:

means-tested entitlement without funding

employment-based entitlement

Lack of coverage:

adds to pressure on publicly financed health services

may encourage non-cost-effective patterns of use

limits effective policy responses

In an economic crisis, universal

coverage is a much better starting point

Being ‘prepared’ is important:

having good coverage makes a difference

But an effective response needs leadership:

commitment to protecting access

being selective

sequencing

Access barriers have increased in spite of apparent

awareness of need to protect access

In an economic crisis, universal

coverage is a much better starting point

Many countries tried to enhance value in

public spending

cutting selectively: targeted price reductions

addressing waste: better procurement,

prescribing and dispensing of drugs

investing more carefully

agreement and action on previously infeasible

reforms

the low-hanging fruit were easier to pick…

Constraints include:

need for upfront investment

lack of information / capacity / time

pressure for short-term ‘savings’

opposition and sequencing

radical or sustained cuts

There are limits to efficiency gains

What lessons?

countries were resourceful in trying to maintain public

spending on the health system

there are limits to efficiency gains

being ‘prepared’ makes a difference (especially

universal coverage)

but the response is critical

being selective is important: blanket cuts do not promote

health system goals

weak policy design is a source of fiscal pressure

effective responses need governance and leadership

What lessons?

Additional information

WHO/Observatory survey

methodology

two waves of a questionnaire sent to a network

of health policy experts in 53 countries in WHO’s

European Region

in each country two different experts were asked

to describe the government’s response to the

economic crisis with a focus on health policies

results received in 2011 and 2013

47 countries responded

Threats to health and health system performance

through two pathways:

reduced household financial security

reduced government resources (fiscal pressure)

both can undermine access to health services

The importance of the policy response:

social policy for financial security

fiscal policy for adequate social spending

health policy to protect access to health services

Experience from previous crises

Policy options for public funding

Cut spending to match revenue

• Do nothing as government revenues fall

• Target the health budget for cuts

• Abolish pro-rich tax subsidies

• Limit government exposure to employer contributions that favour the rich

Find additional revenue

• Reallocate across government

• Deficit financing

• Countercyclical mechanisms

• Lift contribution rates / ceilings

• Broaden public revenue base

• New earmarking

• New taxes

Get more out of available resources

• Enforce collection

• Centralise collection

Coverage: policy responses

Population

• Countries with means-tested entitlement restricted entitlement

• Countries often targeted more vulnerable people

• Planned expansions were postponed

User charges

• Some countries increased user charges but protected access to primary care and drugs or access for poorer people

• Some countries increased user charges across the board

Benefits package

• Ad hoc cuts were common

• But some countries introduced or stepped up HTA

• Savings from lower drug prices improved access

Source: Thomson et al 2014; results across 47 countries in Europe

Planning, purchasing, delivery: policy responses No of

countries

Medical products: procurement and payment 38

Restructure health ministries, public health or purchasing

bodies; reduce overheads; cut salaries

34

Promote public health (including increasing taxes) 28

Reform primary care 19

Restructure the hospital sector 19

Reduce hospital tariffs or budgets 18

Hospital payment methods 18

Reduce health sector worker pay 16

Abandon or stall hospital sector investment 13

Develop eHealth 11

Public health: lower funding or closing / merging bodies 6

Lower / higher funding for primary care 5 / 5

Primary care payment method 5

Skill mix 3

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