delsa/gov 3rd health meeting - tamas evetovits
DESCRIPTION
This presentation by Tamas EVETOVITS was made at the 3rd Joint DELSA/GOV Health Meeting, Paris 24-25 April 2014. Find out more at www.oecd.org/gov/budgeting/3rdmeetingdelsagovnetworkfiscalsustainabilityofhealthsystems2014.htmTRANSCRIPT
Division of Health Systems & Public Health
Fiscal sustainability and
sustainable public financing for health
Dr Tamás Evetovits
Sr Health Financing Specialist & Head of Office a.i.
WHO Barcelona Office
OECD meeting of the Joint Network on Fiscal
Sustainability of Health Systems, 24-25 April 2014
Let’s get the concept and the objectives right
Reality check on health spending and its fiscal impact
Sustainable public financing for health
Outline
An accounting exercise or
a matter of choice in public policy priorities and finding the right
instruments to minimize adverse effects on health, equity and
financial protection?
Fiscal sustainability of health systems
Fiscal sustainability is meaningless if not
linked to public policy objectives
• Fiscal sustainability should not be seen as a policy objective worth pursuing for its own sake…
• …if it was an objective, then a simple cost cutting exercise would do the job…
• … and both equity and efficiency would suffer
• Fiscal sustainability should be treated as a constraint that has to be respected by all sectors of public financing
• Continual increase of government debt is bad policy and not in the interest of future generations…
• …because both equity and efficiency would suffer
Fiscal sustainability: a slippery concept
• It applies at the level of overall public spending (overall fiscal balance)
• At a sectoral (e.g. health) level, the concept is less clear
– How much gets spent depends on a country’s overall fiscal context and the priority that government gives to each sector in its budget
– So the impact of the health sector on “fiscal sustainability” depends in part on choice
There is nothing wrong with health
expenditure growing faster than GDP
As long as…
• other sectors are not growing that fast
(no fiscal imbalance)
• spending is efficient (welfare enhancing)
• people prefer to spend the additional
wealth on health (THEY DO!)
Health is the top priority for more public spending
across Europe
02
04
06
0
% o
f po
pu
lation
su
pp
ort
Health Education Pensions Assisting poor Housing Infrastructure Environment
First priority Second priority
Source: Life in transition survey 2010, EBRD
Reality check on health
spending and its fiscal impact
Health spending increased, but did not carve out an unfair
share of growing public spending in the previous decade
Source: WHO NHA database, 2012
12.9% 12.1%
And this relative increase has faded
away in the past 10 years (2003-2012)
12.5% 12.7% 12.5% 12.7% 12.5% 12.7%
12.5% 12.7%
Source: WHO, 2014
While health has been taking a greater share of public
spending in high income countries pre-crisis, it is not the case
in less developed countries of the WHO European Region
Source: WHO NHA database, 2012
14.4% 13.7%
The health sector is certainly not a threat to
fiscal sustainability in Hungary…
…or in Malta where health just started
to catch up
...widening gap between health and non-
health public spending in Luxembourg
...in some countries it is clearly not health
but other sectors that grow faster than GDP
France cannot decide between health and
non-health spending: clearly not sustainable
The Irish decision is pretty clear
Sustainable public financing for
health: why and how?
Insurance function and public financing
• Let’s not forget the primary reason why health
is a big ticket item on the public budget
• Public financing achieves better financial
protection and equity in access to care i.e.
health insurance according to need and not
according to ability to pay
• User charges do not provide financial risk
protection…or equity… and not even
efficiency or cost control
Public spending is growing only in high income
countries: closing the gap in a generation?
0
2
4
6
8
10
12
14
He
alth
exp
en
dit
ure
%G
DP
public private
Private (mostly out-of-pocket) spending is high and
growing: bad for health, inefficient and inequitable
0 2 4 6 8 10 12
Low & Lower-Middleincome
Upper-Middle income
High income
Source: WHO NHA database, 2010
Unmet need in the poorest quintile
Source: EU SILC
0
5
10
15
20
25
30
2007 2008 2009 2010 2011
% o
f p
op
ula
tio
nin
(p
oo
rest
qu
inti
le) Latvia
Romania
Italy
Greece
Iceland
EU (27countries)Hungary
Belgium
Spain
How much inequity is “sustainable” in Latvia?
In contrast, counter-cyclical public spending at
work in Lithuania
23
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
planas
2013 m.
projektas
Total amount of contributions of economically active population, million LTL
Total amount of contributions and aditional allocations of national budget, million LTL
mln
. L
t
Source: G. Kacevicius
Avoiding unproductive cost escalation is our joint
responsibility: some good options
Reduce variation, inappropriate utilization of services through supply side measures
Improve rational drug use and price control. Careful with new drugs of marginal benefits
Allocate more to primary and outpatient specialist care at the expense of hospitals
Invest in infrastructure (including IT) that is less costly to operate
Avoiding unproductive cost escalation is our joint
responsibility: some bad options
Shifting costs to patients
Under-providing health services
Spending less on cost-effective services by cutting across the board
Leaving it to the doctors to decide and pay them fee-for-service
In summary
Health is highly valued by population:
spending above GDP growth can be justified
Public spending on health needs to grow
in low and middle income countries
Unproductive cost escalation should be avoided, but cutting spending ≠ efficiency
Shifting the burden to patients is a poor
alternative to many other options