Health system reformin Europe: access, efficiency

and economic crisis

Sarah ThomsonSenior Health Financing Specialist, WHO Europe

Head of the LSE Hub, European Observatory

Associate Professor, Department of Social Policy, LSE

Helsinki, 3 October 2013

Reforms: Health coverage Public funding Purchasing

Themes: Challenges Trends: 2000-2008 Crisis and beyond

Options for addressing the challenge of financial

sustainability

spend more

spend less

spend better

in line with goals

The move to universal coverage was the key achievement of EU health systems in the early 21st Century: why and how did this happen?

Recent coverage expansions in EU countries

2000: France (residents)

2001: Ireland (older people)

2006: Netherlands (residents)

2008: Belgium (self-employed people)

2009: Germany (residents)

2009: Estonia (long-term unemployed)

2011: Spain (residents)

WHY expand coverage?

People should not face financial hardship when accessing effective care

Financial protection makes a huge contribution: individuals, society, economy

Financial protection is about efficiency and access

Lack of universality created access and efficiency problems in these countries

Population Total health spending

1%5%

10%

55%

69%

27%

Sou

rce:

Mon

heit

2003

and

Ber

k an

d M

onhe

it 20

01

Health spending is not evenly distributed across the population

50%

97%

"Unless you're a Warren Buffett or Bill Gates, you're one illness away from financial ruin in this country"

Himmelstein et al (2009), Medical bankruptcy in the United States, 2007: results of a national study, JAMA 122(8): 741-746. The quote is by S Woolhandler from Harvard (interviewed for CNN).

Coverage has three dimensions:

Sou

rce:

Wor

ld H

ealth

Rep

ort 2

010

HOW did countries achieve universal coverage?

By cutting other dimensions of coverage? Spending less publicly, expanding OOPs or VHI

By increasing public funding? Spending more

By enhancing value? Spending better

Trends in private spending

A more systematic approach to defining benefits based on value (efficiency)

More use of HTA

Reductions often at the margin, not always evidence based

Technical, financial, political obstacles

Coverage: benefits package

UK HTA decisions usually recommend coverage

0

20

40

60

80

100

Available from: http://www.nice.org.uk/newsroom/nicestatistics/TADecisionsRecommendationSummary.jsp

Widely applied in EU health systems

Mixed trends over time

Increase in protection: poor, chronic conditions, ambulatory care

Increase in value-based approaches

Coverage: user charges

 User charges

GP visits Specialist visits

Outpatient drugs

Dental care Inpatient care

AUT        BEL        DEN        FIN          FRA        GER          GRE          IRE (I)          IRE (II)          ITA        NETH        POR        SPA          SWE          UK          

So

urc

e: T

ho

mso

n a

nd

Re

ed

fo

rth

com

ing

User charges in EU14, 2012

Protection from user charges in selected countries, 2012

Primary care annual cap

OP prescription annual cap

Inpatient annual cap (daily charge)

AUT €10 (poor free) 2% 28 days (10%)

BEL €450-1,800 depending on income

DEN FREE €480 (chronic only) FREE

GER 2% (1% for chronically ill)

FIN €630 (minors free)

x 7 days (minors only) (€32)

FRA x (chronic free, minors free primary care) 31 days (€18 + 20%)

IRE x (poor free) €120-€1,440 (chronic free, low for poor)

€750 (poor free) (€75)

NETH FREE €220

NOR €250

SE €105 €205 x (€10)

UK FREE €130 FREE

Source: Thomson and Reed forthcoming

Value-based user charges for outpatient drugs

Economic evaluation -Therapeutic value FRAClinical indication (drug) BEL, FIN, FRA, GRE,

ICE, IRE, ITA, NOR, POR, UK

Clinical indication (user) FINPrice in relation to identical substitutes

Reference pricing (ATC 5): BEL, DEN, FIN, FRA, GER, GRE, ICE, ITA, NETHS, POR, SPA

Source: Thomson, Schang and Chernew, Health Affairs 2013

The value-based approach is not a panacea!

User charges are a blunt policy tool and may undermine efficiency

Evidence of financial barriers to access

Strong policy design important

Policy focus should be on purchasing and delivery

Coverage: user charges

% reporting health care to be unaffordable, EU27, 2007

Out of pocket % of total

Hospitals Specialists GPs

HighestCY 47 MT 57 PT 78 EL 43

LV 38 BG 52 EL 71 CY 39

Finland 18 22 59 17

EU27 16 21 35 11

LowestFR 7 SE 7 DK 7 UK 4

DK 6 DK 1 SE 7 DK 1

Source: EC 2007, WHO 2012

Source: WHO 2009

Cyp

rus

La

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Gre

ece

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0

10

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40

50

60

1998 2008

Out-of-pocket payment as a % of total health spending

Countries in which OOPs have increased as % of TEH since 1998

Source: WHO GHO 2011

Source: Cylus and Pearson 2013 in press

Irel

and

Gre

ece

Latv

ia

Icel

and

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a

Hun

gary

Por

tuga

l

Fin

land

Spa

in

Bel

gium

Sw

eden

Slo

veni

a

Sw

itzer

land

Ital

y

UK

Cze

ch R

ep

Aus

tria

Cyp

rus

Ger

man

y0

1

2

3

4

5

6

7

8

9

10

Most countries did not seen much increase in OOPs during the crisis

% change 2009-2010

Countries in which VHI = >10% of total health spending (2009)

Very few large VHI markets globally

Source: WHO data

Fra

nce

Slo

ven

ia

Ge

rma

ny

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lan

d

Cyp

rus

Ne

ths

Sp

ain

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a

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Gre

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Fin

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d

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nm

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UK

Italy

La

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Lith

ua

nia

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Est

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ia

Sw

ed

en

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ch

Po

lan

d

Ro

ma

nia

Slo

vaki

a0

10

20

30

40

50

60

70

80

90

100

Large variation in market size: spending & coverage

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ort

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g

VHI as % of total health spending, EU 2009

% of population covered by VHI, EU 2009

FranceSlovenia

NetherlandsGermany

IrelandAustria

LuxembourgSpain

BelgiumPortugal

DenmarkMalta

TurkeyCyprusFinland

UKHungary

GreeceItaly

LatviaLithuaniaSwedenEstonia

BulgariaCzech Rep

PolandRomaniaSlovakia

0 10 20 30 40 50 60

PHI as % TEHOOP as % TEH

VHI ranked by % of private spending on health (from low to high) in 2009 …

So

urc

e:

WH

O d

ata

… shows VHI does not do well in filling gaps in coverage

Coverage: policy responses during the crisis

Coverage  Population Benefitspackage

Usercharges

No change

BG DE DK EE FI HR HU IT LV MT NL PL PT RO SK

UK

DE DK FI LV SE SI SK MT

Increased protection

AT BE EL FR LT SE

AT BE BG HR FR IT LV MT NL UK

AT BE BG DE DK EE EL ES FI FR HU IT LV NL PT RO SK

UK

Decreased protection CY CZ ES IE SI

BE BG CZ EE HU IE LT NL RO

AT BG CY CZ DK EL ES FI FR HR IE IT LV NL PT RO SE

SI

MixedBE CY CZ DK EL

ES HU PL ROEE EL ES FI FR IT

LV NL PT UK

HTA-based de-listing

targeted protection

little increase in VHI

Source: Thomson et al forthcoming 2013

Trends in public spending

Public spending on health as a % of GDP has risen, EU27

Source: WHO

Cyp

rus

La

tvia

Est

on

ia

Bu

lga

ria

Po

lan

d

Ro

ma

nia

Lith

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nia

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Gre

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Ma

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Sp

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Fin

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Italy

Be

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Un

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0

1

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9

10

1997 2007

Total government spending as a % of GDP has declined, EU27

Source: WHO

Slo

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Est

onia

Latv

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Lith

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Irel

and

Rom

ania

Luxe

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urg

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Bul

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Pol

and

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ta

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Uni

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Italy

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Bel

gium

Hun

gary

Den

mar

k

Fra

nce

Sw

eden

Gre

ece0

10

20

30

40

50

60

70

1997 2007

Size of government

Health spending has grown as a % of total government spending, EU27

Source: WHO

Cyp

rus

Latv

ia

Pol

and

Bul

garia

Gre

ece

Rom

ania

Hun

gary

Est

onia

Lith

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Fin

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Italy

Sw

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Den

mar

k0

2

4

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20

1997 2007

‘Priority’ in allocating resources to health care

The economic challenge: sustained decline in public spending on health

2009 2010 2011

Bulgaria Croatia GermanyCroatia Czech Rep GreeceIreland Estonia PortugalLatvia Finland UK

Lithuania GreeceRomania Ireland

ItalySlovakiaSlovenia

Spain

Source: Cylus and Pearson 2013 in press using WHO NHA per capita public spending on health

Other constraints: uncertainty? time? info? capacity? opposition?

Source: Cylus and Pearson 2013 in press

The crisis has lowered the public share of health spending in just over half of EU28 countries

The crisis has slowed but not reversed per capita public spending growth in most EU28 countries

Source: Cylus and Pearson 2013 in press

Public funding reforms

Centralising and enforcing collection

Broadening the revenue base

Addressing stability issues

Better targeting

Trends in purchasing

How the US health system wastes $750 billion a year

Source: Institute of Medicine 2012

Purchasing: competition

Purchasers: countries with multiple insurers

Hospitals: waiting times

Mixed effects

Purchasing: paying providers

DRGs to pay hospitals

P4P mainly in primary care

Mixed effects

Useful as governance tools

Health care expenditure growth slowed in the 2000s

Source: Thomson et al 2009 using OECD data in national currency units at 2000 GDP price level

THE COMMONWEALTH

FUND

76

88 8981

88

99 97

109116

106

97

134

115 113

127120

55 57 60 61 61 64 66 67 74 76 77 78 79 80 8396

0

50

100

150 1997–98 2006–07

Deaths per 100,000 population*

* Countries’ age-standardized death rates before age 75; including ischemic heart disease, diabetes, stroke, and bacterial infections. Analysis of World Health Organization mortality files and CDC mortality data for U.S.

Health systems have improved avoidable mortality

Source: Adapted from E. Nolte and M. McKee, “Variations in Amenable Mortality—Trends in 16 High-Income Nations,” Health Policy, published online Sept. 12, 2011.

P4PHTA

Skill mixCoordinated

care

Adapted from Repullo 2013

PublicHealth

Rationalise hospitals

E health

User charges

Staffcuts

Salary cutsPopulation

exclusions

Delayedinvestmen

t

Cutting benefits

Training, research

cuts

Price controls

HTAGuidelines

Crisis: policy responses

P4P

Co-ordinated care

Skill mix

Public health

Purchasing: lessons from the crisis Countries can do more with less but

complex reform is difficult

Strong pressure for short-term savings but savings ≠ efficiency

Importance of being selective and context-specific

Governance and leadership

What does the direction of change tell us?