Tamás Evetovits Senior Health Financing Specialist WHO Regional Office for Europe Financial...
Transcript of Tamás Evetovits Senior Health Financing Specialist WHO Regional Office for Europe Financial...
Tamás Evetovits
Senior Health Financing Specialist
WHO Regional Office for Europe
Financial sustainability in the context of economic crisis:
sustaining equity and solidarity
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
Outline
Dealing with the downturn
Why protect public spending on health?
Balancing the budget
Sustainability. Let’s clarify
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
OBS/HEN Policy summary on the response to the financial crisis1. Protect health budgets and consider health sector as a
component to economic recovery
2. Adjust revenue collection
3. Consider re-allocation within the exisiting government budget and within the health budget
4. Careful with coverage decisions and shifting to private expenditure
5. Improve efficiency
6. Improve preparedness for dealing with downturns
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
Financial sustainability in the context of economic crisis
28 June, 2012. Tallinn, Estonia
Coverage decisions
Improving efficiency reduces adverse effects of the crisis and help secure popular and political support for more spending in the future...
eliminate ineffective and inappropriate services
improve rational drug use (including volume control)
allocate more to primary and outpatient specialist care at the expense of
hospitals
invest in infrastructure that is less costly to run
cut the volume of least cost-effective services
Financial sustainability in the context of
economic crisis29 June, 2012. Tallinn, Estonia
Short-term solutions are important to keep the system running, but proceed with care when looking for savings
Aim for sustainable efficiency gains
Avoid losing human resources
Careful with shifting from public to private spending especially out-of-pocket expenditure
Cost containment ≠ efficiency
Financial sustainability in the context of
economic crisis29 June, 2012. Tallinn, Estonia
Crisis presents opportunities not to be missed and potential
failures to avoid
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
Why protect public spending for health?
There is strong correlation between public spending on
health and the level of out-of-pocket expenditure
“Today, it is unacceptable that
people become poor as a result of ill health”
Tallinn Charter
Catastrophic spending is highest among poorer
people
Medicines are the main cause of spending for
poorer people
Patients forego seeking care or do not buy
prescribed medicine
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
Catastrophic spending is highest among poorer people
Source: Võrk A et al. Income-related inequality in health care financing and utilization in Estonia 2000–2007. Copenhagen, WHO Regional Office for Europe, 2009.
Patients forego seeking care or do not buy prescribed medicine
Source: EU-SILC 2006
The unmet need for health services was already high before the crisis. (Latvia)
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
Health impact of social welfare spending and GDP growth
•Each additional 100USD per capita spending on social welfare (including health) is associated with 1,19% reduction in mortality
Social welfare
spending
•Each additional 100USD per capita increase of GDP is associated with only 0,11% reduction in mortality
GDP
Source: Stuckler D et al. BMJ 2010;340:bmj.c3311
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
The rationale for counter-cyclic fiscal policies for social and health expenditure
• Need for health care during the crisis increases• Drop in public expenditure leads to an increase in
private spending which in turn reduces financial protection for the poor who may forgo seeking care
• Utilization of services and quality of care during a crisis decrease despite increased needs
• Utilization decreases less where the cost of seeking care is low
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
Balancing the budget
An accounting exercise or a matter of choice in public policy priorities
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
What determines level of public spending on health?
• Context– Size of the economy – economic context– Size of the government: taxation policy – fiscal context
• Priorities– Government decision on allocation to health
Size of the economy (2010 GDP/capita) CRO and RUS have same size of GDP/capita
Tajikis
tan
Repub
lic o
f Mold
ova
Georg
ia
Ukrain
e
Albania
TFYR Mac
edon
ia
Kazak
hsta
n
Bulgar
ia
Roman
ia
Latv
ia
Croat
ia
Poland
Eston
ia
Portu
gal
Malt
a
Greec
e
Cypru
sSpa
in
Icela
nd
Finlan
d
Belgium
Denm
ark
Irelan
d
Switzer
land
Luxe
mbo
urg
0.00
10000.00
20000.00
30000.00
40000.00
50000.00
60000.00
Fiscal context: relative size of the government (2010) CRO and RUS have similar size of government as a share of GDP
Source: WHO, 2011
Kazak
hsta
n
Armen
ia
Albania
Kyrgy
zsta
n
Georg
ia
Croat
ia
Russia
n Fed
erat
ion
Slovak
ia
Eston
ia
Lithu
ania
Luxe
mbo
urg
Belaru
sIs
rael
Mon
tene
gro
Serbia
Spain
Ukrain
e
Hunga
ry
Greec
e
United
King
dom
Portu
gal
Austri
a
Belgium
Franc
e
Irelan
d0.00
10.00
20.00
30.00
40.00
50.00
60.00
70.00
Source: WHO, 2011
The real measure of “priority”: government spending on health as a % of total government spending (2010)CRO and SVK give high priority to health, LVA and RUS below 10%
Azerb
aijan
Tajikis
tan
Georg
ia
Albania
Latv
ia
Irelan
d
Belaru
sIs
rael
Roman
ia
Eston
ia
Greec
e
Lithu
ania
TFYR Mac
edon
iaM
alta
Sloven
ia
Slovak
iaIta
ly
Sweden
Belgium
Luxe
mbo
urg
Austri
a
Bosnia
and
Her
zego
vina
Norway
Nethe
rland
s
Switzer
land
0.00
5.00
10.00
15.00
20.00
25.00
Public sector expenditure on health as a % of GDP (2010)
Source: WHO, 2011
Azerb
aijan
Armen
ia
Cypru
s
Albania
Russia
n Fed
erat
ion
Bulgar
ia
Belaru
s
Ukrain
eIs
rael
Turke
y
Lithu
ania
Poland
Slovak
ia
Mon
tene
gro
Serbia
Croat
ia
Finlan
d
Bosnia
and
Her
zego
vina
Spain
Portu
gal
Sweden
Belgium
Austri
a
Franc
e
Denm
ark
0.00
2.00
4.00
6.00
8.00
10.00
12.00
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
Priorities matter: what if Latvia gave the priority to health that its neighbours do?
GDP per capita
(int US$)
Public spending as
% GDP
Health as % of total
public spending
Government health spending
as % GDP
Latvia (2010) 16,344 44.37 9.21 4.09
LTU priority 16,344 44.37 12.64 5.61
EST priority 16,344 44.37 11.68 5.18
Instead, Latvia has further reduced its public spending on health to 3.21% of the GDP in 2012
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
Priority to health. Is it that simple?
What if political commitment is short lived?
How can health financing policy help with securing stable, predictable revenue for health?
Why do we see low priority given to health in some countries but not others?
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
Beveridge and Bismarck are not helpful here
Latvia (tax financed) and Hungary (SHI) both gave low priority to health long before the crisis and in their responses as well. Their health systems were in bad shape already
UK (tax financed), Czech Republic, Croatia and Slovenia (SHI) maintained high priotity
Institutional arrangements helped Lithuania and Estonia (at least in the short run) except for public health programmes
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
Sustainability. Let’s clarify
Economic sustainability: is there a cause for corncern? What do we spend our GDP on?
Source: WHO NHA database, 2012
2000 20100
5000
10000
15000
20000
25000
EST health spending EST non-health spending
PP
P a
dju
sted
in
tern
atio
nal
US
$
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
Fiscal sustainability: is the health sector a threat to fiscal sustainability?
Source: WHO NHA database, 2012
Government health spending less than 12% of total in 2000...
and in 2010 as well
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
The real challenge in many CEE and SEE countries
•SHI: exclusive reliance on earmarked payroll tax is unsustainable in the long run
•Tax-financed: unpredictable annual allocation decisions make stakeholders argue for earmarking
•Mixed systems are evolving, but that does not solve the fundamental question of priority to health
Sustaining stable,
predictable revenues for
health seems to be a challenge in both SHI and
tax-financed systems
Financial sustainability in the context of
economic crisis28 June, 2012. Tallinn, Estonia
Sustainability and health policy objectives• Sustainability is meaningless if
not linked to health system objectives
• Financial 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.