Professor Peter smith

Healthcare in Europe – a macroeconomic viewpoint

Peter C. SmithImperial College Business School

and Centre for Health Policypeter.smith@imperial.ac.uk

WealthWealthHealthHealth

Health Health SystemsSystems

SocietalSocietalWell-beingWell-being

Investing in Health SystemsInvesting in Health SystemsA Conceptual FrameworkA Conceptual Framework

Source: McKee, M. and Figueras, J. (2011), Health systems, health, wealth and societal well-being: assessing the case for investing in health systems, Maidenhead: Open University Press.

How do health systems contribute to wellbeing?

• Through their impact on wealth– Health services as a core part of the economy– Helping improve productivity

• Through their impact on health – Increasingly recognized as an important determinant

of health– Many health technologies are very good value for

• Directly through their impact on social protection

1. HEALTH SYSTEMS AND THE ECONOMY

Total spending on healthcare% of GDP

1960 1965 1970 1975 1980 1985 1990 1995 2000 2005

AustraliaAustriaBelgiumCanadaChileCzech RepublicDenmarkFinlandFranceGermanyGreeceHungaryIcelandItalyJapanKoreaLuxembourgMexicoNetherlandsNew ZealandNorwayPolandPortugalSlovak RepublicSpainSwedenSwitzerlandTurkeyUnited KingdomUnited StatesIreland

Future healthcare spending

• The US Congressional Budget Office (2007) estimates that – with no policy change – total spending on health care will rise from 16 percent of the US economy in 2007 to – 25 percent in 2025– 37 percent in 2050– 49 percent in 2082.

• Congressional Budget Office. 2007. The Long-Term Outlook for Health Care Spending. Washington DC: Congress of the United States.

Public spending on healthcare% of total

RAND projections for US (2005)• Reductions in spending resulting

from better health will be outweighed by the costs of new technologies, and by additional health expenditure during the additional years of life that the technologies make possible.

• Although highly socially desirable, tackling chronic diseases will not in general save money.

• The one exception may be obesity.

• RAND Health. 2005. Future Health and Medical Care Spending of the Elderly. Santa Monica: RAND.

Estimates of NHS expenditure growth drivers, 2002-2022 , optimistic scenario

Wanless, D., Appleby, J., Harrison, A., Patel, D. (2007), Our Future Health Secured? A review of NHS funding and performance, London: King’s Fund

£bill

2. HEALTH SYSTEMS AND HEALTH

Life expectancy at birth

OECD Rankings• Determinants of life expectancy

– Health care spending– Education– GDP– Pollution– Alcohol– Tobacco– Diet

• Residual is health system efficiency

Joumard, I., C. Andre, C. Nicq and O. Chatal (2008) Health status determinants: lifestyle, environment, health care resources and efficiency. Economics Department Working Paper 627. Paris: OECD.

Joumard et al (2008): Country-specific effects (life years) relative to OECD average

-5 -4 -3 -2 -1 0 1 2 3

United StatesHungaryNorwayDenmarkTurkeyGermanyAustriaSwitzerlandNetherlandsCzech RepublicUnited KingdomIrelandBelgiumFranceSwedenPolandFinlandCanadaGreeceKoreaNew ZealandAustraliaIceland

Programme budgeting expenditure England 2010/11 £per capita

http://www.dh.gov.uk/en/Managingyourorganisation/Financeandplanning/Programmebudgeting/index.htm

Estimates of marginal costs of saving a life year, by disease programme, England 2005/6

• Cancer £13,900• Circulatory disease £12,600• Respiratory problems £7,400• Gastro-intestinal £19,000• Diabetes £26,500

Martin, S., Rice, N. and Smith, P. (2012), “Comparing costs and outcomes across programmes of health care”, Health Economics, 21(3), 316-337.

The Effects of Health Coverage on Population Outcomes:A Country-Level Panel Data Analysis

by Rodrigo Moreno-Serra and Peter C. Smith (2011)

• Examines the link between health spending and health outcomes in 153 countries over a 14 year period

• Results strongly indicate that higher government health spending per capita reduces both child and adult mortality rates.

• The estimated gains are larger for low and middle income countries than in the full sample.

• The implied marginal cost of saving a year of life is around US$1,000 in the full sample of countries.

• Public spending seems more effective in reducing mortality than prepaid private insurance

• Investing in broader health coverage can generate significant gains in terms of population health.

http://resultsfordevelopment.org/projects/transitions-health-financing

3. HEALTH SYSTEMS AND SOCIAL PROTECTION

5th July 1948

• “...there are no charges, except for a few special items. There are no insurance qualifications. But it is not a ‘charity’. You are all paying for [the NHS], mainly as taxpayers, and it will relieve your money worries in times of illness.”

Out-of-pocket spending on healthcare: % of total

20Cost-Related Access Problems

in the Past Year

Percent AUS CAN FR GER NETH NZ NOR SWE SWIZ UK US

Did not fill prescription or skipped doses

12 10 7 6 3 7 6 7 4 2 21

Had a medical problem but did not visit doctor

13 4 6 16 2 9 6 5 6 2 22

Skipped test, treatment, or follow-up

14 5 6 10 3 8 5 4 4 3 22

Yes to at least one of the above

22 15 13 25 6 14 11 10 10 5 33

Source: 2010 Commonwealth Fund International Health Policy Survey in Eleven Countries.

THE COMMONWEALTH FUND

Overall Views of Health Care System, 2010

Percent AUS CAN FR GER NETH NZ NOR SWE SWIZ UK US

Only minor changes needed

24 38 42 38 51 37 40 44 46 62 29

Fundamental changes needed

55 51 47 48 41 51 46 45 44 34 41

Rebuild completely 20 10 11 14 7 11 12 8 8 3 27

THE COMMONWEALTH FUND

Very strong link between % reporting cost problems and opinions of health system

SWECANNZ

Concluding comments

• Growth of publicly funded health services one of the major social policy successes on twentieth century

• Expenditure on health services yields many gains in social welfare in terms of health, wealth and social protection

• Many reasons for seeking to protect publicly funded health services as a priority

... but if expenditure control becomes an imperative:

• Supply side– Little evidence globally that there is scope for step changes in productivity – But potential for gains from (eg) better information, carefully regulated

competition etc– Care with incentive effects of provider payment mechanisms

• Demand side – Ageing population not intrinsically problematic, but it is if citizens live

longer sicker lives– Some scope for public health interventions, especially on obesity, but lack

of evidence on effectiveness

• Limiting the scope of the publicly funded ‘health basket’– Careful exclusion of treatments with low cost-effectiveness– More targeted patient charges for treatments of intermediate value

Professor Peter smith

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