Health & Medicine

A sustainable health system II

1. A sustainable health system (II)Madrid17 July 2012 Círculo de Empresarios 2. Index1. Executive summary 52. Key structural factors 9 2.1 The architecture of national…
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  • 1. A sustainable health system (II)Madrid17 July 2012 Círculo de Empresarios
  • 2. Index1. Executive summary 52. Key structural factors 9 2.1 The architecture of national health care systems 9 2.2 The National Health System (NHS) 12 Coverage of the system 15 Architecture of the NHS 19 Provision of services 243. Key financial factors of the NHS 31 3.1 The level of health care expenditure 31 3.2 The evolution of health care expenditure 32 Outlook and determining factors for growth of health care spending 33 Growth in health care spending in Spain 38 3.3 Decentralization 424. Key impact factors 45 4.1 Restrictions on resources and services of the system 45 4.2 Reforms on supply side 51 Decentralization 51 Incentives 52 Market mechanisms 53 4.3 Reforms on demand side 56 Co-payment or ticket moderator 56 Other co-responsibility formulae 59 4.4 The impact of reforms on the growth of health care spending 595. Proposals by Círculo de Empresarios 63 Governance of the NHS 63 Supply 66 Demand 686. Appendices 717. Bibliography 738. Recent publications by Círculo de Empresarios 77
  • 3. A sustainable health system (II) 1. Executive summary The provision of health coverage under universal conditions has been one of the greatachievements of the National Health System (NHS) and has been a determining factor in thefavorable evolution of Spain in recent decades. Círculo de Empresarios believes it is essentialto guarantee the existence of an NHS which has enabled access by the population to a widerange of health services under fair conditions. To do so, its sustainability must be ensured,which involves considering certain structural, financial and impact key factors of healthpolicies on the budget. In regard to structural key factors, Spain has an integrated public model: the funding,purchase and provision of health care are essentially public. The public insurance and universalcoverage models are not always in line with this integrated scheme. The NHS reaches a degreeof universality similar to that of other OECD countries with different models. The NHS isperceived as a cornerstone of the welfare state and is positively valued, although the need forchange has become evident. The system is valued more for medical care than in terms of userparticipation. Círculo de Empresarios believes that one must emphasize that other public anduniversal systems within the OECD include mechanisms of co-responsibility of demand(users) and of supply (professionals and businesses), enable the user to choose (occasionally, ata price) and resort to formulae of involving competition and risk transfer to the private sector.These formulae are perfectly compatible with a public and universal model. In addition,despite the existence of a universal NHS, about 20% of the total Spanish cost on health care isdirectly assumed by the citizens, aside from insurance policies (public and private) andcopayment schemes. Universal coverage is linked to a benefits portfolio. In Spain there are geographicaldifferences between the benefits resulting from the various interpretations of the items in thecommon services portfolio and the creation of complementary portfolios. Criteria of necessityor utility have not always prevailed in the introduction of treatments, nor has there been asystematic and transparent policy of underfunding thereof based on cost-effectiveness. Once the transfer of health services to the Autonomous Communities was completed in2002, the coordination has been articulated by way of the Inter-territorial Council for theNational Health System, where decisions are taken by consensus, resulting in a governance ofthe system with ample room for improvement and economic effects which, in the opinion ofCírculo de Empresarios, are undesirable. 5
  • 4. Key structural factors HNS services are free of charge at the point of provision, and are provided at two carelevels (primary and hospital & specialized). This is a model geared for the treatment of acutecases, when a system geared for chronic cases is required as, very gradually, someAutonomous Communities are beginning to consider. Most of the NHS service suppliers belong to the public sector and the prevalentgovernance model is that of direct management or similar. Indirect management forms arealso used by way of agreements. The Autonomous Communities have been graduallyintroducing new health care formulae which, whilst maintaining the public nature of thesystem, are seeking new levels of efficiency, funding or risk transfer to the private sector. Butthe “new forms of management”, still a minority, are not articulated on the basis of a nationalpolicy of analysis and comparison of results and encouragement of new formulae, over andabove the legal framework allowing for their development. The sustainability of the NHS requires certain financial key factors to be considered.The NHS makes the financial effort which pertains to Spain in terms of GDP per inhabitant, butbetween 2000 and 2009 the real public health expenditure per inhabitant experience acumulative increase of 42%. Additionally, according to the IMF, in 2030 the health expenditurein terms of percentage of GDP in Spain will be 1.6pp above that of 2010 (this would mean thatthe net present value of the increase in health care expenditure would account for over 50% ofthe current GDP). On its part, the Spanish government expects an increase between 2010 and2050 of 1.2 points, taking into account the impact of the recent reform contained in RDL 6/2012.In light of such data, the health care system will present in the future a more importantbudgetary challenge than that, for instance, presented by pension. All the foregoing, withouttaking into account the budgetary restrictions to which Spain is currently subject. The determining factors on the growth in the cost of health care are associated with allsystem participants. Aging is not the only or the most important, determining factor in healthcare cost, so that the health care policy must ensure, in the opinion of Círculo de Empresarios,that every participant therein contributes towards its cost containment: 44% of public healthcare expenditure goes towards personnel costs and 25.5% towards pharmaceutical products viaprescriptions (19%) or hospital dispensation (6.5%). Between 2002 and 2009 hospital andspecialized services have gone from 53.4% to 55.9% of total cost. Primary health servicesaccounted in 2009 for 14.9% of expenditure, having slightly reduced their share of the overallcost. Prevention and public health activities merely account for 1.5% of the public healthexpenditure and their weight has hardly changed in the last decade. This evolution is not, inthe opinion of Círculo de Empresarios consistent with the factors which determine healthcare cost. 6
  • 5. A sustainable health system (II) Additionally, there are substantial differences in expenditure by inhabitant amongAutonomous Communities due to disparities in public funding, different preferences amongusers between public and private services, and various options of the governments in regard topublic, agreed or private provision of services. Attention must also be paid to the differentspeeds at which this expenditure is adjusted among Autonomous Communities. The impact ofthe budgetary adjustment on equal access to health services must be watched over from ageographical perspective. As for the health care key factors which have an impact on the sustainability of NHSexpenditure, available evidence suggests that measures design to introduce competition anduser choice (supply measures) are the ones which have the most impact on containment ofhealth care cost, ahead of budget ceilings and the improvement in public management andcoordination and demand rationalization measures. But, in particular, the evidence indicatesthat the most effective reforms are those which combine all instruments (budgetary,coordination and management, and supply and demand). Círculo de Empresarios proposes a number of initiatives designed to improve the system.As for the public management, it suggests an improvement in NHS governance by means ofcentralized accountability of a decentralized system, the improvement of availability of publicinformation on the NHS and the inter-operability of regional information systems. Moreover, itadvises the encouragement of assessment mechanisms and the integration into one singleindependent body of the central government network of institutions and the AutonomousCommunities, currently devoted to the assessment of health care technologies. As for supply, greater autonomy and accountability for the managers, the flexibilizationof the statutory condition of health care personnel and the encouragement of integrationbetween health care levels and hospitals are all advocated. The importance of the introductionof competition and guaranteed user choice are also emphasized, so that patients are treatedmore like customers than as users. Lastly, in terms of demand, the use of the system must be rationalized by means of userco-responsibility for health care costs. This can be achieved by implementing joint paymentsystems (co-payment) or via the promotion of preventive health campaigns. Finally, Círculo deEmpresarios estimates that the generation of revenues not strictly associated with basic healthcare should be encouraged. Some of the foregoing considerations are shared by a large part of NHS experts andanalysts. The recent health care reform has made inroads, within the competency limits of thegovernment and financial conditioning, in some of these. 7
  • 6. Key structural factors In any event, Círculo de Empresarios believes that the problem is not just one of diagnosisbut of governance of the NHS. The aim is therefore not whether competencies pertain to one oranother agent, but that decisions affecting the whole can be taken by a majority. In order toreform, indeed, a diagnosis is required. But in order to implement, an improvement in the rulesof governance becomes necessary. In this regard, Círculo de Empresarios believes that thegovernance of the system should be examined closely, not in terms of centralization ofcompetencies but in terms of the enforceability of the decisions made by a majority of itsparticipants. 8
  • 7. A sustainable health system (II) 2. Structural key factors2.1. The architecture of the national health systems Health systems in the OECD exhibit different kinds of architecture, but in most casesthey have a common foundation: universal and equal access to health care benefits. This isalso the model of the General Health Care Law of 1986. Indeed, health care systems fulfill, at least, three basic functions: • That of financier, assuming the costs of coverage of the health care benefits in exchange for tax revenue, social security contributions or premiums, depending on the model. • That of purchasing entities, which acquire medical and hospital services on behalf of their users1, to provide the agreed health care benefits. • That of the health care providers, with contracts with the purchasing entities that pay them for the services offered to the users. In OECD health care systems in general, the funding function is public, whereas othershave different configurations. In Spain, there is an integrated public model where both thefunding for the provision of health care and the purchase and provision of health care servicesare of an essentially public nature. Public insurance and universal coverage models are always based on this integratedscheme. There are models which, on the basis of public funding, rely more on competition andthe users’ choice and others which rely on public control and management (table 1).1 The nature of health care prevents the patient from evaluating the care received. Health care meets the characteristics of what are known as“credence goods” whose quality is difficult to determine with any accuracy. These are goods where the offerors are, in turn, experts whichdetermine the needs of the consumers. Despite the fact that the performance of the service is observable, users are not always able to establish theneed for the service, nor reliably assess performance and cost thereof. This circumstance can give rise to opportunist behaviors by the suppliers. 9
  • 8. Key Financial Factors of the NHS Table 1 Health care models They rely on market mechanisms for service provision Private insurance for basic coverage Public insurance for basic coverage Private insurance beyond basic coverage and some restrictions Little private insurance beyond basic coverage with no restrictions Germany The Netherlands Slovakia Switzerland Australia Belgium Canada France Austria Czech Republic Greece Japan Korea Luxembourg Rely on mainly public services and insurance Broad range of suppliers and no access filters With access filters Limited choice of suppliers and relaxed budgetary restriction Broad range of choice of suppliers and strict budgetary restriction Iceland Sweden Turkey Denmark Finland Mexico Portugal Spain Hungry Ireland Italy New Zeeland Norway Poland United Kingdom Among the first, there are countries such as the Netherlands, where private insurers perform the purchase function (box 1). In other cases, private insurers are the ones who provide benefits above and beyond the basic package. Among those which resort to public insurance for purchase duties, and rely on market mechanisms for provision of services, some have access filters2 (France or Canada) and some have not (Austria or Japan). Box 1: The Dutch system and user choice Following the reforms of 2006, the Netherlands combine an obligatory insurance system with a patient-based insurance market. The government defines a minimum health care package and a standard 2 The role of the filter for access to health care benefits refers to the primary care physician having to refer the patient to the hospital or specialist. In other cases, this obligation does not exist but is carries financial preference. For example, if a specialist is consulted without having been referred by the primary care physician, the co-payment is higher. 10
  • 9. A sustainable health system (II)insurance premium. In order to guarantee universality, all individuals are obliged to be insured by thebasic package. They pay a lump sum premium to their insurance company of choice and their employerwithholds social security contributions from the salary. Lower income insured parties receive governmentsubsidies. The insurance companies are private and the insured party has freedom of choice (a change afterone year is allowed). These must accept all residents in their coverage area. In order to compensateinsurance companies for not being able to select the risk to be covered, compensations are established bymeans of the Health Care Insurance Fund. The insurance companies send the premiums charged to thisFund, which also receives salary contributions. Then the premiums (and contributions) are redistributedamong the insurance companies according to the original decisions made by the consumers, adjusted bycriteria of joint and several liability, risk, etc. Insurance companies compete on nominal premiums for the basic package (this cannot be altered),volume discounts (10% maximum) for groups of insured individuals, or lower premiums if the insuredparty becomes co-responsible for the costs generated over and above a given amount. The basic health care package is covered by the private insurer. Additional public fundingguarantees universality and a safety net for illegal immigrants. Complementary health care by means ofprivate insurance, is voluntary, with no public support and risk is freely covered or not by the insurancecompany. Most of the population purchases complementary insurance policies from the insurers,providing the minimum legal coverage. Registration with a primary health care physician is obligatory, who controls the costs by limitingreferrals to specialists. A medical referral must be obtained before consulting a specialist, except in acuteconditions such as trauma or myocardial infarction. Over 90% of the hospitals are privately owned and managed, but not for profit. The Treatment-Diagnosis Combination payment system is used, which links prices to real costs and enables the insurancecompanies to negotiate the prices of hospital services. The models which have been articulated on the basis of public control span from thosewithout access filters and broad user choice mechanisms (Sweden) to those which do use filtersto access health care services. Among the latter, some countries are subject to a lax budgetaryrestriction and offer a limited choice of suppliers (Denmark or, to date, Spain) and othersmaintain the ability to choose among suppliers, but with strict budgetary restriction (UnitedKingdom). 11
  • 10. Key Financial Factors of the NHS The OECD points out that there is no evidence of superiority of any of these systems in terms of cost and health care results, since there is remarkable diversity in each of the groups (see other models in Appendix). The National Health System compares satisfactorily with these systems as is shown in Table 2. It is important to underline that universality, equal access and public nature are only one part of the system configuration. The Co-responsibility of users (and their ability to choose), of the supply industry and health care professionals, or the introduction of competition, among other formulae, are perfectly compatible with a universal and public model, as can be seen in other countries. Table 2 Comparison of National Health Systems Spain France The Japan United Sweden Netherlands Kingdom Funding Total health care expenditure (% GDP) 9.5% 11.0% 12% 8.5% (2008) 9.80% 10% Total public health care expenditure (% total health care expenditure) 73.6% 77.9% 84.7% 80.8% (2008) 84.1% 81.50% Total private health care expenditure (% total health care expenditure) 20.1% 7.30% 6% (2007) 15.8% (2008) 10.50% 16.70% $ per person (US $ PPP) 3,067 3,978 4,914 2,878 (2008) 3,487 3,722 Process results Practicing physicians (per 1000 inhabitants) 3.5 3.3 2.9 (2008) 2.2 (2008) 2.7 (2010) 3.7 (2008) Nurses (per 1000 inhabitants) 4.9 8.2 8.4 (2008) 9.5 (2008) 9.5 (2010) 11 (2008) MRI scans (per million inhabitants) 10 7 (2010) 11 43.1 (2008) 5.9 (2010) --- CT scans (per million inhabitants) 15.1 11.8 (2010) 11.3 97.3 (2008) 8.3 (2010) --- Health results Life expectancy Men 78.6 78 (2010) 78.5 79.6 78.3 79.5 (2010) Women 84.9 85 (2010) 82.7 86.4 82.5 83.5 (2010) Child mortality rates (per 1,000 live newborns) 3.3 3.3 (2010) 3.8 2.4 4.6 2.5 Maternal mortality rates (per 100,000 live newborns) 3.4 10(2005- 8.5 (2005) 5 8 5.4 Note: Figures for 2009 unless otherwise indicated * MRI scans in hospitals only included and does not take into account those carried out in private clinics Source: CIVITAS, OMS and OCDE 2.2 The National Health System (SNS) The SNS3 offers universal coverage funded by taxes since 1999, with mostly public health care. Services are free of charge at the point of provision, although certain formulae of co-payment have been introduced in the pharmaceutical area. Of the 9.5 percentage points of the GDP which accounts for the Spanish health care spending in 2009, 7 (73.6%) pertain to public spending, almost entirely funded by taxes (graph 1). 3 Its basic legal framework is set forth in General Health Care Law 14/1986 of 25 April, and Law 16/2003 of 28 of May, on the coherence and quality of the NHS, and subsequent reforms, such as Royal Decree Law 6/2012, of 20 April, on urgent measures to guarantee the sustainability of the National Health System and improve the quality and safety of the benefits provided (RDL 6/2012). 12
  • 11. A sustainable health system (II)Graph 1Unit cost by type of funding in 20096.2 5.5 84.7 The Netherlands10.5 1.1 84.1 United Kingdom16.7 81.5 Swede
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