1. Healthcare in Europe –
a macroeconomic viewpoint
Peter C. Smith
Imperial College Business School
and Centre for Health Policy
peter.smith@imperial.ac.uk
2. Investing in Health Systems
A Conceptual Framework
Health
Systems
Societal
Well-being
Health Wealth
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.
3. 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
money
• Directly through their impact on social
protection
4. Health
Systems
Societal
Well-being
Health Wealth
1. HEALTH SYSTEMS AND THE
ECONOMY
5. Total spending on healthcare
% of GDP
18 Australia
Austria
Belgium
16 Canada
Chile
Czech Republic
14 Denmark
Finland
France
12 Germany
Greece
10 Hungary
Iceland
Italy
8 Japan
Korea
Luxembourg
6 Mexico
Netherlands
New Zealand
4 Norway
Poland
Portugal
2 Slovak Republic
Spain
Sweden
0 Switzerland
Turkey
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 United Kingdom
United States
Ireland
6. 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.
7. Public spending on healthcare
% of total
120 Australia
Austria
Belgium
Canada
100 Chile
Czech Republic
Denmark
Finland
France
80 Germany
Greece
Hungary
Iceland
60 Italy
Japan
Korea
Luxembourg
Mexico
40 Netherlands
New Zealand
Norway
Poland
20 Portugal
Slovak Republic
Spain
Sweden
Switzerland
0 Turkey
0 3 6 9 2 5 8 1 4 7 0 3 6 9 2 5 8 United Kingdom
6 6 6 6 7 7 7 8 8 8 9 9 9 9 0 0 0 United States
9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 Ireland
8. 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.
9. 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
250
200
n150
o
i
l
l
i
b
£100
50
0
10. Health
Systems
Societal
Well-being
Health Wealth
2. HEALTH SYSTEMS AND HEALTH
11. Life expectancy at birth
90 Australia
Austria
85 Belgium
Canada
Chile
80 Czech Republic
Denmark
Finland
75 France
Germany
Greece
70 Hungary
Iceland
65 Italy
Japan
Korea
60 Luxembourg
Mexico
Netherlands
55 New Zealand
Norway
50 Poland
Portugal
Slovak Republic
45 Spain
Sweden
Switzerland
40 Turkey
0 3 6 9 2 5 8 1 4 7 0 3 6 9 2 5 8 United Kingdom
6 6 6 6 7 7 7 8 8 8 9 9 9 9 0 0 0 United States
9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 Ireland
1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2
12. 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.
13. Joumard et al (2008): Country-specific
effects (life years) relative to OECD
average
Iceland
Australia
New Zealand
Korea
Greece
Canada
Finland
Poland
Sweden
France
Belgium
Ireland
United Kingdom
Czech Republic
Netherlands
Switzerland
Austria
Germany
Turkey
Denmark
Norway
Hungary
United States
-5 -4 -3 -2 -1 0 1 2 3
14. Programme budgeting expenditure
England 2010/11 £per capita
http://www.dh.gov.uk/en/Managingyourorganisation/Financeandplanning/Programmebudgeting/index.htm
15. 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.
16. 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
17. Health
Systems
Societal
Well-being
Health Wealth
3. HEALTH SYSTEMS AND SOCIAL
PROTECTION
18. 5 July 1948
th
• “...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.”
19. Out-of-pocket spending on
healthcare: % of total
80 Australia
Austria
Belgium
70 Canada
Chile
Czech Republic
60 Denmark
Finland
France
Germany
50 Greece
Hungary
Iceland
40 Italy
Japan
Korea
Luxembourg
30 Mexico
Netherlands
New Zealand
20 Norway
Poland
Portugal
10 Slovak Republic
Spain
Sweden
Switzerland
0 Turkey
0 3 6 9 2 5 8 1 4 7 0 3 6 9 2 5 8 United Kingdom
6 6 6 6 7 7 7 8 8 8 9 9 9 9 0 0 0 United States
9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 Ireland
1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2
20. 20
Cost-Related Access Problems
in the Past Year
Percent AUS CAN FR GER NETH NZ NOR SWE SWIZ UK US
Did not fill
prescription or 12 10 7 6 3 7 6 7 4 2 21
skipped doses
Had a medical
problem but
did not visit
13 4 6 16 2 9 6 5 6 2 22
doctor
Skipped test,
treatment, or 14 5 6 10 3 8 5 4 4 3 22
follow-up
Yes to at least
one of the 22 15 13 25 6 14 11 10 10 5 33
above
THE COMMONWEALTH
FUND
20
Source: 2010 Commonwealth Fund International Health Policy Survey in Eleven Countries.
21. 21
Overall Views of Health Care
System, 2010
Percent AUS CAN FR GER NETH NZ NOR SWE SWIZ UK US
Only minor
changes 24 38 42 38 51 37 40 44 46 62 29
needed
Fundamental
changes 55 51 47 48 41 51 46 45 44 34 41
needed
Rebuild
completely
20 10 11 14 7 11 12 8 8 3 27
THE COMMONWEALTH
FUND
Source: 2010 Commonwealth Fund International Health Policy Survey in Eleven Countries.
22. Very strong link between % reporting cost
problems and opinions of health system
UK
NLSWIZ
FR
SWE NOR
NZ CAN
GER
USA
AUS
Source: 2010 Commonwealth Fund International Health Policy Survey in Eleven Countries.
23. Health
Systems
Societal
Well-being
Health Wealth
24. 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
25. ... 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
26. Further reading
• 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.
Notas do Editor
This conceptual framework provides the conceptual backbone for this presentation. The case for health systems investment rests on the understanding that health systems are intricately linked to health, wealth and well being , with the causal, direct and indirect relationships between the key elements captured by the ‘conceptual triangle’ . Importantly, it positions health system investment in a direct relationship with the ultimate goal of all social systems: societal well-being. Health systems contribute to societal well-being in three main ways : First, and above all health systems produce health which is both a major and inherent component of well-being and through its impact on wealth creation, and indirect (yet key) contributor to well-being. Second, although to a much lesser extent, health systems have a direct impact on wealth as they are a significant component of the economy which again impacts on societal well-being. Third, health systems contribute directly to societal well-being because societies draw satisfaction from the existence of health services and the ability of people to access them. Note that there is much debate about the boundaries of the health system with Member States taking different definitional approaches. This presentation takes a pragmatic approach and adopts the definition of health systems as all the activities whose primary purpose is to promote, restore or maintain health including i) the delivery of (personal and population based) health services; ii) those activities (within the functions of finance, stewardship and resource generation) to enable the delivery of services and iii) stewardship activities aimed at influencing the health impact of activities in other sectors such as education or environment. Therefore, the presentation takes a broad approach including all public health interventions those provided by the health services (secondary and tertiary prevention) as well as those aimed at addressing health determinants outside the health sector i.e. Health in All Policies. Ultimately, the aim is not to assess investment on health service interventions in isolation but to set them against interventions in other sectors and compare them in light of their health and cost effectiveness impact.
Gives public spending by ICD chapter per capita. Excludes ‘other’, mainly GP services, £495.50 per capita. Total spending is £2,043.23 pc
Calculated using econometric analysis of link between disease programme spending and mortality data in 152 English primary care trusts