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Brief analytical summaries or syntheses #47

Health policy responses to the financial crisis in Europe

Summary

This August 2012 report by the Health Evidence Network (HEN) identifies key challenges for European health policy makers in the wake of the ongoing financial crisis. The report focuses on responses to essential service cuts and interruptions in revenue streams, as well as on inefficiencies and exacerbations of adverse effects evident in national health systems.

Background

The global financial crisis that began in 2007 can be classified as a health system shock – that is, an unexpected occurrence originating outside the health system that has a large negative effect on the availability of health system resources or a large positive effect on the demand for health services. Economic shocks present policy-makers with three main challenges:

  • Health systems require predictable sources of revenue with which to plan investment, determine budgets and purchase goods and services. Sudden interruptions to public revenue streams can make it difficult to maintain necessary levels of health care.
  • Cuts to public spending on health made in response to an economic shock typically come at a time when health systems may require more, not fewer, resources – for example, to address the adverse health effects of unemployment.
  • Arbitrary cuts to essential services may further destabilize the health system if they erode financial protection, equitable access to care and the quality of care provided, increasing health and other costs in the longer term. In addition to introducing new inefficiencies, cuts across the board are unlikely to address existing inefficiencies, potentially exacerbating the fiscal constraint.

Analysis and results

The results of the survey suggest that the response to the crisis across the European Region varied considerably across health systems and, in part, depended on the extent to which countries experienced a significant downturn in their economies. Some countries introduced no new policies, while others introduced many. Some health systems were better prepared than others due to fiscal measures they had taken before the crisis, such as accumulating financial reserves. There were many instances in which policies planned before 2008 were implemented with greater intensity or speed as they became more urgent or politically feasible in face of the crisis, particularly the restructuring of secondary care. There were also cases where planned reforms were slowed down or abandoned in response to the crisis.

Policies intended to change the level of contributions for publicly financed health care

Several countries reported cuts in the national health budget in response to the financial crisis. In some countries, cuts were partly caused by rising unemployment, which reduced revenue from social insurance contributions.

In a few cases, social insurance revenues and expenditures continued to increase, in part due to the counter-cyclical contribution rate paid by the state for economically inactive people. Several countries increased or instituted user charges in response to the crisis. In contrast, others reported expanding benefits.

Policies intended to affect the volume and quality of publicly financed health care

In general the statutory benefits package and the breadth of population coverage were not radically changed following the financial crisis but some reductions were made, usually at the margin. In terms of policies to reduce demand for health services, several countries increased taxes on alcohol and cigarettes, but very few pursued health promotion policies such as healthy eating, exercise and screening in response to the crisis. Only one country increased waiting times as an explicit response to the crisis, although waiting times may also be increasing elsewhere as an indirect result of other health policy reforms.

Policies intended to affect the costs of publicly financed health care

Many countries introduced or strengthened policies to reduce the price of medical goods or improve the rational use of medicines. In most cases these policies were part of ongoing reforms. The crisis increased efforts to negotiate pharmaceutical prices in some national markets. Some countries reduced the salaries of health professionals, froze them, reduced their rate of increase or used other approaches to lower salaries. Several countries reduced the health service prices paid to providers or linked payment to improved performance to realize efficiency gains and contain costs. Several governments are restructuring their Ministry of Health, statutory health insurance funds or other purchasing agencies in an attempt to increase efficiency and reduce overhead costs.

In many countries, the economic crisis created an impetus to speed up the existing process of restructuring the hospital sector through closures, mergers and centralization, a shift towards outpatient care and improved coordination with or investment in primary care.

Conclusion

The survey results indicate that European Region countries have employed a mix of policy tools in response to the financial crisis. Some countries seem to have used the crisis to increase efficiency, although little has been done to enhance value through policies to improve public health, which is a missed opportunity. Policies to secure financial sustainability in the face of the financial crisis, and to improve the health sector’s fiscal preparedness for financial crises, should be consistent with the fundamental goals of the health system.

Implications and recommendations

  • European Region countries employed a mix of policy tools in response to the financial crisis. Some of the policy responses were positive, suggesting that some countries have used the crisis to increase efficiency. The breadth and scope of statutory coverage was largely unaffected and in some cases benefits were expanded for low-income groups. However, some countries reduced the depth of coverage by increasing user charges for essential services, which is a cause for concern. Little was done to increase efficiency through policies to improve public health.
  • Policy tools likely to promote health system goals include: risk pooling; strategic purchasing; health technology assessment; controlled investment; public health measures; price reductions for pharmaceuticals combined with rational prescribing and dispensing; shifting from inpatient to day-case or ambulatory care; integration and coordination of primary care and secondary care, and of health and social care; reducing administrative costs while maintaining capacity to manage the health system; fiscal policies to expand the public revenue base; and counter-cyclical measures, including subsidies, to protect access and financial protection, especially among poorer people and regular users of health care.
  • Policy tools that risk undermining health system goals include: reducing the scope of essential services covered; reducing population coverage; increases in waiting times for essential services; user charges for essential services; and attrition of health workers caused by reductions in salaries.
  • Where the short-term situation compels governments to cut public spending on health, the policy emphasis should be on cutting wisely to minimize adverse effects on health system performance, enhancing value and facilitating efficiency-enhancing reforms in the longer run.

Source

Health policy responses to the financial crisis in Europe


Gouvernement du Québec
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