Financing health care in the European Union

1 Financing health care in the European Union The European Observatory on health Systems and Policies supports and promotes evidence - based health policy-making through comprehensive and rigorous analysis of health systems in Europe. It brings together a wide range of policy-makers, academics and practitioners to analyse trends in health reform, drawing on experience from across Europe to illuminate policy issues. The European Observatory on health Systems and Policies is a partnership between the World health Organization Regional O ce for Europe, the Governments of Belgium, Finland, Norway, Slovenia, Spain and Sweden, the Veneto Region of Italy, the European Investment Bank, the World Bank, the London School of Economics and Political Science and the London School of Hygiene & Tropical Medicine. Financing health care in the European Union Challenges and policy responses Sarah Thomson Thomas Foubister Elias Mossialos This study was requested and financed by the European Parliament's Committee on Employment and Social Affairs (EMPL).

2 Keywords: Financing , health . DELIVERY OF health care economics health care COSTS. health care REFORM. European Union . World health Organization 2009, on behalf of the European Observatory on health Systems and Policies All rights reserved. The European Observatory on health Systems and Policies welcomes requests for permission to reproduce or translate its publications, in part or in full. Address requests about publications to: Publications, WHO Regional O ce for Europe, Scher gsvej 8, DK-2100 Copenhagen , Denmark Alternatively, complete an online request form for documentation, health information, or for permission to quote or translate, on the Regional O ce web site ( ). The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the European Observatory on health Systems and Policies concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries.

3 Dotted lines on maps represent approximate border lines for which there may not yet be full agreement. The mention of speci c companies or of certain manufacturers' products does not imply that they are endorsed or recommended by the European Observatory on health Systems and Policies in preference to others of a similar nature that are not mentioned. Errors and omissions excepted, the names of proprietary products are distinguished by initial capital letters. All reasonable precautions have been taken by the European Observatory on health Systems and Policies to verify the information contained in this publication. However, the published material is being distributed without warranty of any kind, either express or implied. The responsibility for the interpretation and use of the material lies with the reader. In no event shall the European Observatory on health Systems and Policies be liable for damages arising from its use.

4 The views expressed by authors, editors, or expert groups do not necessarily represent the decisions or the stated policy of the European Observatory on health Systems and Policies. ISBN 978 92 890 4165 2. Printed in the European Union Contents Acknowledgements vi Note on the text vi List of abbreviations vii List of tables and figures ix Executive summary xiii Introduction 1. 1. The problem of sustainability 5. Distinguishing economic and fiscal sustainability 5. Addressing the fiscal sustainability problem 7. health care expenditure in context 15. 2. health care Financing in the European Union 23. Frameworks for analysis 23. Descriptive analysis of Financing arrangements 26. 3. health care Financing reforms: options, trends and impact 49. Maximizing collection and changing the mix of contribution mechanisms 49. Addressing fragmented pooling 74. Expanding entitlement to public coverage and defining benefits 75.

5 From passive reimbursement to strategic purchasing of health services 80. 4. Conclusions and policy recommendations 89. Which reforms are most likely to enhance sustainability? 89. Is there an optimal method of Financing health care ? 95. Policy recommendations 97. References 101. Annex: summaries of health care Financing by Member State 111. Acknowledgements We are grateful to Melissa Ouellet for her help in constructing tables and graphs and preparing country summaries. We are also grateful to o cials from the European Parliament and the health Systems Financing team of the World health Organization (WHO) Regional O ce for Europe for their comments on an earlier version of the report. The views expressed in the report are our own and do not necessarily re ect those of the European Parliament, the WHO. Regional O ce for Europe or the European Observatory on health Systems and Policies. The responsibility for any mistakes is ours.

6 Note on the text We have sometimes found it necessary to distinguish between the Member States that were part of the European Union prior to 1 May 2004 and those that have joined since that date. We refer to the former as older Member States and the latter as newer Member States. List of abbreviations AME Aide M dicale d' tat (State- nanced medical cover, France). AWBZ Algemene Wet Bijzondere Ziektekosten (Exceptional Medical Expenses Act, the Netherlands). CASAOPSNAJ Ministries and agencies related to national security (Romania). CAST Ministry of Transports, Constructions and Tourism (Romania). CMU Couverture Maladie Universelle (universal coverage, France). CMU-C Couverture Maladie Universelle Compl mentaire (complementary private coverage, France). CSG Contribution Sociale G n ralis e (income tax, France). DKK Danish kroner DMP Disease management programme DRG Diagnosis-related group DTC Diagnosis treatment combinations ECJ European Court of Justice EHIF Estonian health Insurance Fund EU European Union FFS Fee for service GDP Gross domestic product GP General practitioner HAS Haute Autorit de Sant (National health Authority, France).

7 HIIS health Insurance Institute of Slovenia HiT health System in Transition HRG health resource group HSE health Service Executive HTA health technology assessment IGIF Institute for Financial Management and Informatics (Portugal). IGIF Institute for Financial Management and Informatics (Portugal). IKA Social Insurance Institute (Greece). IRAP Imposta regionale sulle attivit produttive (regional corporation tax, Italy). LFN Pharmaceutical Bene ts Board (Sweden). MISSOC Mutual Information System on Social Protection in the Member States of the European Union MSA Medical savings account NGO Nongovernmental organization x List of abbreviations NHIFA National health Insurance Fund Administration NHIS National health Insurance Scheme (Cyprus). NHS National health Service (United Kingdom); National health System (Greece, Italy, Portugal, Spain). NICE National Institute for health and Clinical Excellence NTPF National Treatment Purchase Fund OECD Organisation for Economic Co-operation and Development ONDAM Objectif National de D penses d'Assurance Maladie (ceiling for the rate of expenditure growth in the statutory health insurance scheme, France).

8 OOP Out-of-pocket (payment). PBC practice- based commissioning PbR Payment by results PCC Primary care Centre PCT Primary care Trust (United Kingdom, England). PHI Private health insurance PRP Performance-related pay RSZ-ONSS National O ce for Social Security (Belgium). SEK Swedish kroner SSN Servizio Sanitario Nazionale (Italian health service). UNCAM Union Nationale des Caisses d'Assurance Maladie (National Union of health Insurance Funds, France). UNOCAM Union Nationale des Organismes Compl mentaires d'Assurance Maladie (National Union of Voluntary health Insurers, France). VAT Valued-added tax WHO World health Organization ZVW Zorgverzekeringswet ( health Insurance Act, the Netherlands). Country abbreviations AT Austria IT Italy BE Belgium LT Lithuania BG Bulgaria LU Luxembourg CY Cyprus LV Latvia CZ Czech Republic MT Malta DE Germany NL Netherlands DK Denmark PL Poland EE Estonia PT Portugal EL Greece RO Romania ES Spain SE Sweden FI Finland SI Slovenia FR France SK Slovakia HU Hungary UK-ENG England IE Ireland UK United Kingdom List of tables and figures Tables Table 14 OECD countries ranked by level of age-standardized mortality 13.

9 From causes amenable to health care , 1997 1998 and 2002 2003. Table Changes in health care expenditure as a proportion of GDP in 19. selected countries, 1970 2004. Table Changes in health care expenditure (in national currency units at 20. 2000 GDP price level) in selected countries, 1970 2004. Table The collection process: sources of finance, contribution 27. mechanisms and collecting organizations Table Contribution rates, ceilings and distribution between employers 35. and employees in the European Union , 2007. Table Collection, pooling and purchasing market structure in the 37. European Union , 2007. Table Provider payment methods in the European Union , 2007 42. Table Cost sharing for health care in the European Union , 2007 46. Table Market roles of private health insurance 58. Table Comparison of health status and access to health care among 60. privately and publicly insured people in Germany, 2001 2005.

10 Table Changes in the level of statutory reimbursement in Slovenia, 63. 1993 1996. Table Direct and indirect forms of cost sharing and their incentives 68. Table Cost sharing protection mechanisms 70. Table Percentage of households with catastrophic health expenditure 72. due to out-of-pocket payments, selected countries Table Acute and maternity need variables in the United Kingdom 83. resource allocation formula, 2006 2008. xii List of tables and figures Figures Fig. GDP per capita (purchasing power parity (PPP)) in the European 16. Union , 2006 (EU = 100). Fig. Harmonized unemployment rates /+ 25 years, annual average in 16. the European Union , 2000 and 2005. Fig. Size of the informal economy as a proportion of GDP in the 17. European Union , 1991/1992 and 2001/2002. Fig. General government expenditure as a percentage of GDP, 2006 17. Fig. Public balance: net borrowing/lending of consolidated general 18.