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Challenges for Public Health in the New Financial Environments

Challenges for Public Health in the New Financial Environments. Guillem López-Casasnovas Professor in Public Finance Univ. Pompeu Fabra. Catalonia (Spain) Bucarest, March 25th 2011. Main messages. HCE will grow faster than PubHCE finance

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Challenges for Public Health in the New Financial Environments

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  1. Challenges for Public Health in the New Financial Environments Guillem López-CasasnovasProfessor in Public Finance Univ. Pompeu Fabra. Catalonia (Spain) Bucarest, March 25th 2011

  2. Main messages • HCE will grow faster than PubHCE finance • Look for a better focus on what should be under public and private responsibilities • Grading delivery according to its cost-effectiveness, unavoidable • Be smart in opening new financing spaces between pure public and pure private health care finance (social charges; community premia and tax incentives for users)

  3. HOW THE CRISIS AFFECTS (i) POPULATION HEALTH AND (ii) HCE FINANCEIN THE HEALTH DETERMINANTS MAP, 70 % OF THE FACTORS ARE NOT-GENETIC COMPONENTS, BEING TWO THIRDS OF THESE, BEHAVIOURAL AND SOCIAL FACTORS: THIS IS THE RISKIEST PART FOR VALUING THE IMPACT OF THE ECONOMIC CRISIS ON HEALTHTHE REMAINING THIRD IS HEALTH CARE….

  4. FORECASTING THE NEW SITUATION: The impact of the crisis on health • 1. Compounding factors amongst the conventional explanatory variables: income, poverty, inequality, education, life styles. Data analysis for European OECD countries only (Measuring Disparities in Health Status and Access OECD WP March 9th 2009): • on income: Greece and Germany the most foreseeable income elasticity dependent countries for health coverage • on inequality: Belgium, UK and Ireland with the worst ratios between deciles • on poverty: more catastrophic exposure for Spain, Portugal and Switzerland • on life styles: unmet access reported need for medical examination, higher in Poland, Portugal, Italy, Greece and Slovakia. • on education differences: worst ratios for Poland, Hungary, Netherlands and Czech Republic …BUT, not enough convincing evidence on the observed relations in the past in order to accurately forecast the future: Need of a difference-in-difference type of approach from micro individual panel data

  5. FORECASTING THE NEW SITUATION • 2- Not clear how short time changes in income, employment…) may affect basic trends (on human capital investment, individuals’ behavior, consumption on life cycle permanent income). • 3- Not sure that even overcoming (1) and (2) difficulties public health policies may change the direction of the bullet • 4-More analysis is needed on the Epidemiology and macroeconomics of social factors (tax regressivity, food policies, occupational and corporate practices, land zoning…)

  6. HOW THE CRISIS MAY AFFECT POPULATION HEALTH …However, common sense tells that • factors at risk are: Unemployment, anxiety, healthy nutrition and human capital accumulation • public consumption for services provision is more protected than social transfers. (Financing health care spending is not at risk in a keynesian world of expenditure multipliers). More doubtful is the impact of the financial crisis on the social and economic determinants.

  7. HOW THE CRISIS MAY AFFECT POPULATION HEALTH …However, common sense tells that (iii) effects much more dependent on the basic family and welfare support model, family asset risk-pooling; dual earners family types; workfare versus welfare support policies, role of the immigration, etca. (iv) increasing need to be more than ever selective with taylored-made policies for target frail groups; ie. age is not a determinant factor. The variance and not the mean is the relevant element in defining new type of public policies

  8. THE IMPACT OF THE CRISIS ON FINANCE: GOVERNMENT RESPONSES. Governments have committed 2.5% of euro area GDP to capital injections and other debt increasing support measures (about less than half been used thus far). In responde to the economic downturn so fa the EU fiscal stimulus is 1.5% of GDP (the remainder coming from the EU budget and the European Investment Bank). ROMANIAN DEFICIT FROM -2.2 TO -8.6 % (2006-2009; ECB 2011) All the process goes with increasing Government unbalanced accounts: According the European Comission more recent forecast the Euro area, general government deficit is expected to increase from 1.7% of GDP in 2008 to 4.0 to 4.4% in 2010. In ten out of sixteen contries deficits will stand above 3%. Government debt to GDP ratio has increased from 68.7% in 2008 to 75.8% in 2010. …However, this a problem but it is not the problem. Unemployment, income reduction asset losses and credit rationning in the day to day life...

  9. SOME ADDED CONCERNS DUE TO LACK OF CLARITY OF WHAT POLICY-MAKERS UNDERSTAND IN REAL LIFE BY EQUITY AND EXCELENCE IN HEALTH CARE, PLUS SOME DISTORTING HEALTH CARE INDUSTRY STRATEGIES: CONTINUOUS TREND TOWARDS SOCIAL DISEASE MONGERING: medicalisation of individual responsibilities. Expanding the boundaries of treatable illness to develop markets for new treatments: • Turning ordinary ailments into medical problems • Seeing mild symptoms as serious • Treating personal problems as medical • Portraying risk as diseases • Framing prevalence estimates to maximize potential markets…

  10. 0THER DRIVERS IN THE PUBLIC FINANCE SIDE:A TREND TOWARDS REGRESSIVITY IN FINANCING PUBLIC SPENDING THROUGH DUAL FISCAL SYSTEMS IS LEADING TAX REVENUES: MORE INDIRECT TAXES, LOWER FISCAL BURDEN FOR CAPITAL THAN FOR LABOUR THIS SHOULD FORCE PUBLIC EXPENDITURE TO BE MORE SELECTIVE (LESS UNIVERSAL, MORE TARGET ORIENTED) ON PUBLIC POLICIES IN ORDER TO INCREASE PROGRESSIVITY ON THE SPENDING SIDE

  11. RESULTING MAIN POINTS:THEDYNAMICS MORE THAN COMPARATIVE STATICS TO FOLLOW THE RIGHT TRACK OF THE ANALYSIS:TO FIGHT ANXIETY AND SOCIAL ISOLATION FROM JOB LOSSES, POVERTY, UNEMPLOYMENT ERODING HUMAN CAPITAL, NUTRITION AND UNHEALTHY BEHAVIOR… THE K-ISSUES, MORE RELATED TO WORKFARE THAN TO WELFAREIN THE FINANCING SIDE, THERE IS A NEED TO REBALANCE THE MIX BETWEEN SOCIAL SPENDING ON HEALTH CARE (PUBLIC REGULATED INDIVIDUAL AND COMMUNITY CONTRIBUTIONS), PUBLIC BUDGETS OUT OF GENERAL TAXATION AND PURE PRIVATE VOLUNTARY PAYMENTS

  12. THE ANSWERS. THE HEALTH CARE DELIVERY SYSTEMS • National Health Service- Social Health Care Systems

  13. HEALTH SYSTEMS: “The Health Care Box” FINANCIAL MECHANISM: Taxes (direct/indirect), pay-roll Savings, fees, premia COLLECTING ORGANISATION: Country/regional, Social Security Mutual Funds, Private, HMOs SOURCE: Employer, employees Tax payers, users Copayment PUBLICLY PROVIDED HEALTH EXPENDITURE OVER GDP Cost utilisation extent Eligibility field Services Scope (depth) Cure/Care Population coverage (breadth) Restricted / Universal Modified from Busse R, et al (Feb 2007) HNP “Analyzing changes in Health Financing Arrangements in High-Income Countries

  14. …HOW HEALTH CARE BOXES, MAINLY THOSE IN PUBLIC SYSTEMS, GET ADJUSTED: SDOLVENCY IS THE PROBLEM, NOT FINANCIAL SUSTAINABILITY!!! • FOR GREATER MANAGEABILITY, PORTABILITY (INNOVATION AND ADJUSTMENT TO NEW SOCIAL NEEDS) … • HOW -BY CHANGING THE HEALTH CARE BOXES-, THE NATIONAL HEALTH SERVICES AND THE SOCIAL HEALTH INSURANCE SYSTEMS ANSWER TO THE NEW CHALLENGES: DEMOGRAPHICS, TECHNOLOGY CHANGES AND CONCERNS FOR EQUITABLE ACCESS TO CARE

  15. TO UNDERSTAND THE DIFFERENT RATIONALE AND LOCATE THE FUNCTIONS TO THE BEST POSITIONNED AGENTS • Planning/ Finance/ Insurance Risk management/Purchasing Production of care • Health and Finance Depart. /Health Insurance Agencies / Purchasers of care services /Production and Managerial Units

  16. “NHS type” Flow of funds District Health Authorities Public Funder FundHolders or Integrated Providers (Trusts) Inpatient care (Capitation risk adjusted) Hospital Care Primary Care Services Services Citizens / tax payers Services

  17. “SHIS type” Flow of funds Health Insurer Providers Public Funder Prices Copayments Complementary insurance Basic package Services Citizens / premia

  18. LET S DO A GREAT JOB FOR THE COMMON GOODTHANKS FOR YOUR ATTENTION!! ….FOLLOWS A DATA ADDENDA ON THE EFFECTS OF DEMOGRAPHICS ON SOCIAL POLICIES AND ON THE EVIDENCE OF GROWTH AND INEQUALITY

  19. THE ANALYSIS: ...the departing point: the nature of the systems • The ‘NHS’:‘NATIONAL’ (aiming to geographical-universal uniform access conditions) ‘HEALTH’ (through an intersectional coordinated action) ‘SERVICE’ (by state administered care). • However: diversity at the point of access is unavoidable (not much contribution to reduce health inequalities in the English NHS–Le Grand); corporative interests of health care providers, rather than health targets, usually prevail; and some care services prove unmanageable in political hands (difficulty to say ‘no’, lack of commitment)

  20. To minorate these problems NHS have moved to the provision/ production split,with DECENTRALISATION in order to improve efficiency (by transferring responsibilities to providers) and assure that, if inequalities, they are ‘acceptable’ (by choice or being local communities financially accountable after the central levelling of resources)

  21. NHS’ SYSTEM INCENTIVES for improvement:For coordination in delivering care (fund-holding on a capitation risk- adjusted basis), mostly centred in primary care management of illnesses (LTCs, Chronic care conditions…) and paying for health outcomes performed.New roles for the private sector: Public-private partnerships, internal markets in providing public services, opening complementary private finance for less cost effective care, once excluded from the public packages

  22. ...the departing point: the nature of the systems. THE SOCIAL HEALTH CARE INSURANCE SYSTEMS: ‘Social’ (community –solidarity- premia); ‘Health Care’ (life cycle utilization of affiliates); ‘Insurance’ (risk pooling, entitlements of coverage); ‘System’ (networks of multiple independent providers). However: Sustainability implies to restrain open access, favoring primary care gate keeping for the delivery of care and a more accurate screening of the basic package granted for collective compulsory finance.

  23. To minorate these problems SHIS have moved towards RISK TRANSFER from insurers to affiliates (copayments, deductibles..) and providers (risk-rating, prospective case-mix payments, global budgeting…) INCENTIVES FOR COORDINATION by inserting into the system new ‘brokers’ of the individuals’ care and lower co-payments to users if they access the system through primary care NEW STRATEGIES IN MANAGING ILLNESS EPISODES, being more selective in what services are ‘in’ and ‘out’ in the former comprehensive package of services

  24. BASIC NHS- SHIS: DIFFERENCES: 1-Degree of choice between cash transfers versus in-kind delivery of care 2-Political involvement still in the public provision/private production split

  25. NHS- SHIS: DIFFERENCES: 3- Scope and actual mix of health care coverage: On basic (tax financed), complementary (tax- favoured, under regulated community premia) and additional (private) package of services. With limited opting-out 4-On the way they allocate the health care management roles and its finance: The flow of Funds

  26. ARGUMENTS FOR ASSESSING THE SUPERIORITY OF EACH MODEL: INCENTIVES TO PROVIDERS FOR AN EFFICIENT AND EQUITABLE DELIVERY COMPATIBLE WITH CONSUMERS’ CHOICE STRATEGIES FOR REDUCING MORAL HAZARD IN HEALTH CARE CONSUMPTION, HOLDING EQUITABLE OUTCOMES THE EFFECTIVENESS OF IN-KIND VERSUS CASH TRANSFERS  IN ACHIEVING POPULATION HEALTH TARGETS

  27. Which part of the coverage should be under public regulation and collective finance: less predictable, more financially catastrophic… How to decentralise responsibilities: minimum risk-pooling for a credible financial transfer and competition by improving providers’ autonomy: the options COMMON GROUNDS IN BOTH SYSTEMS

  28. The frameworks of health care organisation and finance Planning/ Finance/ Insurance Risk management/Purchasing Production of care Health and Finance Depart. /Health Insurance Agencies / Purchasers of care services /Production and Managerial Units …The options

  29. STRATEGIC MANAGEMENT DESIGN (HAX, MAJLUF) Planning System Control System Information Financing System System ORGANISATIONAL CULTURE COST CENTERS / RESPONSIBILITY CENTERS

  30. THE FINANCIAL RISK TRANSFER FROM PAYERS TO PROVIDERS: (AVERHILL, 2003)

  31. Conclusions: Some reflections on policy • More research attention to the long term Epidemiology and the macrosocial determinants of health • The crisis requires in the short term a better targeting of relatively more needed population: taylored made policies, horizontally coordinated, attending for whom and not who has spending responsibilities • From an efficiency standpoint, it should be a clear advantage to invest in children and education (the frail part of the chain). • If intergenerational fairness was to be adopted we would need a more clear understanding of the dynamics of social policy, to include • a) a more gradual reform adjusting social expenditure to a new mix of financial sources: public, private and community regulated contributions) • b) a horizontal accounting system that analyses the welfare situation of specific target groups and age bands cutting across the vertical budget administrations and monitors check-sums of resources and effects obtained.

  32. The relevant factors • Unemployment is linked to poor health and has been associated with increased mortality rates, especially from heart disease and suicide (The Lancet nov 17, 2008, Carol Jagger et al. Inequalities in healthy life years in the 25 Countries of the EU in 2005). Social inequality created by occupational status may call for less universal and more target-oriented welfare policies (A discussion on this: The role of welfare state principles and generosity in social programmes for Public Health The Lancet vol 372, nov 8, 2008)

  33. New focus in the Epidemiology and the macrosocial determinants of health: - The intergenerational equity (the welfare of children: human capital) -on taxation practices (dual fiscal systems lead to regressivity), -the education gap (inequality: effects on smoking and overweight), -zoning laws (mobility and obesity), -corporate practices and nutrition habits (production and design, marketing and retail distribution and pricing) and -in general, contents of the economics and welfare models (dual earner-families; general family policies; or more market oriented policy models) and the incidence of migration in particular (S Putnam and S. Galea Journal of Public Health Policy, 29, 2008)

  34. SOME EVIDENCE: Inequalities in education and death

  35. SOME EVIDENCE Inequalities in education and Smoking and Obesity

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