Social Policy VIII Health

1
Social Policy VIIIHealth

• Dariusz Stanko, Ph.D.
• Department of Social Insurance
• www.sgh.waw.pl/katedry/kus

2
Negative definition of health

• Health is the absence of disease, dysfunction or
  injury
• Health is a normal state of the organism in which
  there is no physical or psychic sickness and all
  parts of the organism realize their functions

3
WHO definitions of health

• Health is a state of complete physical, mental
  and social well-being and not merely the absence
  of disease or infirmity.

• accepting the positive concept of health -
  health is not any longer dependent on the notion
  of sickness
• assuming the subjective opinion on ones health
  status as the proper (and in some
  interpretations even as the privileged) health
  criterion
• professional (medical) criteria are not the sole
  criteria for assessing health
• explicit inserting the health concept into wider
  context of social norms and values
• Source Wlodarczyk C. (1996), Polityka zdrowotna
  w spoleczenstwie demokratycznym, Vesalius,
  Kraków, s.106

4
The right to health

• access to medical care as the human right (The
  United Nations Universal Declaration of Human
  Rights, adopted in 1948).
• religions and humanists support for this view
  while...
• some other ideologies (laissez-faire etc.)
  providing health care funded by taxes immoral
  legalized robbery, infringement of some ones
  own will, doctors as the traders

Source http//en.wikipedia.org/wiki/Healthcare
5
EU health Common Values and PrinciplesCouncil
of the European Union, June 2006

• universal coverage
• solidarity in financing
• equity of access
• provision of high quality health care

Source Thomson S., Foubister T., Mossialos E.
(2008), Health Care Financing in the Context of
Social Security, study for the European
Parliament,IP/A/EMPL/ST/2006-2008, page 1.
6
Threats to the four values system

• 1. Uncertainty around the full reach of the EUs
  Internal Market Rules non-applicability of
  Internal Market rules to public health systems
  (as provided by the Treaty of the EU) is getting
  less clear-cut
• ruling from the ECJ on the right to receive
  treatment in other member states
• attempt to include health care in the proposed
  Services Directive
• growing complexity of the public-private mix in
  health care
• 2. Two potential cost drivers
• population aging
• innovation in health technology

Source Thomson S., Foubister T., Mossialos E.
(2008), Health Care Financing in the Context of
Social Security, study for the European
Parliament,IP/A/EMPL/ST/2006-2008, page 1.
7
Aims theoretical framework (Barr, 1998)

• Allocative efficiency quantity, quality, and
  mix of health interventions (also preventive care
  and health education)
• external efficiency size of the health sector
  as a proportion of GDP and the way to divide
  resources between alternative uses within the
  health sector
• internal efficiency running medical
  institutions as efficiently as possible
• Equity in consumption as equity of
• public expenditure
• use (same needs same quantity)
• cost (same treatment same costs)
• outcome (but unequal allocation due to various
  health status or educational attainments)
• Equity of opportunity (same care as anyone else
  in the same medical conditions)

Source Based on Barr (1997 chapter 12).
8
Factors affecting health

• biology (genetics) some 15
• behaviour (lifestyle, health related habits -
  smoking, diet, nutrition, alcohol binge
  drinking, sexual behaviour) and psychosocial
  factors (stress, risk taking etc.) some 50
• environment some 20
• health care system some 10

Source Research of C. Wlodarczyk.
9
Life expectancy at birth and health spending per
capita, 2005
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113221054683
10
Mortality road accidents mortality rates, 2004
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113524161632
11
Mortality AIDS incidence rate, 2005
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113724174126
12
Mortality AIDS incidence rates
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113724174126
13
Ischemic heart disease (heart attack), mortality
rates, 2004
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113384677718
14
Stroke, mortality rates, 2004
1) 2003. 2) 2002. 3) 2001.
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113384677718
15
Mortality infant mortality rates 2005
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113588610054
16
Mortality infant mortality rates 1970-2005
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113588610054
17
Perceived health statusPercentage of adults
reporting to be in good health, f and m combined,
2005 (or latest year available)
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113710855475
18
Percentage of adult population smoking daily, 2005
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113773816887
1) 2004. 2) 2003. 3) 2002.
19
Tobacco consumption, 1980 and incidence of lung
cancer, 2002
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113773816887
20
All cancers, mortality rates, males and females,
2004
1) 2002. 2) 2003. 3) 2001.
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113450104303
21
Alcohol consumpt. in l/capita, population
15 years, 2005
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113804155542
1) 2003. 2) 2004.
22
Percentage of adult population with Body Mass
Index over 30 (obese population), 2005 (or latest
year available)
For Australia, the Czech Republic (2005),
Luxembourg, New Zealand, the United Kingdom and
the United States, figures are based on health
examination surveys, rather than health interview
surveys.
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113882465568
23
Practising physicians per 1 000 population, 2005
(or latest year available)
1) Data for Spain include dentists and
stomatologists. 2) Ireland, the Netherlands, New
Zealand and Portugal provide the number of all
physicians entitled to practise rather than only
those practising.
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/114007335156
24
Health care system

• Functional definition.
• Goals of the health care systems (WHO, World
  Health Report 2000 Health systems, improving
  performance)
• good health
• responsiveness to the expectations of the
  population
• fair contribution
• Quality vs equity (c.f. Barr)

25
Characteristics of the health care

• The provision of critical health care treatment
  often regarded as a basic human right regardless
  of whether the individual has the means to
  paysome treatments cost more than a typical
  family's life savings.
• Health care professionals are bound by law and
  their oaths of service to provide lifesaving
  treatment.
• Health care costs and benefits difficult to
  measure (Barr, 1998)
• Asymmetric information (or lack of) about
  product, clients, future
• power to enforce customer decisions both factors
  create inefficient consumer choices that leads to
  under/over consumption and inequity (if
  compounded by socio-economic status)
• adverse selection
• moral hazard
• third party problem (zero private costs vs social
  costs)
• High risk level

Source Compilation of various sources.
26
Technical conditions for insurance (Barr, 1998)

• probability of needing treatment must be
  independent across individuals OK, but major
  epidemics?
• probability must be below 1
• OK, but chronic medical problems (diabetics),
  genetic screening?
• probability must be known or estimable
• OK, but policies with benefits that are long
  time in the future (long-term incapacity to work,
  residential-care insurance)
• 4) there should be no problem of adverse
  selection or
• 5) moral hazard
• Conds. 4 5 imply perfect information on the
  part of the insurance company.

27
Total health expenditures in 2004 ( PKB)
() 2003
Source OECD Health Data 2006, October 2006.
28
Total health expenditure as a share of GDP, 2005
1) 2004. 2) 2004-05. 3) Total expenditure on
health in both charts. 4) Public and private
expenditures are current expenditures (excluding
investments).
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/114324554454
29
Total health expenditures ( GDP)
Source OECD Health Data 2006, October 2006.
30
Total health expenditures per capita (USD, PPP)
Source OECD Health Data 2006, October 2006.
31
Total health expenditure per capita in USD PPP
2005
Source Based on OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/113221054683
32
Basic types of health systems

• Bismarcks - insurance
• Beveridges tax-financed, separate fund
• residual market-oriented but public health
• Siemaszkos central planning

Source Paszkowska M. (undated) Zarys
finansowania systemu zdrowotnego w Polsce,
http//www.e-finanse.com/artykuly/56.pdf
33
Framework for descriptive analysis of health
financing functions
Source Thompson et al. (2008) 18.
34
Health care systems - financing

• direct or out-of-pocket payments,
• general taxation,
• social health insurance,
• voluntary or private health insurance, and
• donations or community health insurance.

Source C.f. WHO.
35
Financing taxes

• Direct taxes levied on individuals and
  corporations (eg income tax, corporate tax,
  property tax).
• Indirect taxes levied on the consumption of goods
  and services (eg value-added tax VAT). Taxes
• may be collected by central, regional or local
  governments, going to public budget
• may be earmarked for specific purposes (eg
  education or health).
• The nature of the taxes used to finance health
  care have a bearing on equity in finance,
  transparency and accountability. While direct
  taxes tend to be proportionate or progressive,
  indirect taxes are often regressive.

Source Thomson S., Foubister T., Mossialos E.
(2008) Health care financing in the context of
social security, report for the European
Parliament, IP/A/EMPL/ST/2006-11, page 21
http//www.europarl.europa.eu/activities/committee
s/studiesCom/download.do?file20111
36
Financing social insurance

• Social insurance contributions almost always
  levied on earnings (wages, salary)
• Paid by employees and employers usually set as a
  fixed proportion of income by the government or
  by individual health insurance funds.
• May also cover non-contributors (unemployed
  people, retired people or non-working dependants)
  or the government or other body may make
  contributions on behalf of non-contributors.
• All other things being equal, social insurance
  contributions would be proportionate or mildly
  regressive due to the fact that they are not
  levied on savings or capital gains. In practice,
  there is often a ceiling on how much an
  individual has to contribute,which increases
  regressivity.

Source Thomson S., Foubister T., Mossialos E.
(2008) Health care financing in the context of
social security, report for the European
Parliament, IP/A/EMPL/ST/2006-11, page 21
http//www.europarl.europa.eu/activities/committee
s/studiesCom/download.do?file20111
37
Health insurance coverage for a core set
of services, 2005 (or latest year available)
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/114348073674
38
Financing private insurance

• Private insurance premiums are set by individual
  insurers, almost always as a flat rate per month
  or year. May be
• community rated (the same for all members of a
  particular insurer or other community eg a
  geographical area or a business) or
• risk rated (based on individual or group risk of
  ill health using factors such as age, sex,
  occupation and smoking status etc).
• provided by commercial (for profit) companies or
• public and private non-profit organisations such
  as statutory health insurance funds and mutual or
  provident associations.

Source Thomson S., Foubister T., Mossialos E.
(2008) Health care financing in the context of
social security, report for the European
Parliament, IP/A/EMPL/ST/2006-11, page 21
http//www.europarl.europa.eu/activities/committee
s/studiesCom/download.do?file20111
39
Population covered by private health insurance,
2005 (or latest year available)
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/114348073674
40
Coverage by different private health insurance
types in selected countries, 2005
(or latest year available)
1) Countries where private health insurance
accounts for over 6 of total health spending.
Countries ranked by decreasing share of private
health insurance in total health expenditure.
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/114348073674
41
Financing MSAs

• Medical savings accounts involve compulsory or
  voluntary contributions by individuals to
  personalised savings accounts earmarked for
  health care. Originated in Singapore now used in
  private health insurance markets in the United
  States (health savings accounts) and South
  Africa.
• May be
• stand-alone accounts or
• may be purchased alongside an insurance plan
  providing cover for catastrophic health expenses
  (form of cost sharing).
• Do not involve risk pooling (except if combined
  with insurance), so there is no cross subsidy
  from rich to poor, healthy to unhealthy, young to
  old or working to non-working.
• The only MSAs in EU Hungary, (savings accounts
  that benefit from tax
• subsidies are used to cover statutory cost
  sharing or to cover out of pocket payments for
  services obtained in the private sector.)

Source Thomson S., Foubister T., Mossialos E.
(2008) Health care financing in the context of
social security, report for the European
Parliament, IP/A/EMPL/ST/2006-11, page 21
http//www.europarl.europa.eu/activities/committee
s/studiesCom/download.do?file20111
42
Financing Out of pocket payments

• Out of pocket payments take three broad forms
• direct payments for services not covered by the
  statutory benefits package
• Used to pay for health care not covered by any
  form of pre-payment, usually for services in the
  private sector.
• cost sharing (user charges) for services covered
  by the benefits package
• Statutory cost sharing user charges applied to
  services included in the publicly-financed
  benefits package.
• Informal payments (under the table or
  envelope payments) - charges for services or
  supplies that are supposed to be free and are
  prevalent in several of the NMS and Greece.
• Cost sharing and informal payments lower the
  depth and therefore the level of financial
  protection provided by public coverage.

Source Thomson S., Foubister T., Mossialos E.
(2008) Health care financing in the context of
social security, report for the European
Parliament, IP/A/EMPL/ST/2006-11, page 21
http//www.europarl.europa.eu/activities/committee
s/studiesCom/download.do?file20111
43
Out-of-pocket and private health insurance spendin
g as a share of total health expenditure, 2005
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/114324554454
44
Public share of total expenditure on health, 2005
1) 2004. 2) 2004-05. 3) Share of current
expenditure (i.e. excluding investments).
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/114324554454
45
Public share of expenditure on medical services
and pharmaceuticals, 2005
Source OECD Health at a Glance 2007,
http//dx.doi.org/10.1787/114324554454
46
Breakdown of the percentage of total expenditure
on health by main contribution mechanisms
Source Own complilation based on Thomson et al.
(2008) 84-163
47
Financing health expenditures in the EU

• First, largest group social insurance
  contributions
• The Czech Republic, France, Luxembourg, Estonia,
  Slovenia, Germany, Slovakia, Belgium, Hungary,
  the Netherlands, Romania, Lithuania, Poland and
  Austria
• Second group mainly taxation
• The United Kingdom, Sweden, Denmark, Ireland,
  Malta, Italy, Portugal, Spain and
• Finland
• Third group still rely most heavily on out of
  pocket payments
• Cyprus, Greece, Latvia and Bulgaria).
• A major change since 1996 has been the shift from
  tax to social insurance as the dominant
  contribution mechanism in Bulgaria, Lithuania,
  Poland and Romania.

Source Thomson et al. (2008) 22
48
Contribution rates, ceilings and distribution
between employers and employees in the EU, 2007
Notes CS civil servants EE employee ER
employer F farmers P pensioners SE
self-employed SMU small land users V
voluntary insured
Source Thomson et al. (2008) 28 after EOHSP HiT
reports (www.observatory.dk) and (MISSOC 2007).
49
Direct forms of cost sharing and their incentives
Source Thomson et al. (2008) 54
50
Indirect forms of cost sharing and their
incentives
Source Thomson et al. (2008) 54
51
Health care systems performance
Source Thomson S., Foubister T., Mossialos E.
(2008) Health care financing in the context of
social security, report for the European
Parliament, IP/A/EMPL/ST/2006-11,
http//www.europarl.europa.eu/activities/committee
s/studiesCom/download.do?file20111
52
Costs vs type of financing?

• One recent study published by the National Bureau
  of Economic Research Sherry A. Glied, "Health
  Care Financing, Efficiency, and Equity," National
  Bureau of Economic Research Working Paper No.
  13881, March 2008
• found no systematic relationship between the
  cost efficiency of health care systems and the
  type of financing used. The author concluded
  that almost all financing choices are compatible
  with efficiency in the delivery of health care.

Source Wikipedia, http//en.wikipedia.org/wiki/He
alth_care_system