Lessons from Europe by suchenfz


									European Health Reform
     Lessons for China

   Dr. Henk Bekedam
 WHO Representative China
        16 September 2006

     http://www.wpro.who.int/china   1
         Overview of Presentation:
European Health Reform - Lessons for China
1. Structural characteristics of Health systems
2. Public sector and economy-wide resources to Health
3. Macroeconomic cost containment initiatives
4. Improving cost-efficiency at micro level
5. Ensuring adequate and equitable access to health
6. Improving quality of health services and patient satisfaction
7. Government role in regulating quality, safety and cost control
8. Reflection and ways forward for China
                OECD Health working paper 9: Health care systems: Lessons learned from the reform experience

  1. Structural characteristics of Health
            Systems: Europe
UNIVERSAL coverage to Health with Governments take major responsibilities
- For adequate public health financing
- Universal access and coverage to essential services
Health insurance
  All have some form of publicly financed health insurance
  Private insurance:
    - main mode (Swiss, US)
    - filling the gap in public coverage (Ireland, Italy, Spain)
    - increasing choice & timeliness of care (UK, Ireland, Australia, etc)

Way health systems financed affect equity
  Relying on taxes and social insurance
      more equitable and supports access to care
  Individual premium and cost sharing
      costs of services to those at risk and use services
    Structural characteristics: Europe
Public-integrated model (Australia, Nordic countries, UK pre-1990s)
  Merging of insurance and provision: run like Govt department
   – Staff salary paid and complete population coverage
   – Cost control can easily be done
   – Weak incentives to improve efficiency, outputs, quality and responsiveness to
     patient needs
Public-contract model (UK after 1990s reform, Japan, New Zeeland)
   – Public contract with private health care providers
   – More responsive to patient needs
   – More difficult to contain costs
Private insurance / provider model (Switz mandatory + US voluntary)
   – Affordable insurance not available for all
   – High degree choice
   – Cost control weak
2. Public sector & economy-wide resources to
   Health: Europe
-   Rapid rise of health expenditure in 1960s and 1970s
-   After reductions in 1980s, several European countries have raised
    their public spending on health in the 1990s
    Total health expenditure (THE) averaged:                     8.4% GDP
        with a range from 2.0% for Turkey to 13.2% for the US
    Public expenditure on health averaged:                       6.2% GDP
        Most EU countries over 6% and the lowest is 4.2%, in Poland
        Turkey 1.5%; Korea 2.6%; US 5.9% of GDP
    Public share of THE averages:                                nearly 75%
        Surpasses 70% in most EU countries
            Lowest is 56% in Greece and Switzerland; Dutch 63%
            US and Korea both 44%
-   Devoting more of GDP to health care as society gets richer not
    necessarily inappropriate (Health as a luxury good)                       5
  3. Macroeconomic cost containment
          initiatives - Europe
Two major factors driving up health care spending in Europe:
   –   Technology: likely explained half of the total spending growth
   –   Population ageing

1980s European countries used 3 policy sets to control cost
   often in the following order:
   1. Regulation of prices and volumes of health care and inputs
   2. Caps on healthcare spending, either overall or by sector
   3. Shifts of the cost onto the private sector through increased
      but limited cost-sharing

I. Regulation of prices and volumes of healthcare and inputs

Price controls
       Wage controls esp. in systems with public-integrated systems
       (Denmark, Finland, Ireland, Spain, Sweden, UK)
       Price and fee controls between purchasers and providers
       (Belgium, France, Luxemburg, Germany, Austria, Hungary)
       Administrative price setting for pharmaceutical drugs (all EU
       countries except Germany and Switzerland)
       Disease Related Grouping (DRG)

Price and volume controls
       Prices adjusted as a function of volume to stay within budget
       (Germany – ambulatory care; Austria – hospital care)
       Reduce marginal costing for additional supply and volumes
Cont. I. Regulation of prices and volumes of healthcare and inputs

Volume controls
   Limits on entry to medical schools (most EU countries)
    – requires human resource planning taking into account age related needs increases
   Technology advances can reduce average length of stay in hospitals
    – leading to reduced number of beds per capita

Impact of cost control be undermined by supplier response by:
        Increasing volumes
        Providing and up-rating patient into higher cost classifications
        Shifting services into areas where there are no price controls

Price and wage controls can have negative longer-term supply effects
   Shortage of personnel, affecting flexibility and ability to increase supply

II. Budgetary caps
    Most effective in integrated models (Denmark, NZ, UK) or single
    payer countries (Canada)
      Budget process holds key to cost controls
   More effective for hospital sector
   Indicative budgets/targets – in countries with social-insurance
   systems (Belgium, France, Luxemburg, Netherlands)
   Prospective / forward-looking budgets (hard budget constraint)
   instead of retrospective payments (paying provider on costs basis)
   Limit the incentives to improve efficiency
III. Shifting cost to private sector
     Cost sharing esp. in pharmaceuticals through non-reimbursable and
     Burden those who use services (sick & poor) and potentially
     restricting access to services
4. Improving cost-efficiency at micro level:
Ambulatory care – shifting care to an ambulatory environment helps
  control overall costs and enhance cost-efficiency
The gate-keeping role of GPs has been encouraged in several EU
  countries (France, Norway, UK)
GPs are employed on:
    – salaries (Greece, Finland, Iceland), salary-fee mix (Norway)
    – salary-capitation mix (Portugal, Spain, Sweden)
    – capitation-fee mix (Austria, Denmark, Ireland, Italy, Netherlands, UK)
    – fee for service (Germany)
Reliance on fee-for-service limited to avoid supply-induced demand
Growing interest blending different elements of 3 payment approaches

   Improving cost-efficiency at micro level
    Purchaser (GP fund holders, primary doctors, insurers, patient) / provider split
     – Budgetary authorities: helps control overall costs and enhance cost-efficiency
     – Patients: strengthen quality and accessibility care
Critical issues: (1) Purchaser adequate information; (2) Increasing and competing
    providers and insurers; (3) Administrative cost

Hospital contracting and payment system
   Block or global grants/budgets
     – main payment method in public integrated systems and direct means to control
        spending can be combined with DRG (price and volume)
   Bed-day payments (Switzerland): flat rate per occupied bed
   Payments per case (prospectively) such as Diagnosis Related Group (DRGs)
Fee for service: not used in EU as prone to supplier induced demand!

Enhancing competition among insurers (Dutch: main trust new reform)
Improving cost-efficiency at micro level

Pharmaceutical drugs
  Strict drug approval process and pre-marketing requirements to assess
  whether products are safe & cost-effective for use (widespread in EU)
  Price controls at the wholesale and retail level (widespread in EU,
  convergence in prices across EU countries)
  Distribution of pharmaceuticals governed by national regulation with
  professional bodies, health providers and health users
   −   Number of pharmaceutical wholesalers has decreased
  Rational use supported by:
   −   clinical practice guidelines (widespread in EU)
   −   prescribing budgets and data to provide feedback to individual doctors
  The degree for cost-sharing for drugs has been more widespread than
  for other components of healthcare – demand
 Improving cost-efficiency at micro level

Technological change
  Major impact health outcome per disease and major driver health
  care spending
  Pre-marketing controls to determine whether a new technology is
  safe and cost-effective for a particular use (widespread in EU)
  Budget caps to purchase equipment make hospitals more selective
  in acquiring new technologies (wide-spread; similarly, capital charges
  in UK)
   – Purchase of high technical equipment through central committee

     5. Ensuring Adequate and Equitable
          Access to Health: Europe
Universal coverage as policy objective means that everyone has
  access to appropriate care when they need it and at affordable cost
   – Also adopted by poorer European countries (Moldova and
    – Belgium, Finland, Greece, Portugal, Spain

The approach generally used to attain universal coverage in
  European countries has been:
   – make insurance coverage compulsory
   – include essential health services the service benefit package
   – minimize cost sharing with vulnerable groups often been
      exempted from cost-sharing
   – provider payment methods emphasis is on prepaid and pooled
      contributions and away from user fees
            Stages of coverage and
          organisational mechanisms
                               aym en
                        ck et p t                                 Universal
                 -of -po ymen                                     coverage
            e out prepa
         duc rease
       Re inc
                                                                • Tax-based financing
        and                                                     • SHI
                         Intermediate stages of                 • Mix of tax-based financing
                                 coverage                         and various types of
                                                                  health insurance
                              Mixing community-, cooperative
                             and enterprise-based health
  Absence of                 insurance, SHI-type coverage and
  financial protection       limited tax-based financing
Out-of-pocket spending

   Cont … Ensuring Adequate and Equitable Access to
                    Health: Europe
Many countries have found that universal and comprehensive insurance coverage is not
  always sufficient to ensure equitable access to health services. The following
  problems need to be addressed separately:
   – Shortages or maldistribution of providers or services
   – Socio-cultural barriers

All EU countries, including some of the poorer countries, provide
   nearly universal health coverage to their citizens
    – Out-of-pocket payments of total health spending    below 23%
       in most EU countries (and max 33%, in Switzerland)
    – Out-of-pocket of total household consumption                    below 3%
       in most EU countries (max is 6%, in Switzerland)

Universal coverage
European experience suggests that universal
  coverage has potentially many advantages
   – Improve the health and productivity of the population by
     making health services financially accessible to all
   – Providing coverage for preventive care can lower future
     expenditures for care
   – Reduce the need to provide for a large array of safety-net
     facilities for sick people who cannot afford care
   – Reduce administrative costs because processes such as
     verifying eligibility for the program will not be necessary
   – Reduce problems of adverse selection into health
     insurance plans
   – Enhance fairness in society

  6. Improving quality of health services
      and patient satisfaction: Europe
Policy-makers across Europe increasingly address issues of
      – Inappropriate and poor technical quality of health-care services
      – Patient safety and medical errors
Increased accountability for quality
(1) Improving information systems and make reports public on health-
     care quality and performance of hospitals, individual providers, health
     insurance plans to enhance health system performance
     –    DRG as a measure of quality (Czech)
     –    Funding reward (UK)
(2) Standardizing protocols and involvement professional associations
(3) Mandatory accreditation
     – Setting targets and standards for improvement
(4) Formalizing patients’ rights and introduction of patient safety program
7. Government role in paying, providing and
   regulating: Europe
Government as the provider & payer of services, using tax revenues:
  UK, Finland, Denmark, Ireland, Sweden, Norway, Spain
Government as the payer of services, using tax revenues; private
  providers: Canada
Government oversees the provision & payment of services by non-
  profit organizations (sickness / insurance funds) which rely on
  employer & employee contributions: Germany, France, Netherlands
Government provides safety net for those outside private insurance
  schemes: Switzerland
Government strongly regulates or oversees quality, safety and cost

    8. China Reflection
                  Structural characteristics

China weak regulator function (cost, quality, safety)
Insurance coverage low with incomplete package
    – Urban: 55%, employment based + commercial and non-commercial health insurance
    – Rural: 25%, voluntary, focus catastrophic illness, very low reimbursement level (30%)
“Insurers” either way Govt (MoLSS, MCA) or scattered rural schemes
   (RCMS) have limited or no negotiation power with provider
Provider merely public but salary paid 50 – 90% through user fees:
    – Increasing amounts of clinical care and under-providing preventive and basic care
    – Prescribing excessive and unnecessary amounts of drugs and diagnostics
    – Cost control measurements difficult due to dependency on user fees

China reflection ……
Resources to Health
Health expenditure in China
Health expenditure (2000): $45 per capita per year
Health expenditure (2004): $71 per capita per year (5.6% of GDP)
Total Health Expenditure (THE)
  Govt                         17% in 2004 vs. 40% in 1980
  Insurance mainly urban       29% in 2004 vs. 40% in 1980 (Rural)
  Individual (HH)              54% in 2004 vs. 20% in 1980
Fear that health care cost will reach 8 - 10% of GDP in 5 years time
without necessarily improving quality due to limited mechanisms and
tools to control costs (price) and quantity (volume)
Drugs consist 44% of THE. In Europe this around 15%
China reflection ……
Improving cost efficiency at micro-level

China’s experience in public spending on Health
   68% of public health resources toward hospitals for mainly urban
   residents and insufficient public resources go to “public goods”
   Local governments in poor areas, which are responsible for financing
   health services, face sharp financial constraints and fail to fulfill their core
   public health functions – unfunded mandates

Doctors outnumber nurses
No gate keeper and excessively using tertiary services, bypassing available
  health services in the community – TRUST, increasing cost

China reflection ……
Ensuring adequate and equitable access to Health:

China Health services are: (1) grossly under-funded by Govt; (2)
    insurance coverage low; (3) packages inadequate; (4)
    reimbursement low and (5) health workers relying on user fees.
This has resulted in:
     Over two thirds of China’s population need to rely on their own pockets
     to cover the cost of medical bills
     Out-of-pocket spending is 54% of total health spending
     Health care cost main single reason for people falling into poverty
     (30% NHSS; 50% DRC report)
    Govt acknowledges accessibility to Health as key problem with around
    40% of population lacking access to hospital – mainly financial
                European lessons learned in Health Reform
         Reflections and ways forward for China
1.   Step by step ….
2.   Clarify vision and strengthen Government role in Health:
          Govt to increase public expenditure towards public health and to support
          safety net and access to Health for the West and the poor
          Regulator in safety, quality and cost
     Senior level endorsement required to guide the many actors in Health
3.   Consider universal coverage to essential services:
          Make health insurance compulsory
          Improve, expand and integrate current urban, rural health insurance, and
          medical financial assistance with focus on ensuring access to Health for the low
          resource areas and safety net for the poor.
          Include essential heath services in package with focus on West and the poor
       Reflections and ways forward for China
4.   Change the method of provider payment:
         Towards prepaid and pooled contributions away from user fees
         Introduce forward looking budget instead of retrospective payments
         Strengthen the role of purchaser of health services
5.   Put in place cost containment tools and mechanisms
         Regulate price and volume of health care & inputs
         Caps on health care spending
         Develop National Medicine Policy, registration, pricing, distribution, rational
6.   Strengthen ambulatory care and introduce gate keeping village
     clinics and urban community health centers
         Improve quality of health services at lower level – gain trust
     Reflection and ways forward for China
7.    Improve quality of health services, especially at lower level
          Standardize treatment protocols
          Introduce mandatory accreditation
          Improve reporting system and ,make reports public on health care quality
          Improve quality of staff at lower level

8.    Introduce health system indicators that will focus on accessibility
      to quality of health services instead of availability

Involve all stakeholders in the process



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