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The Impact of the Economic Crisis on Health and the Health System in Ireland Anne Nolan (TCD, ESRI) Charles Normand (TCD) Irish Economic Policy Conference.

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Presentation on theme: "The Impact of the Economic Crisis on Health and the Health System in Ireland Anne Nolan (TCD, ESRI) Charles Normand (TCD) Irish Economic Policy Conference."— Presentation transcript:

1 The Impact of the Economic Crisis on Health and the Health System in Ireland Anne Nolan (TCD, ESRI) Charles Normand (TCD) Irish Economic Policy Conference Dublin, 31 st January 2014

2 Context Substantial health system pressures in Ireland Large, real declines in public expenditure 2

3 Total public health expenditure Sources: Department of Public Expenditure and Reform; CSO

4 Context Substantial health system pressures in Ireland Large, real declines in public expenditure External pressures: Demographic change (population growth; fertility) Internal pressures: Limited capacity in some sectors Weak primary and community care Demand-led schemes High costs (salaries; pharmaceuticals) Programme for Government commitments 4

5 Approach Review responses and policy levers in three key areas: Level and mix of statutory resources for health Health cover Health service efficiency Examine impact of crisis, and health system responses, on population health Mortality Self-assessed health Health behaviours Conclusions 5

6 1Level and mix of statutory resources for health Statutory resources, i.e., payments that are pre-paid and mandatory General taxation (direct/indirect) Payroll taxes/social health insurance Mandatory health insurance (e.g., Netherlands) Principles: Adequate level Stability and predictability Fairness/equity Transparency Other (e.g., impact on labour costs) 6

7 Current situation in Ireland Public health expenditure as % of total health expenditure has been falling Trend in contrast to OECD average Increasing reliance on out-of-pocket payments and PHI Public health expenditure as % of total public expenditure has been relatively stable Initial pace of cuts could not be sustained 7

8 Public health expenditure as % total health expenditure, Source: OECD

9 Public health expenditure as % of total public expenditure, Source: Department of Public Expenditure and Reform

10 Policy options Continue with budget reductions Earmark resources for health (within existing funds) Introduce a new source of statutory revenue, e.g., payroll tax But, off-setting reductions in general taxation Adequacy and stability (pro-cyclical fluctuations) Introduce a new source of statutory revenue, e.g., tax on sugar-sweetened drinks (SSD) Primary objective is behavioural change HIA report on SSD tax published in May

11 2Health cover Three aspects of public health cover: Breadth: who is covered? Scope: what is covered? Depth: how much is covered? Are there user fees? Principles, i.e., role of coverage in: Alleviating/exacerbating fiscal pressure Strengthening health system performance Enhancing efficiency in allocation and use of statutory resources 11

12 Current situation in Ireland Complex system of public healthcare entitlements Category I (full medical card) Category II Also GP visit card (since 2005) Other entitlements: LTI, HTD, etc. Role of private health insurance (PHI) Recent declines in cover 12

13 Population cover (%) 13 Source: Thomson et al. (2012), Figure 4.2

14 Changes to statutory coverage Breadth e.g., re-introduction of means test for over 70s in 2009, proposed extension of GP visit cards to all those 5 and under Scope Reductions in dental, optical and aural entitlements Depth Increases in user fees (e.g., public hospital charges; prescription deductible for Category II) Introduction of new user fees (e.g., prescription fee-per-item for Category I) 14

15 Policy options Breadth International trend is towards increasing coverage Removing coverage increases role for PHI (fiscal pressure via tax relief) Scope Role of HTA Streamlining the benefit package is often technically and politically difficult to achieve Depth Usual arguments for user fees do not hold in health care May conflict with Programme for Government objectives 15

16 3Health system efficiency Concerned with purchasing arrangements What to purchase? Who should purchase? From whom? At what price? Under what conditions? Principles: Matching resources to need Reducing waste Ensuring quality Setting priorities 16

17 Current situation in Ireland Purchasing largely co-ordinated by HSE Sometimes also plays a provider role Paying for primary care Paying for acute hospital care Reforming delivery structures Primary care teams Hospital trusts/groups Working practices 17

18 Policy options Payment of providers GPs: increasing capitation component Acute hospitals: increased use of DRGs, MFTP Specialists: salary levels Reform of delivery structures Primary care teams Integration across primary, community and acute sectors Hospital autonomy Input prices In particular, pharmaceuticals 18

19 Impact of economic crisis on health? Caveats Availability of timely data Time lags in effects Establishing causality (crisis, response to crisis, something else?) Large international literature on the impact of the macroeconomic cycle on population heath In general, mortality found to be procyclical (with exception of suicide) In general, poor physical health status found to be procyclical, while poor mental health status found to be countercyclical In general, negative health behaviours found to be procyclical Complex relationships (income, unemployment, leisure-time, stress, access to health care, etc.)

20 All- and cause-specific mortality (age standardised) 20 Note: Causes of death with rates below 10 are excluded Source: OECD 2007 (per 100,000 pop) 2010 (per 100,000 pop) change Cancer Endocrine Mental & behavioural Nervous Circulatory Respiratory Digestive Genitourinary External injury & poisoning All causes

21 Mortality from external causes of death Source: OECD

22 Self-assessed health & subjective well-being, % >= good self assessed health % very satisfied with life n/a25 Sources: OECD; Eurobarometer

23 Alcohol and tobacco consumption Source: OECD

24 Summary Irish health system experiencing unprecedented cuts in expenditure Backdrop of external and internal pressures So far, cuts achieved by cutting staff numbers and pay; increased activity; increased user fees Ongoing concerns over ability to absorb further cuts (in context of rising demand and Programme for Government commitments) Difficult to ascertain impact on health at this stage 24

25 Further Challenges Questions over feasibility of future cuts in required timeframe Programme for Government commitments are welcome, but will require extra resources and strong governance Recognise the difficulty of improving efficiency in times of structural/organisational change Important to maintain a focus on policy goals 25

26 Contact Dr Anne Nolan Research Director, TILDA Professor Charles Normand Edward Kennedy Professor of Health Policy and Management, TCD


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