Abstract
Despite the difficulties in comparing the problems and solutions in the European healthcare system reforms, this paper will emphasise that there are signs of convergence among them given the way that they respond to similar challenges. By observing recent developments in national health services and social health insurance systems the focus will be on common trends. They both appear to favour models of (i) greater decentralisation of responsibilities in managing insurance coverage, (ii) population-based mechanisms to finance providers and (iii) more extensive consumer choice and additional private finance.
Despite different initial foundations, common challenges make for common answers
As is well known, national health service (NHS) and social health insurance system (SHIS) models were conceived in the past century with different initial historical foundations. However, they do seem to apply similar solutions in the way they have developed and manage current problems today (such as the issue of financial sustainability and their aim to better serve citizens' welfare). This leads to convergence. The transfer of responsibilities and financial risk to healthcare providers in general, together with greater clinical autonomy and patient choice, are some of the so called ‘converging policies’. In addition, both types of system try to increase private finance in healthcare expenditure. The need to diversify revenue sources by methods other than collective taxation (either general taxes or specific payroll contributions) arises from the difficulty of balancing the rise in healthcare expenditure with the increasing burden of taxation on the economy. Pressure on containing the tax burden in a global, competitive economy goes hand in hand with the argument that today it is less justifiable than ever to use solidarity finance to provide some services; at least in a universal non-discriminatory way for any type of care that technology makes available. This is particularly the case in developed countries; public resources impact the flat part of the relationship between healthcare expenditure and health. It makes sense in this context to discuss alternative financing for those components of care that prove to be less cost effective, or whose efficacy is in doubt. New forms of ‘utilitarian’ healthcare in a modern, ageing and wealthy society have been suggested. These seem to call for more out of pocket payments (such as charging fees, co-payments and complementary premiums) and hence less redistributive taxation. In other words, to continuously finance those new forms of healthcare by coactive taxes and to provide services on a universal basis, as most NHS systems have traditionally done, without needs and means testing, may prove to be unfair. This is due to the fact that to raise revenues by increasing taxes in order to finance new healthcare spending may no longer be income progressive. Taxes today tend to be more regressive than in the past.
Our modern fiscal systems are indeed ‘dual’ at present, in the sense that they tax labour more than capital income. Taxes on capital gains try to favour savings above consumption. It is seen to be easier to increase indirect rather than direct taxes. All this builds in regressive taxation policies. In this context, more selective (redistributive), rather than universal, public expenditure is needed more than ever. Public finance should be focused on the more cost-effective components of healthcare that are technologically available, which creates the need to discuss what role private resources should have in financing some components of the new ‘cure and care’ vector for health in most European healthcare systems. SHIS seem to have some advantages in achieving this, as private sources of finance have always played a role; but NHS cannot avoid this discussion.
Another common response observed in the way healthcare systems reform their financial mechanisms has to do with the idea that the providers' autonomy should go in tandem with the financial transfer of responsibilities; strengthening of the role of primary care as a gate keeper for patients to access healthcare services. NHS have some advantage in achieving this since restricted access has always existed, but migration from fee for service payments and from unrestricted consumer choice are also being proposed today in SHIS. In this new context, risk-adjusted capitation formulas are proposed for those public entitlements covered by the basic public package (desirably, on the cost-effective side of the balance). However, they may be complemented with private finance, either for excluded services, or non-substantial aspects of care among those included, given the fact that not everything of the best quality can be provided free for all. NHS-type systems show more difficulty in moving in this direction, although they have entered the debate.
A global management trend
Does this mean that a ‘global management trend’ is arising from all of those factors? Is it evidence based? Is managed care the convergence factor? Can we detect a common trend towards the integration of healthcare and/or towards the creation of (virtual) holdings of healthcare providers? Yes. We believe that this is indeed the case. Effective health planning and efficient managed care require a shift in the financial risk, in all these cases, from payers to providers, more explicit financial (professional) incentives to clinicians for efficient care delivery and the creation of competition among providers in cost, scope and quality of services, embedded with a higher role for consumer choice.
Does this mean that a perfect system exists for healthcare? Yes, we believe that this is possible, although today it is still much easier to define than to implement. Nevertheless, basic features are:
1.The integration (even virtually, there is no need for it to be done hierarchically) of providers for better coordinated management of services;
2.Clear purpose, in the fact that the main target for the finance of our health systems is to improve population health outcomes, and for this, healthcare services and healthcare providers are simply inputs in the process;
3.The need to align incentives among all healthcare agents in the added value chain for health, in order to avoid the effect that ‘whenever it is worst for the system’ (lower patient health or more illness episodes), it is ‘better for the providers’ (larger amounts of finance for providers' tasks and supply of inputs);
4.The search for a better balance between user charges and tax payer's revenues in order to make the system sustainable.
These changes lead to contracts between financers and insurers, which combine prospective capitation rates, good for efficiency (promoting prevention) and risky for equity (incentives to select patients), and retrospective financing (the opposite effects). This means that purchasing healthcare coverage, rather than health services, under population risk-adjusted mechanisms and optimal risk pooling, will be likely with reinsurance.
With regard to the contracts between insurers and healthcare providers, a budget-based contract on case-mix adjusted activity is likely to be the best option. In addition, it may be necessary to blend prospective costs with actual costs and to adjust global budgets by re-scaling payment units according to the financial restrictions and existing activity levels. Finally, with regard to the users' financial flows, money should follow the patient's choice; hand-in-hand with individual decisions on coinsurance for complementary services, and with co-payments at the providers' level, where this is the case. Equity adjustments through fiscal expenditure and selective tax reductions may be in place too.
In addition, a desirable feature of the convergence trends of NHS and SHIS is to achieve greater accountability at all levels: politicians facing tax payers by explicit prioritisation; insurers facing politicians in proving comprehensive and no-risk selections; providers facing insurers by supplying cost-effective healthcare without waste; and in general, users facing providers, insurers and politicians, gaining social legitimacy by proving that the whole system is good value for money (the goals of the system are achieved at lower social costs).
Acknowledgements
Declaration of interest: Guillem Lopez-Casasnovas is a member of the Center for Health and Economics (CRES) at the University of Pompeu Fabra. CRES is supported by an unrestricted grant from the Merck Foundation.