Transcript Leading innovation in world healthcare

European issues in Cost
Containment –
the Italian case
How cost containment policy in
healthcare thwarts patient choice and
innovation
Content
• 1 What is the issue with healthcare?
• 2 How does the Italian healthcare system
operate in this respect?
• 3 How to solve the problem?
1 What’s the Issue with Healthcare?
• Healthcare expenditure has steadily increased over
time
•Cost containment: a major issue
• No structural solutions
• Major future concerns:
– Demographic trends
– Innovation
– Unsustainability of the welfare state
European Trend:
increasing state involvement
• Public arrangements for health insurance
• From self-regulation to state involvement
• Extending material and personal scope
• Values: solidarity (risk, income)
Cost Containment: the Major Issue
• Charges and Co-Payments
• Restrictions (on what is reimbursed by the insurer)
• Budget Setting
• Controls
– NB! Italy has tried all cost containment tools!
2 The Italian Healthcare System:
Overview
• NHS complex network of public and private
providers.
• Financed mainly by public hand (71%) but
covers only 45% of total healthcare
expenditures.
• Providers are either public, private, or
subcontractors for the NHS.
• NHS covers ‘all’ medical care but copayments are significant
The Italian Healthcare System:
Financing
• General revenues (31%)
• Regional taxes on manufacturing (Irap) 1998: Irap
replaced by pay roll taxes
• Pay-roll taxes (59,5%)
• Specific regional contributions (5,5%)
• Revenues of the healthcare sector (4,3%)
– Thus: main source of income: regional taxes on
manufacturing and payroll taxes!
And still those debts!
Cumulative deficits of Italy’s NHS, millions of euros, 1994–1998:
Years
Millions of euros
Up to 1994
1 750
1995
1 170
1996
2 070
1997
5 090
1998
4 130
Cumulative deficit 14 210
Source: Corte dei Conti (Court of Auditors) (10).
Consumption of healthcare
(% GDP - OECD)
12
10
Germany
France
The Netherlands
Belgium
Italy
Austria
UK
Spain
8
6
4
2
0
%
Consumption of medicines
(% GDP - OECD)
2
1,8
1,6
France
Italy
Belgium
Germany
Spain
Sweden
UK
The Netherlands
1,4
1,2
1
0,8
0,6
0,4
0,2
0
%
Consultations with prescription
(% - OECD)
100
90
80
Italy
Belgium
Spain
France
Germany
UK
Sweden
The Netherlands
70
60
50
40
30
20
10
0
%
1994: The Italian Reference Price
•Redefined the Positive List
•Clustering based on broad population/
indication: product form not important
•Therapeutic added value for broad
population against “golden standard”
•Nationwide Drug expenditure Budget
•“Free” pricing: based on costs estimates
•Introducing generics
Pharmaceuticals: the key to
changing cost containment policy
• Group A, B, C and H: criteria being ‘clinical
efficacy’, the ‘risk-benefit balance’ of the therapy,
‘acceptability’ of the therapy to patients, and the
costs of the therapy
• Which causes: Long negotiations for Group A, and
especially Group B, products (the ‘gate-keeping’
component’ of the system), causing:
– No incentive for innovation in product form
– No incentive for innovation for sub group
– No incentive for incremental innovation
Essential problems in healthcare, also in
Italy: TPP and ‘one size fits all’
TPP = Any organization, public or private, that pays or insures health or
medical expenses on behalf of beneficiaries or recipients.
• Third-Party Payment leads to
• Excess consumption, which leads to
• Runaway costs, which leads to
• Third-Party rationing, which leads to
• Limited supply of services, which leads to
• Consumer discontent, which leads to
• Governmental interference: out of pocket spending
disappears!
Obstacles to Reform are thus:
• ‘Protect the Hapless Patient’
–Tax code, serious problem for the
sustainability of the welfare state
–Insurance regulations
–Provider regulations
–Infrastructure, entrenched interests
–Entitlement mentality!!
3 How to Solve the Problem?
Moving from “one size fits all”
and Third Party Payment….
Insurer
?
Consumer
Provider
To two Party Contracts and
Patient Choice!
Provider
Insurer
Consumer
Consumer
Employer
Shift in Paradigms:
• See health care as investment and not as costs
• See medicines as part of total health care
• Value innovation in healthcare, also incremental and
also in product form or sub group
• Make market access fast and without unneeded
administration
• Most importantly: EMPOWER THE
PATIENT/HEALTH CONSUMER!
The New Paradigm:
Empower the Patient!
• Voluntary insurance: insurance has always been a
risk sharing institution, so it should be voluntary to
insure some risks
• Restore Patient/Physician direct relationship
• Agencies should be made accountable to the
consumer
• Patients should be able to merge resources: most
importantly with Web-enabled information
Milestones of Reform:
• Governmental Actions should be to:
– Roll-Back Regulations
– Malpractice Reform
– Enact Health Savings Accounts!
facilitate & encourage HSA’s by:
– Tax Credits/Deductions – Individual Market
– Dismantle the reference price system and
introduce patient-centred reimbursements!
Milestones of Reform:
• Private Sector Actions should be to:
– Implement / Deliver HSAs and individual
health plans
– Make prices, such as hospital prices,
transparent
– Improve Individual Markets
– Provide more Information and support
Patients and Patients Groups!
Consequences:
the Healthcare ‘Utopia’
• Government: Spends budget on other issues
• Patients: Keep money ‘in own pocket’; pay for themselves
• Employers: Less paternalism, provide market and finance
• Physicians: Cash practices, retainer medicine
• Facilities: Price disclosure, fewer discounts (esp.
Pharmacists)
• Health Plans: Insurance versus medical management
• Pharma Companies: Price pressure, generic competition,
R&D
Conclusion:
A cost containment policy that
acts on prices and budgets
alone can have serious
implications in terms of
welfare! Patient choice and
patients’ financial responsibily
should replace ‘One size fits all
regulations’.
My favorite one-liner:
“If you think healthcare is
expensive,
try disease”
Eline van den
Broek
the European Independent Institute
www.european-independent.org
Noordeinde 10D
2514 GH Den Haag
The Netherlands
T +31 70 3925180
F +31 70 3651809
[email protected]