Professor Peter smith

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Peter Smith, Professor of Health Policy at Imperial College London
'Healthcare in Europe – a macroeconomic viewpoint'

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  • This conceptual framework provides the conceptual backbone for this presentation. The case for health systems investment rests on the understanding that health systems are intricately linked to health, wealth and well being , with the causal, direct and indirect relationships between the key elements captured by the ‘conceptual triangle’ . Importantly, it positions health system investment in a direct relationship with the ultimate goal of all social systems: societal well-being. Health systems contribute to societal well-being in three main ways : First, and above all health systems produce health which is both a major and inherent component of well-being and through its impact on wealth creation, and indirect (yet key) contributor to well-being. Second, although to a much lesser extent, health systems have a direct impact on wealth as they are a significant component of the economy which again impacts on societal well-being. Third, health systems contribute directly to societal well-being because societies draw satisfaction from the existence of health services and the ability of people to access them. Note that there is much debate about the boundaries of the health system with Member States taking different definitional approaches. This presentation takes a pragmatic approach and adopts the definition of health systems as all the activities whose primary purpose is to promote, restore or maintain health including i) the delivery of (personal and population based) health services; ii) those activities (within the functions of finance, stewardship and resource generation) to enable the delivery of services and iii) stewardship activities aimed at influencing the health impact of activities in other sectors such as education or environment. Therefore, the presentation takes a broad approach including all public health interventions those provided by the health services (secondary and tertiary prevention) as well as those aimed at addressing health determinants outside the health sector i.e. Health in All Policies. Ultimately, the aim is not to assess investment on health service interventions in isolation but to set them against interventions in other sectors and compare them in light of their health and cost effectiveness impact.
  • Gives public spending by ICD chapter per capita. Excludes ‘other’, mainly GP services, £495.50 per capita. Total spending is £2,043.23 pc
  • Calculated using econometric analysis of link between disease programme spending and mortality data in 152 English primary care trusts
  • Professor Peter smith

    1. 1. Healthcare in Europe –a macroeconomic viewpoint Peter C. Smith Imperial College Business School and Centre for Health Policy peter.smith@imperial.ac.uk
    2. 2. Investing in Health Systems A Conceptual Framework Health Systems Societal Well-being Health WealthSource: McKee, M. and Figueras, J. (2011), Health systems, health,wealth and societal well-being: assessing the case for investing inhealth systems, Maidenhead: Open University Press.
    3. 3. How do health systems contribute to wellbeing?• Through their impact on wealth – Health services as a core part of the economy – Helping improve productivity• Through their impact on health – Increasingly recognized as an important determinant of health – Many health technologies are very good value for money• Directly through their impact on social protection
    4. 4. Health Systems Societal Well-being Health Wealth1. HEALTH SYSTEMS AND THEECONOMY
    5. 5. Total spending on healthcare % of GDP18 Australia Austria Belgium16 Canada Chile Czech Republic14 Denmark Finland France12 Germany Greece10 Hungary Iceland Italy8 Japan Korea Luxembourg6 Mexico Netherlands New Zealand4 Norway Poland Portugal2 Slovak Republic Spain Sweden0 Switzerland Turkey 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 United Kingdom United States Ireland
    6. 6. Future healthcare spending• The US Congressional Budget Office (2007) estimates that – with no policy change – total spending on health care will rise from 16 percent of the US economy in 2007 to – 25 percent in 2025 – 37 percent in 2050 – 49 percent in 2082.• Congressional Budget Office. 2007. The Long-Term Outlook for Health Care Spending. Washington DC: Congress of the United States.
    7. 7. Public spending on healthcare % of total120 Australia Austria Belgium Canada100 Chile Czech Republic Denmark Finland France 80 Germany Greece Hungary Iceland 60 Italy Japan Korea Luxembourg Mexico 40 Netherlands New Zealand Norway Poland 20 Portugal Slovak Republic Spain Sweden Switzerland 0 Turkey 0 3 6 9 2 5 8 1 4 7 0 3 6 9 2 5 8 United Kingdom 6 6 6 6 7 7 7 8 8 8 9 9 9 9 0 0 0 United States 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2 Ireland
    8. 8. RAND projections for US (2005)• Reductions in spending resulting from better health will be outweighed by the costs of new technologies, and by additional health expenditure during the additional years of life that the technologies make possible.• Although highly socially desirable, tackling chronic diseases will not in general save money.• The one exception may be obesity.• RAND Health. 2005. Future Health and Medical Care Spending of the Elderly. Santa Monica: RAND.
    9. 9. Estimates of NHS expenditure growth drivers, 2002-2022 , optimistic scenarioWanless, D., Appleby, J., Harrison, A., Patel, D. (2007), Our Future Health Secured? A review of NHS funding and performance, London: King’s Fund 250 200n150oillib£100 50 0
    10. 10. Health Systems Societal Well-being Health Wealth2. HEALTH SYSTEMS AND HEALTH
    11. 11. Life expectancy at birth90 Australia Austria85 Belgium Canada Chile80 Czech Republic Denmark Finland75 France Germany Greece70 Hungary Iceland65 Italy Japan Korea60 Luxembourg Mexico Netherlands55 New Zealand Norway50 Poland Portugal Slovak Republic45 Spain Sweden Switzerland40 Turkey 0 3 6 9 2 5 8 1 4 7 0 3 6 9 2 5 8 United Kingdom 6 6 6 6 7 7 7 8 8 8 9 9 9 9 0 0 0 United States 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 Ireland 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2
    12. 12. OECD Rankings• Determinants of life expectancy – Health care spending – Education – GDP – Pollution – Alcohol – Tobacco – Diet• Residual is health system efficiency Joumard, I., C. Andre, C. Nicq and O. Chatal (2008) Health status determinants: lifestyle, environment, health care resources and efficiency. Economics Department Working Paper 627. Paris: OECD.
    13. 13. Joumard et al (2008): Country-specific effects (life years) relative to OECD average Iceland Australia New Zealand Korea Greece Canada Finland Poland Sweden France Belgium Ireland United Kingdom Czech Republic Netherlands Switzerland Austria Germany Turkey Denmark Norway Hungary United States-5 -4 -3 -2 -1 0 1 2 3
    14. 14. Programme budgeting expenditure England 2010/11 £per capitahttp://www.dh.gov.uk/en/Managingyourorganisation/Financeandplanning/Programmebudgeting/index.htm
    15. 15. Estimates of marginal costs of saving a life year, by disease programme, England 2005/6 • Cancer £13,900 • Circulatory disease £12,600 • Respiratory problems £7,400 • Gastro-intestinal £19,000 • Diabetes £26,500Martin, S., Rice, N. and Smith, P. (2012), “Comparing costs and outcomes across programmes of healthcare”, Health Economics, 21(3), 316-337.
    16. 16. The Effects of Health Coverage on Population Outcomes: A Country-Level Panel Data Analysis by Rodrigo Moreno-Serra and Peter C. Smith (2011)• Examines the link between health spending and health outcomes in 153 countries over a 14 year period• Results strongly indicate that higher government health spending per capita reduces both child and adult mortality rates.• The estimated gains are larger for low and middle income countries than in the full sample.• The implied marginal cost of saving a year of life is around US$1,000 in the full sample of countries.• Public spending seems more effective in reducing mortality than prepaid private insurance• Investing in broader health coverage can generate significant gains in terms of population health. http://resultsfordevelopment.org/projects/transitions-health-financing
    17. 17. Health Systems Societal Well-being Health Wealth3. HEALTH SYSTEMS AND SOCIALPROTECTION
    18. 18. 5 July 1948 th • “...there are no charges, except for a few special items. There are no insurance qualifications. But it is not a ‘charity’. You are all paying for [the NHS], mainly as taxpayers, and it will relieve your money worries in times of illness.”
    19. 19. Out-of-pocket spending on healthcare: % of total80 Australia Austria Belgium70 Canada Chile Czech Republic60 Denmark Finland France Germany50 Greece Hungary Iceland40 Italy Japan Korea Luxembourg30 Mexico Netherlands New Zealand20 Norway Poland Portugal10 Slovak Republic Spain Sweden Switzerland 0 Turkey 0 3 6 9 2 5 8 1 4 7 0 3 6 9 2 5 8 United Kingdom 6 6 6 6 7 7 7 8 8 8 9 9 9 9 0 0 0 United States 9 9 9 9 9 9 9 9 9 9 9 9 9 9 0 0 0 Ireland 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2
    20. 20. 20 Cost-Related Access Problems in the Past Year Percent AUS CAN FR GER NETH NZ NOR SWE SWIZ UK USDid not fillprescription or 12 10 7 6 3 7 6 7 4 2 21skipped dosesHad a medicalproblem butdid not visit 13 4 6 16 2 9 6 5 6 2 22doctorSkipped test,treatment, or 14 5 6 10 3 8 5 4 4 3 22follow-upYes to at leastone of the 22 15 13 25 6 14 11 10 10 5 33above THE COMMONWEALTH FUND 20Source: 2010 Commonwealth Fund International Health Policy Survey in Eleven Countries.
    21. 21. 21 Overall Views of Health Care System, 2010 Percent AUS CAN FR GER NETH NZ NOR SWE SWIZ UK USOnly minorchanges 24 38 42 38 51 37 40 44 46 62 29neededFundamentalchanges 55 51 47 48 41 51 46 45 44 34 41neededRebuildcompletely 20 10 11 14 7 11 12 8 8 3 27 THE COMMONWEALTH FUNDSource: 2010 Commonwealth Fund International Health Policy Survey in Eleven Countries.
    22. 22. Very strong link between % reporting cost problems and opinions of health system UK NLSWIZ FR SWE NOR NZ CAN GER USA AUSSource: 2010 Commonwealth Fund International Health Policy Survey in Eleven Countries.
    23. 23. Health Systems Societal Well-beingHealth Wealth
    24. 24. Concluding comments• Growth of publicly funded health services one of the major social policy successes on twentieth century• Expenditure on health services yields many gains in social welfare in terms of health, wealth and social protection• Many reasons for seeking to protect publicly funded health services as a priority
    25. 25. ... but if expenditure control becomes an imperative:• Supply side – Little evidence globally that there is scope for step changes in productivity – But potential for gains from (eg) better information, carefully regulated competition etc – Care with incentive effects of provider payment mechanisms• Demand side – Ageing population not intrinsically problematic, but it is if citizens live longer sicker lives – Some scope for public health interventions, especially on obesity, but lack of evidence on effectiveness• Limiting the scope of the publicly funded ‘health basket’ – Careful exclusion of treatments with low cost-effectiveness – More targeted patient charges for treatments of intermediate value
    26. 26. Further reading• McKee, M. and Figueras, J. (2011), Health systems, health, wealth and societal well-being: assessing the case for investing in health systems, Maidenhead: Open University Press.

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