This presentation by Anita CHARLESWORTH was made at the 3rd Joint DELSA/GOV Health Meeting, Paris 24-25 April 2014. Find out more at www.oecd.org/gov/budgeting/3rdmeetingdelsagovnetworkfiscalsustainabilityofhealthsystems2014.htm

1. © Nuffield Trust25 April 2014
User Changes and Co-payments: How
useful and how dangerous?
Anita Charlesworth
Chief Economist
Nuffield Trust

2. © Nuffield Trust
The concerns about user charges and co-payments
• User charges increase the financial burden on households, and, in general, they
do not differentiate effectively between cost-effective and low-value care.
• They reduce use among lower-income individuals and older people, even when
the level of user charges is low.
• Increasing user charges in primary or ambulatory care may worsen health
outcomes. In some cases they may increase spending in more expensive acute,
emergency care.
• The transaction costs involved may be significant.
(Wagstaff and others 1992, Newhouse & Rand Corporation Insurance Experiment Group,1993; Gemmill
and others 2008 Braithwaite and Rosen, 2007; Bach, 2008; Thomson and others, 2009, Trivedi and others
2008, Goldman and others 2007).

3. © Nuffield Trust
0%
10%
20%
30%
40%
50%
60%
Proportionofhealthspending%
out of pocket as a % of spending Average Out of pocket spending
Source: OECD 2013
Out of pocket spending and health spending as a share of
GDP across the OECD

4. © Nuffield Trust
Out of pocket spending and health spending as a share of
GDP across developed countries
Source: OECD 2013
0%
5%
10%
15%
20%
25%
30%
35%
Proportionofhealthspending%
out of pocket as a % of spending health spending as a share of GDP
Average out of pocket Average health spending as share of GDP

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Why do user charges and co-payment policies continue to
be such a focus on policy debate and action
• Unpalatable alternatives?
• Scope to raise revenue which although comparatively small are
important in an economic and fiscal crisis?

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Bringing tax and spend back to pre-crisis levels

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Government spending as a share of total budget

8. © Nuffield Trust

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Relationship between out of pocket expenditure and male
PYLL (23 countries)
R² = 0.0033
0
1000
2000
3000
4000
5000
6000
7000
0% 5% 10% 15% 20% 25% 30% 35%
Potentialyearlifelossmale
Out of pocket as a proportion of spending %

10. © Nuffield Trust
Relationship between out of pocket expenditure and female
PYLL (23 countries)
R² = 0.1307
0
500
1000
1500
2000
2500
3000
3500
4000
0 5 10 15 20 25
PYLLallcausesfemale
Out of pocket as proportion of spending %

11. © Nuffield Trust
Relationship between Out of pocket expenditure and gap
between male/female, potential year life loss (PYLL) (23
countries).
R² = 0.2656
0%
10%
20%
30%
40%
50%
60%
0% 5% 10% 15% 20% 25% 30% 35%
percentagechangebetweenmaleandfemale,PYLL
allcauses
Out of pocket as a proportion of spending %

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What is the role of user charges and co-payments in health
system sustainability
• Increasing user charges and co-payments in countries with
universal coverage is tempting as a short-term source of
additional revenue. But they are unlikely to improve system
efficiency.
• In assessing the health effects policy makings need to consider
the alternatives which may have equal if not greater negative
impacts on health or well being.
• User charges and co-payments are unlikely to improve long-
term sustainability for which stable funding growth and
sustained productivity growth is key.

13. © Nuffield Trust
Size of over and underspending in percentage of budgeted
spending (2006 – 2012)

14. © Nuffield Trust23 April 2014
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