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, 31st January 2014
Context

Substantial health system pressures in Ireland

Large, real declines in public expenditure
2
Total public health expenditure
2000-2013
18.0
€bn (capital + current)
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
nominal
Sources: Department of Public Expenditure and Reform; CSO
real (2000=1)
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
Approach

Review responses and policy levers in three key areas:




Examine impact of crisis, and health system responses, on
population health




Level and mix of statutory resources for health
Health cover
Health service efficiency
Mortality
Self-assessed health
Health behaviours
Conclusions
5
1

Level 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
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
Public health expenditure as
% total health expenditure, 2000-2011
% of total health expenditure
80.0
75.0
70.0
65.0
60.0
55.0
50.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Ireland
OECD
Source: OECD
8
Public health expenditure as % of total
public expenditure, 2008-2012
% of total public expenditure
30.0
28.0
26.0
24.7
24.6
24.4
2008
2009
2010
24.7
25.1
24.0
22.0
20.0
2011
2012
Source: Department of Public Expenditure and Reform
9
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 2013
10
2

Health 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
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
Population cover (%)
100%
90%
80%
% of population
70%
60%
50%
40%
30%
20%
10%
% Category I
% GP Visit card
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
0%
% Category II
Source: Thomson et al. (2012), Figure 4.2
13
Changes to statutory coverage

Breadth


Scope


e.g., re-introduction of means test for over 70s in 2009, proposed
extension of GP visit cards to all those 5 and under
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
Policy options

Breadth



Scope



International trend is towards increasing coverage
Removing coverage increases role for PHI (fiscal pressure via tax relief)
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
3

Health 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
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
Policy options

Payment of providers




Reform of delivery structures




GPs: increasing capitation component
Acute hospitals: increased use of DRGs, MFTP
Specialists: salary levels
Primary care teams
Integration across primary, community and acute sectors
Hospital autonomy
Input prices

In particular, pharmaceuticals
18
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.)
All- and cause-specific mortality
2007-2010 (age standardised)
2007
(per 100,000
pop)
2010
(per 100,000
pop)
change
Cancer
246.8
227.3

Endocrine
22.8
19.5

Mental & behavioural
15.9
20.1

Nervous
28.9
29.4

Circulatory
322.6
272.0

Respiratory
110.1
95.6

Digestive
35.6
30.0

Genitourinary
22.3
19.6

External injury & poisoning
43.8
38.6

All causes
877.6
775.4

Note: Causes of death with rates below 10 are excluded
Source: OECD
20
Mortality from ‘external causes of death’
2007-2010
Deaths per 100,000 population
(standardised)
14
12
10
8
6
4
2
0
2007
2008
Transport Accidents
Source: OECD
2009
Intentional Self-Harm
2010
Self-assessed health &
subjective well-being, 2007-2012
% >= ‘good’ self assessed
health
% ‘very’ satisfied with life
2007
84.2
33
2008
84.4
29
2009
83.4
29
2010
83.3
31
2011
83.4
29
2012
n/a
25
Sources: OECD; Eurobarometer
Alcohol and tobacco consumption
2000-2011
16
3.0
14
2.5
2.0
10
8
1.5
6
1.0
4
0.5
2
0
0.0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Alcohol consumption (litres per capita)
Source: OECD
Tobacco consumption (kgs per capita)
Kilos per capita
Litres per capita
12
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
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
Contact

Dr Anne Nolan
Research Director, TILDA
annolan@tcd.ie

Professor Charles Normand
Edward Kennedy Professor of Health Policy and Management, TCD
normandc@tcd.ie