Are Health Problems Systemic?

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1 Document de travai Working paper Are Heath Probems Systemic? Poitics of Access and Choice under Beveridge and Bismarck Systems Zeynep Or (Irdes) Chanta Cases (Irdes) Meanie Lisac (Bertesmann Stiftung) Karsten Vrangbæk (University of Copenhagen) Urika Winbad (Uppsaa University) Gwyn Bevan (London Schoo of Economics) DT n 27 September 2009 Institut de recherche et documentation en économie de a santé IRDES - Association Loi de rue Vauvenargues Paris - Té. : Fax :

2 Director of pubication: Chanta Cases Scientific adviser: Thierry Debrand InstItut de recherche et documentation en économie de a santé 10, rue Vauvenargues Paris Té: Fax: E-mai: Copy editing: Franck-Séverin Cérembaut - Anne Evans Layout compositor: Khadidja Ben Larbi Distribution: Suzanne Chriqui, Sandrine Bequignon Judgement and opinions expressed in this pubication are those of the authors aone and do not carry endorsement of Irdes.

3 - 1 - Are Heath Probems Systemic? Poitics of Access and Choice under Beveridge and Bismarck Systems Zeynep Or,a, Chanta Cases a, Meanie Lisac b, Karsten Vrangbæk c, Urika Winbad d, Gwyn Bevan e Abstract Industriaised countries face simiar chaenges for improving the performance of their heath system. Nevertheess the nature and intensity of the reforms required are argey determined by each country s basic socia security mode. This paper ooks at the main differences in performance of five countries and reviews their recent reform experience, focusing on three questions: Are there systematic differences in performance of Beveridge and Bismarck-type systems? What are the key parameters of heath care system which underie these differences? Have recent reforms been effective? Our resuts do not suggest that one system-type performs consistenty better than the other. In part, this may be expained by the heterogeneity in organisationa design and governance both within and across these systems. Insufficient attention to those structura differences may expain the imited success of a number of recent reforms. Keywords: Heath system, Beveridge, Bismarck, reforms, performance JEL Cassification: I18, 057. Résumé Pour améiorer a performance de eur système de santé, es pays industriaisés reèvent des défis assez sembabes. Néanmoins, a nature et 'intensité des réformes exigées sont en grande partie déterminées par e modèe de protection sociae mis en œuvre dans chaque pays. Examinant es principaes différences de cette performance dans cinq pays, cet artice compare eur expérience récente de réforme à partir de trois questions majeures : Y a-t-i des différences systématiques de performance entre es systèmes de type beveridgien et bismarckien? Ques sont es principaux paramètres du système de soins à origine de ces différences? Les réformes récentes ont-ees été efficaces? Nos résutats ne suggèrent pas qu'un système-type est invariabement meieur qu un autre. L'hétérogénéité de a conception organisationnee et de a gouvernance tant à intérieur qu à travers ces systèmes expique en partie eurs écarts. Une attention insuffisante à ces différences structurees peut expiciter e succès imité d'un certain nombre de réformes récentes. Mots-cefs : Systèmes de santé, Beveridge, Bismarck, réformes, performance Corresponding author: Zeynep Or, IRDES, 10 rue Vauvenargues, Paris,. Te: ; Emai: a b c d e Institute for Research and Information in Heath Economics, Paris,. Bertesmann Stiftung, Guetersoh, Germany. Department of Poitica Science, University of Copenhagen, Denmark. Department of Pubic Heath and Caring Sciences, Uppsaa University,. London Schoo of Economics, London,.

4 Introduction Finding the right baance between cost containment, promoting choice and quaity, and preserving or enhancing equity of access to care has been one of the major drivers of heath reforms in most European countries. Whie the objective of universa coverage has been attained in most countries, this has not aways been sufficient to ensure equity of access by need and not by abiity to pay, or an equitabe distribution of suppy. At the same time there has been increasing poitica pressure to reorganise deivery in order to improve the quaity of pubicy financed heath care, particuary by reducing waiting times and giving more choice to patients. However, the nature and intensity of these probems seem to be argey determined by the basic socia security mode financing each country s heath care system. On the one hand, it is often said that Beveridge-type, tax-based Nationa Heath Systems ensure more equitabe access, as they are universa in coverage and tend to minimise the probems of risk seection and cost shifting by heath care providers and insurers. Whie these systems aso appear to perform we in containing overa heathcare costs, they have traditionay performed ess we in terms of offering choice for users and generating improvements in capacity (waiting times). Thus the major emphasis of reforms in countries with these systems, such as the, has been to increase choice and reduce waiting times. On the other hand, one of the hamarks of Bismarck-type, insurance-based, systems is the puraity of providers and abundance of choice. However, the major chaenge for these systems is cost containment. As a resut, there has been a noticeabe increase in the eve of government contro and reguation, which may be constraining choice and/or access. For exampe, both and Germany are trying to contro the choice of providers by introducing soft (i.e. optiona) gatekeeping arrangements. These trends coud suggest that a process of convergence in heath care systems is taking pace and the difference between Beveridge and Bismarck is no onger as significant. At the same time, there may be other key contextua parameters of the heath system which need to be taken into account in addressing the specific probems in each country, such as payments to physicians for pubic and private patients. It coud be argued that these reforms have mainy invoved adjustments at the margin and the more fundamenta parameters which distinguish each system remain argey intact. Therefore, this paper focuses on three questions: Are there reay systematic differences in performance of Beveridge and Bismarck-type systems? What are the key parameters, beyond the financing base of heath care system which underie these differences? Have recent reforms adequatey addressed the observed weaknesses of each system and so eroded key differences between them?

5 - 3 - The paper starts off, in Section 2, with an overview of differences in performance of seected Beveridge and Bismarck systems (Denmark, Engand,, Germany, and ). Section 3 identifies each system s key structura parameters which may expain these differences using a common framework to describe different working practices, vaues and capacity underying each system. Section 4 reviews a number of recent reforms addressing performance probems, and common to each system, with the aim of identifying organisationa and poitica requirements for these reforms to be successfu. 2. Comparison of heath system performance in five countries The principa objectives of the heath care system in a countries are to maximise heath outcomes, quaity of care, ease and equity of access, whie at the same time containing costs. The overa performance of a heath system can be measured by the extent to which these objectives are being met. Within this very broad framework, the performance of two Bismarck (Germany, ) and three Beveridge-type (Denmark,, Engand) systems is assessed in this section. Performance assessment of heath care systems is a compex task which needs to take into account a arge number of parameters simutaneousy. Extensive work has been carried out on deveoping an appropriate framework and methodoogy for cross-country performance assessment. Our aim here is not to provide a fu performance assessment of each system but to review a imited set of comparabe data to test the hypothesis that there are systematic differences between Bismarck and Beveridgetype systems with respect to different performance dimensions. We seect a number of different indicators for each dimension to cover different aspects of the heath system and/or different segments of the popuation. The choice of indicators is aso determined by the avaiabiity of comparabe cross-country data, which is often probematic. We then cacuate a score for each country and on each dimension based on their average performance rank on a scae of one to five. Cost containment As part of any assessment of the performance of the heath care systems, it is important to evauate not just how each system performs in terms of heath outcomes, but aso how much each system costs. In Figure 1, we compare the cost of resources consumed by each heath care system with three common indicators: tota heath care expenditure, pubic heath expenditure and tota pharmaceutica expenditure, a expressed as a percentage of GDP. Together, these three indicators give an idea about the opportunity cost of the resources used by the heath sector within each country. The two Bismarck-type systems, foowed by Germany, have the highest tota and pubic heath care expenditure as percentage of GDP. They both devote about 11% of their GDP to the heath sector. The share of pubic heath expenditure in is sighty higher than in Germany (9% against 8.2%). Of the three Beveridge-type systems, the United Kingdom has the owest tota and pubic heath expenditure (about 8 and 7 per cent of GDP), but there is itte differences between Denmark and

6 - 4 - (about 9 and 8 per cent of GDP). In terms of pharmaceutica expenditures however, the differences are more marked. The share of pharmaceutica expenditure in GDP in (1.8%) and Germany (1.6%) is more than twice as high as in Denmark (0.8%), which has the smaest share; (1.3%) and the (1.2%) are in the midde. Figure 1. Tota, pubic heath and pharmaceutica expenditures in five countries, 2006 Tota heath expenditure Expenditure on pharmaceuticas Pubic heath expenditure Germ any 10.6 Germany 1.6 Germ any 8.1 De nmark 9.5 Denmark 0.8 De nmark % of GDP % of GDP % of GDP Source: OECD Heath data, Heath outcomes Defining a singe heath outcome measure combining various aspects of heath status and heath is both chaenging and probematic 1. Here, we use three commony used heath outcome indicators to cover different situations: neonata mortaity, ife expectancy at age 65, and five-year surviva rates after breast/prostate cancer for women and men respectivey. Neonata mortaity is argey used for benchmarking effectiveness of heath care interventions during pregnancy and chidbirth. Life expectancy at age 65 provides a widey estabished summary measure of the heath status of the edery popuation which is not aways covered by other measures. Both of these indicators are aso affected by ife stye and socio-economic factors which coud be seen as outside the scope of heath systems. Surviva rate after cancer provides a more direct indicator of heath system effectiveness (OECD, 2006). Life expectancy at age 65 goes from 20 years in to 17 in Denmark (Figure 2). has the owest neo-nata mortaity rate and the the highest (1.8 and 3.5 per 1000 ive births). aso has the highest five-year surviva rate for breast cancer, foowed cosey by, and Engand the owest (82, 80 and 70 per cent). Germany has the highest five-year surviva rate for prostate cancer and Denmark the owest (76.4 and 38.4 per cent). Hence, there is no cear-cut distinction in terms of these outcomes between Beveridge and Bismarck-type countries. and consistenty outperform the and Denmark whie Germany is typicay paced in between. 1 The technica and theoretica difficuties of producing such a measure are discussed widey around the WHO 2000 exercise of performance measurement. See for exampe, Smith (2002).

7 - 5 - Figure 2. Heath outcomes in five countries, 2006 Neonata mortaity Deaths/1000 ive births Life expentancy at 65 years Germ any 2.6 Germany De nmark 3.2 De nmark Breast cancer surviva 5-year surviva rate (%) Prostate cancer surv. 5-year surviva rate (%) Germany 75.5 Germany De nmark 73.6 De nmark 38.4 Engand 69.8 Engand 50.9 Source: OECD Heath data, 2008, reative surviva rates from Eurocare-3, aged standardised, diagnosed between foowed up unti Responsiveness Increasingy, attention is not just being paid to improving heath outcomes but aso the responsiveness of heath care provided (OECD, 2006). This is often assessed in terms of patient s experience with heath care. Figure 3 provides the resuts from a recent European survey on quaity of care (Eurobarometer, 2007). The question is asked on the quaity of three types of care: hospita, generaist and medica, and surgica speciaists 2. The percentage of peope reporting that quaity of GP and speciaist care is fairy or very good is the highest in, foowed by Germany and Denmark cosey. The picture is somewhat different for hospita care: the percentage of peope reporting that quaity is good is the highest in, foowed by Denmark, whie is in the midde just above Germany and the. Ceary, peope s assessment of quaity depends on a mixture of things incuding their expectations, hence making cross-country comparisons difficut. 2 QA3.1 to 4. Can you pease te me if you think that the quaity of each of the foowing is very good, fairy good, fairy bad or very bad?

8 - 6 - Figure 3. Responsiveness: satisfaction with the care provided (% of persons reporting that the quaity of the foowing are fairy or very good) Generaists Speciaists Hospitas 93% 87% 83% Germany 88% Germany 77% Germany 79% Denmark 91% Denmark 75% Denmark 85% 68% 71% 90% 87% 71% 77% Source: Euro-barometer, Access to care Ensuring that a segments of the popuation can obtain heath care at the right time and pace is aso being seen as an important objective. Figure 4 gives the percentage of peope reporting that access is fairy easy or very easy for each type of care. performs particuary poory on this measure with one third of the popuation reporting that access to generaists is difficut and with this proportion rising to two thirds for speciaist care. Germany, on the other hand, performs significanty better in terms of access to a three types of care. Surprisingy however, the percentage of peope reporting that access is difficut to hospitas and speciaists is very simiar in and in the. It is possibe that peope s expectations differ from country to country, which might expain some of these resuts. Nevertheess, the imited survey data avaiabe from supports the fact that access to certain types of speciaist care, outside of the Parisian region, coud be quite difficut because of the unequa distribution of speciaists (ESPS, 2004). Figure 4. Access to care: persons reporting that it is fairy or very easy to gain access Generaists Speciaists Hospitas 93% 62% 80% Germany 94% Germany 71% Germany 87% Denmark 82% Denmark 54% Denmark 74% 63% 38% 68% 86% 61% 80% Source: Euro-barometer, 2007.

9 - 7 - In order to obtain more objective information on the probems of access in these systems, we tried to gather information on waiting times for primary/secondary care in each country. However, it is very difficut to compare these data as the way the information is coected differs significanty between countries. The perceived wisdom is that ong waiting times are a probem of Beveridge-type systems. The fact that and Germany do not coect any data on waiting times is sometimes used to argue that this is not a probem in these counties (Sciiani and Hurst, 2003). However, at east in, there are some indications that access to eective surgery in some regions coud be a probem for those who are not wiing to pay the extra fees asked by private providers. Moreover, data suggests that the size of the probem varies between the three countries with Beveridge-type systems. Tabe 1 presents the avaiabe information on access to primary or speciaist care in five countries. The data for Engand and Germany refer to out patient visits whie those for and refer to GP appointments ony. In Engand data correspond to effective engths of wait coected from receipts of GPs requests to first outpatient appointment whie in other countries it comes from specific surveys. In Denmark the question asked is on the abiity to get quick hep from a GP, rather than the waiting time invoved. Bearing in mind these caveats, the percentage of peope obtaining an appointment within the same day is quite simiar in and. The information is not avaiabe on the urgency of the probem treated, but in for exampe, ony 14 % of those who waited more than 48 hours for a GP visit wanted to have an earier appointment whie one over three person wanted to have an earier appointment for a speciaist visit for which average waiting time is estimated to be over four weeks (ESPS 2004, IRDES). These data aso need to be interpreted cautiousy given that there may be systematic cross-country differences in the way individuas report on access to care.

10 - 8 - Tabe 1. Waiting times for outpatient visits % Denmark 1 Abiity to get quick hep from GP in acute conditions. Acceptabe to exceent: 66 Abiity to contact cinic by phone. Acceptabe to exceent 71 % of patients getting an appointment with a GP within the same day 65 2 % of patients getting an appointment with a GP within 48 hours 80 % of patients wishing an earier appointment with an out-patient speciaist 32 Engand 3 % of patients with referras seen within 4 weeks for outpatient appointment 40 % of patients with referras who waited more than 8 weeks for outpatient appointment 30 Germany 4 % of patients getting an outpatient appointment within the same day 32 % of patients who waited more than 2 weeks for out-patient appointment 25 % of patients getting an appointment with a GP within the same day 64 5 % of patients getting an appointment with a GP within the week Survey. Research Unit for Genera Practice. Århus University IRDES, Heath, heath care and insurance survey, Compendium of Heath Statistics, Zok (2007), concerns SHI-insured individuas seeking an appointment for an acute condition. 5. Sjukvårdsdata i Fokus, SKL Affordabiity Ideay one s access to care shoud be determined by need and not by his/her socio-economic status or avaiabiity of heath services (objective of equity). One criterion to judge how fairy heath care is distributed wi be its financia burden for users. Eurobarometer survey provides some information on peope s perception on affordabiity. Given the co-payment arrangements often differ between primary and secondary care services, the question is asked separatey for hospita, GP and speciaist services. Figure 5 presents the percentage of the popuation reporting that these services are not affordabe. Figure 5. Affordabiity of heath care: percentage of persons reporting the foowing are not very or not at a affordabe Hospitas Generaists Speciaists 17% 8% 48% Germany 24% Germany 10% Germany 28% Denmark 1% Denmark 1% Denmark 7% 7% 4% 7% 8% 4% 13% Source: Euro-barometer, 2007

11 - 9 - In the two Bismarck-type systems, the percentage of the popuation reporting that care is not affordabe is significanty higher than in the Beveridge ones. In particuar, one out of four peope in Germany report that hospita care is not affordabe, whie one out of two thinks speciaist care is not affordabe in. In marked contrast, ony 1% of the popuation in Denmark reports that hospita and/or generaist care is not affordabe. It is interesting to note that around 13% of peope in the report that speciaist care is not affordabe even though in principe it is free at the point of deivery. This probaby refects use of private speciaists by some peope for shorter waiting times and trave/time cost for others. Affordabiity can aso be compared on a more objective basis by ooking at out-of-pocket expenditures (Figure 6). Despite Denmark s we-rated access to GP and speciaist care, it has the highest per capita out-of-pocket payments (after adjusting for differences in the cost of iving). This is mainy due to copayments for pharmaceuticas (despite exemptions) and for dentistry, physiotherapy etc. Figure 6. Out-of-pocket payments per capita, 2006 /capita, US$ PPP 201 Germ any De nmark Source: OECD Heath Data Authors estimations for the based on data from the OHE and the OECD. Putting the performance pieces together In order to provide a more synthetic picture of how countries vary across the dimensions presented here, we have constructed a simpe score for each country on each of the five performance dimensions taking their average ranks on a scae of one to five for each sub-indicator. Figure 7 presents the positioning of countries on the different dimensions. We cacuated the country ranks in a way that for each dimension (on the axes) the better performers get higher points, the highest point (best performance) being 5. For exampe, concerning cost containment the has the highest score (best performer) and has the worst, given their average ranking on the three indicators presented above (tota, pubic heath and pharmaceutica expenditures). These comparisons iustrate systemic differences on three dimensions: the Beveridge-type systems appears to perform better on cost containment and affordabiity; and Bismarck-type systems appears to perform better on access to care (defined as avaiabiity of services when required). There appears, however, to be no cear systemic differences in performance on heath outcomes and responsiveness:

12 and consistenty perform better than the others on heath outcomes; and and Denmark on responsiveness. Figure 7. Heath system performance: comparison of five countries Cost containment Responsiveness 5,0 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Heath outcomes Germany Denmark Affordibiity Access Cick here to downoad a printabe version of figure 7 (version imprimabe de a figure 7 en tééchargeant ce ien) 3. Comparison of structura parameters The previous section has highighted a number of simiarities but aso significant differences within Bismarck and Beveridge systems in heath performance which need to be expained. There may be other aspects of heath system which need to be examined simutaneousy for understanding these differences in performance and for deveoping appropriate poicy responses. Therefore, this section proposes a comparison of the main structura parameters of Beveridge and Bismarck systems which can differ substantiay in their organisationa design in carrying out their functions which are ikey to affect both their performance and resource use. In order to conceptuaise the design and structure of each country s heath system, we distinguish four broad features: the governance of the system, its underying vaues, financia incentives for the providers and consumers, and the capacity of the system. In reaity, each of these woud consist of further ayers of parameters. For exampe, the system governance, among other things, refers to the degree of decentraisation in decision-making which coud be different for hospita and ambuatory sector in one system. We woud aso suggest that these key features are not independent of each other (Figure 8). For exampe, both governance structure and the way doctors are paid may infuence capacity (in terms of doctor suppy), but avaiabe capacity may aso have an infuence on how payment mechanisms are adjusted. This has impications on cost, quaity and equity of heath care as we as for heath reform. For instance, copying a reform impemented in one country may not work in another country if other

13 systemic differences exist between the two countries and may ony become effective when combined, in a certain way, with other (structura) reforms of the system. Figure 8. The structura features of heath care system Vaues Governance Financia incentives Capacity Performance For each of the heath system features, we provide beow a brief review of the situation in each country in our study. Tabe 2 provides a summary of country-specific parameters. A. Vaues The fundamenta principes of Bismarck-type heath systems coud be summarised as puraity, soidarity and freedom. Both in and Germany the contributions are mainy based on the abiity to pay 3. has achieved universa coverage in 2000 with the introduction of free insurance (CMU) for the poorest part of the popuation. Germany introduced mandatory universa heath insurance in In both countries ambuatory care deivery is based on historica principes of private practice: patients are free to choose their physicians and, in contrast to Beveridge-type systems, genera practitioners do not have a forma gatekeeping roe. In, freedom of instaation for generaists and speciaists and the freedom of prescription are aso seen as basic rights by the physicians. The ony reguatory mechanism for controing suppy is the yeary quotas for imiting the number of medica students. This expains the very unequa distribution of doctors across regions which became a serious subject of concern for poicy. In Germany however physicians settement is reguated by the regiona physician associations jointy with the regiona sickness funds. In order to ensure equa distribution of physicians across regions, the Federa Joint Committee (GBA, which consists of representatives of the sickness 3 However, privatey insured persons in Germany (around 10% of the popuation) pay according to sex, age and heath status.

14 funds, physicians, hospitas and patients) determines physician/inhabitant ratios that are mandatory at the regiona eve. The fundamenta principe in Beveridge-type heath care systems, on the other hand, is its universa coverage; a citizens have a fundamenta right to heath care irrespectivey of their financia contribution to the system. In a three countries heath care systems are based upon underying vaues such as equity and soidarity. In Denmark and Engand, heath care is free for a residents with few exceptions but out-of-pocket payments in Denmark are amost three times higher than in Engand. Whie patients in pay a sma patient fee per visit, these payments are we reguated to contro out-of-pocket expenditures (see Tabe 2). Yet, in a three countries the increase of suppementary heath care insurances with a spread of private hospitas and cinics in the past decade might ead to an erosion of the equity principe and instead ead to greater emphasis on vaues such as patient choice and access. The growth in private insurance in Denmark is driven by tax exemptions and waiting times, athough waiting time guarantees have graduay reduced this probem. In Engand traditionay, private insurance for eective hospita care is aso a perk of executive remuneration and had the benefit of enabing those who were insured to have operations much more quicky than through the NHS. However, dramatic reductions in waiting times for eective care in the NHS 4 between 2001 and 2008 are seen as one expanation for the fa in private spending on eective surgery such as knee and hips by about 10% in 2007 (Trigg, 2008). B. Governance In broad terms governance of systems heath care concerns a the actions and means (poicies, customs, aws and institutions) which affect the way heath care is provided. Governance thus can be situated at different eves (corporate, financia and cinica). Providing a compete anaysis of the governance structures and various initiatives for improving cinica governance is beyond the scope of this paper. Here we just aim to point out some major country differences in corporate governance structures. Gatekeeping, for exampe, is one basic parameter which differs across the systems studied here and affects significanty the way heath care is provided. In Denmark, Engand and, heath care has been organised around genera practitioners being gatekeepers for the system. Gatekeeping is considered as a mechanism of cost containment, in part because of the evidence that speciaists induce demand for costy and sometimes unnecessary procedures, but aso because it equates with an estabished primary care system where emphasis is both on prevention and treatment. In contrast, in and Germany, genera practitioners work as independent providers with no particuar responsibiity for assuring coordination between outpatient and inpatient care and across different sectors. Therefore, in these countries there have been continuing strugges to promote integrated care for patients. 4 In 2001, NHS patients coud wait over two years, in 2008, they expect to be treated within 18 weeks.

15 Another distinguishing feature of Beveridge-type systems, in terms of governance, is that they are integrated. That means that both the provision and the financing of heath care services are handed within one organizationa system. Before 1991, the Engish NHS had a hierarchica integrated mode, in which the same organisations were responsibe for meeting the needs of their popuations and for running providers. Such organisations can either be funded equitaby for their popuations or for the performance of providers, but not both. Hence, the attraction of the mode of an interna market with a purchaser-provider spit, in which purchasers are funded for their popuations and contract with independent providers. Engand has tried four variations of this mode in its efforts to improve provider performance: competition in the first interna market from 1991 to 1997; partnership in a third way between 1997 and 2000; pubishing performance in star ratings between 2001 and 2005; and again an interna market from 2006 (Bevan and Robinson, 2005). In contrast, the governments in Scotand, in 2003, and Waes, in 2008, have decided to abandon the purchaser-provider spit and revert to an integrated hierarchica organisation (NHS Scotand, 2003; Wesh Assemby Government, 2008). A further issue is the presence or absence of centra government in decisions of tota funding of heath care. Cost contro might be easier when exercised by a centra government. In the Beveridge countries discussed here, Engand has a mode where the decision on tota NHS spending is the prerogative of nationa government. Denmark has recenty centraized decision-making regarding taxation. The expenditure eve is sti subject to negotiations between the nationa government and the regiona authorities but the nationa government obviousy has gained more direct contro. In decisions on spending are utimatey made by regiona authorities but, ike in Denmark, subject to agreements and monitoring by the nationa government, which may withhod bock grants. In and Germany, nationa governments have imited say in decisions on expenditure by the insurers. A common characteristic for the Danish and the Swedish heath care systems is their ong tradition of oca sef-government, where regiona units are responsibe for the provision of heath services and the nationa government has mainy the roe of reguator and supervisor. In both Denmark and, regiona units are eected poitica bodies. The Swedish county councis aso hod a strong position by their right to evy proportiona income taxes from their popuation, whereas taxation for heath care was centraized to the state eve in the 2007 structura reform in Denmark. The government essentiay determines spending on the NHS of the four countries, but foowing devoution in 1998, each country (Engand, Northern Ireand, Waes and Scotand) is free on setting their priorities and governing styes abeit with the same set of vaues.

16 Pubic/private mix Despite being both socia insurance based, the roe and functioning of insurance funds differ significanty between and Germany. In Germany there are two parae insurance systems: Socia heath insurance (SHI), covering about 88% of the tota popuation 5, and private heath insurance, covering about 10% of the popuation. There are about 210 private, non-profit SHI and 52 private for-profit heath insurers in Germany, whie in three pubic insurance schemes cover 95% of the popuation. Both in and in Germany heath care provision reies heaviy on private providers. In ambuatory sector, physicians work in private, and in genera as soo practice. Inpatient care is deivered both by pubic and private non-profit and for profit hospitas. Patients choose their hospita freey between pubic and private providers. Private for-profit hospitas represent about one third of a beds in both countries, and they are speciaised in particuar in eective surgery (in they represent two thirds of a stays for surgery). In Germany, the majority of private for-profit hospitas are part of the state hospita pans and therefore underie the same reguations concerning access and payment. In the private providers are aowed to charge extra fees to patients but the reimbursement is based on fixed tariffs. Beveridge-type systems have traditionay been run by the pubic with few private providers (ess than 1% of a beds in Denmark, Engand and, despite an increasing trend), athough GPs are predominanty saaried in but not in Denmark and the (see beow). In Denmark hospita care is mosty deivered by pubic hospitas owned and operated by the regions. In, in the whoe heath care sector, ony about 15 percent of doctors and 10 percent of nurses work privatey. But, there are vast oca variations in this respect. In the Stockhom region amost one third of doctors work privatey in comparison with the northern region where the same figure is ony 6 percent. In Engand, there has been a recent emphasis on puraity of provision for pubicy-financed care with the creation of foundation trusts, which enjoy greater autonomy from nationa government, and of private independent sector treatment centres to provide diagnostic and eective services, intended to create an independent sector market. C. Capacity Traditionay, there is a wide choice of heath care providers in and Germany, and the density of physicians and hospitas per capita remains comparativey high (see Tabe 3). Large variations are found across countries for ratios of acute hospita beds and generaists per Germany has by far the highest ratio of acute hospita beds per 1000 (6.2): this is twice that of Denmark, amost twice that of and amost three times that of and Engand. has by far the highest ratio number of generaists per 1000 (1.7): amost twice that of Germany and amost three times that of Denmark, and Engand. There is ess variation in the ratios of speciaists per 1000: Denmark 5 SHI covers a individuas with a yeary income up to 48,150 Euros (BMG, 2008). Individuas whose yeary income exceeds this income threshod three years in a row are aowed to opt out of SHI and buy fu-coverage private insurance.

17 and Germany have the highest (2.4), and Engand the owest (1.7), with in the midde (1.9). In, even if the nationa government has emphasized the importance of primary heath care since the 1960s, the county councis have chosen to focus more heaviy on hospita care. Today, the number of generaists per capita is one third of that in and 20% ess than in Denmark. The ratio between hospita doctors and GPs in is approximatey 3:1 today eading to an overrepresentation of speciaised hospita care, despite that the number hospita beds per capita is haf of in Denmark for exampe (2.2 versus 3.1 per 1000 habitants).

18 Tabe 2. Major structura parameters of heath care system in five countries, 2006

19 Vaues 1.1. Basic principas 2. Governance Denmark Engand Germany Universaity, equity Universaity, equity Universaity, equity Puraity, iberty, soidarity Puraity, iberty, soidarity 2.1. Resource aocation Decentraised Centra Decentraised Centra, regiona deconcentration Regiona eve 2.2. Capacity panning Primary care Regions Subregiona Regions Individua Nationa and regiona eve Hospita care Regions Subregiona Regions Centra State eve 2.3. Pubic/private mix (% of private providers) Primary care 100%.. 25% 100% 100% Hospita care 1% 1% 1% 33% 32% 3. Financia dis/incentives 3.1. Payment methods 1 GP Capitation+ FFS Capitation+ performance Saary+ FFS FFS FFS Speciaist FFS Saary Saary FFS FFS Hospita DRG +GB DRG DRG +GB DRG DRG 3.2. Cost sharing ( for a reguar case) Free at the point of deivery Yes Yes No No No a. GP care at east maximum b. Speciaist care at east Differs betw een regions, minimum /year (for a services, GP, hospita, speciaist) Differs bw regions, from 21 to 32, on average % of negotiated tariff = per No imit Around 9 to 18 if has a referra, around 25 otherw ise 10 Euros per quarter 2% of gross househod income (1% for chronicay i) 10 if outpatient speciaist is first physician visited in that quarter maximum 95 /year No imit See above c. Hospita care Same as 16 /day +20% of 10 /day at east speciaist tota cost for nonvita care maximum 95 /year No imit 280 /year 4. Capacity 4.1. Leve of resources 2 no of GP/1000 habitant 0,8 0,7 0,6 1,7 1 Speciaist/1000 hab. 2,3 1,7 1,9 1,7 2,4 Acute beds/1000 hab. 3,1 2,2 2,2 3,8 6, Distribution (geographica) 3 Speciaists 4 19,1 14,6 19, ,8 Hospita beds 7,3 16,8 13,4 15,5 11,4 1. DRG = Activity based payment, GB = Goba budget 2. Source: OECD Heath data Coefficients of variation across regions/counties w ithin each country. The smaer the coefficient, the more equa is the distribution of speciaists and beds. 4. Refers to tota number of doctors for Denmark and Engand.

20 In Engand, between 1997 and 2007, there were dramatic increases in staff working in the NHS: the numbers (fu time equivaents) of genera practitioners increased by 17%, and medica and denta staff in hospita and community heath services rose by 53% (The Information Centre, 2008a; 2008b). Even after these dramatic increases, the ratios of speciaists and genera practitioners per capita are the owest and second owest of the five countries. D. Financia incentives/ disincentives In, amost a the physicians in ambuatory care, as those working in for-profit hospitas, contract with heath insurance and they are paid on a fee-for-service according to a negotiated schedue (sector 1). Some of the physicians are authorized by the heath insurance funds to charge higher fees (caed sector 2), but the reimbursement to patients by pubic heath insurance is made on the basis of the negotiated fee for sector 1. There is no officia imit on these fees charged by doctors in sector 2, and patients associations depore increasingy high extra biings charged, particuary by surgeons. At present, 35% of speciaists and 15% of generaists work in sector 2, but their distribution is very uneven. In some areas access to physicians, particuary speciaists, who do not charge extra fees (sector 1) is quite imited. In Germany as we, ambuatory care providers are reimbursed according to a fee-for-service system. Since they are mosty private for-profit providers, they have a egitimate interest in maximizing their own profits. However, income maximization is ony possibe to a certain extent because there are fixed budgets for genera and speciaist outpatient care. The attempt to introduce same type of spending constraints in was decared anti-constitutiona after ong strikes and strong opposition by speciaists (Or, 2002). In Germany, socia heath insurance is based on the benefit-in-kind principe (ie. heath care is free at the point of access for patients except for certain co-payments (see Tabe 2), providers are directy reimbursed by sickness funds. In heath insurance is organized according to the costreimbursement principe (ie. patients pay first and get reimbursed by their insurer), whie this is usuay ony the case for privatey insured in Germany. In, the copayment rate varies for different heath services and goods: about 20% for inpatient care, 30% for ambuatory care; between 35% and 65% for pharmaceuticas. About 85% of the popuation own a suppementary insurance which can cover these copayments, but the generosity of contracts varies widey. The poorest 7% of the popuation benefit from a free compementary insurance. In Denmark and Engand, genera practitioners and speciaists run privatey owned cinics, but receive most of their income through pubic reimbursement based on genera agreements on fees and working conditions between the regions and the medica associations. A generaists are paid a combination of capitation and fee-for-service payments. In, since the county councis run most of the heath care, amost a physicians and other staff categories are saaried empoyees.

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