Crisis as threat: theory

In previ ous work we defined a health system shock as ‘an unex pec ted occur-rence origin at ing outside the health system that has a large negat ive effect on the avail ab il ity of health system resources or a large posit ive effect on the demand for health services’ (or both) (Mladovsky et al. 2012: v). An economic shock is partic u larly chal len ging because it gener ates pres sures on multiple fronts, affect ing house holds and govern ments and health sector reven ues as well as expendit ures. These pres sures, and the responses they trigger, can have serious implic a tions for health and for health system perform ance.

Economic crises affect health outcomes by increas ing people’s need for health care and making it more diffi cult for them to access the care they need (Musgrove 1987). Figure 1.1 shows how health outcomes can be lowered through two path ways. In the first pathway, unem ploy ment, falling incomes and greater indebted ness reduce house hold finan cial secur ity, leading to changes in levels of stress, changes in health- related beha viours and changes in access to health services. In the second pathway, a reduc tion in govern ment resources gener ates fiscal pres sure in the health system, which also leads to changes in access to health services.

Neither pathway is as linear as this descrip tion implies. Both include elements that can exacer bate the initial impact on house holds and govern ments, creat ing vicious circles. For example, a reduc tion in govern ment resources that leads to

job losses in the public sector or cuts in public spend ing on social protec tion is likely to under mine house hold finan cial secur ity and have a knock- on effect on tax reven ues. At the same time, a cut in public spend ing on health that results in higher user charges or longer waiting times will shift some costs to house holds, adding to their finan cial insec ur ity.

The path ways are contin gent on a wide range of public policy choices, many of which lie outside the health sector. Fiscal policy – the way in which govern-ments use taxes and spend ing to influ ence the economy – shapes the effect of a crisis on public spend ing on social protec tion, while non- health social policies influ ence house hold expos ure to finan cial insec ur ity. Choices are avail able in the health sector too, even if constrained by fiscal policy, an issue we discuss more fully below.

Variables in both path ways can create or exacer bate fiscal pres sure in the health sector. Health systems exper i ence fiscal pres sure when per capita levels of public spend ing on health do not rise to meet increased demand for health services or fall while demand remains stable or increases. In an economic crisis, sources of fiscal pres sure may include factors relat ing to fiscal policy, health Figure 1.1 Pathways to lower health outcomes in an economic crisis

Source: Adapted from Musgrove (1987).

Note: The figure mainly explores health sector path ways. It is import ant to note that ‘non- health social protec tion’ will usually involve many mech an isms to protect house holds and ensure their finan cial secur ity.

4 Economic Crisis, Health Systems and Health in Europe

finan cing policy, lower health outcomes and coping strategies adopted by finan cially insec ure house holds.

Figure 1.2 presents these factors in more detail. It high lights the sali ence of house hold finan cial insec ur ity as a source of fiscal pres sure. It also shows how house hold coping strategies inter act with health system factors to create fiscal pres sure. While fiscal policy may be the single most import ant determ in ant of finan cial pres sure, the other factors can be signi fic ant, espe cially where unem-ploy ment rises rapidly and enti tle ment to health care is linked to emunem-ploy ment status.

The poten tial for house hold finan cial insec ur ity to contrib ute to fiscal pres-sure is partic u larly evident on the expendit ure side. When people exper i ence greater finan cial insec ur ity, they may make more use of publicly financed health services for the follow ing reasons: their health has deteri or ated and they need more care; they have gained means- tested cover age through safety nets;

they have lost employ ment- based cover age – or stopped paying mandat ory health insur ance contri bu tions – and can only access services that are univer-sally avail able; they have stopped buying volun tary health insur ance; or they want to avoid paying out- of- pocket for privately provided treat ment (Di Matteo 2003). People who are finan cially insec ure may also reduce their use of publicly financed health services or use them in ways that are less cost- effect ive for the health system and can damage health outcomes in the longer term – for

Figure 1.2 Sources of health system fiscal pres sure in an economic crisis Source: Authors.

example, stop ping medic a tion, delay ing seeking care (espe cially prevent ive care) or relying more on emer gency care.

If not care fully managed, fiscal pres sure is likely to under mine all aspects of health system perform ance – not only health outcomes, but also finan cial protec tion, equity in finan cing the health system, equity of access to health services, quality and effi ciency in service deliv ery, patient satis fac tion, trans-par ency and account ab il ity (WHO 2000, 2010). How badly perform ance is affected will depend to some extent on the sever ity of the pres sure facing the health system and house holds and on the under ly ing context, includ ing the perform ance of the health and wider social protec tion system. Perhaps the most crit ical factor, however, is the way in which poli cy makers respond to fiscal pres sure, both at the level of the govern ment as a whole and in the health sector.