Implications for private spend ing on health

Private spend ing on health may change in response to an economic shock as house holds compensate for changes in income or in levels of public funding for the health system, includ ing changes to tax subsidies for private health spend-ing – for example, tax relief for volun tary health insur ance (VHI). In the context of falling house hold incomes and greater finan cial insec ur ity, we would not expect signi fic ant increases in demand for VHI, except perhaps among richer house holds in contexts where waiting times are an issue (see chapter four for further discus sion of the role of VHI).

The expec ted effects on out- of- pocket spend ing are less clear. Out- of- with a 1.5–3.4 per cent decline in per capita public spend ing on health (Cylus et al. 2012). However, as house hold incomes fall, people may switch to using publicly financed health services or use fewer health services (espe cially poorer people), result ing in reduc tions in out- of- pocket spend ing on health (Di Matteo 2003).

Figure 2.16 shows how per capita levels of private spend ing on health increased in 37 out of 53 coun tries in the European Region between 2009 and 2010. In most (27) of these coun tries, however, public spend ing levels also

Private spend ing fell in 16 out of 53 coun tries in 2010 (Figure 2.16) and three coun tries in 2011. Since 2007, most decreases in health spend ing in the European Region have been due to declines in public spend ing per capita; the size of falls in private spend ing has been signi fic antly smaller than the size of falls in public spend ing, both in terms of numbers of coun tries and abso lute amounts of spend-ing. For example, in 2010 the average fall in private spend ing was USD 23 (PPP), whereas for public spend ing it was USD 67 (PPP). Between 2009 and 2010, per capita private spend ing on health fell in half of the coun tries that also

40 Economic Crisis, Health Systems and Health in Europe

Figure 2.15 Growth in public spend ing on health per capita (2009–10) and real GDP per capita (2008–9), European Region

Source: WHO (2014).

Note: Countries ranked from high to low by size of increase in GDP.

Figure 2.16 Change in per capita public and private spend ing on health (PPP NCU per US$), 2009–10, European Region

Source: WHO (2014).

Note: Countries ranked from high to low in terms of increase in level of private spend ing on health. PPP = purchas ing power parity; NCU = national currency unit.

42 Economic Crisis, Health Systems and Health in Europe

exper i enced a decline in per capita public spend ing on health. In Greece, private spend ing fell by USD 200 (PPP) in 2010 and by a further USD 372 (PPP) in 2011, a signi fic antly larger decrease than in any other country in the European Region.

During the crisis addi tional private spend ing on health came largely from out- of- pocket payments rather than from VHI. Among the 31 coun tries in which private spend ing rose as a share of total health spend ing between 2009 and 2010, an average of 81 per cent of that increase was due to increases in out- of- pocket spend ing (Table 2.3). In seven coun tries, the increase in out- of- pocket spend ing was above the total increase in private spend ing, indic at ing that VHI spend ing fell (Table 2.3). In only three coun tries (Cyprus, Italy and the United Kingdom) did the private share of total spend ing increase as a result of increases in VHI. This pattern was repeated between 2010 and 2011: among the 25 coun tries report ing increases in the private share of total health spend ing, 69 per cent of the increase was due to increases in out- of- pocket spend ing.

Overall, between 2007 and 2012, out- of- pocket spend ing fell as a share of total health spend ing in 31 out of 53 coun tries (Figure 2.17). Some of the largest changes in the share of out- of- pocket spend ing occurred in coun tries most affected by the crisis. For example, during this period the out- of- pocket share fell by almost five percent age points in Greece and Estonia and grew by over two percent age points in Latvia, Lithuania and Iceland and by over six percent age points in Portugal. Reductions in the out- of- pocket share in Greece – in the context of increas ing user charges for publicly financed health services and signi fic ant changes in house hold incomes – are likely to reflect reduc tions in the use of health care. In Estonia, the reduc tion may reflect both reduc tions in the use of some health services and, perhaps, reduc tions in the finan cial burden asso ci ated with outpa tient prescrip tion drugs (Habicht and Evetovits 2015).

Figure 2.18 compares changes in out- of- pocket spend ing in 2010 with changes in real GDP per capita in 2009. It shows that most (26) of the coun tries that exper i enced negat ive GDP growth in 2009 shifted costs towards house holds in 2010. From this we conclude that in spite of lower incomes asso ci ated with the crisis, house holds in most coun tries were paying more out- of- pocket for health services in 2010.