Implications for public spend ing on health

Research shows that health spend ing trends often reflect broader economic trends. Historically, public spend ing on health has grown more slowly than Figure 2.10 Change in the share (%) of the govern ment budget spent on differ ent sectors, 2007–10, selec ted European coun tries

Source: Eurostat (2014).

Note: Countries ranked from high to low by size of real loc a tion away from health. ‘Other’

includes general public services, defence, public order and safety, envir on ment protec tion, housing and community amen it ies and recre ation, culture and reli gion.

usual in the year follow ing severe economic down turns (Cylus et al. 2012), with tempor ary shocks to GDP usually affect ing health spend ing with a lag of one to five years, depend ing on the struc ture of the health system (Devaux and Scherer 2010). Nevertheless, public spend ing on health has, in the past, tended to follow a coun ter cyc lical pattern in high- income coun tries, continu ing to rise as the economy declines (Velényi and Smitz 2014). This section focuses on the follow ing dimen sions of public spend ing on health: per capita growth rates, the health share of public spend ing (largely reflect ing prior ity or commit ment to health in decisions about the alloc a tion of public spend ing) and public spend ing on health as a share of total health spend ing. See chapter five for a discus sion of changes in public spend ing on differ ent parts of the health system (admin is tra tion, public health, outpa tient care, inpa tient care and phar ma ceut ic als).

Per capita growth rates

Between 2007 and 2012, per capita public spend ing on health fell in several coun tries and was lower in 2012 than it had been in 2007 in Ireland, Portugal, Latvia, Greece and Croatia (Figure 2.11). Measured in national currency units (PPP), per capita public spend ing on health fell in 20 coun tries in 2010; the coun tries with the largest decreases in per capita public spend ing on health were not neces sar ily those with the largest decreases in real per capita GDP in 2009, but the correl a tion between the two series is posit ive (0.18), indic at ing that health spend ing and lagged real GDP growth are likely to move in the same direc tion.

Analysis of health expendit ure trends is complic ated because it is diffi cult to determ ine the extent to which slow downs are related to the crisis and are a matter of concern. There are many reasons why health spend ing growth might slow. To gauge whether a slow down in growth is out of the ordin ary, we identify coun tries in which per capita public spend ing on health growth patterns differ from histor ical patterns by more than two stand ard devi ations (Table 2.2). This list is not exhaust ive and may exclude coun tries that made cuts in response to the crisis, but either did so to a small degree relat ive to previ ous spend ing patterns or have histor ic ally had high annual vari ation in health spend ing.

This analysis suggests that few coun tries exper i enced signi fic ant changes in public spend ing on health in the early years of the crisis, consist ent with research showing a lagged health system response (Devaux and Scherer 2010; Cylus et al. 2012). It also suggests that some coun tries may have initially protec ted public spend ing on health, either delib er ately or due to auto matic stabil izers in the health sector (a subject covered in more detail in chapter three). According to the measure shown in Table 2.2, however, a handful of coun tries have exper i enced sustained reduc tions in public spend ing on health (espe cially Greece, Ireland and Slovenia, but also Italy, Portugal, Spain and the United Kingdom).

34 Economic Crisis, Health Systems and Health in Europe

Figure 2.11 Change (%) in per capita public spend ing on health (NCUs), 2007–12, European Region

Source: WHO (2014).

Note: NCU = national currency unit.

Priority or commit ment to health: the health share of public spend ing In 2007, on average, health comprised 13 per cent of total public spend ing in the European Region, the second most substan tial area of public spend ing after (non- health) social protec tion. Between 2007 and 2011, the health share of public spend ing (in part reflect ing the prior ity given to health in decisions about the alloc a tion of public spend ing) fell at some point in 44 out of 53 coun tries (WHO 2014), revers ing the trend of the previ ous decade. It remained lower in 2011 than it had been in 2007 in 24 coun tries (Figure 2.12), and by a margin of over 2.5 percent age points in Ireland, Armenia, Latvia, Iceland, Luxembourg and Croatia (Figure 2.13).

This indic ates that follow ing the onset of the crisis, many coun tries in the European Region reduced public spend ing on health at a rate that was greater than any reduc tion in the size of govern ment. These reduc tions tended to be concen trated among coun tries heavily affected by the crisis, with some excep-tions (Azerbaijan, Norway, Denmark). Conversely, the health share of public spend ing increased in some crisis- affected coun tries (Italy, Cyprus, Estonia, the Czech Republic).

Public spend ing on health as a share of total health spend ing Public spend ing accounts for the bulk of total spend ing on health in most European coun tries. Between 2007 and 2012, the public share of total health spend ing declined in 24 out of 53 coun tries (Figure 2.14). The decline was largest in Ireland and pushed Ireland’s share to below the EU average.

Table 2.2 Countries in which growth rates for per capita public spend ing on health (NCUs) fell below histor ical average growth rates, 2009–12, European Region

2009 2010 2011 2012

Ireland Ireland Ireland Ireland

Latvia Greece Greece Greece

Slovenia Slovenia Slovenia

Spain Spain Slovakia

Czech Republic Portugal Portugal

Iceland Italy Italy

Finland United Kingdom United Kingdom

Norway Source: Author calcu la tions based on WHO (2014).

Note: Lower than histor ical average growth rates between 1995 and 2008 by more than two stand ard devi ations; NCU = national currency unit.

Figure 2.12 Priority or commit ment to health: public spend ing on health as a share (%) of total public spend ing, 2007 and 2011, European Region

Source: WHO (2014).

Note: Countries ranked from high to low by health share of total public spend ing in 2011.

Source: WHO (2014).

Note: Countries ranked from high to low based on the size of increase in the health share of total public spend ing between 2007 and 2011.

38 Economic Crisis, Health Systems and Health in Europe

Figure 2.14 Public spend ing on health as a share (%) of total health spend ing, 2007 and 2012, European Region

Source: WHO (2014).

Note: Countries ranked from high to low based on the size of increase in the public share between 2007 and 2012.

Changes in public spend ing on health and crisis sever ity