Powers indirectly related to health

The EU has been granted a range of useful powers, but the EU was born in economic integration and its most powerful legal bases are in areas such as promotion of the internal market rather than health.

Internal market

Over time, the core of the EU has been its internal market; an area within which goods, services, people and capital should be able to move freely without being hindered by national borders or regulations. Health being such a significant part of the economy as well as of society, any such project of economic integration also has a major impact on health and the goods and services related to it.

The powers of the EU to achieve this internal market are correspondingly broad:⁴¹ The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the pro-visions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.

The need to protect health while legislating to create this internal market is recognized:⁴²

3. The Commission, in its proposals envisaged in paragraph 1 concerning health, safety, environmental protection and consumer protection, will take as a base a high level of protection, taking account in particular of any new development based on scientific facts. Within their respective powers, the European Parliament and the Council will also seek to achieve this objective (emphasis added).

In addition the clause “the protection of health and life of humans”⁴³ recognizes protecting health also as a reason to limit free movement. However, the key point here is that, while these powers require health considerations to be taken into account, health is not the objective as such. In practical terms, this means that, while internal market legislation can provide a powerful basis for establishing free movement in ways that also achieve health objectives (e.g. setting standards for pharmaceutical products), internal market legislation is harder to use where the health objective is to prevent or restrict something being sold (e.g. in relation to tobacco or alcohol), as will be discussed in more detail below.

41 TFEU, Article 114, paragraph 1.

42 TFEU, Article 114, paragraph 3.

43 TFEU, Article 36.

Coordination of social security systems

Very early in the history of the EU, policy-makers set out to promote labour mobility (for some of the original EU Member States, such as Italy, labour mobility under good circumstances for their citizens was a major purpose of integration).⁴⁴ The third law passed by the new European Economic Community, Regulation 3, was about the coordination of social security mechanisms. This was intended to ensure that as people built up rights to social protection linked to their employment those rights were not lost if they moved to another Member State, but rather aggregated and exported to the next country of stay.

Access to health care was a central aspect of the social protection that this regulation sought to ensure, and this was needed not only for people moving permanently to another country because of a new job but also for those moving temporarily, for example people who work across borders or people who are being posted to work abroad, going to a meeting in another country or on holi-day and then requiring some form of urgent medical care. This Regulation on the coordination of social security systems (revised in 1971 and 2004) was for decades the only EU instrument enabling people to have access to health care in other countries – including, under exceptional circumstances (and subject to prior authorization by the payer in the competent Member State), travelling specifically to other countries for the aim of having health care. However, given the sensitivity of these issues, rights to health care under Regulation 3 were always tightly controlled, and the legal base in the TFEU reflected this; unlike the general shift towards majority voting across most of the TFEU, these provi-sions have required unanimity in the Council.

Fiscal governance

The EU has historically had very limited powers of oversight over national budgets and taxation, these being considered to be exclusively national deci-sions; the creation of a single currency has led to these issues being subjected to more intensive monitoring.⁴⁵ After a long history of currency coordination, the decision at Maastricht to establish a single currency (the euro) increased the degree of European integration in fiscal policy by specifying a variety of economic targets that Member States had to hit, or be on track to hit, in order to join the Eurozone. Two of them – a deficit of less than 3% and a total government debt below or on track to be below 60% – were thought to need enforcement after the establishment of the single currency, and so a Stability and Growth Pact (SGP) enshrined them in EU law, and a process to establish

44 Maas W. Creating European citizens. Lanham, MD, Rowman and Littlefield, 2007.

45 See in particular TFEU, Article 121, together with Article 136 for Member States whose currency is the euro.

the Broad Economic Policy Guidelines was initiated to provide some oversight of Member States’ fiscal policies. This apparatus gained in complexity but did not prevent the build up of some significant fiscal policy and macroeconomic problems in the Eurozone.

Since the financial crisis of 2008, and in particular the sovereign debt crises around the Eurozone, there has been a substantial change in the nature and politics of the EU, and the collective EU control of national budgets has been dramatically increased. For those countries who have required emergency funds from the EU to stabilize their economies, these have come at the cost of detailed requirements for policy change, including (in some detail) for health systems.⁴⁶ To reinforce the legal weight of the EU’s oversight of national budgets and policies more broadly, all EU countries apart from the Czech Republic and the United Kingdom have signed an additional treaty giving legally binding force to their budgetary and economic commitments,⁴⁷ including the possibility of enforcement through the CJEU. This strengthened EU oversight of national budgets cannot avoid having effects on health system priorities and expenditures, given that this is typically one of the two largest components of national budgets. Chapter 5 explains these issues and their implications for health in more detail.

2.4 Budget

The constitutional asymmetry of the EU is particularly visible in its limited finances. Overall government expenditure tends to be around 50% of gross domestic product (GDP) across the EU, but this is overwhelmingly spent within the Member States themselves; the EU itself has a budget capped at around 1% of the EU’s gross national product (Fig. 2.1). Within the budget, the biggest area of expenditure is the agricultural budget (€59.7 billion), fol-lowed by the structural and cohesion funds (€54.5 billion) intended to reduce inequalities in development across the EU, and the EU’s research programme (€10.9 billion) (Fig. 2.2). These three areas account for over 82% of the EU budget, with other areas (including specific expenditure on health care actions) being minor in comparison; EU administration requires around 5% of the overall EU budget.⁴⁸ In terms of the major areas of public finances in Europe as a whole, therefore, only in agriculture is European funding predominant; in all other sectors, national (or regional) funding is the principal source, and this is certainly true for health.

46 Fahy N. Who is shaping the future of European health systems? BMJ, 2012, 344:e1712.

47 Council of the European Union. Treaty on stability, coordination and governance in the economic and monetary union. Brussels, Council of the European Union, 2012 (http://european-council.europa.eu/

media/639235/st00tscg26_en12.pdf, accessed 4 July 2014).

48 European Commission. EU budget 2013: investing in growth and jobs. Luxembourg, Publications Office of the European Union, 2013.

Fig. 2.1 EU Budget for 2012 in relation to its GDP

Fig. 2.2 EU Budget for 2013

In order to avoid annual rows over funding, the EU prefers to have one big argument every seven years and agree an overall allocation of funding for that whole seven-year period. This is called the Multiannual Financial Framework, and a new one was agreed in 2013 for the period 2014–2020.⁴⁹ Although the detailed EU budget is still negotiated and agreed annually, this takes place within

49 Council of the European Union. Council Regulation (EU, EURATOM) No 1311/2013 of 2 December 2013 laying down the multiannual financial framework for the years 2014–2020. Official Journal, 2013, L 347/884.

98.96% GDP of EU 1.04% EU annual budget

5%EU as a global player 6%Administration

10%Rural development and fisheries

9%Competitiveness 1%Citizenship, freedom, security and justice

33% Common agricultural policy

36% Cohesion

the overall Multiannual Financial Framework, and thus these total amounts are unlikely to shift substantially over this period.

There are two important areas of funding specifically allocated to health (struc-tural funds, discussed in section 4.5, often finance health-related projects but are not specifically designed to finance health work). One is the allocation for health within the research programme of the EU (section 4.7). This is both much larger (at around €1 billion a year) and more targeted (being only for research), although it is still small in comparison with national expenditure on research, and, of course with private expenditure, in particular by the pharmaceutical industry. The second area of funding, and the one with the highest profile, is the EU health programme.