Nova workboard

a blog from young economists at Nova SBE

User Charges in Portugal – Effects on Demand for Health Care Services

The extent at which people search for public health services depends on several factors. However I would like to focus on the user charges that Portuguese government imposes to their population because as we are going to see these co-payments (e.g. user charges) affect in a significant way the demand for health care.

Starting by clarifying what is co-payment, it refers to the amount of money that the insured person pays for a particular visit or service. The most common form of co-payment is cost-sharing. The implementation of this cost-sharing influences the price of health care services and, therefore, leads to changes in health care consumption. As a result, one of its main objectives is to regulate demand for health care. User charges are a good example of co-payment where citizens share the price of public health services with the government.

Focusing on the Portuguese public health system, it can be stated that several changes have been made regarding the user charges practiced in the public health facilities. Since 2010 these fees have been increasing abruptly, which didn’t pleased Portuguese people. Due to Portuguese economic situation, most do not feel comfortable paying more for a primary service. Moreover, by increasing user charges it discourages people to use public health services, especially hospital emergencies, leading them to search for other alternatives such as private hospitals where prices have been reduced significantly in order to be more appealing. To sum up, if all the rest remains constant, the demand for public health services would decrease significantly. However, it should be also mentioned that at the same time Portuguese Government also extended exemptions to these user charges.  In fact, around 50% of Portuguese population is charge exempt. [1]

But other factors should also be taken into account. By increasing user charges and consequently increasing cost-sharing, the government is capable of preventing overutilization by those whom the conferred benefit is lower than the costs of providing them the good. One of the mechanisms related to this efficient allocation of resources is the moral hazard behavior. If health services are costly, then people are motivated to stay healthy and avoid injuries. Consequently the demand for health services would decrease. It should also not be forgotten that by increasing user charges it would lead to improvements in quality which may help to maintain utilization rates. All these facts work as governments’ encouragements to establish higher user charges.

Contrary to what was expected, some studies registered that this increase in user charges haven’t reflected a significant reduction in demand for public health services. Taking all this into account, some questions may arise. Would these facts encourage the government to increase even more user charges, as they don’t have such a huge influence on demand for public health facilities? At a first glance, probably yes but it depends on several issues. So, a linear answer cannot be given. Then, what would be the ultimate impact on Portuguese society? In my opinion, a socially desirable outcome wouldn’t definitely be. Portugal is being terribly affected by the economic crisis and people would not be willing to pay more to be treated, especially middle class people. As most of them are not charges exempted, they would be the most affected ones. 

As a result, Portuguese Government has the responsibility of evaluating very well the pros and cons of increasing, decreasing and/or maintaining user charges in order to improve health systems and therefore citizens’ life.

 

Ana Paula Pereira

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Author: studentnovasbe

Master student in Nova Sbe

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