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a blog from young economists at Nova SBE


Aren’t we underestimating palliative care?

It is true that the developments of health care, treatments, drugs and even cures have been increasing considerably with time, but that does not apply to every disease. Unfortunately there are still some chronicle diseases that urgently need a cure, but that specialists and technologies were not able to discover yet. For example, in Portugal, cancer already kills 24 thousand people, and according to World Health Organization, this number is about to increase by 34% until 2030, while in worldwide terms the number will reach the 13 million people.

Going a little bit deeper, in Portugal the number of cancer cases below 65 years old will most likely increase by 12% hence in older people the growth is about to reach the 40% mark.

The truth is that we live in an ageing population. In Portugal people over 65 represent almost 25% of the total population and this number is expected to increase to near 35% in 2050. In addition, the ageing index has been growing exponentially, to near 127%, which means that people over 65 are more than double of the ones until 14 years, and that should be a reason to be worried. To be worried first all because, as the Grossman Model predicts, the more older we are more healthcare we demand, and continuing at this pace, in a near future we will most likely not have enough active people to satisfy that demand.

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Nevertheless, if we join all the dots we get to the point I want to highlight. The number of chronicle diseases it is increasing, and science hasn’t found a solution for that yet. At the same time, population is getting older, which obviously accelerates the growth of the number of these diseases. So the question that we should rise is: if science cannot do anything for these patients, what can we do that is going to increase their utility, their well being, that at least gives them dignity and release them from pain in the phase that they are heading to death?

It is curious to know that according to INE 51,2% of people would prefer to die at home, but incredibly, 61,7% of the Portuguese actually end up dying at a hospital. At the end of the day, only 10 to 12% of the Portuguese have access to Palliative care, when about 60% need it. Palliative Care are, according to World Health Organization, “Palliative care is an approach that improves the quality of life of patients and their families facing the problem associated with life-threatening illness, through the prevention and relief of suffering by means of early identification and impeccable assessment and treatment of pain and other problems, physical, psychosocial and spiritual”. Again, in Portugal there is only 1 to 1,5 domestic support services of palliative cares for 100.000 habitants and 80 to 100 beds per million of habitants (http://www.observaport.org/sites/observaport.org/files/RelatorioPrimavera2013.pdf), which is incredibly low compared to the demand that we are facing.

In a time that population is changing and the healthcare necessities are changing if it, shouldn’t we be changing gears and shifting to solutions that can actually increase the utility, meaning will being, of these people? If that was not enough, one of the reasons why people do not have access to palliative care is because most of them do not have access to private health insurance, benefiting only from the public insurance offered by SNS which does not offer this type of care, which ends up being even more surprising considering the fact that palliative care is not as expensive as people in general think, especially when compared with the recurring attempts for saving people that unfortunately cannot be saved, through chemotherapy and other procedures. The question remains: aren’t we underestimating the palliative care?

Tomás Loureiro

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Ageing and health expenditures in Portugal – an overview

On September 14-15, a conference promoted by Fundação Francisco Manuel dos Santos, launched a large debate about how Portugal will be in 2030. One of the topics subject to discussion was ageing and the challenges it poses to the Welfare State. During that weekend, the debate was also extended to the media. As expected, the skeptics appeared and presented ageing as an enemy, responsible for jeopardizing the sustainability of the Welfare State and for uncontrollable health expenditures in the future.

From my point of view, it is impossible to reach those conclusions with such certainty, as far as we are in 2012. The Welfare State is not an unchangeable concept – instead, it is an emanation from society aimed at answering to the most imperative problems concerned with well-being. Therefore, since problems are continuously changing, new challenges require new and more prepared answers.

Why do people tend to easily conclude that ageing will imply more and more resources to be allocated to the health sector? As a starting point, the following graph may provide a hint:

Here, we must recall our first lesson from statistics: correlation does not imply causation. In fact, there is a strong positive correlation between the 2 variables: the weight of population aged more than 65 is growing and public health expenditures have also been growing (and also private expenditures, though not mentioned). The main difference is that public health expenditures have been growing very much faster.  

As predicted by the Grossman model, the older we are the more healthcare we demand. It is also important to recognize that older people cost more to the system – they are more likely to have chronic diseases, cardiac problems, dementia and diabetes, which require longer stays in hospitals. However, the ageing effect is somewhat overvalued, since other factors have contributed more decisively to health expenditures growth. Barros (1998) confirms that ageing is of less importance for healthcare expenditures than usually pointed out – his estimates suggest that ageing has no explanatory power on healthcare expenditures.[1] Since ageing has a strong impact on other aspects of the Welfare State, mainly retirement pensions, there is a common extrapolation to healthcare services of this demographic pressure. Nevertheless, at the same time, urban middle-classes with rising incomes, new needs and preferences, also originated a fast-growing demand for healthcare. But, more importantly, we have the role of cost drivers: medical and technological advances (new equipment and better OR conditions) have increased costs and healthcare services have also become more expensive (inflation).

In my opinion, the impact of ageing population alone will not be responsible for uncontrollable health expenditures in the future. Furthermore, we cannot also forget that devoting more resources to the health sector can potentially increase life-expectancy. This also means that in the medium/long-run, since individuals live longer, they will tend to invest more in education and increase the stock of human capital, with a likely positive impact on economic growth. However, more population above 65 also means the possibility of lobbying in order to change government policies in favor of their interests: withdrawing resources from youth (e.g.: sports and education) to employ in a higher budget for healthcare. Which effect will prevail? Well, in 2030, I will surely have a better answer!

By Tiago Silva


[1] Barros, P.P., 1998, “The black-box of health care growth determinants”, Health Economics, 7(6). 533-544.


The evolution of some health indicators: The case of Germany

Developed countries are experiencing great gains in life expectancy along the past years owing this to improvements in living conditions, public health interventions and evolution in medical care.

In this brief comment I will focus on the particular case of Germany.

It is common in EU countries to have jointly financed health care systems. In fact, the Social Health Insurance was first established by the German politician Otto von Bismarck.[1]

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In graph 1 we can observe an increase of the total expenditure on health per capita since the 70s and although this raise is more significant in Germany, it is also common to the EU12 and EU15 countries. 

 

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In graph 2 during the period 1989-1990 (there was no data available about 1991) we can perceive a fall in the total expenditure on health (as a % of GDP) that may be due to historical reasons (the reunification of Germany may have led to allocation of funds from health to the catch-up process from Eastern to Western Germany). Still nowadays, the costs of reunification consume four percent of Germany’s gross domestic product annually.[1] 

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Despite the Euro crisis, health spending has, in fact, been increasing approximately 2% from 2000 to 2010. The only exception happened between 2003 and 2004, where this indicator reached a negative value.

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Germany’s health system is financed through a Publicly-Financed Scheme (SHI) (statutory health-insurance) but also by Private health insurance (PHI). The public sector is the main source of health funding in Germany.

In the graphic 4 and 5 it is noticeable a sharp increase in the public expenditure on health as a percentage of total expenditure after 1992. Nevertheless, after 1996 the weight of the public expenditure on the total expenditure (on health) has been close to 76%, which represents a decline in comparison to the previous 4 years. The introduction of the social long-term insurance provoked an increase in health expenditure leading to the high growth rates between 1994 and 1996. The modest increases in health-care spending in 1997 and 1998, are due to the benefit cuts passed in 1996 and 1997.[1]

 Since the 1990s, German health care policy has been varying. From a political perspective, the SPD and Greens favoured the citizen’s insurance, while the CDU/CSU preferred a flat-rate insurance. This citizen’s insurance would subject all individuals to health insurance contributions.[2] In Germany, a coalition of the Social Democratic Party and The Greens governed the country from 1998 to 2005.

 The health sector has been increasing its weight relatively to the overall economy (as a percentage of GDP), almost doubling its share from the 70s to 2010. The ageing trend in Germany, also observed in Europe, and the following need for an increased expenditure in long-term care costs; the lower fertility rate are aspects to take into account when interpreting this variable.

 

Sofia Gonçalves


[1] Wörz, Markus; Busse Reinhard; Analysing the impact of health-care systemchange in the EU member states: Germany; Department of Health Care Management, Berlin University of Technology, Germany

 

[2] Mosebach, Kai; Institutional change or political stalemate? Health care financing reform in Germany; London School of Economics

 [1] http://www.spiegel.de/international/spiegel/germany-s-eastern-burden-the-price-of-a-failed-reunification-a-373639.html

[1] Zweifel, Peter; Breyer, Friedrich; Kifmann, Mathias; Health Economics


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Evolution of Health Care in Denmark

Denmark is one of the world leading modern societies and its concerns on health care and social system might be represented through a high level of public expenditure in Health Care in an attempt to elevate lifestyle standards and increase life expectancy of the population.

Denmark has a highly protective social and health system (in average superior to other countries and quite above OECD average). Its Government tries to deliver equitable distribution of wealth and equal accessibility to all citizens and around 85% of health care expenses are financed by public funds.

Danish central State is in charge of legislation and provides national guidelines for supervision, monitoring and general planning of the overall framework of the health economy. The responsibility for running the public health service is decentralized from the Central State until municipalities and the ability of reallocation is delivered at the municipality level. 

As stated in the OECD table below Denmark has the highest contribution in public expenditure: private has near 1 % of influence (small procedures of primary care, dental care, and prescription medication and dermocosmetical products). There are no medical insurance companies which implicate neither bureaucracies nor time lost for patients needing medical care. Denmark has a higher overall health bill in average as healthy people are directly paying treatment of sick people through the universal taxes.

Denmark has a public spending on health over 2% of GDP, with the average on other countries close to 1% of GDP across OECD countries.

The majority of funding arrives from public taxes applied to everyone who creates a public private ratio much more state controlled than in Portugal whereas funding comes almost at the same proportion: private, public and other active agents like insurance companies or medical associations.

Although the funding of health services arises mainly from state contribution (after tax), Denmark enjoys one of the lowest per capita spending on health care (less than 300 USD per capita at parity prices because the system is simpler and less profit-oriented, it ends up being cheaper) which represents around 15% of the total spending (OTC products and self-medication).

While in Portugal we may find public hospitals; private or mixed administration, in Denmark the administration of hospitals and workforce is oriented by the Ministry of the Interior, while primary care facilities and community care are at charge of the Ministry of Social Affairs. Citizens can go to a physician for free and the public health system entitles each citizen to his own doctor. 

The Government has the power to establish health policies, legislation and regulation on the health sector while at the same time holds responsibility to promote efficiency and quality service –forcing it to promote innovation through compensation on medical research developments.

Unlike happened in Portugal Denmark adopted measures to prevent excess of expenditure in the Health sector in order to be funded only by directed taxes or by privates rather than reimbursing or co-funding treatments decided by patients such as having one central organization responsible for management of personnel and costs of all country and so can reallocate easier and closer the right tools/human resources to match demand for health care while for example in Portugal each hospital has own administration and thus presents less flexibility.

The easy and free access for Danish citizens of primary medical care is different from the Portuguese reality where due to lack of coordination some processes may take longer (e.g.: queuing phenomenon) or have fee costs (e.g.: urgencies). A clear belief on anticipation is assumed while Danish authorities promote continuously national screenings among children. These measures release parents from extra costs and accommodate to daily life of their citizens.

In Portugal, for several years, occurred a lack of regulation on the health care industry and corruption aroused from various points and has been the escaping route of taxes paid by citizens in a loss fund investment; this situation is trying to be tackled but there is not still a white fire that would put an end on this issue. and that will impose a long-term recover of the health care market.

Comparing to Portugal, Denmark has understood earlier the importance of such investment in long-term planning of the economy and the inherent value of a healthy life of citizens (Danish health care system fully covers every citizen) and its further impact on the economy and so, developed a tax-funded state-run universal health care system (in tune with the Scandinavian economies) meaning that it is free for all and funded by direct taxes.

These measures could be reapplied in Portugal since they are already proven to bring efficacy to the health care of citizens at lower costs (per capita).

 

André Oliveira Martins


The evolution of health expenditures in OECD´s countries:

Health Expenditures have been consistently increasing over the past decades. In this comment I´ll compare two OECD´s countries, in what concerns those expenditures, and I´ll take a closer look at how they have been behaving, in comparison with GDP.

As we´ll come to conclude, Sweden and the United States have quite different approaches regarding health systems. Still, neither can seem to escape this undeniable upward trend.

 

Fig. 1 – Total Health Expenditure as a % of GDPImage

 

As previously discussed, there´s an upward trend on health expenditures as a percentage of GDP.  It may be clearer for the US, but both countries seem to have been increasing this index since 1970. In this year, the swedish were spending pretty much the same as americans, given their countries GDP´s. 7,13% and 7,29% respectively. Then, by growing at an astonishingly higher average yearly rate, (2,32% against 0,92%), the United States ended up (forty years later, in 2010), with health expenditures as percentage of GDP of 17,61%, 8,05pp above Sweden.

One may well wonder about this undoubtful trend. Many have already done so.

When confronted with the data one gets nowadays, and specifically after checking those values out from 1970, it´s logical to recall the War in Vietname and the 1973 oil shock that so deeply affected Uncle Sam´s economy. But then we take a closer look at the data set as a whole, and end up concluding that this trend is actually really smooth. Moreover, it´s constant throughout these 40 years, which will lead us to let go the possibility that a serious drop in GDP, could explain these increases in total health expenditure as a percentage of GDP.

As a matter of fact, there are several reasons worth while to be pointed out. Newhouse´s research (1992) and Barros (in his book, “Economia da Saúde – Conceitos e Comportamentos”), are some of the scholars that first argued on the following theses.

So, why would health expenditures tend to increase faster than GDP, in any given country (or, at least, in any given OECD´s country). Ageing does play a role in this, but a small one, when compared to another really straightforward factor. Recently, people started getting health insurance for a lower price than before. All else equal, it´s really easy to understand that this will boost the demand for insurance, both public and private, thus increasing health expenditures.

Being all of this true, it´s relevant to mention another curious factor. If a couple of years ago, four doctors were needed to perform a really difficult X procedure, the truth is that, nowadays, that same X procedure will still tend to be performed by four doctors.  In other words, the productivity in this sector tends to rise at a much lower pace than in most other sectors in the economy, thus inducing an increase in relative prices, and its weight in GDP. This phenomenom is called the Baumol desease, and seriously affects health systems everywhere in the world.

Finally, there´s another quite straightforward factor that is said to account for most of the variation in health systems´ relative prices, which is technological progress. Eventhough it allows us to live longer, it ends up making us pay a premium.

Despite the fact that these two countries face the same upward trend we mentioned, it´ll be interesting to end this comment discussing their approaches (which are quite different) to Health Systems.

While in Sweden, Public Expenditure accounts for 81% of Total Health Expenditure, in the United States public insurers only provide 48% of the total.

Moreover, one knows that Scandinavian people are satisfied with their Health System, whereas in the US, Health Care is still a privilege for some.

            Eventhough I´m in no position to state which of this regimes is the best, it seems to me that, once again, the Scandinavian model of the Social State proves itself as a successful case study.

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Fig. 2 – Health Expenditure as a % of GDP, distributed by insurance provider

 

Francisco Farto e Abreu


The evolution of Health Expenditure in Germany (2004-2010)

The following comment contains an analysis of some economic data for the Health Care sector in Germany. The focus lies on the evaluation of the total expenditure on health as well as the public expenditure on health. The findings comprise data for the 7 years between 2004 and 2010. In order to point out the most important aspects, a comparison between the German Health Care data and the average of the EU-15 countries’ data has been made. Please note that Germany has been excluded from the EU-15 graph data. To visualize the analysis, graphs have been developed and will be included in the following descriptions:

  • Since 2004, the total expenditure on health per capita has steadily increased throughout the years in both Germany as well as in the rest of the EU-15 countries (with the exception of 2009 ->2010, where a downfall for the EU-15 could be registered). However, in the most recent years, the gap between Germany and the rest of the countries has been increasing. This downfall from 2009 to 2010 on the rest of the EU-15 was mainly due to big downfalls of a handful of countries only (mainly Greece and Ireland, but also to some extent, Finland and Italy).

 

Graph 1: Public expenditure on health per capita

At current prices and PPPs

 

  • In the second graph we be see that Germany’s public expenditure on Health Care is taking a higher percentage of the total expenditure, when compared to the rest of the EU-15. With such a low margin between the highest and lowest registered values of public expenditure on Health Care of the past 8 years (0,5% for Germany and 0,65% for rest of the EU-15) we can say that this value is quite stable. Considering how much the public expenditure is changing (and by extension, total expenditure), this is quite impressive.

 

Graph 2: Public expenditure on health

As a percentage of total expenditure on health

 

  • As a percentage of the total GDP, the public expenditure on health has been somewhat stable in the past years – with Germany spending an average of 10,94% of its GDP on Health Care, while the other fourteen countries have been spending an average of 9,55% of their GDP on Health Care.

 

Graph 3: Total expenditure on health
As a percentage of gross domestic product

 

  • Between 2004 and 2010, and on average, Germany has the 5th highest expenditure on health (per capita) amongst the EU-15. However, when compared to the same countries, it only takes the 7th place in terms of life expectancy, with all but one of the countries spending more than Germany being ahead of it.

 

Graph 4: Total expenditure on health per capita
At current prices and PPPs

 

 

Graph 5: Life expectancy at birth, total population

 

  • Between 2004 and 2010, Germany total expenditure went from 3166 to 4338, while the rest of the EU-15 countries average went from approximately 2824 to 3718. This means that the total expenditure on health in Germany increased at a rate of 5,3% per year, while its EU-15 counterparts` expenditure on Health Care only grew on a average of 4,7% per year.


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Are we sick of this crisis?

Are we sick of this crisis?

Without second thought, you’d say Yes, I am sick, tired of the current economic situation. However, have you ever wondered if you are getting sick because of it?

Probably you haven’t and now, intuitively, you may be tempted to answer positively.  The rising unemployment leads to a reduction in household consumption and tax revenues, which imply that countries cut in the national budgets, including the health one. To do so, you think, countries may introduce/increase user charges, increase the waiting times or reduce the scope of services/population covered. Even though this doesn’t affect your health directly, it might do so indirectly.

While research on previous crises actually confirms the first intuition, the policy tools suggested are highly questionable – they interfere with the equitable access and quality of care and may undermine the health system in the long-term -, so the number of countries that reported its use on the actual crisis in Europe is surprisingly small. [1]

Given this new data, you may change your first answer to “my health remains unchanged”. Once again, a quick look through some bibliography can prove you wrong. [2]

In fact, research suggests that the health status of populations may actual improve during economic downturns, and many arguments may be pointed out: more leisure time allows people to exercise more; over-consumption of food, alcohol and tobacco decreases; and road-traffic and work-related accidents decrease.

Even though the suicide rate tends to rise and the mental health status tends to worse, researchers say that if these hazardous effects are mitigated by adequate support programs, the health benefits of economic crises tend to overweight the risks, at least in the short-term.

Noting the counterintuitive nature of these results, I tried to find empirical evidence of them, studying the Japanese case.

When we look at the Japanese governments’ health expenditures, we clearly see sharply decreases during crises periods.

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The first cut followed the 1997s Asian Crisis and was integrated in a boarder policy of fiscal consolidation, aimed at cutting government spending (Japan’s situation, in the 1990s, was the worst of any G7 country). The government decided to raise tax rates, to end some subsidies and to increase the patient co-payments under the national health insurance. [3] The severe recession and the rising unemployment that followed lead to a reduction of tax revenues, aggravating this effect.

Although the second decline precedes the rise of the current crisis, it may correspond to a similar austerity policy to reduce Japanese high debt.

Looking at the non-medical indicators, we indeed notice a slight decrease in the percentage of daily smokers in 1997, as well as in 2007, which may be a reflect of financial constraints (eg. unemployment or rising taxes).

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We can also notice a small reduction in the rate of accidents – either labor-related or traffic accidents -, whose link to the crisis might, however, be questionable due to the persistent pattern till the present.

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Even though these results are insufficient to confirm the effect suggested by literature, they at least give us a different perspective of crises periods. In fact, every coin has two sides and despite the catastrophic economic consequences, crises may be an opportunity to improve the efficiency of health systems, as well as the population health status.

Ana Margarida Lemos

[1][2] Philipa Mladovsky, Divya Srivastava, Jonathan Cylus, Marina Karanikolos, Tamás Evetovits, Sarah Thomson, Martin McKee. Health policy responses to the financial crisis in Europe. European Observatory on Health Systems and Policies. 2012.

[3] Toshihiro Ihori, Toru Nakazato, Masumi Kawade. Japan’s Fiscal Policies in the 1990s. 2006.


The historic development of health expenditures in Germany

In the following I will describe the development of health expenditures in Germany from 1970-2008, based on data from the OECD (OECD Health Data, frequently requested data).

 

Looking at the first graph, we can notice that both in Germany as well as the OECD on average (without Germany) the per capita health expenditures (measured in purchasing power parities) have grown significantly over the last 40 years (almost with the factor 14). We can further notice 3 points: a) the increase of health expenditures for both curves seems to have been accelerated in the last years, indicating an even faster growth of health expenditures in recent years, b) the overall level of health expenditures per person in Germany has always been higher than in the OECD on average and c) the gap between Germany and the OECD has opened especially in the 80s and 90s of the last century whereas recently the difference between both lines has remained constant, implying similar growth rates for both Germany and the other OECD countries.

However, growing per capita health expenditures must not be problematic if the overall economy grows at the same rate or even faster. Therefore, it’s wise to take a look at the development of the relative health expenditures compared with the GDP. This analysis reveals the actual problem the current health care systems are facing: Both in Germany and in the OECD on average the health expenditures require an increasing part of the GDP, taking away resources from other activities. E.g. in Germany the share of the health expenses has almost doubled from 6% in 1970 to more than 10% in 2008. The same goes for the OECD (5% compared to almost 10%). Again, we can notice 3 conclusions: a) the development has been more volatile in Germany whereas the expenses in the other OECD countries grew more smoothly. E.g. a short drop of the share can be noticed in the wake of the German reunion, b) in Germany the share of health expenditures is higher than in the OECD analogous to the per capita development and c) the gap between the two lines has more or less remained constant over time, i.e. there is no evidence of converging developments.

This development may be reason for concern as we will have to spend more and more money on our health care systems. Although the data doesn’t indicate any reasons for the increase, it’s safe to infer that both the demographic development of an aging population and new, but costly medical innovations and technologies are two of the main reasons for this development.

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Discussing austerity and public health expenditures in Portugal

Nowadays, if we compare the front pages of the main Portuguese newspapers, in all of them we will find the two most currently used words: crisis and austerity. Etymologically, these words remember us that we are living a decisive moment in which we need to adopt rigorous procedures.  

Education, Social Security and Health – the largest Ministries in terms of public expenditure – are now facing a strong budget constraint. A special attention is devoted to Health due to the sector specific characteristics, and where the MoU predicts for 2012 that costs control will allow savings worth €550Million.

Since we are significantly cutting public expenditure, does this mean we will have a worse public healthcare sector? This is a legitimate question that everyone might ask. Indeed, these are changing times, but they are also challenging. As a science, Economics should offer its contribution. How? Economics studies the adequate use of scarce resources to satisfy theoretically unlimited needs. Economic analysis should work as an auxiliary tool in the decision-making process. It is important to know what is behind the trade-offs, which are the social preferences and which criteria we should set. In order to improve efficiency in the sector, the best choices and the definition of priorities should incorporate all these features.

Will this be painless? No. In order to induce a more rational use of the services and also to control expenditure, higher moderating fees will severely affect those who lost the exemption and those many others with a more inelastic demand for healthcare. According to the press, in some public hospitals, the reduction in intermediate consumption is already noticed and some basic materials have now become scarce (bandages, syringes, antiseptics). The adoption of innovation in the NHS is also more difficult when we are facing a more visible budget constraint. Since many physicians are now suffering the consequences of austerity, they might prefer to definitely change to the private sector, earning higher wages and benefiting from better working conditions. Does this raise equity concerns? If I were to a public hospital in January, am I sure that would I be treated equally as if I were in December when the budgetary limit is more evident?

How will the aftermath of the adjustment program be? Some might propose that, in the future, public health expenditures should have a constitutional limit as percentage of GDP in order to introduce commitment. The debate between rules and discretion is not new. We know that flexibility allows the reaction to unexpected shocks (a new deadly disease). However, we are also aware of the dynamic inconsistency of optimal plans. Usually, governments change their preferences over time and what was considered optimal in a certain point in the past may be considered inconsistent with what is preferred at another point in time. The problem is that preferences change without having any new information that was not possible to anticipate in the past. In summary, flexibility – the main advantage – becomes the main argument against discretion. However, this is what we learn from Public Economics: in thesis, rules are preferred to discretion. But now suppose: would it be difficult for the deputies in Parliament to congregate efforts and change the limit? 2/3 would be enough. And moreover: which limit should be set? Who will be responsible for calculating and monitoring? More recently, do we have any tradition of compliance with rules? This discussion illustrates how something theoretically good can, in practice, be inverted by reality.                                 

Tiago Silva


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Why is health care on the spotlight in the race for the US 2012 presidential elections?

As the United States (US) presidential elections of 2012 approaches, the health care debate has been brought to the spotlight again. Among others, the discussion is concerned with universal coverage, expenditure management, insurance reform and the fundamentals behind provision and funding. But why is the reform of the US health care system so important to be on the centre of the presidential election’s debate?

Firstly, it is of uttermost important to describe one main characteristic of the US health system. In this country, although health care provision is not a synonym of health care insurance – the population has the right to a minimum level of treatment in a life endangered situation regardless of their ability to pay – the fact is that most of health care provision requires patients to have private or public health insurance. However, many Americans do not qualify for public health insurance coverage and either cannot afford, choose not to purchase or do not qualify for private health insurance. As a whole, US Census Bureau reported that 16,3% of Americans (49,9 millions) were uninsured in 2010, which shows the fragility and inequity of such a health care system.

Secondly, there is the question of excessive spending on health care. As graph 1 shows, health care expenditures as a percentage of GDP in the US have been growing fast from 1960 to 2009 passing from 5,1% to 17,7%, always above the OECD average and representing the highest share among OECD countries. The USA was also above the average of OECD in health spending per capita (in US$ purchasing power parity) from 1960 to 2009. As shown, health spending per capita in the US has grown promptly in this period, from 148 US$ to 7990 US$.

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These values, quite impressive by themselves, lead researchers to claim that the US is not efficient in the application of its health care resources. For instance, a study by the Institute of Medicine of September 2012 claimed that as of 2009, 750 US$ billion spent on the US health care system were wasted mainly on unnecessary services and that they could have provided instead health insurance coverage for 150 million workers.

Taking this into account, it is understandable why during its mandate Barack Obama has insisted on a health care reform approved on March 2010, the Patient Protection and Affordable Health Care Act (PPACA). This includes a number of health-related provisions for the next four years aimed at providing affordable health insurance to all US citizens. In the 2012 elections, Obama is campaigning against his rival Mitt Romney by strongly defending the PPACA reforms and this has proven to be so successful that Romney has already publicly supported some of PPACA’ measures, when before he stood against them.

Who will win 2012 presidential elections in the US? Nobody knows. Nevertheless, the health care discussion will certainly continue in the US.

By: Ana Rita Borges