Nova workboard

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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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


Public Health Care in Canada

Canada’s health care system has long been considered a national icon for the Canadian identity. The system is based on the principle of universal health care for all residents ensuring reasonable access to hospital and physician services. Although the program encompasses all of Canada, individual insurance plans are developed by each of the thirteen provinces and territories across the country. Guidelines are mandated by the Federal Government and must be met by provincial and territorial governments in order to be eligible for the full cash contribution under the Canadian Health Transfer.

Health and health care falls primarily under the jurisdiction of each province, creating a system of individualized provincial and territorial health insurance programs. Although they may differ in coverage all insurance programs offer basic and necessary health care to residents. Additional services such as dental, cosmetic, vision, and pharmaceuticals are often not covered under the provincial insurance system, however many citizens are covered under private insurance through their occupation or choose to pay out of pocket for these services. In 2010, public expenditure accounted for 71.1% of all health care expenditures in Canada with the remaining expenses used for services not included in provincial insurance plans. Canada has higher public expenditure than other health regimes such as in the United States where 48.2% of health expenditures are public, but lower than other countries such as the United Kingdom where 83.2% of health expenditures are public[1].

Critics to the Canadian health care system are quick to point out the high wait times associated with health services. Although there are no monetary costs for essential services, the trade-off costs experienced by Canadian residents are increased wait time for procedures and appointments with specialists. Depending on individual preferences for health care and time of service many Canadians are in favour of other health regimes, either private or semi-private, which may have lower wait times. Comparisons among different systems show that in 2010 59% of Canadians versus 20% of Americans waited four weeks or more for a specialist appointment. Wait times in the United Kingdom for 2005 and 2008 were higher than the United States and on par with the Canadian average; however there has been a sharp decline in wait times for 2010 with only 28% of patients waiting four weeks or more[2].

Debates are ongoing concerning health care reform in countries across the world, and Canada is no exception. It is argued that market solutions to health care are viable with a range of policy alternatives including privatization, the creation of a two-tiered public and private system, or the implementation of a health care tax[3]. These alternatives are countered with arguments citing the responsibility of providing necessary health care to low income citizens and the ethics of providing health services under a private regime.

The Canadian health care system is a good model for countries with strong regional governments similar to the provincial jurisdictions in Canada. The system is able to cover essential medical services for the population spread out over a large geographic area by mandating health insurance guidelines at the national level that must be met by provincial health authorities. Increased efficiencies for the health sector can made in terms of reduced waiting time for residents and further coverage for additional medical services, and Canada should continue to draw upon experiences with other public systems such as the United Kingdom to achieve these efficiencies.

Jacob Macdonald
NOVA School of Business and Economics


[1] OECD (2012), “Public Expenditure on Health: Total Expenditure on Health”, in OECD Health Data 2012 – Frequently Requested OECD Publishing. http://stats.oecd.org/Index.aspx?DataSetCode=SHA

[2] OECD (2011), “Waiting times”, in Health at a Glance 2011: OECD Indicators, OECD Publishing. http://dx.doi.org/10.1787/health_glance-2011-59-en

[3] Gordon, Micheal, MD; Jack MIntz, PhD; Duanjie Chen, PhD. 1998. Funding Canada’s Health Care System: a tax based alternative to privatization. Canadian Medical Association. Vol. 159, Issue 5 (September): 493-496