Nova workboard

a blog from young economists at Nova SBE

User charges, to what end?

European countries are well sunk in deficits and one of the main contributors is the expenses of keeping a running national healthcare system. As the financial crisis hit and countries applied a Keynesian model and increased expenses, deficits increased even further. When markets started to question some countries’ ability to repay their debt authorities cried for cuts in expenses everywhere.

Portugal was one of the unfortunate ones that were simply unable to compete with the big countries in expansionist policies. Regardless of whether it was wrongdoing by the government or a chain of coincidences, in 2011 troika arrived in Lisbon to negotiate a programme of austerity that included tax raises and expense cuts in all areas, especially in healthcare, which is one of the main sources of expense for the government.

One of the main policies of the government aided by troika was to raise user charges, one of the sources of financing of the NHS, to guarantee the sustainability of the system[1]. Interestingly enough, user charges had been introduced without the purpose of financing. The argument at that time was that people were using carelessly the healthcare services of the state and that user charges would help filter the adverse selection problem that a full insurance system creates – in short they were to moderate demand. Grounded on economic reasoning, these were instituted albeit their effect was somewhat questionable. Curiously, in Germany, very recently, the argument was to remove user charges completely, a strange policy when compared to what their European brethren are doing.

Back to troika’s argument that without user charges the service is financially unsustainable, it is questionable if this is the right argument, especially looking at what Germany did recently. Even if we consider that reducing the amount of service provided by reducing further the percentage of insurance is the right way to go, tax values being to hit numbers that act as a surcharge to finance the system rather than a tax to moderate demand. If €20 is supposed to moderate an emergency call, then patients might be better off in private clinics. If in fact user charges are trending towards financing the system, then we might ask if income taxes should not be enough for that purpose.

Looking at the way taxes are being charged to the patients when considering complementary methods of diagnosis[2], makes the argument even more dubious. Since January 1st 2012, a pathologist that wishes to conduct immunohistochemical techniques to reach a diagnosis must write in the patient’s file how many he will use so that the patient can pay. Some of these techniques can cost up to €300, which translates to a user surcharge of €30[3]. If we look at this from a financial perspective, the patient is in fact paying a percentage of what he is costing to the State. From a healthcare perspective, this is far from fair. What choice does a patient have regarding the need for additional techniques to get a diagnosis? Can the doctor make the best medical decision knowing that it is forcing the patient into a cost?

There are no clear answers to the problem except one: user charges in Portugal are currently filling a role they were not designed to. It might be due to the over indebted system, or even a genuine attempt to moderate demand. Still, they are financing in in a possibly dangerous way the medical act, and condition both patient and doctor on their choices.

[1] Decreto-Lei nº113/2011: …medidas reguladoras do uso de serviços de saúde, designadamente as taxas moderadoras, as quais constituem uma das fontes de receita própria das instituições e serviços do Serviço Nacional de Saúde. (…) O Governo comprometeu-se a tomar medidas para reformar o sistema de saúde com vista a garantir a sustentabilidade do Serviço Nacional de Saúde (SNS) (…), quer no que diz respeito aos seus recursos financeiros. Entre essas medidas encontra-se a revisão do regime de taxas moderadoras do SNS.

[2] Decreto-Lei nº113/2011 Artigo 2º alínea b): Na realização de exames complementares de diagnóstico e terapêutica em serviços de saúde públicos ou privados.

[3] Portaria nº306-A/2011 ANEXO


João Teixeira