Funding health care: current options and future direction

1. Funding health care: current options and future direction Anna Dixon Research Officer

2. Funding health care: themes • Public sources of revenue – taxation and social health insurance • Private sources of revenue – user charges and private health insurance • Health and social care – complementary?

3. 100 L 80 F NL D 60 Percentage of total health expenditure from GRE 40 social health insurance B CH 20 FIN S UK IRL P NOR I E 0 DK 0 20 40 60 80 100 Percentage of total health expenditure from taxation Proportion of tax and SHI as % THE in western Europe

4. Contribution of taxation to social health insurance fund income • Austria: • farmers fund - 23% • overall 0.5% • Belgium: 35-40% • France: about 60% • Germany: • farmers fund - 52% • overall <1% • Luxembourg: up to 40% • Netherlands: 25%

5. How fair is social health insurance? Upper income ceiling % contribution Lower income threshold Earnings

6. Middle income tax rate How fair is tax? Top income tax rate % contribution Lower income tax rate Income

7. Changes to social health insurance • Universal coverage • Wider revenue base • Greater government control • Choice and competition

8. Extension of coverage, Germany • 1883 – 10% pop covered • 1901 – white collar from transport and commercial • 1914 – domestic servants, agricultural and forestry • 1972 – farmers

9. Insurance Competition • Netherlands (1987) • Germany (1996) • Switzerland (1911) • Belgium (1945)

10. Out-of-pocket payments as % of total health expenditure OECD Health Data 2000

11. Differing impacts of user charges • The availability of supplementary insurance • Reducing ‘necessary’ and ‘unnecessary’ utilisation • Impact on prevention • Concerns for health - Impact on health status • Health as a public good and caring externalities

12. Voluntary health insurance is… • “health insurance that is taken up and paid for at the discretion of individuals or employers on behalf of individuals. VHI can be offered by public or quasi public bodies and by for profit and not for profit private organisations” • Mossialos and Thomson 2001

13. European experience • Substitutive • Alternative to public insurance; main form of insurance cover for individual • Supplementary • may increase subscriber choice of provider and improve (speed of) access • Complementary • full or partial coverage for services that are excluded or not fully covered by the statutory health system

14. Expenditure projections for England, 1996 to 2031 1.8% of GDP Wittenberg et al, Health Statistics Quarterly, winter 2001

15. ‘Those in employment have a duty to ensure, through contributions or taxes, that older people have a decent standard of living’

16. Where next? • Sustainability of public finance • Culture of solidarity • Interpersonal • Intergenerational • Rationing • EU regulation

17. Further information • a.dixon@lse.ac.uk • Or look up publications via • www.observatory.dk • www.lse.ac.uk/Depts/lsehsc