Health spending and resources
One of the most important areas of public spending in Spain is health, which amounts to almost 6.3% of GDP. In the last 20 years, the system has expanded for a number of reasons. Firstly, the universal nature of the system, though limited in some phases due to the introduction of more restrictive access criteria, has meant that the size of the population served has grown constantly over the years. Secondly, the changes in the age structure of the population, with an increasingly large proportion of senior citizens over the age of 65, has led to an increase in chronic and long-term diseases, which has in turn put upward pressure on spending.
The strains caused by the combination of the universality of the system, the growing demand for healthcare and the budgetary restrictions affecting all public spending policies have not always been resolved in the form of an increase in the allocation of financial resources. Prior to the start of the last financial crisis, the trend in per capita spending was clearly upwards in real terms. The decline in economic activity and the period of budgetary consolidation that followed brought this trend to an end, with a considerable drop in the indicator back to the levels of ten years earlier. Since 2013, the indicator has begun to rise again, though at a slower pace than during the economic boom that preceded the recession.
The indicators most commonly used to compare health spending in European countries show that the level in Spain is below the average, although in terms of its position in the ranking, Spain is in the middle of the table. The relative level of spending is very similar to that of Italy and Portugal, giving rise to a certain Mediterranean model as regards the allocation of public funds to healthcare. One notable fact is that in general there is a close correlation between this indicator and countries’ level of wealth. Those in Eastern Europe are a long way from the European average.
Spain’s position in the middle of the ranking of European Union countries is also confirmed when the assessment of spending is analysed not in relation to population size but on the basis of each country’s GDP. In any event, this gives rise to a certain improvement in Mediterranean systems, with the exception of Greece. Public spending on health has, however, grown very slowly in Spain in comparison with GDP in recent years, with the value for 2017 (6.3%) lower than that for 2009 (6.8%).
1. Financing pharmaceutical spending
Spending on pharmaceutical products in Spain has traditionally been a significant cost and higher than the European average as a proportion of total public spending on health. The part of this spending covered by patients used to be relatively small due in part to free prescriptions for incapacity benefit recipients and pensioners, who account for a large and growing proportion of medication consumption.
This situation changed with the reform introduced by Royal Decree 16/2012 on urgent measures to ensure the sustainability of the Spanish National Health System and to improve the quality and security of its services. Following this reform, incapacity benefit recipients and pensioners pay 10% of the cost of their medication unless they have an income of more than €100,000, in which case they pay 60%.
Monthly maximum limits were established of €8 for those on incomes below €22,000, €18 for those on incomes up to €100,000 and €60 for those on incomes higher than €100,000. Those in employment in the same income brackets pay 40%, 50% and 60% of the price with no monthly maximum limit. There are exemptions for groups such as incapacity benefit recipients and pensioners receiving non contributory benefits, the unemployed whose benefit entitlement has expired and treatments needed for a work related disease, and a maximum of €4.13 has been established for each prescription for the chronically ill. It is important to note that public employees, both those currently in work and retired, were excluded from the copayment reform and continue to contribute 30% of the cost with no monthly maximum limit and regardless of their income level.
FAMILIES’ SPENDING ON PHARMACEUTICAL PRODUCTS RISES AFTER THE COPAYMENT REFORM
The copayment reform of 2012 increased the percentage of the cost of medication that is paid by users, especially in the case of incapacity benefit recipients and pensioners. This change is reflected in the average spending on pharmaceutical spending per household, which rose in families led by persons aged 65 and over from €100 in 2011 to some €220 in 2013, according to Household Budget Survey (EPF) data.
This means that expenditure on medication accounts for a larger proportion of household spending following the copayment reform. If we look at income levels, the largest increase is to be found in households in the second, third and fourth deciles, the income brackets in which most incapacity benefit recipients and pensioners are to be found. Even though the new copayment system has the benefit of differentiating payments on the basis of income level, unlike the previous system, it still contains aspects that have been questioned by health experts. One of these aspects is the lack of monthly maximum limits for people in jobs and the unemployed, which may ultimately turn the copayment into a veritable ‘tax on illness’ for people who have multiple health problems. Another aspect is the fact that the general mechanism is not applied to the Civil Service mutual societies.
2. The challenge of long-term care
According to the OECD, long-term care is the element of health spending that has risen the most in recent years due to the ageing of the population. The latest projections calculate that the proportion of GDP allocated to this care could double or more by the year 2060 (OECD, 2017).
There are currently significant differences in the public funds allocated to this policy in the various countries in the OECD. A number of countries in northern Europe are at the top of the ranking, allocating to longterm care more than 2% of their GDP. Spain remains well below the average, despite the increase in spending since the System for Autonomy and Dependency Care (SAAD) was put in place in 2007, as it devotes just 0.8% of GDP to long-term care. This percentage is almost five time lower than the amount spent on long-term care in the Netherlands. In Spain, there are also fewer formal carers per thousand inhabitants, and fewer places in care institutions, than the average in the 18 countries of the OECD for which comparable data exist.
The organisation of the care system determines the level and structure of the spending in the various countries. Spain devotes approximately two-thirds of its spending to people residing in institutions, a percentage similar to the OECD average. This percentage is higher in countries such as Canada, Estonia, Iceland and Hungary, but much lower in others, among them Denmark, Poland and Finland.
3. Coverage of the health system
Most countries in the European Union, including Spain, have universal or almost universal health systems. Private health insurance is held by 15% of Spain’s population, a higher percentage than in countries like Sweden, Lithuania and Bulgaria, where it is almost non-existent. Within Europe, there are some countries (France, Netherlands, Slovenia, Belgium and Croatia) where more than half of the population has private cover that complements or supplements the public system. In the case of France, virtually all citizens have private health insurance that covers the cost of the public system copayments.
The scope of the cover provided depends on the percentage of the population covered (breadth of the cover), but also on the type of services and other benefits included (depth of the cover) and the proportion of the costs covered (extent of the cover). The OECD compares the overall cover for five central functions, delimited according to the definitions in the System of Health Accounts: i) hospital healthcare, ii) healthcare outside the hospital environment (excluding dental care), iii) dental care, iv) the purchase of medication, and v) the purchase of therapeutic appliances (hearing aids, glasses, etc.). To do this, it analyses the percentage of total spending for each function that is financed by the public purse.
Spain is about average in healthcare provision in and outside the hospital environment, but below the average in relation to the purchase of pharmaceuticals. In addition, very little public spending goes towards dental care and the purchase of therapeutic devices and hence this expenditure is far below the European average.
Other types of indicator that make it possible to interpret the cover offered by the public health system are the number of healthcare staff and the prevention of diseases through vaccination programmes. In recent years, there has been a gradual, albeit moderate, rise in the number of healthcare staff, an increase that was particularly modest during the economic crisis. In the most common vaccination programmes, the results vary, with no notable changes in primary vaccination but a considerable drop since the start of the recession in flu vaccination for people aged over 64.
4. The efficiency of the public health system
One result common to comparative analyses of public health systems is that traditionally Spain ranks higher in efficiency indicators than it does in spending indicators. One of the possible indicators that can be used to measure these results is the rate of unnecessarily early and medically preventable deaths. This indicator is frequently used in the analysis of the quality and outcomes of health systems.
This indicator makes it possible to distinguish between amenable (treatable) deaths and preventable deaths. A death is deemed to be amenable if, in the light of current medical knowledge and technology, all or most deaths due to this cause, taking age limits into account, could have been prevented by means of quality healthcare. A death is preventable if, in the light of current knowledge of the factors that determine health, all or most deaths due to this cause, taking age limits into account, could have been prevented by public health interventions in the broadest sense. Whereas the first of these indicators makes reference to shortcomings attributable to the health system, the second is related to the capacity of health policies.
As some studies show, more amenable deaths were traditionally recorded in Spain than those categorised as preventable (Oliva et al., 2016). Nevertheless, the differences have gradually reduced over the years, fundamentally due to the greater fall in amenable deaths, part of a general downward trend in both causes. The economic crisis, however, put a halt to this trend, so much so that the rate of preventable deaths actually rose at some point during these years.
When Spain’s data are compared with those of other European countries, it ranks highly, with results noticeably better than those of countries with relatively higher spending on health. As the OECD points out (2017), this good result is due to a large extent to the falls and decreasing rates of death due to ischemic heart disease and stroke.
5. The degree of satisfaction among users of the health system
One of the mainstays of any health system is citizens’ perception of the quality of the healthcare services they receive from the public system. Generally, the system is highly rated in comparison with other areas of public spending. Fiscal barometers, such as the one used by the Institute of Fiscal Studies, usually identify healthcare spending as one of the few for which Spanish citizens would be prepared to pay more tax.
The data that sum up the general level of satisfaction with the health system have been relatively stable in the last ten years, which seems to indicate that, despite the slight reduction during the worst moments of the economic crisis, the severe downturn in the economy during this period did not erode the public’s evaluation of the system to any lasting or significant degree. Even so, when this assessment is broken down into different areas, citizens’ perception of the quality of the services provided shows growing dissatisfaction. In the case of primary healthcare, the percentage of people surveyed who thought this type of service had worsened rose by more than 20 points during the recession. And this figure increased by almost 30 points in the other areas. In every area, the perception of the decline in the quality of the system is considerably greater than before the economic crisis.
EVALUATING THE DEGREE OF FINANCIAL PROTECTION: CATASTROPHIC SPENDING ON HEALTH
The degree of financial protection in relation to health is measured using the indicators of ‘catastrophic spending’ (when spending on health takes up more than 10% of a household’s income) and ‘impoverishment from medical expenses’ (healthcare spending leaves the family below the poverty line).
The Regional Office for Europe of the World Health Organization recently devised a methodology applicable to the Household Budget Surveys (EPF) in Spain. Each household’s ability to pay is calculated by subtracting from their financial resources a standard amount to cover the cost of food, housing, energy and water (around €450 a month in 2017 for a single-person household).
The household is deemed to have catastrophic healthcare spending when payments exceed 40% of this calculated ability to pay.
Using this definition, the incidence of catastrophic spending rose in Spain between 2006 and 2016, with two moments of obvious impact associated with the start of the economic crisis and the copayment reform (2013). The increase was particularly severe among families in the worst socioeconomic circumstances.
In households with a negative ability to pay (households whose resources do not even cover the cost of their basic needs), any healthcare payment is by definition catastrophic.
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