Funding Health Care: Options for Europe
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N:\EC\COM\HDS\IDP\DOCSTORE\DOCSTORE\Docs for PDF filing\Obs\Funding health care.doc Funding health care: options for Europe European Observatory on Health Care Systems Series Series Editors Josep Figueras is Head of the Secretariat and Research Director of the European Observa- tory on Health Care Systems and Head of the European Centre for Health Policy, World Health Organization Regional Office for Europe. Martin McKee is Research Director of the European Observatory on Health Care Systems and Professor of European Public Health at the London School of Hygiene & Tropical Medicine as well as a co-director of the School’s European Centre on Health of Societies in Transition. Elias Mossialos is Research Director of the European Observatory on Health Care Systems and Brian Abel-Smith Reader in Health Policy, Department of Social Policy, London School of Economics and Political Science and Co-Director of LSE Health and Social Care. Richard B. Saltman is Research Director of the European Observatory on Health Care Systems and Professor of Health Policy and Management at the Rollins School of Public Health, Emory University in Atlanta, Georgia The series The volumes in this series focus on key issues for health policy-making in Europe. Each study explores the conceptual background, outcomes and lessons learned about the dev- elopment of more equitable, more efficient and more effective health systems in Europe. With this focus, the series seeks to contribute to the evolution of a more evidence-based approach to policy formulation in the health sector. These studies will be important to all HHthose involved in formulating or evaluating national health care policies and, in particular, will be of use to health policy-makers and advisers, who are under increasing pressure to rationalize the structure and funding of their health systems. Academics and students in the field of health policy will also find this series valuable in seeking to understand better the complex choices that con- front the health systems of Europe. Current and forthcoming titles Martin McKee and Judith Healy (eds): Hospitals in a Changing Europe Martin McKee, Judith Healy and Jane Falkingham (eds): Health Care in Central Asia Elias Mossialos, Anna Dixon, Josep Figueras and Joe Kutzin (eds): Funding Health Care: Options for Europe Richard B. Saltman, Reinhard Busse and Elias Mossialos (eds): Regulating Entrepreneurial Behaviour in European Health Care Systems The European Observatory on Health Care Systems is a unique project that builds on the commitment of all its partners to improving health care systems: • World Health Organization Regional Office for Europe • Government of Greece • Government of Norway • Government of Spain • European Investment Bank • Open Society Institute • World Bank • London School of Economics and Political Science • London School of Hygiene & Tropical Medicine The Observatory supports and promotes evidence-based health policy-making through comprehensive and rigorous analysis of the dynamics of health care systems in Europe. European Observatory on Health Care Systems Series Edited by Josep Figueras, Martin McKee, Elias Mossialos and Richard B. Saltman Funding health care: options for Europe Edited by Elias Mossialos, Anna Dixon, Josep Figueras and Joe Kutzin Open University Press Buckingham · Philadelphia Open University Press Celtic Court 22 Ballmoor Buckingham MK18 1XW email: [email protected] world wide web: www.openup.co.uk and 325 Chestnut Street Philadelphia, PA 19106, USA First Published 2002 Copyright © World Health Organization 2002 The views expressed in this publication are those of the editors and contributors and do not necessarily represent the decisions or the stated policy of the participating organizations of the European Observatory on Health Care Systems. All rights reserved. Except for the quotation of short passages for the purpose of criticism and review, no part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the copyright holder or a licence from the Copyright Licensing Agency Limited. Details of such licences (for reprographic reproduction) may be obtained from the Copyright Licensing Agency Ltd of 90 Tottenham Court Road, London, W1P 0LP. A catalogue record of this book is available from the British Library ISBN 0 335 20924 6 (pb) 0 335 20925 4 (hb) Library of Congress Cataloging-in-Publication Data Funding health care: options for Europe / edited by Elias Mossialos . [et al.]. p. cm. — (European Observatory on Health Care Systems series) Includes bibliographical references and index. ISBN 0-335-20925-4 (hb) — ISBN 0-335-20924-6 (pb) 1. Medical care—Europe–Finance. 2. Medicine—Europe—Finance. 3. Federal aid to medical care research—Europe. 4. Medical care—Economic aspects— Europe. I. Mossialos, Elias. II. European Observatory on Health Care Systems series R852 .F86 2002 338.4′33621′094—dc21 2001036111 Typeset by Graphicraft Limited, Hong Kong Printed in Great Britain by Biddles Limited, Guildford and Kings Lynn Contents List of figures, tables and boxes vii List of contributors x Series editors’ introduction xii Foreword xiv Acknowledgements xv one Funding health care: an introduction 1 Elias Mossialos and Anna Dixon two Financing health care: taxation and the alternatives 31 Robert G. Evans three Social health insurance financing 59 Charles Normand and Reinhard Busse four Health financing reforms in central and eastern Europe and the former Soviet Union 80 Alexander S. Preker, Melitta Jakab and Markus Schneider five Private health insurance and medical savings accounts: theory and experience 109 Alan Maynard and Anna Dixon six Voluntary health insurance in the European Union 128 Elias Mossialos and Sarah M.S. Thomson vi Funding health care: options for Europe seven User charges for health care 161 Ray Robinson eight Informal health payments in central and eastern Europe and the former Soviet Union: issues, trends and policy implications 184 Maureen Lewis nine Lessons on the sustainability of health care funding from low- and middle-income countries 206 Anne Mills and Sara Bennett ten Funding long-term care: the public and private options 226 Raphael Wittenberg, Becky Sandhu and Martin Knapp eleven Strategic resource allocation and funding decisions 250 Nigel Rice and Peter C. Smith twelve Funding health care in Europe: weighing up the options 272 Elias Mossialos and Anna Dixon Index 301 List of figures, tables and boxes Figure 1.1 The health care triangle 2 Figure 1.2 Functions of health care systems 4 Figure 1.3 Examples of funding sources, contribution mechanisms and collection agents 5 Figure 1.4 Total expenditure on health care as a percentage of gross domestic product (GDP) in Europe as a whole (average for the European Region of WHO) and regional averages for the European Union (EU), the countries of central and eastern Europe (CEE) and the countries of the former Soviet Union (FSU), 1985–99 9 Figure 1.5 Percentage of total health expenditure financed by taxation and by social health insurance in selected western European countries in 1998 or latest available year 11 Figure 2.1 Expenditure (in millions of Canadian dollars) on publicly financed health care according to pretax income decile in Manitoba, Canada, 1994 34 Figure 2.2 Tax contribution (in millions of Canadian dollars) to publicly financed health care according to pretax income decile in Manitoba, Canada, 1994 34 Figure 2.3 Net transfer (in millions of Canadian dollars) to or from each pretax income decile from the public financing of health care in Manitoba, Canada, 1994 35 viii Funding health care: options for Europe Figure 2.4 Net transfer to or from each pretax income decile as a share of pretax income from the public financing of health care in Manitoba, Canada, 1994 35 Figure 2.5 Expenditure on health care in the United States as a percentage of pretax family income according to family income decile and type of expenditure, 1987 36 Figure 2.6 Expenditure on health care in the United States as a percentage of pretax family income according to family income decile, type of expenditure and the age of the head of household 65 years or older versus younger than 65 years, 1987 36 Figure 2.7 Estimates of the progressivity (Kakwani (1977) Progressivity Index) of total health care expenditure in 12 OECD countries in various years according to the percentage of health expenditure financed by taxation 38 Figure 3.1 Simplified model of the financing functions and monetary flows in countries with social health insurance 61 Figure 4.1 Percentage of total health expenditure financed by taxes and by social health insurance in 16 CEE and FSU countries, 1997 or latest available year 85 Figure 4.2 Percentage of health expenditure that is prepaid versus paid at the point of service in 16 CEE and FSU countries, 1997 or latest available year 92 Figure 4.3 Organizational forms for the relationships among transacting parties in health care 97 Figure 4.4 Infant mortality rates (< 1 year) and child mortality rates (< 5 years) among the population quintile with the lowest income and highest income in Kyrgyzstan and Kazakhstan, 1997 105 Figure 8.1 Average informal payments (in 1995 US dollars adjusted for purchasing power parity) per capita for people who sought care in five CEE and FSU countries, 1996 or 1997 196 Figure 8.2 Average informal payments (in 1995 US dollars adjusted for purchasing power parity)