EUROPEAN PAPERS ON THE NEW WELFARE

Health Care System in the Industrialised Countries and the Role of Private Insurance

3. General features of the health reforms in the most important countries

The rise in health service costs and in health needs urged policy makers of the industrialised countries to make a more selective and effective use of the existing resources, but the strategies adopted to reach this goal have been different and ranged across private and public mechanisms. Common features (differentiating Europe from the United States) are universal coverage to all citizens and the strong role of the central government in regulating the provision of health care services.
The United Kingdom has been a very important testing ground for ‘quasi-market’ mechanisms. In the late 1980s, Thatcher’s government decided that the budget allocated by the State to local health authorities should be used to purchase services from providers (hospitals, physicians), which were set in competition with each other. In addition, hospitals owned by the district health authorities were encouraged to become private enterprises. The most efficient ones managed to widen their service pipeline, while others were forced to close when their resources were reduced. The Netherlands is trying to encourage market elements in the exchange between health service providers, sickness funds and insurance companies. Even in more centralized economies, techniques to enable and evaluate services based upon free market principles — have been adopted or are under scrutiny.
The results showed that quasi-market systems are not the best solution to improve the cost/service ratio of medical treatments. After a decade of testing of private mechanisms, the United Kingdom reversed itself and decided to find a fair balance between competition, dirigisme and cooperation, in the light of the problems affecting the quality of services and of the enormous transaction costs linked to the quasi-market system.
Information asymmetry is the main cause of failure of the free market mechanism in health services. To be perfect, a market must be transparent, which means that service users must be informed about the quality and prices of the services they want to have access to. In the health sector, information is lacking on the demand side, and this hampers the market functioning3. Moreover, demand induction should also be considered, as health care providers use their knowledge to influence demand with a view to fulfilling personal objectives. However, experts in the field accept the SDI (supplier-induced demand) concept, which they deem to be a minor problem (Folland, et al. 1997).
Blair’s reforms introduced cooperation mechanisms to avoid the excessive competitiveness that might lead to non optimal results from a social policy viewpoint. Curbing competitiveness put a lid on the enormous costs generated by the high number of transactions and of subjects involved in the exchange, and with the introduction of long-term contracts, long-term planning in a framework of stability was possible, thus avoiding the problem of overlapping and duplications.
In all the most important countries, co-payments have been adopted to make citizens more responsible, so that they resort to health services only when they really need to; co-payments curb demand and supplement other forms of cost control.
Medications are the category of expenditure where cost sharing by citizens is at its highest. Drug spending is significantly on the rise because of the latest technological advances and the trend of replacing surgery with pharmacological treatment. In particular, the ticket system (a minimal flat contribution by the citizen) based on the average price of any kind of drugs (thus raising the price of the medication within the relevant bracket) can push demand towards equivalent but less expensive products, like generic drugs.

3 Since the study by Arrow (1963), the problem of asymmetric information has been acknowledged as the main cause of the malfunctioning of the health market.


Pages: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17


Tags: , , , , ,