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1、European issues in Cost Containment the Italian case,How cost containment policy in healthcare thwarts patient choice and innovation,Content,1 What is the issue with healthcare?2 How does the Italian healthcare system operate in this respect?3 How to solve the problem?,1 Whats the Issue with Healthc
2、are?,Healthcare expenditure has steadily increased over timeCost containment:a major issueNo structural solutionsMajor future concerns:Demographic trendsInnovationUnsustainability of the welfare state,European Trend:increasing state involvement,Public arrangements for health insuranceFrom self-regul
3、ation to state involvementExtending material and personal scopeValues:solidarity(risk,income),Cost Containment:the Major Issue,Charges and Co-PaymentsRestrictions(on what is reimbursed by the insurer)Budget SettingControlsNB!Italy has tried all cost containment tools!,2 The Italian Healthcare System
4、:Overview,NHS complex network of public and private providers.Financed mainly by public hand(71%)but covers only 45%of total healthcare expenditures.Providers are either public,private,or subcontractors for the NHS.NHS covers all medical care but co-payments are significant,The Italian Healthcare Sy
5、stem:Financing,General revenues(31%)Regional taxes on manufacturing(Irap)1998:Irap replaced by pay roll taxesPay-roll taxes(59,5%)Specific regional contributions(5,5%)Revenues of the healthcare sector(4,3%)Thus:main source of income:regional taxes on manufacturing and payroll taxes!,And still those
6、debts!,Cumulative deficits of Italys NHS,millions of euros,19941998:Years Millions of eurosUp to 1994 1 7501995 1 1701996 2 0701997 5 0901998 4 130Cumulative deficit 14 210Source:Corte dei Conti(Court of Auditors)(10).,Consumption of healthcare(%GDP-OECD),Consumption of medicines(%GDP-OECD),Consulta
7、tions with prescription(%-OECD),1994:The Italian Reference Price,Redefined the Positive ListClustering based on broad population/indication:product form not importantTherapeutic added value for broad population against“golden standard”Nationwide Drug expenditure Budget“Free”pricing:based on costs es
8、timatesIntroducing generics,Pharmaceuticals:the key to changing cost containment policy,Group A,B,C and H:criteria being clinical efficacy,the risk-benefit balance of the therapy,acceptability of the therapy to patients,and the costs of the therapyWhich causes:Long negotiations for Group A,and espec
9、ially Group B,products(the gate-keeping component of the system),causing:No incentive for innovation in product formNo incentive for innovation for sub groupNo incentive for incremental innovation,Essential problems in healthcare,also in Italy:TPP and one size fits all,TPP=Any organization,public or
10、 private,that pays or insures health or medical expenses on behalf of beneficiaries or recipients.Third-Party Payment leads toExcess consumption,which leads toRunaway costs,which leads toThird-Party rationing,which leads toLimited supply of services,which leads toConsumer discontent,which leads toGo
11、vernmental interference:out of pocket spending disappears!,Obstacles to Reform are thus:,Protect the Hapless PatientTax code,serious problem for the sustainability of the welfare stateInsurance regulationsProvider regulationsInfrastructure,entrenched interestsEntitlement mentality!,3 How to Solve th
12、e Problem?Moving from“one size fits all”and Third Party Payment.,Consumer,Insurer,Provider,?,To two Party Contracts and Patient Choice!,Consumer,Insurer,Provider,Employer,Consumer,Shift in Paradigms:,See health care as investment and not as costsSee medicines as part of total health careValue innova
13、tion in healthcare,also incremental and also in product form or sub groupMake market access fast and without unneeded administrationMost importantly:EMPOWER THE PATIENT/HEALTH CONSUMER!,The New Paradigm:Empower the Patient!,Voluntary insurance:insurance has always been a risk sharing institution,so
14、it should be voluntary to insure some risks Restore Patient/Physician direct relationshipAgencies should be made accountable to the consumerPatients should be able to merge resources:most importantly with Web-enabled information,Milestones of Reform:,Governmental Actions should be to:Roll-Back Regul
15、ationsMalpractice ReformEnact Health Savings Accounts!facilitate&encourage HSAs by:Tax Credits/Deductions Individual MarketDismantle the reference price system and introduce patient-centred reimbursements!,Milestones of Reform:,Private Sector Actions should be to:Implement/Deliver HSAs and individua
16、l health plansMake prices,such as hospital prices,transparentImprove Individual MarketsProvide more Information and support Patients and Patients Groups!,Consequences:the Healthcare Utopia,Government:Spends budget on other issuesPatients:Keep money in own pocket;pay for themselvesEmployers:Less pate
17、rnalism,provide market and financePhysicians:Cash practices,retainer medicineFacilities:Price disclosure,fewer discounts(esp.Pharmacists)Health Plans:Insurance versus medical managementPharma Companies:Price pressure,generic competition,R&D,Conclusion:,A cost containment policy that acts on prices a
18、nd budgets alone can have serious implications in terms of welfare!Patient choice and patients financial responsibily should replace One size fits all regulations.,My favorite one-liner:“If you think healthcare is expensive,try disease”,Eline van den Broekthe European Independent Institutewww.european-independent.orgNoordeinde 10D2514 GH Den HaagThe NetherlandsT+31 70 3925180F+31 70 3651809broekeuropean-independent.org,
