Academic journal article Review of European Studies

Reforms to Limit Increases in Health Care Expenditures, with Special Attention to the Netherlands

Academic journal article Review of European Studies

Reforms to Limit Increases in Health Care Expenditures, with Special Attention to the Netherlands

Article excerpt

Abstract

In Europe, an ageing population and technological innovation are the most significant drivers behind public health care expenditure increases. Several reforms are needed in order to limit these increases. International research has shown that market mechanisms and better public management have the most effective impact on limiting expenditures. Budget caps can also be important in lowering costs, though they may have some drawbacks. Other instruments, such as supply-side constraints and demand-side reforms, are less effective. Since the 2006 Dutch health care reform, patient orientation within the curative system has improved. However, in order to be able to limit increases in Dutch expenditure, further modifications to the market-orientated health insurance system are needed. For long-term care the recommendation is put forward that ultimately a reform stage should be implemented which would boost the responsibility of individuals and the family and limit the role of the government.

Keywords: Health care, Reforms, Ageing Europe, Technology push

1. Introduction and Questions

Limiting increases in public health-care expenditures will be a real challenge in Europe in the coming decades. Due to an ageing public, EU health care expenditure is expected to increase by more than 2.5 percentage points of GDP in the next fifty years (see EC (2009a)). This EU-wide average hides substantial disparity among countries. Notably, the cost of Dutch long-term care will rise by 4.5 percentage point GDP and is therefore a great policy challenge. Moreover, this EU projection is based on the assumption that technological innovation does not increase costs. However, in recent years in advanced economies technological innovations have been a more important driver for expenditure increases than ageing. For this reason, IMF projections based on past technological experience are two to three times higher than EU projections (see IMF (2010)).

Nevertheless, the EU projections for public health care spending may still be realistic if several policy reforms are made. In this paper we discuss the impact of such reforms. It appears that introducing market mechanisms and strengthening public management have the most effective impact on increasing efficiency. Budget caps can also be important in lowering costs, though they may have some drawbacks. Other instruments, such as supply-side constraints and demand-side reforms, are less effective, as they are often eroded by supplier responses or tax expenditures.

In addition, we compare this reform impact analysis with the effects of the 2006 reform of the Dutch curative health care system. From the perspective of the patient, the reform was successful. However, since the beginning of this century there has been an increase in curative health care expenditure and expected efficiency improvement after the 2006-reform has not taken place yet. Therefore, some further smaller reforms are outlined which should increase efficiency in years ahead.

2. EU Health Care Expenditures Increase due to Ageing

Most countries in the European Union are facing a structural worsening of their public budget as a result of the future development of the various age-related spending categories. Based on an EU calculation, total age-related public spending for the EU-27 is projected to increase by 4.6 percentage point of GDP over the period 2010-2060 (see EU (2009a)). Of this total, 2.3 percentage point is due to an increase in public pensions and 2.5 percentage point to an increase in health-care spending, including long-term care. (Note 1) In other words, public pensions account for only half of the rise in age-related spending, though they usually receive most of the attention in public discussions about ageing costs. Less attention is given to health care, despite the fact that it accounts for the other half of spending increases.

Those EU-wide averages hide substantial disparity among countries and among expenditure categories. …

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