To our future health

Health represents the single most important expenditure for OECD governments today, and our countries are spending record amounts on healthcare. But with cost pressures rising, how can we achieve value for money while continuing to improve quality? This is a vital question that health ministers will discuss at their ministerial conference on 13-14 May. The OECD Health Project has produced many answers, but it raises even more questions. 

There is an Icelandic proverb which says that we all want to live longer, but no one wants to grow old. We in OECD countries do live longer and, at the same time, our growing old raises many challenges, not least in the area of healthcare.

OECD countries have good reason to feel proud of their accomplishments in improving health. A child born in an OECD country in 2000 can expect to live nine years longer, on average, than someone born in 1960. Infant mortality is five times lower today than it was then. In the past four decades, the level of premature death – as measured by years of life lost before age 70 – has been cut by half.

Prosperity and education have laid the foundation for this progress, though healthcare improvements deserve credit too. There have been recent major breakthroughs in prevention and treatment of conditions like heart disease, cancer and premature birth. Thanks to improved treatments, more patients can now live relatively normal and healthy lives with some chronic conditions, such as diabetes.

In most countries, universal healthcare coverage – whether publicly or privately financed – not only provides financial security against the costs of serious illness, but also promotes access to up-to-date treatments and preventive services. Only a third of children in most OECD countries were immunised against measles 10 years ago, compared with 90% today.

These gains do not come cheap. Health-related spending exceeds 8% of GDP on average for the OECD area, and 10% in Switzerland and Germany. The US leads the field in healthcare spending, with 14% of GDP. Compare this with 1970, when the OECD average was just 5% of GDP. Even the OECD’s lowest spenders today in GDP terms – the Slovak Republic (5.7%) and Mexico (6.1%) – spend more.

Three quarters of OECD health spending comes from the public purse. Even in the US, where the private sector plays a major role in financing, public expenditure on health represents 6% of GDP. Much of the increase over the last 30 years has been generated by progress in medicine, with more expensive treatments, and the rise in expectations for healthcare from older, fitter populations.

Clearly, despite great strides, we can do better. No country has a perfect healthcare system. Take the case of France. It has excellent health status and long life expectancies, as well as few waiting-list problems, but its public health financing is stretched. Despite this impressive record, the 2003 heat wave which ended in 15,000 deaths revealed organisational weaknesses that are now being addressed. The US is another example. For although Americans spend more than the average and are leaders in R&D and treatment innovation, achieving adequate access to services for all continues to pose serious challenges.

To understand these points is to grasp the spirit of the OECD Health Project, which was launched in 2001 to address the key challenges policymakers face in improving their healthcare systems. A desire for real progress and a need to fill important information gaps drove this collaborative project. It provided member countries with multiple opportunities to participate and learn from each other, through meetings of officials and experts.

Difficult questions were asked. What can be done to ensure that spending on health is affordable today and sustainable tomorrow? What is needed to improve quality and to ensure that health systems meet the demands of patients and other stakeholders? How should equitable and timely access to necessary care be supported?

The Health Project encompasses studies addressing these key policy questions, focusing on health technologies, long-term care, private health insurance, cost control, equity of access, waiting times, and more.

We have learned many basic lessons. For instance, it is important not to overlook opportunities to think outside the box of mainstream policy levers. Improving health also means addressing issues such as violence, accident prevention and worker safety, road traffic enforcement, and the use of drugs, alcohol and tobacco.

While curative medicine is vital, preventive action should not be underestimated. Just 5% of healthcare spending goes towards initiatives designed to keep people healthy. Health has improved thanks to public awareness campaigns, regulation and taxation, and the reduction of smoking, for example. New challenges emerge, with the current rise in obesity in several OECD countries being a common concern. More could and should be done. It is important not to lose sight of the value of personal responsibility in healthcare.

Everyone wants to see improved quality in healthcare, and to ensure appropriate treatments are available. For example, medicines to control hypertension are often not prescribed when they should be, and more heart attack patients could be prescribed a simple aspirin. Differences across countries in outcomes for conditions like stroke and breast cancer might be explained by the intensity of treatments, the technical quality of care, and so on.

The Health Project found organisation to be vitally important. Good organisation prevents some accidents and mistakes from happening, for instance. Better systems for recording data on patients help make leaps in quality, as demonstrated by hospitals in Australia and the US that have adopted automated systems for placing medication orders.

Physicians and hospitals need to be given incentives to take on the cost of investing in such systems. But they should not be burdened with management to the detriment of delivering proper healthcare for all.

Indeed, the job of providing universal care is already complicated by shortages of nurses and physicians in many countries. In some countries, increasing nurses’ pay and improving working conditions could help, as could focusing on raising productivity through training. Hiring from abroad has also helped, though some countries now discourage recruitment campaigns targeting developing countries to avert a “brain drain”.

Accessibility is a major concern in all countries. It is influenced by many factors, such as the effect of user fees, differences in insurance coverage across the population, geography, and so on. Policy can mitigate these inequities, although measures can be costly. Excessive waiting times for elective surgery are a source of public dissatisfaction, too. The most common solution is to increase either capacity or productivity, though again, better organisation also helps, such as by prioritising patients in greatest need.

Offering choice in health coverage can result in a more responsive health system. The very availability of publicly or privately financed options provides some options. However, we also know that multi-payer systems can raise cost pressures and lead to inequities.

Every solution carries risks and striking a balance is not easy. But the bottom line is that society is ageing, and the burden on public finances cannot be expected to rise forever. This may mean that individuals will have to fund more of their own healthcare. This is already happening in some countries, though again there are challenges, since vulnerable populations have to be looked after.

Private health insurance can offset some public spending, but even in countries where a sizeable share of the population is privately insured, this is sometimes concentrated on lower-risk cases, as these are less costly to insure.

Ultimately, increasing efficiency may be the only way of reconciling rising demands for healthcare with financing constraints. Changing how funding is spent, rather than mere cost-cutting, is the key. Payment methods for healthcare providers have moved away from cost reimbursement, which encourages inefficiency, towards activity-based payments rewarding productivity. But these systems also introduce risks, such as that of encouraging services of low or marginal health benefits, even if generous in terms of reimbursements.

Shifts in responsibility can also reduce waste and increase productivity. Certain qualified nurse practitioners might take on certain duties performed by physicians, and so on. In long-term care, which is a source of growing disquiet in ageing societies, existing funding could be used to help patients receive care at home, rather than in an institution.

Clearly, health experts in OECD countries now know quite a bit about which tools and approaches can be used to accomplish many key policy objectives, such as improving quality of care, ensuring equitable access and increasing value for money. Reform of health systems is necessarily an ongoing process and there are few quick fixes. Health strategies involve making trade-offs, as well as handling uncertainty. Nor is promoting health the only consideration, and policies to reform the health sector – a major employer in many countries – can carry economic and social repercussions.

Not all countries will respond to the findings of the Health Project in the same way, as they do not all face the same challenges and anyway, there are no one size-fits-all solutions. Some countries enjoy good health outcomes and so want to maintain standards while generating savings as well. Others will want to find ways of improving outcomes by reorganising existing resources. A few countries may find they need to invest more money to lift quality. But whatever the policy mix, the Health Project results offer a valuable resource of facts, data and observations garnered from different health systems. They serve as a benchmark for deciding what works best for each situation.

There is still so much we do not know, about advances in medical technology, dealing with certain diseases or even how to assure a sustainable supply of personnel. But the OECD Health Project has investigated the nature and extent of many of the problems and provided us with some of the answers. As with healthcare itself, it is an ongoing task, and there are many questions we must pursue. That means gathering more data and finding more time to think and discuss. Our citizens demand it, and rightly so. After all, it is not only their money, it is their lives.


For more on the OECD Health Project and other OECD work on health:

OECD (2003), Health at a Glance, Paris. 

©OECD Observer No 243, May 2004

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