Analysis of the Health Accounts System 2019

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Cuentas Sistema de Salud 2019.

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For the seventh consecutive year, a great feat, Julio Villalobos, friend, manager and health analyst, presents us with an analysis of health spending in Spain, based on consolidated expenditures published by the Ministry of Health, consistent with a methodology of analysis accepted by OECD, Eurostat and WHO.

The article that he just published in 2021 (Agathos, nº 2) analyzes the latest information, which corresponds to 2019. It may surprise that in 2021 the data for 2019 will come out, but it is that it is consolidated data.

Therefore, the analysis is pre-COVID-19.

Total health expenditures in 2019 reached 115,458 million euros, with an increase in the 2015-2019 period of 15,748 million, representing an increase of 15.79%. The increase in this period was less in public spending than in private spending.

Total spending in health relative to GDP in 2019 was 9.3%, the same percentage as in 2015.

The total health expenditure per inhabitant/year in 2019 was 2,451 euros, an increase of 14.1% compared to 2015.

Most of the health expenditure in 2019 was used in curative and rehabilitative care, which accounted for 57.54% of the total expenditure.

As in previous years, the low amount dedicated to prevention and public health is striking, a meager 2.11%.

Investments represent 1.55% of total spending in 2019, something totally insufficient to alleviate the accumulated deficit during the years of economic crisis.

Of the expenditure devoted to curative and rehabilitative care, the highest percentage corresponds to outpatient care (51.57%), while 43.62% to hospital care. This corresponds to both public and private care. The trend, already observed in previous years, of greater private financing for outpatients persists.

Regarding pharmaceutical products, the public sector financed 70.16% in 2019, while the private sector financed 29.84%.

Regarding private health spending, 24.20 (8,196 million euros) corresponds to private insurance (with a spectacular growth of 38.07% in the period 2015-2019), while 73.21% corresponds to direct payment from households .

Regarding the destination of direct payment expenses from homes, 52.6% corresponds to medical products and 40.6% to curative care and rehabilitation (the main item in this concept being dental care).

Some conclusions

  • Already in 2018, a growth in public health spending began to be seen, after the economic crisis that meant 6 years of decline in health spending. This trend is consolidated in 2019.
  • Private spending is mainly made by households in direct payment, which contributes to reducing the purchasing power of families.
  • 92.31% of public health spending during 2019 was managed by the autonomous communities.
  • Most of the health spending was dedicated to curative and rehabilitation actions, with minimal spending for prevention and public health, as would be evident in the coronavirus crisis, which highlighted the weakness of our health system.
  • As for private spending, most of it is direct payments from households. The weight of public funding in dental care, 1.4%, and the purchase of therapeutic devices (hearing aids, glasses, etc.) 5%, is much lower than the EU-28 average, which is situated in 30 and 36% respectively.
  • With regard to private insurance, it is found that this expense is related to the level of income. Of the families with less than 1,050 euros net per month, only 4% have contracted private insurance; compared to 41% in families with a net income of more than 3,600 euros / month.
  • The investment item, 1.55%, has increased very discreetly. This also takes us away from the average spending in European countries, which invest between 2 and 3% of total health spending only on ICT in health
  • The talent deficit is also noted, due to egalitarianism and the poor assessment of the needs and the real worth of the candidates in a statutory, almost civil service regime, where other variables far from the contribution of value influence.
  • It is found that the anti-crisis measures have not formed a comprehensive strategy, but rather a succession of measures, which have in common the objective of controlling health spending.
    If we want to have a Health System that lasts over time, we must maintain an economic balance between the expenses and the income of the system, paying attention to the causes that originate a growth in health spending and trying to correct them; improve efficiency in the production of services; and adapting the service to new trends in aging and chronicity.
  • A very important change, which far exceeds what is possible to carry out in a legislature.

2021: a year in review in medicine and healthcare

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In the number corresponding to December 18, 2021, The Lancet publishes an article written by Farhat Yaqub, which considers 10 events in medicine and healthcare in 2021.

These events are:

The pandemic of the Covid-19

From January 1 to December 10, 2021, there were 3.3 million killed by Covid-19, more than in all 2020. The Delta variant became dominant throughout the world.

The vaccination of the Covid-19

As of December 11, 2021, more than 8,4 billion doses of the vaccine had been administered globally, which is a feat if we take into account that vaccination began practically in January of this year. However, the COVAX initiative to distribute vaccines to low and middle-income countries has fully failed. While in developed countries, vaccination reaches 75%, compared to 46% in middle-income countries and 7% in low-income.

Biden, instead of Trump

The presidency of Trump is considered a misfortune for the US and for the whole planet. With the arrival of Biden, one of the first actions of him was to sign an executive order that returned the US tothe WHO.

Impact on health of the conflict of Ethiopia

The conflict for more than a year between the forces of the Government of Ethiopia and the Tigray Liberation Movement meant a systematic blockage of the distribution of goods, including medicines, food, etc. According to the American Secretary of State, Tony Bliken, 9.4 million people need food in northern Ethiopia.

Effects of the Cortes of Humanitarian Aid of the United Kingdom

In November-21, the British Government announced the cut of Humanitarian Aid to other countries from 0.7% to 0.5% of GDP agreed at 2020, will continue to at least 2024. The cuts, between 4 and 5 billions of pounds will affect the lives of many people, and will alter the functioning of many charity organizations, such as the WHO Eradication Initiative of Polio, the International Rescue Committee, with a Syria, Yemen and Pakistan involvement; as well as other programs.

COP26

COP26, continued the Paris Agreement on Climate Change, took place in November in Glascow. The agreement was limiting the growth of global temperature at 1.5º C. The climate alterations are affecting the whole world, including the Filomena Storm, which meant the presence of torrential rains, as they had not been known in 50 years in Madrid.

The crisis of Afghanistan

It is believed that 95% of the population has problems of food. Almost 24 million people are exposed to hunger, due to the combined effect of conflict, droughts, COVID-19 and the economic crisis. This critical situation will cause a growing number of people leaving Afghanistan, creating another refugee problem.

Oscillations in abortion laws

In 2021, abortion became legal for the first time in Argentina; while in Honduras the prohibition hardened; strong restrictions were introduced in Texas (USA); as well as in China, because the aging and reduction of the population are leading them to limit abortions not linked to medical causes.

Approval of the malaria vaccine

After a broad essay, WHO recommended in October-21 the use of a vaccine against malaria for children from Sub-Saharan Africa and in other regions. Gavi, the alliance for vaccines, approved investments for the distribution of vaccines.

Midwives 2021

According to WHO reports and other agencies, more than 1.1 million additional midwives are necessary worldwide.

USA: 19,7% of the GPD devoted to healthcare!

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In the latest issue of Health Affairs (January, 2022), the figures for healthcare spending in the USA in 2020 are published. The growth was 9.7% over the previous year, which had grown by 4.3%. The acceleration is due to the increase in federal spending, which grew 36%, especially in relation to COVID. The percentage of GDP dedicated to health reached 19.7%. The number of uninsured decreased. Public health spending surpasses private spending (51% vs 49%).

Never in the United States had 19.7% of GDP in health been reached, nor had public health expenditures been seen to exceed private ones. It remains to be seen whether these phenomena correspond to the COVID pandemic or have come to stay.

Dental coverage in Medicare in the United States

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In a recent issue of N Engl J Med (December 2, 2021), the subject of Medicare dental coverage, currently excluded, and the many attempts to introduce it are discussed.

The article mentions that in 1958 the American Medical Association, the American Dental Association and other professional organizations created the Joint Council to Improve Health Care of the Aged, whose objective was to oppose the creation of what would later become Medicare (medical care public to those over 65 in the United States).

Despite that, Medicare was created in 1965, without dental care being covered. From this point of view we can say that the doctors lost, but the dentists won. Dental care continues to operate under a fee-for-service formula, with a high proportion of the cost of out-of-pocket money and with greater financial barriers than in other forms of health care.

After decades of attempts to cover dental care with Medicare, it appears that the American government is close to achieving this goal. There was a previous attempt in 2019 through a law passed in the House of Representatives, but rejected by the Senate. A law with similar claims was introduced in Congress in 2021, forming part of Joe Biden’s “reconciliation package.” The Centers for Medicaid and Medicare have already appointed a “chief dental officer.”

This time, the American Dental Association supports the introduction of dental care into Medicare, but only if it only covers people below 300% of the FPL (federal poverty level).

The health system in general is assuming the problems of the absence of dental coverage, in the form of millions of patients, including older adults, who present themselves in the emergency areas, hospitals and primary care for dental pain, a visit that generally concludes with the recommendation to go to a dentist, which many cannot afford. Untreated dental disease can lead to endocarditis, brain abscess, and mediastinitis.

Even if the law that includes dental care in Medicare is finally signed, many problems will remain to be solved, such as the need to enroll dental providers.

In any case, if this measure is finally introduced, it will have been a giant step in the improvement of American healthcare and, this time, with beneficial consequences for Europe and, specifically, for Spain, the country that dedicates the least public budget to dental care in European countries.

“Virtual-first” Primary Care

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“Virtual-First” Primary Care

A revolution among American insurers

JAMA magazine has just published (see PDF) an article on the growing phenomenon of “Virtual First” Primary Care.

It all arises when in October 2021, the United Health group announced that it was going to offer a cheaper premium with a “virtual-first primary care” plan in which subscribers would receive longitudinal care by a virtual doctor for most of their primary care needs. This announcement follows similar initiatives from other large insurers such as Humana, Aetna, and many regional plans last year. Doctor on Demand, a telecare company supports many of these plans and announced that it is in the process of recruiting more than 1,000 doctors. Firefly Health, another telemedicine company, decided to launch its own insurance plan.

This growing phenomenon follows the rise of telemedicine during the pandemic and the fact that this practice has been achieving more and more comfort among patients and doctors.

Conceptually, this “virtual-first primary care” phenomenon means that patients will use the virtual channel as the first option to obtain service.

There are several variants, such as that of MDLive, in which the doctor or other virtual professional complements the activity of the doctor who is seen in person. But patients are encouraged to use their virtual doctor, whatever the problem they have, and the expectation is that this will be used more and more frequently.

The shift towards virtual care models arises from the difficulties of maintaining face-to-face activity in chronic diseases, which require almost continuous monitoring.

Possible concerns

Despite all its advantages, virtual care in primary care raises a number of questions. The first, that although many health problems can be solved by telemedicine, the question arises as to what portion of primary care can be solved without problems in a virtual way, without personal interaction and a physical examination. The second problem is how virtual models coexist with traditional primary doctors, if there is not a very adequate coordination between them.

A robust evaluation is needed to determine if these models deliver on the promise of better chronic disease management, fewer avoidable emergency room visits, and better referrals. There are no minor issues of analyzing patient satisfaction, or the responsibility of doctors when they offer their assistance virtually.

The future will tell us

Logically, it remains to be seen if this form of care substantially attracts patients to be viable in the long term, but we are inclined to think that a wise combination of face-to-face care-virtual care, with a good protocolization of in which cases virtual care is recommended and in which cases direct care is required can be the key to success.

An opportunity also for Spanish insurers

The operation of Spanish insurers is through an endless list of specialists who are accessed directly. There is, in practice, no primary care as such. This is one of the problems for Spanish insurers and a great challenge if they want to continue advancing in cost and quality control. This is an opportunity to set up primary care, without the need for a large investment or the creation of a new network. Success may be for Spanish insurers to reproduce an experience similar to “virtual-first primary care”, without breaking direct access to the specialist, one of the great attractions of the model.

Consolidation in the hospital world: not only in Spain

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The New York Times of July 16, 2013 reports what has been the latest and most notorious hospital merger in the United States, nothing less than that of two New York City giants: Mount Sinai Medical Center and Continuum Health Partners.

The new company will have 3,300 beds on seven campuses scattered throughout Manhattan, Brooklyn and Queens, making it the largest hospital system in New York City, apart from the public. It will eclipse the current giant Presbyterian Hospital with 2,600 beds.

This consolidation follows a trend for hospitals in the US, according to PwC, quoted in the New York Times article, which says it will ultimately lead to higher prices for consumers.

Mount Sinai CEO Dr. Davis says the merger will allow hospitals to be “more efficient than they are.” Combining Mount Sinai’s specialty care with Continuum’s primary care will create “an integrated system that will allow patients to be cared for throughout the cycle of their problems.”

According to Dr. Davis, the Federal Trade Commission, which reviews competition issues, has already approved the operation.

While the merger may be a success for hospitals, it may lead to higher prices for consumers, as it increases bargaining power with insurance companies, resulting in more expensive policies.

The real question is whether, after the merger, the new hospital network becomes a must-have, a service that all insurers must have, if they want to remain in the market.

According to Prof. Gayner, the evidence says that these processes raise prices by 20 to 50%.

Karen Ignagni, CEO of the American Association of Health Insurers, says that “the promises are usually more efficient, but the reality is higher prices for consumers.”

However, Dr. Davis, CEO of Mount Sinai, says: “In all of our financial models we have not contemplated any rate increases.”

Interesting debate in the United States, which may not be so far from the situation in Spain. We will follow it with interest, there and here.

30% of GDP in the United States dedicated to healthcare, unless …

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Victor Fuchs, probably the most prestigious living health economist in the world, writes an interesting article on the evolution of health spending in the United States in the last 60 years (N Eng J Med 2013; 368: 107-109)

A quick summary of it:

The difficulty of forecasting health spending

How much will the United States spend on healthcare in the next decade or two? Prof. Fuchs begins by asking himself. Unfortunately, he continues, predicting healthcare spending is extremely difficult. Future expenditures depend, in part, on changes in the health sector and, in part, on the evolution of the economy. Changes in the healthcare sector include changes in the prevalence of health problems, such as obesity, infectious diseases, and dementias, as well as changes in medical technology, such as new drugs, imaging equipment, and surgical procedures. The economy as a whole includes variables such as the unemployment rate, trends in wages and prices of securities and housing.

An optimistic reading

The President’s 2013 Economic Report makes an optimistic reading of future healthcare spending, based on the slowdown in the growth rate of healthcare spending in recent years. The report comments that a possible explanation is the economic recession, but says that it is not a relevant factor, in relation to the greater efficiency in hospitals and groups of doctors, payment reforms and initial results of the Affordable Care Act (“Obamacare” ).

The answer is important because if the United States has entered an era of moderate growth in health spending, the current pressure for radical changes in financing systems, modes of payment, organization and delivery, would lose urgency. If, on the contrary, the present slowdown is mainly due to the most severe recession since the 1930s, ‘the rapid growth in healthcare spending will likely return when the economy becomes more robust.

Data from the last 60 years

An examination of data from the last 60 years, comparing economic growth with growth in health expenditures, indicates that there has been a strong relationship between the two. Between 1950 and 2011, real GDP per capita grew 2% per year, while health spending per capita grew 4.4% per year. The gap between the two growth indices -2.4% per year- resulted in health expenditures going from representing 4.4% of GDP in 1950 to 17.9% in 2011.

In the 60-year period, most of the increases (and decreases) in GDP were accompanied by similar movements in health spending.

The introduction of managed care

The only exception was in the 1990s when health spending growth was below 3% per year, even when real GDP per capita was accelerating above that figure. This was precisely the period of introduction of “managed care”. Under the “managed care” insurance companies selectively contract with hospitals and doctors; fees and prices are negotiated in advance; medical decisions are subject to external review; patients are fined if they go to providers outside of their plan’s network; and providers sometimes share risk with insurers.

A forecast for 2040

Between 1950 and 1995 the gap between per capita GDP growth and per capita health spending was 3.1%. Between 1995 and 2011 this gap was 1.7%. Maintaining the 60-year gap of 2.4% until 2040 would mean that the percentage of GDP dedicated to health would reach 30% in that year. The simple continuation of the gap of 1.7% until 2040 would give rise to 26% of GDP dedicated to health, which would be a great national problem and for public finances.

Is it possible to extrapolate the last two years?

Some observers focus on the significant decline in 2010 and 2011. How useful is expanding the pattern from two years to the next 20 years? . When we analyze these years, we see that part of the cause of this decline is the change from brand-name drugs to generic drugs, as well as the reduction in hospital readmissions, phenomena that are difficult to repeat.

In conclusion, the growth rate of health spending seems to be substantially related to the increase in GDP.