What can countries learn from each other as they work to make health care more affordable, particularly for people with low incomes or chronic conditions? Grounded in country experience from health systems across Europe, a new series of WHO/Europe briefs explores how health financing policy changes affect financial hardship and unmet need caused by out-of-pocket payments for health care.
The briefs show how well designed policies can reduce out-of-pocket payments and improve health system equity, efficiency and resilience. They provide practical examples and evidence-based guidance to help countries address shared challenges.
Population ageing and financial protection
The first brief in the series, “How does population ageing affect health system financial sustainability and affordable access to health care in Europe?”, simulates the size of the gap between health system revenue and spending due to ageing from now to 2060 in 5 countries (Bulgaria, Italy, Slovakia, Slovenia and Spain) and explores the likely impact of using out-of-pocket payments to fill this gap.
It finds that health systems that rely heavily on social health insurance contributions levied on employment to finance health care are most likely to experience a significant decline in public revenue for health as the working-aged share of the population shrinks, while those that use a more diverse mix of taxes show greater resilience to population ageing.
It also shows that although countries with strong financial protection now are in a better position to cope with financial pressure attributable to population ageing, good performance today does not guarantee good performance tomorrow; it is also essential that these countries maintain strong coverage policies in the future.
Unintended consequences of increasing co-payments to manage budgetary pressure
User charges (co-payments) are widely applied in European health systems but often pose a challenge for affordable access to health care. The design of user charges is a key determinant of financial protection – simple changes in design can have a significant impact.
“The impact of increasing user charges for diabetes medicines: lessons from Finland” reviews the country’s 2017 decision to increase user charges for all diabetes medicines except insulin. In response to growing diabetes-related costs and budgetary pressure, the Finnish health system moved from a fixed co-payment (€4.50 per item) to a percentage-based co-payment (35% of the retail price). This seemingly modest change in co-payment design led to a substantial increase in out-of-pocket payments for these medicines.
Data and monitoring revealed several outcomes of concern: a rise in the number of people experiencing financial difficulty in paying for diabetes medicines; an increase in the use of social assistance to cover co-payments; a decrease in the use of non-insulin diabetes medicines; growing scepticism about the fairness of co-payments; and a decrease in satisfaction with diabetes care.
When “avoidable” co-payments cannot be avoided
Reference pricing is a coverage policy designed to control public spending on outpatient medicines and improve efficiency by lowering prices. Health authorities group therapeutically interchangeable medicines and define a reference price for each group, which sets the maximum amount they will cover. People are then required to pay any difference between the reference price and the pharmacy retail price, in addition to other co-payments in place.
The brief “Can people avoid the avoidable co-payments caused by reference pricing for outpatient medicines?” shows how this mechanism often results in co-payments that have the potential to undermine affordable access to health care for 3 main reasons.
First, reference pricing is widely used in Europe, yet few countries try to protect people from avoidable co-payments. As a result, avoidable co-payments can amount to a substantial share of all co-payments for outpatient medicines.
Second, while policy-makers often consider them to be avoidable, many people face challenges in finding medicines priced at or below the reference level due to weaknesses in prescribing and dispensing policies.
Third, these co-payments are likely to fall disproportionately on lower-income households, particularly in contexts marked by uneven levels of health literacy.
The brief provides a checklist of the types of policies that should be in place to ensure that reference pricing does not inadvertently undermine affordable access to health care. The checklist includes policies targeting prescribing, dispensing and coverage.
Income-based caps on co-payments protect people and the health budget
Countries can protect people from user charges by setting a limit – a cap – on co-payments. A cap that is set as a flat rate is likely to be of greater benefit to people with higher incomes, so some countries link caps to income. Income-based caps aim to give greater protection to people with lower incomes, softening the impact on the health budget and enhancing equity and efficiency in the use of public funds.
The brief “Using income-based caps to protect people from user charges for health care: lessons from Austria, Belgium, Germany and Spain”, finds that an income-based cap is most likely to be effective if it is:
- applied to all people and all co-payments – a single cap provides more financial certainty for people and is more administratively efficient;
- applied automatically, using digital solutions;
- adjusted for household size, so that households of all sizes benefit equally;
- applied on a monthly rather than annual basis, in line with most people’s income flows; and
- monitored regularly and adjusted as needed.
Caps alone are unlikely to be enough to protect people from financial hardship and unmet need, however. Countries should also exempt people with low incomes from all co-payments (including by lowering existing caps to 0) and remove administrative barriers to accessing entitlements.
Using digital tools to enhance protection from co-payments
Digital tools can significantly enhance the effectiveness and reach of mechanisms to protect people from co-payments – such as exemptions and caps – by reducing administrative barriers.
The Estonian health system aims to protect people from user charges (co-payments) for outpatient prescribed medicines by reducing them for people who spend more than a certain amount a year. Historically, only a few people benefited from this protection mechanism because the eligibility threshold was high and the process was administratively cumbersome – people had to keep track of co-payments and apply retrospectively for reimbursement.
In 2018 the eligibility threshold was lowered and the protection mechanism was digitalized using an electronic prescription system that tracks people’s co-payments and automatically reduces them once they reach the threshold.
The brief “Using digital solutions to protect people from user charges for health care: lessons from Estonia” highlights the impact of these policy changes, which eliminated administrative barriers, increased uptake of protection mechanisms and reduced out-of-pocket payments for outpatient prescribed medicines.
About WHO/Europe’s work on financial protection
WHO/Europe monitors affordable access to health care (financial protection) through the WHO Barcelona Office for Health Systems Financing, using regional indicators that are sensitive to equity. Financial protection is central to universal health coverage (UHC) and a key dimension of health system performance assessment. It is an indicator of the Sustainable Development Goals, part of the European Pillar of Social Rights and at the heart of the European Programme of Work, WHO/Europe’s strategic framework.
Explore country-level and comparative data and analysis on UHC Watch, an online platform tracking progress on affordable access to health care in Europe and central Asia.
These briefs and UHC Watch benefited from financial assistance from the European Union through the EU4Health programme.