Division of Health Systems & Public Health Health financing in Latvia: analysis of expenditure and financial protection Dr Tamás Evetovits Head of Office WHO Barcelona Office for Health Systems Strengthening Riga, 21 September, 2016

Universal health coverage and SDGs

Universal health coverage and SDGs All people should have access to needed health services of sufficient quality to be effective (including prevention, promotion, treatment, medicine, rehabilitation and palliative care) without experiencing financial hardship “Universal coverage is the hallmark of a government’s commitment, its duty, to take care of its citizens, all of its citizens. [It] is the ultimate expression of fairness” Dr Margaret Chan, Director General of WHO, at the 55th World Health Assembly Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all

Latvia health spending is low for its economic development Public spending lower than upper middle income average & four-times less high income average Private spending higher than upper middle income average Health spending across the WHO European Region (per capita ppp$ 2011), WHO data

Public spending on health is far below comparator countries and EU trendline 5% Netherlands SVN CRO CZE SVK HUN EST POL LTU Latvia

What determines level of public spending on health? Fiscal context Size of the economy Size of the government: taxation policy Government priorities Government decision on allocation to health Better health contributes to economic growth, therefore the size of the economy is indeed dependent on the health of the nation Taxation policy determines who bears the burden of public financing and the overall fiscal space for competing public policy objectives The government’s decision on the budget for the health sector shows the priority given to health within the fiscal space of the public sector. Small government does not necessarily mean small health sector: it is a question of priorities. But not all spending is good spending! The health system has to demonstrate good performance otherwise there is no willingness to pay - either publicly or privately! Neither inside the government, nor in the society at large will there be support for more spending on health if performance of the system is unsatisfactory and does not produce good value for money.

Accounting for government spending on health Gov’t health spending Total gov’t spending Gov’t health spending = X GDP GDP Total gov’t spending Government health spending as share of the economy Fiscal context Public policy priorities This shows a simple mathematical formula for the calculation of government health spending as a % of GDP. This is the product of the fiscal context (just shown) and the share of their total spending that governments allocate to health. This latter reflects the priority that governments give to health in their resource allocation decisions. [click]

Source: WHO data for 2013

Source: WHO data for 2013

Source: WHO data for 2013

Source: WHO data for 2013

Message: yes, you can! Lithuania has smaller government, but gives higher priority to health and spends more than Latvia Croatia poorer country with large government sector and high priority to health – spends almost double the Latvian public spending

Semmelweis Egyetem Egészségügyi Menedzserképző Központ MSc11 II. félév, M121/1 2012. február 20. Share of health within government budgets over time in the European Region >14% 12% <9% Latvia 2007-2013 Explain chart Crisis has already made its impact on reducing health spending growth 14.4% 13.7% Source: WHO NHA database, 2012 Dr. Evetovits Tamás (evetovits@emk.sote.hu)

Priority to health in public spending: a political choice Health as a share (%) of the government budget in the European region high-, upper-middle- and lower-middle-income countries Minimum 12% Source: WHO data for 2013

Accounting for public spending on health 5% 36-42% 12-14% Gov’t health spending Total gov’t spending Gov’t health spending = X GDP GDP Total gov’t spending Government health spending as share of the economy This shows a simple mathematical formula for the calculation of government health spending as a % of GDP. This is the product of the fiscal context and the share of their total spending that governments allocate to health. This latter reflects the priority that governments give to health in their resource allocation decisions. Fiscal context Public policy priorities

OECD countries have allowed the health sector to get a greater share of their budget… It is time for Latvia to join! Change in the structure of general government expenditures on average in OECD countries by function (2001 to 2011) Source: OECD National Accounts Statistics (database). Data for Australia are based on Government Finance Statistics provided by the Australian Bureau of Statistics. Source of slide: Ankit Kumar, OECD

Why do we argue for more public spending on health?

Two key measures of universal health coverage (UHC) Unmet need Financial protection

Our vision in WHO is a Europe free of impoverishing health expenditures 0%

Incidence of catastrophic and impoverishing out-of-pocket payments (OOPs) over time Co-payment exemptions discontinued for the poor in 2013 Source: WHO Barcelona Office for Health Systems Strengthening 2016

Distribution matters: households experiencing catastrophic spending are disproportionately poor (2013 data, incidence of catastrophic level of spending: 12.9% of all households) 70% roughly are pensioners Source: WHO Barcelona Office for Health Systems Strengthening 2016

Catastrophic spending is primarily due to co-payments for medicines (2013) Source: WHO Barcelona Office for Health Systems Strengthening 2016

Share of out-of-pocket payments is a proxy for financial protection OOPs

Out-of-pocket payments (OOPs) as a % of total spending on health (high, upper-middle and lower-middle income countries) Danger zone >30% Warning 15-30% Safe <15% Source: WHO data for 2014

Out-of-pocket payments on health as a share of total health expenditure is on the rise again in Latvia Far above European average and Estonia. Alarming trend of increase. Source: WHO, 2014

It is not just about financial protection but health gain: huge potential to improve by spending more on health Source: Jonathan Cylus using GHED and WHO Mortality database, 2015

In summary The Latvian population is not well protected from the cost of ill health and unmet need is also high Spending more public resources on health can offer high returns in financial protection and health gain Reduce out-of-pocket payments in general and co-payments for the poor & pensioners Spending more on health is a political choice. Priority to health in Latvia has been low in the past

A number to remember 12%