Ag.no 12.2 New Health-care PPP? Doc.A6465/15/04 Ag.no 12.2 New Health-care PPP? Working Group on Article 64 and Article 65 of the Staff Regulations Meeting in Luxembourg 26th & 27th March 2015

Content of this presentation Brief historical reminder Details of new ECP approach Proposal how to integrate new ECP approach for A64 calculations

Current approach to healthcare PPP Source: ECP The problem: different delivery systems in MS Full payment by consumer at point of purchase Part payment by consumer, balance paid by government or private insurer Full payment by government or private insurer Part payment by government, balance paid by private insurer → Potential impact for price collection

How resolved in ECP at present? Output approach: Consumer price survey (eg. 2011-2) on three year rolling cycle collects market price (and also asks subsidised price) for medical goods and some medical services. Inbetween, updated with HICP. Input approach: Supplementary survey of "Compensation of government employees" collects medical salaries, intermediate consumption costs. 6 basic headings: Pharmaceutical products; Other medical goods; Therapeutical equipment; Medical services; Dentist services; Hospital care

How resolved in A64 at present? Single basic heading for "healthcare" Just uses ECP output approach (price survey data) - Covers all sub-groups EXCEPT hospital care Always able to calculate a parity with Brussels, even if for some countries it is based on fewer item comparisons than is the case for others

A6465WG discussions to date March 2013 Option 1: consider using price data from Joint Sickness Insurance Scheme of the EU institutions to fill gaps in ECP coverage (notably hospitals) Option 2: monitor ECP research into output-based measure of hospital costs

Option 1: JSIS database Contains staff claims for reimbursement of medical costs Already analysed for internal management purposes Similar groupings of medical goods/services Includes hospitals Findings can be made available to ESTAT Coefficients d'égalité (not underlying prices)

JSIS database items vs. ECP survey Consultations Medical services Hospitalisation and surgery - Dental care and treatments Dental services Various treatments Paramedical services Orthopaedic devices Therapeutic appliances and eqpt. Other medical products Pharmaceutical products

JSIS: conclusion ECP coverage adequate for medical goods and services except hospital care JSIS potentially helpful for hospital care subject to limitations regarding country coverage and in-country sample size, and the comparability of the medical intervention For consistency, preferable to explore new ECP approach to establish PPP for hospital care

What is the new ECP approach? Output-based: specific survey of hospital quasi-prices Defined sample of representative hospitals in each country (up to 100%) Defined model cases (surgical interventions) Adjustments - to add estimated consumption of fixed capital, - to remove estimated expenditure on research and development, - to remove estimated expenditure on training Pilot calculations 2007-2012 show stability Decision to apply with effect from 2013

New ECP approach: results 2010 Source: ECP doc.13/P2/07 "new methodology for hospital PPPs"

New ECP approach: results 2011-13 PLI Member States 300-350 LU, CH, NO 250-300 - 200-250 IE, AT, SE 150-200 BE, DK, DE, ES, FR, NL, FI, IS 100-150 IT, CY, MT, SI, UK 50-100 CZ, EE, EL, HR, PL, PT, BA, TR 0-50 BG, LT, LV, HU, RO, SK, AL, MK, ME, RS n/a Source: ECP doc.14/P2/06 "Publication of hospital PPPs" Conclusion: very similar to 2010 results

Latest developments Method paper DELSA/HEA/WD/HWP(2014)8 No.75 "Comparing hospital and health prices and volumes internationally" 2014 survey (collect 2011-2013 quasi-prices) ECP now publish analytical category for hospital services on the Eurostat "free data" website ECP now integrate into calculation of global PPP

2014 results: PPP for hospital services, 2013 (EU28=1, rebased on BE) BG CZ DK DE EE IE EL ES FR 1.000 0.2572 11.83 7.389 0.8967 0.3640 1.345 0.5043 0.8526 0.9626 HR IT CY LV LT LU HU MT NL AT 2.115 0.8193 0.6417 0.1523 0.6677 1.707 53.84 0.5863 1.020 1.215 PL PT RO SI SK FI SE UK 1.252 0.4308 0.5579 0.5804 0.2458 0.9000 10.76 0.5951

ECP: Conclusion Significant quality improvement Relevance/accuracy (defined model cases) …and for A64 will now allow to cover a part which was missing Intuitive (higher PLI than input cost approach for high expenditure locations, lower PLI for low expenditure locations, which in GDP volume terms suggests more similar volume consumption of hospital care) Comparability (defined model cases) Robust Timely (annual) …in fact, for A64 only need at time of rolling Health survey (updated subsequently with HICP)

How integrate for A64 purposes? Criteria include: feasibility (data availability); transparency (simplicity); accuracy (representativity) Options examined: Type A just need weights, Type B requires revisit price data from last Health survey Method type A Method type B 1 GEOMEAN new+old 'BH' PPP 3 GEOMEAN all 'BH' PPP 2 wgtARIMEAN new+old 'BH' PPP 4 ARIMEAN all 'BH' PPP 5 wgtARIMEAN all 'BH' PPP

Revisit E11-2 Health Regroup by category Around 600 item definitions Average prices for each item, for each country → Individual price ratios with Brussels Single BH PPP = geometric mean all the price ratios Regroup by category → 'BH' PPP = geometric mean of the price ratios for the category Q: overall BH PPP now = ? Geometric mean Weighted arithmetic mean

Comparison of new BH PPP (incl. hospitals) with previous BH PPP (excl Comparison of new BH PPP (incl. hospitals) with previous BH PPP (excl. hospitals) GEOMEAN wgtARIMEAN Maximum +19% HR +19% NL Minimum -29% LT -22% CY Average -8% -6% Standard deviation 15% 11% No. MS = positive 11 9 No. MS = negative 21 23

GDP weights for ECP BH % Pharmaceutical products 35.1 Other medical products 3.2 Therapeutic appliances and equipment 8.8 Medical services 14.4 Dental services 15.4 Paramedical services 7.7 Hospital services 15.5 TOTAL HEALTHCARE 100.0

Comparison of new global PPP with previous global PPP wgtARIMEAN Maximum +0.2% Minimum -0.8% Average -0.2% Standard deviation 0.2% No. MS = positive 10 No. MS = negative 22

Proposal Delegates are invited to Reconfirm that A64 BH "healthcare" should be improved to also include hospital care Agree that new ECP methodology for hospital care should be used to make this improvement Agree that the best way to integrate the new PPP is weighted arithmetic mean