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

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

3. 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

4. How resolved in ECP at present?
Output approach: Consumer price survey (eg ) 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

5. 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

6. 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

7. 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)

8. 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

9. 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

10. 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 show stability
Decision to apply with effect from 2013

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

12. New ECP approach: results 2011-13
PLI
Member States
LU, CH, NO -
IE, AT, SE
BE, DK, DE, ES, FR, NL, FI, IS
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

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

14. 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

15. 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)

16. 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

17. 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

18. 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

19. 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

20. 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

21. 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