State control: the root of the European health crisis

By Stephen Pollard

Date: 13/01/05

Each of the EU's health systems is in varying degrees of crisis. There is nothing new about that. It is the nature of the beast that there can be no such thing as a fully-functioning, economically- efficient, technologically- advanced mechanism which fulfils patient expectations, meets medical demands, and is fully affordable by all. Whatever the system and however much is spent on it, at least one of those functions will not, at any given moment, be met. Dealing with health policy is like pushing sand uphill: you might well get most of what you want, but you will never get everything.

To put it another way: there is no such thing as a perfect healthcare system. At the very least, member states have their own cultures and their own traditions, and what is acceptable in one may be viewed as a political or medical disaster in another.

But some are much more perfect than others - while others are more imperfect. So what matters is the balance that is struck and the immediacy and potency of the crisis.

Take the French system. It has immense strengths: patients can choose their physician and consult specialists as they wish; they can see their contributions on their payslips; and there is some co-payment. But this comes at a cost: it is now in financial crisis. The deficit of the compulsory health insurance fund is increasing by €21,000 a minute and now stands at a total of €11.9 billion. The Health Minister, Philippe Douste-Blazy, rightly said last year that "health insurance is bankrupt".

The German system is also in the midst of a crisis and the UK system is soaking up vast amounts of tax revenue to little noticeable effect.

Although the symptoms may vary, the disease which is crippling healthcare systems stems from the same root across almost the entire EU and can be summed up in two words: state control.

We know from all the evidence that, as people become wealthier, they choose to spend an increasing proportion of their money on healthcare, whether indirectly through gym memberships and such like or directly through cosmetic surgery and procedures which are not vital but which can improve the quality of their life. When people spend their own money, that is not a problem. Far from it; it is all part of economic growth.

The problem arises when health spending is directed through the state, or is funded by taxation. Take pharmaceutical spending. Almost all the 'reforms' being adopted and considered across the EU have the same thing in common: cost containment.

Leave aside the economic stupidity of failing to consider the global savings to health budgets of reduced hospital stays which many new drugs can bring about.

Think instead of why increased spending on heath care is seen as a problem in the first place. It is because, funded out of taxation, budgets have to be capped lest tax rates shoot up to cope with the spending.

Yet the evidence shows that, when left to decide for themselves how they wish to spend their own money, patients choose their health.

So why is there a funding crisis in the first place? Because funding is directed through the state, rather than left to patients themselves.

Healthcare is not in crisis. The crisis lies in the means by which it is funded.

• Stephen Pollard is a senior fellow at the Centre for the New Europe, in Brussels.

Analysis feature in which the author, who is a senior fellow at the Centre for the New Europe, Brussels, suggests that the root of the crisis of Europe's national health system is due to the fact that funding is directed through the state.