© Nuffield Trust 25 April 2014

User Changes and Co-payments: How useful and how dangerous?

Anita Charlesworth Chief Economist Nuffield Trust

© Nuffield Trust

The concerns about user charges and co-payments

• User charges increase the financial burden on households, and, in general, they do not differentiate effectively between cost-effective and low-value care.

• They reduce use among lower-income individuals and older people, even when the level of user charges is low.

• Increasing user charges in primary or ambulatory care may worsen health outcomes. In some cases they may increase spending in more expensive acute, emergency care.

• The transaction costs involved may be significant.

(Wagstaff and others 1992, Newhouse & Rand Corporation Insurance Experiment Group,1993; Gemmill

and others 2008 Braithwaite and Rosen, 2007; Bach, 2008; Thomson and others, 2009, Trivedi and others

2008, Goldman and others 2007).

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0%

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out of pocket as a % of spending Average Out of pocket spending

Source: OECD 2013

Out of pocket spending and health spending as a share of GDP across the OECD

© Nuffield Trust

Out of pocket spending and health spending as a share of GDP across developed countries

Source: OECD 2013

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out of pocket as a % of spending health spending as a share of GDP

Average out of pocket Average health spending as share of GDP

© Nuffield Trust

Why do user charges and co-payment policies continue to be such a focus on policy debate and action

• Unpalatable alternatives?

• Scope to raise revenue which although comparatively small are important in an economic and fiscal crisis?

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Bringing tax and spend back to pre-crisis levels

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Government spending as a share of total budget

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Relationship between out of pocket expenditure and male PYLL (23 countries)

R² = 0.0033

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Out of pocket as a proportion of spending %

© Nuffield Trust

Relationship between out of pocket expenditure and female PYLL (23 countries)

R² = 0.1307

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Relationship between Out of pocket expenditure and gap between male/female, potential year life loss (PYLL) (23 countries).

R² = 0.2656

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Out of pocket as a proportion of spending %

© Nuffield Trust

What is the role of user charges and co-payments in health system sustainability

• Increasing user charges and co-payments in countries with universal coverage is tempting as a short-term source of additional revenue. But they are unlikely to improve system efficiency.

• In assessing the health effects policy makings need to consider the alternatives which may have equal if not greater negative impacts on health or well being.

• User charges and co-payments are unlikely to improve long-term sustainability for which stable funding growth and sustained productivity growth is key.

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Size of over and underspending in percentage of budgeted spending (2006 – 2012)

© Nuffield Trust 23 April 2014

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