OECD health policy: Seeking evidence for market reforms

Health ministers from 33 of the world’s richest countries, the Organization for Economic Cooperation and Development (OECD), will meet in Paris on Oct. 7 and 8 to discuss “Health system priorities in the aftermath of the crisis.”

Austerity plans in Greece, Spain, Italy, Ireland and elsewhere demand outright cuts in spending, but will private providers help reduce costs or simply carve out services they see as profitable?

Journalists wanting to understand their own country’s health services and the policies of their governments may find it useful to follow the debates leading up to the OECD conference. Here’s some background that can help.

Case study: New effort to privatize health care in England

The October meeting is the first since OECD health ministers met in 2004 and  backed away from embracing some of the more radical pro-market “reforms” being discussed in several countries. This time, however, the context will be different. Ministers will now be looking to make “tough choices” to improve health system performance in light of the squeeze on public sector budgets.

In most countries, in spite of the recession, health systems have been virtually unaffected. But public sector deficits are unsustainably high in many countries, and some have sharply cut public expenditures.

The urgency to find ways to cut spending yet maximize efficiency and effectiveness of health care may be greater than before: but there is little evidence that market style reforms and the use of private sector providers can deliver either efficiency or economy. The OECD country with the most expensive, the least inclusive, and the most inequitable health care system is the one with the greatest reliance on “market” forces and competing providers – the United States.

Examining the arguments

A good place for journalists to begin reporting this story is a  2004 report “Towards High-Performing Health Systems” (PDF). The report examined methods for regulating the private sector.

The final chapter of the 2004 report looked at “increasing value for money in health systems”  but concluded that the evidence was limited for the effectiveness of such policies as cost sharing; the purchaser-provider split; decentralization; payment by results (activity based systems of payment); and competition between providers. The section on private insurance and efficiency underlined the concern that although in theory private insurance schemes could employ market power to secure cost-effective health care delivery, in practice most of the evidence, especially from the US, suggests that they do not and will not reliably do so. US-style ‘managed care’ schemes may deliver short-term efficiencies through selective contracting with providers, but tend to break down under pressure from providers and consumers.

The health ministers mandated a further round of research and discussion, and at the end of November 2009, a new booklet was published by the OECD as preparation for the 2010 ministerial meeting, entitled “Achieving Better Value for Money in Health Care.”

Journalists on both sides of the Atlantic should take a look at these studies and learn from the evidence or lack of it as European governments continue to toy with the aspects of privatization as a solution to public sector budget woes and the private health industry becomes more entrenched in the U.S. as a result of health reform.

The OECD’s Health Update is a useful resource when looking at these issues.

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