Health care crisis continues for most European countries

In spite of steps by every European government to cut back on medical costs, the bills continue to grow. Controlling expenditures is proving to be much harder than was expected, and many of the measures - all of which have an adverse political impact - are proving to be either too little or too late.

Costs outstrip income for German funds

Expenditure by the German Health Care Funds (Krankenkassen) in the first half of 1996 continued to exceed contributions. According to Horst Seehofer, federal minister of health, the Krankenkassen themselves are largely to blame, because they have not taken a sufficiently tough line with physicians to change their prescribing habits.

In the one area directly controlled by the federal government, hospital expenditure, there actually is a small reduction in 1996 first-half levels from the previous year.

However, Krankenkassen reports indicated an overall deficit of $4.75 billion for the first six months of 1996, compared to $4.5 billion for all of 1995. The areas showing the biggest increases - dental treatment, dental prostheses, orthopedic aids and ophthalmic aids - look to be the most likely victims of the next round of cutbacks.

Dutch costs are up 5.3%

Health care costs in the Netherlands in 1995 grew by 5.3% to a total $34.6 billion, although that country's ministry of health pointed out that the figure represented a marginal decrease in percentage of gross domestic product from 8.9% to 8.8%. Hospital operating costs on in-patient care grew by 3.6%, with acute-care hospitals showing the largest increase.

In spite of severe cutbacks in specialist physician reimbursements, dental costs and private laboratory reimbursements, overall non-hospital costs still increased, with prescription pharmaceuticals growing by 6.5% over the 12-month period.

Belgium hopes increases are a one-time event

Belgium also has shown a large increase in health care spending in the first six months of 1996, about 17%. The main reason is a new invoicing regulation requiring that physicians' charge certificates must be presented within two months of the procedures being carried out. That has resulted in a 21% increase in surgical costs, 17% gain in radiology and 19% in clinical diagnostics. Government sources hope this is a onetime increase and that operating costs will settle down to earlier levels in the second half.

Over the past five years, however, the Belgium national insurance fund, INAMI, has increased spending from $32 million to $253 million, an astounding 800% rise. The ministry of health has said that orthopedic implant costs, for example, are higher in Belgium than in neighboring countries, and that intraocular lenses are three times more expensive than in the Netherlands, while pacemakers are 15% to 20% higher than in France or Britain.

The Belgian cabinet has drawn up a program calling for savings of $475 million in social security expenditures for 1997, with the main austerity measures including:

* Restrictions on cumulative diagnostic tests in cardiology and some other specialist areas.

* Introduction of a maximum on home nursing expenditures.

* Ceasing reimbursement for physiotherapy following sports injuries.

* Reduction in dialysis reimbursements.

* Reduction in the daily hospitalization fee at university hospitals.

* Shutting down of maternity units with fewer than 400 births a year.

* Closing small hospitals with fewer than 150 beds.

Long-term care costs a concern

As the number of people living well past 80 increases year by year, concerns are growing in Europe about how to fund long-term care.

Under the present system in Britain, local authorities place an immediate charge on the property of someone entering "residential care." The care costs are fully recovered when the property is sold, with a small balance of $25,000 being retained as the individual's residual wealth.

Germany recently introduced a concept that could be expensive, as it implies that coverage for today's elderly will be provided by today's taxpayers.

The Institute for Public Policy Research (London) has proposed a new option, Partial Equity Release Insurance, which would be a voluntarily funded insurance policy sold to those at or near retirement age. Subscribers to the plan would pay no premiums, but would commit an agreed part of their equity to insure against the risk of needing long-term care in the future. The agreed-upon portion of equity goes to the insurer upon death, whether any long-term care costs have been incurred or not.

The Institute for Public Research stated that the plan could readily be developed into a financial product marketed by banks, life insurance companies, residential care providers and so on, offering an integrated package. However, it almost certainly would require government encouragement to be truly successful.

COPYRIGHT 1996 A Thomson Healthcare Company
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