Policy summary 5: health policy responses to the financial crisis in Europe

    Publication year: 2012

    When confronted by an economic shock affecting the health sector, policymakers may decide to maintain, decrease or increase current levels of public expenditure on health. With each option they could also reallocate funds within the health system to enhance efficiency. A range of tools can be used to alter Health policy responses to the financial crisis in Europe v expenditure levels, categorized under the following policy domains: the level of contributions for publicly financed care; the volume and quality of publicly financed care; the cost of publicly financed care. In making decisions about which tools to use, policy-makers need to consider the impact of proposed reforms on the attainment of health system goals. Achieving fiscal balance is likely to be important in the context of a financial crisis but generally it is not regarded as a primary goal of the health system – on a par with or overriding health policy goals such as health gain or financial protection – since, if it were, it could be achieved by cutting public spending on health without regard for the consequences. This stands in contrast to the goal of efficiency. The purpose of trying to increase efficiency in the health sector is to maximize outcomes for a given level of public resources devoted to health care. Governments’ responses exist in a context of broader constraints and opportunities within and external to the health system. Public policy responses to economic shocks should vary according to the nature of the shock. The crisis has had devastating consequences for some countries in Europe, particularly those with high levels of pre-existing debt and deficit, which have found it difficult to borrow to sustain public spending. Inability to obtain affordable credit or to generate revenue through taxation severely constrains a highly indebted country’s fiscal space, leaving it with little option but to cut public spending. Political preferences may also influence public policy responses.