The major drivers of cost growth are the MBS and PBS. The federal government regularly considers opportunities to reduce spending growth in the MBS through its annual budget process. To influence PBS costs, the government makes determinations about which pharmaceuticals to list on the scheme and negotiates the price with suppliers. It also provides funds to pharmacies to dispense medicines subsidized through the PBS and to support professional programs and the wholesale supply of medicines. This arrangement is implemented through the current Community Pharmacy Agreements, which are renegotiated every five years. The Sixth Community Pharmacy Agreement, which began in July 2015, supports AUD 6.6 billion (USD 4.6 billion) in savings through supply chain efficiencies. Read more BrazilA 17 percent increase in the cost of medicines and medical supplies was observed between 2010 and 2014. Important efforts have been launched by the federal government to contain these costs, including more-pervasive regulation of new technologies, centralized purchasing of high-cost medicines, and public–private partnerships for the national production of strategic products through technology transfer. In 2012, the National Commission of Technologic Incorporation (CONITEC) was established. The CONITEC approves inclusion, exclusion, and approval guidelines for the use of new and existing health technologies. From 2012 through 2016, 69 health technologies were removed while 132 new health technologies were incorporated (62% of these were medicines and 38% were medical devices, diagnostic products, health products, and procedures). In 2018, 84 partnerships for technology transfer were initiated: 67 for medicines, 12 for equipment and medical materials, and five for vaccines, with an estimated savings of BRL 4.68 billion (USD 1.09 billion) in product purchases between 2011 and 2017. Read more CanadaCosts are controlled principally through single-payer purchasing, and increases in real spending mainly reflect government investment decisions or budgetary overruns. Cost-control measures include:
Read more ChinaHealth expenditures have risen significantly in recent decades because of health insurance reform, an aging population, economic development, and health technology advances. Health expenditures increased from CNY 584 (USD 164) per capita in 2004 to CNY 4,237 (USD 1,194) in 2018. Read more DenmarkThe overall framework for controlling health care expenditures is outlined in a budget law, which sets budgets for regions and municipalities and specifies automatic sanctions if budgets are exceeded. The budget law is supplemented by annual agreements between regional, municipal, and state governments to coordinate policy initiatives aimed at limiting spending, including direct controls of supply. Read more EnglandCosts in the NHS are constrained by a national health care budget that cannot be exceeded, rather than through patient cost-sharing or direct constraints on supply. NHS budgets are set at the national level, usually on a three-year cycle. CCGs are allocated funds by NHS England, which closely monitors their financial performance to prevent overspending. Both CCGs and NHS providers are expected to achieve a balanced budget each year. Read more FranceSHI has faced large deficits over the past 20 years, but they have fallen from EUR 10–12 billion (USD 12.6 –15.2 billion) in 2003 to EUR 4.1 billion (USD 5.2 billion) in 2016. This trend is the result of a range of initiatives, including:
Read more GermanyRecently, there has been a shift away from reliance on overall budgets for ambulatory physicians and hospitals and collective regional prescription caps for physicians, toward an emphasis on quality and efficiency. The Hospital Care Structure Reform Act of 2016 aims not only to link hospital payments to good service quality but also to reduce payments for low-value services. Currently, the IQTiG works on preparing appropriate concepts and recommendations for the Federal Joint Committee. Read more IndiaCost-containment mechanisms include annual hospital budgets as well as prices for health care services, drugs, and other consumables set administratively by the central and state governments. Significant shortages in the public sector, however, have led patients to use private services, for which prices are unregulated and set far beyond the procured purchase price. Read more IsraelAmong high-income countries, Israel is one of the most successful at containing costs. Strategies include:
Read more ItalyContaining health care costs is a core concern of the central government, as Italy’s public debt is among the highest of the industrialized nations. Fiscal capacity varies greatly across regions. To meet cost-containment objectives, the central government can impose recovery plans on regions with health care expenditure deficits. These plans identify the tools and measures needed to achieve economic balance, such as revising hospital and diagnostic fees, reducing the number of beds, increasing copayments for pharmaceuticals, and reducing human resources through limited turnover. Read more JapanThe 30 percent coinsurance in the SHIS does not appear to work well for containing costs. By contrast, price regulation for all services and prescribed drugs seems a critical cost-containment mechanism. The fee schedule is revised every other year by the national government, following formal and informal stakeholder negotiations. The revision involves three levels of decision-making:
Read more NetherlandsThe main approach to controlling costs relies on market forces while regulating competition and improving the efficiency of care. In addition, provider payment reforms, including a shift from a budget-oriented reimbursement system to a performance- and outcome-driven approach, have been implemented. In the wake of the 2008 global financial crisis, additional activities have been undertaken to contain costs. Since 2012, health care spending has declined from 10.9 percent to 10.5 percent of GDP. Read more New ZealandThe financial sustainability of publicly funded health care is a top government priority. To support this goal, government has implemented a range of measures, including four-year planning within district health boards to align expenditures with priorities and improve regional collaboration to drive efficiencies. All new proposals must demonstrate their fit with the four-year plan and the strategic direction of the health sector. Read more NorwayThe central government sets an overall health budget annually, and the municipalities and RHAs are responsible for maintaining their budgets. About 10 percent of the RHAs’ operating expenses go to buy health services from private providers. Private providers are contracted through tender agreements, for which price of service is one of several criteria. Read more SingaporeThe hallmark of Singapore’s health care market has been strong government control and oversight. Demand- and supply-side controls encourage patients and providers to be judicious and cost-conscious in their use of health care services. In addition, the public sector’s role as the dominant health care provider sets the benchmark for the private sector, as well as the entire health system’s ethos of deemphasizing profit maximization. Private providers need to ensure that they do not price themselves out of a market where public-sector care is available, and therefore offer reasonable prices and quality. Read more SwedenRegions and municipalities are required by law to set and balance annual budgets for their activities and to consider the cost-effectiveness of different treatment alternatives when organizing care. For prescription drugs, the central government and the regions form agreements, lasting a period of years, on the subsidy levels paid by the government to the councils. Read more SwitzerlandSwitzerland’s health care costs are the second-highest in the world. The Swiss Federal Department of Home Affairs postulated in 2013 that the costs of providing mandatory benefits in the health system could be reduced by up to 20 percent. The Health2020 strategy lists possible cost-reducing measures, including:
Read more TaiwanThe global NHI budget system is, by far, Taiwan’s most powerful cost-containment tool. After global budgets were introduced, national health expenditures grew by 3.87 percent a year on average between 2004 and 2015. Prior to that period, annual growth rates ranged from 6 percent to 9 percent. Read more United StatesAnnual per capita health expenditures in the United States are the highest in the world (USD $11,172, on average, in 2018), with health care costs growing between 4.2 percent and 5.8 percent annually over the past five years. Private insurers have introduced several demand-side levers to control costs, including tiered provider pricing and increased patient cost-sharing (for example, through the recent proliferation of high-deductible health plans). Other levers include price negotiations, selective provider contracting, risk-sharing payments, and utilization controls. Read more |