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Out-of-pocket payments in EU healthcare systems

This article aims to understand to what extent healthcare systems in European countries are financed by out-of-pocket payments by investigating what information is available

Pascal Garel
HOPE Chief Executive
Isabella Notarangelo
HOPE Health Economist
Hospitals are by essence an arena where solidarity is of utmost importance, and they usually face the most costly risks. In the context of the financial and economic crisis of 2007 (and the following years), one of the main worries for HOPE was that decisions would be made to reduce the coverage of such risks. HOPE already published a report on the influence of the crisis on healthcare systems, aiming to investigate the impact of these policies, mainly on the hospital sector, but also decided to focus its attention this time on whether the share was covered collectively or not. This issue is also very relevant in the context of the implementation of the Directive on patient’s rights to cross-border healthcare.
According to the data obtained on the WHO European Health for All Database (HFA-DB), the total health expenditure per capita increased by 84%, from 2000 to 2013. This figure increased from 1833 PPP$ to 3379 PPP$ on average in the EU Member States. The same pattern was visible in public health expenditure per capita, where values grew from 1388 PPP$ in 2000 to 2576 PPP$ in 2013. In the same period, the public sector expenditure on health as percentage of total health expenditure slightly increased (0.5 p.p.) while that of the private sector decreased (–0.5 p.p.). 
Out-of-pocket payments on health as percentage of total health expenditure were characterised by two opposite trends during the period 2000–2013. They decreased between 2000 and 2009 moving from 17.4% to 15.8%, and then started to grow until 2013, when it reached 16.1%. This share is higher on average in the countries of EU13 than in those belonging to EU15. 
In this context, HOPE worked on a report, “Out-of-pocket payments in healthcare systems in the European Union”, published in September 2015, that aimed to see if it is possible to have a clear picture of what out-of-pocket payments are, and then to understand if and how policies affected solidarity in healthcare coverage.
Aim and method
This publication aims to understand to what extent healthcare systems (and in particular hospitals) in European countries are financed by out-of-pocket payments by investigating what information is available. The analysis focuses on comparative aspects, which highlight similarities and differences in the countries observed. The information gathered has been organised to understand if out-of-pocket payments are requested for hospital or for non-hospital sector and for what kind of healthcare services, goods or extra services the patient has to pay. Data has been collected from HOPE members through a survey and then integrated with content produced by the European Observatory on Health Systems and Policies. Quantitative and qualitative information has been reorganised in order to understand whether there are common features or significant divergences concerning out-of-pocket payments.
HOPE members were asked first to investigate if in their respective countries, the definition of out-of-pocket payments provided by the WHO1 was reflecting the one adopted at the national level. They also had to give a feedback on the availability of qualitative and quantitative information on out-of-pocket payments on hospital (both in-patient and outpatient services) and non-hospital sector. The next step was to investigate for which health service or good out-of-pocket payments were introduced and which is the most common typology. Then, the report looks at the trend affecting this figure between 2008 and 2012 and how it changed after the financial crisis. Finally, in the last section, the purpose is to find out if the Governments adopted policies affecting out-of-pocket payments on their respective national territories.
Types of out-of-pocket payments
The study highlights that each country has different types of out-of-pocket payments. They are classified in HOPE reports according to the definitions of the European Observatory on Health Systems and Policies. Direct payment is a disbursement for goods or services that are not covered by any form of pre-payment or insurance. Cost-sharing is a provision of most health funding systems that requires the individual who is covered to pay part of the cost of the health care received. Often referred to as user charges, it gathers three different categories: co-payment, co-insurance and deductible. Co-payment is a flat rate payment corresponding to a healthcare service. Co-insurance is a percentage of the total cost of the service, which is paid by the patient while deductible consists in a ceiling up to which the patient is liable (and pays out-of-pocket) and after which the insurer covers the remaining costs. Finally, informal payment is defined as any unofficial expenditure for goods or services that should be fully funded from pooled revenue. Sometimes it is referred to as ‘envelope’ or under-the-table payments.
The research shows that direct payment and co-payment are present in all countries of the sample. Co-insurance is used in 11 out of 24 countries. Information on informal payments is available for the EU13 Member States. 
Health services financed by out-of-pocket payments
According to the information collected, out-of-pocket payments fund both hospital care (inpatients and outpatients) and non-hospital care. Usually, patients have to cover the healthcare expenses they face when the provision of care is not covered by the national insurance or the national health system and if they choose private providers or private treatments in national health services facilities.
What emerged from the analysis is that out-of-pocket payments are frequent for consultations provided by general practitioners, paediatricians and specialists (in the majority of the cases to outpatients). Out-of-pocket payments also exist for prescriptions or to access to healthcare services when patients do not have any referral from a general practitioner. Dental care, rehabilitation, physiotherapy and psychotherapy are often not fully covered as well as care provided in long-term/rehabilitation facilities or facilities that are not hospitals (nursing homes, outpatients and healthcare centres). Diagnostic exams and laboratory tests also fit in this category. Goods such as pharmaceuticals (especially over the counter), medical devices, prosthesis and health products are usually partly paid by the patients. For plastic surgery, payment by a patient is always required. Finally, the fee for transportation service with the ambulance is usually partly paid by the patients.
The consumption of healthcare services is free of charge in some countries where the national healthcare system ensures free access to care to the population. In other systems healthcare can be free of charge for those patients who hold a specific status. Their health expenditures are then completely covered when they adhere to a set of mandatory conditions, which exempts them from any form of payment. The exemption from the payment can be implemented for economic reasons and could be aimed at patients whose taxable income does not exceed a certain threshold.
Besides fully exempt patients, there are those subjected to a minimal contribution. Once this minimal contribution is reached health expenditure (for services, pharmaceuticals, etc.) is free of charge. Furthermore, in several countries patients with a referral letter from their general practitioner have the right to access care for free.
It is very common in Europe to exempt children, pensioners, pregnant women and unemployed people as well as patients with specific health conditions, such as infectious, oncological, chronic and communicable diseases. Patients who need dialysis or with physical and mental disabilities have the right to access care for free, as well as organ donors and those who have had accidents at work. Emergency care as well as some specific medical devices listed in a formulary established by the national law is usually fully covered. In some countries, people who have a particular political status (for example, participants to national resistance movement or victims of political repression) could benefit from such coverage.
The level of coverage of the individual health expenditure provided by the national health system or the national insurance differ in the percentages of coverage sustained individually (or by the family). In general, such percentages are set by law and could vary depending on the level of annual income: the higher the level of annual income, the lower the percentage of coverage of the health expenditure. A patient could benefit from a certain level of coverage if he/she belongs to one of the category for which the coverage is forecasted. These percentages of coverage concern health services, medical devices and pharmaceuticals but also prescriptions. They could differ depending on whether a public or private institution provides them. In some cases, the national law does not put any limit for out-of-pocket payments. However, people with certain conditions (health or economic) are supported by social care. Different levels of coverage may exist according to the severity of the patient conditions. 
Qualitative information on hospital care, including outpatient, inpatient and non-hospital care
Out-of-pocket payments refer to both hospital and non-hospital care. Such payments exist for health services offered by private and public providers and for private health services offered by public providers. In recent years, it was observed that out-of-pocket payments for hospital services are increasing when offered by private providers. This trend, which concerns some specialties more than others, underlines the fact that waiting lists for private providers are shorter than the ones for public providers. 
Out-of-pocket payments applied to hospital care are generally paid when the individual health expenditure overcomes a certain limit. In that case, the level of out-of-pocket payment may differ depending on the level of the patient’s annual income (or their family) or on the total health expenditure already sustained in a certain period (year or month). The patient might be refunded a certain amount depending on whether or not the service obtained is complex. When the individual health expenditure for hospital care is under the limit, the patient is covered 100%.
The contribution required of the patient corresponds to the payment of a daily fee or a fixed fee. The daily fees are set for health services, extra services (such as single room, TV, other) and goods (pharmaceuticals and medical devices) and could be variable. They could be applied to the patients who choose the team of professionals who will provide their care. It is likely that the fixed fees could also exist for some type of surgeries.
In some cases out-of-pocket payments for hospital care are only for certain categories of citizens (such as civil servants), health specialties, pharmaceuticals or medical devices. 
Out-of-pocket payments for non-hospital care correspond to a fixed fee or to a percentage of the fee for health services, pharmaceuticals and prescriptions (all or certain types), which is set by the law up to a maximum limit. The most frequent out-of-pocket payments are for dental care, long-term care, mental care, primary care, specialist visits, psychology, psychotherapy and rehabilitation. Public health insurance may cover treatments referring only to some specialties. Especially after the financial crisis, out-of-pocket payments have been introduced for emergency visits or non-urgent visits in the emergency departments. Fees are also foreseen for the transportation service.
The information gathered on out-of-pocket for inpatients and outpatients revealed that these are more frequent for outpatients (both provided inside and outside the hospital) than for inpatients.
Health services for inpatients are provided for free in the majority of countries, despite the diverse features of the national health systems in Europe; in general, when the patient has a letter of referral of the GP. On the other extreme, when the access to inpatient care is not completely free, the patient has to pay the total fee set. They could benefit of a variable refund, depending on the voluntary health insurance chosen.
Out-of-pocket payments for outpatients correspond to a fixed fee or to a percentage of the fee set for the health service, the medical device or the pharmaceutical. Different percentages of reimbursement exist depending on the age of the patients, on their health condition and on their working status (employed, pensioner or unemployed). Out-of-pocket payments for outpatients could differ on the same national territory according to the law and they are applied to specialist care, diagnostic services and laboratory tests, dental service and pharmaceuticals.
Policies on out-of-pocket payments implemented after the financial crisis
The financial crisis has prompted a rather heated debate on the necessity to cut the total public health expenditure in European countries and, as a consequence, several Governments decided to implement diverse policies on out-of-pocket payments on national territory.
In some cases, typically in those countries where the national health system remains mostly free at the point of use, the out-of-pocket payment trend has decreased. This choice was made to allow the majority of the citizens to access to care when needed. In other countries, the decreasing trend was due to the fact that more and more people were entitled to benefit from the exemptions as their economic situation worsened (for example, from employed to unemployed). In a few examples, the declining out-of-pocket payment trend only considered the public providers. 
When the out-of-pocket payment trend remained stable, other forms of health expenditure financing have been entailed: increasing ‘supplement’ fees or increasing refunds for some health services. 
Some other European Governments also opted for raising the level of the out-of-pocket payments to recover from the financial crisis blow to economic stability, which caused a reduced coverage of health services at the country level. A parallel solution adopted is the extension of the list of non-covered services and the reduction of refund to patients.
The main conclusion emerging from the survey is that the information available is rather sparse, limited or scarce in the national databases. Concerning the payment trends, the survey shows that Governments have chosen very different strategies, sometimes opposite ones, to face the pressure of the financial and economic crisis on their 
healthcare systems.
Further information
  1. Private households’ out-of-pocket payments for health as a percentage of total health expenditure are the direct outlays of households, including gratuities and payments in-kind made to health practitioners and suppliers of pharmaceuticals, therapeutic appliances, and other goods and services, whose primary intent is to contribute to the restoration or to the enhancement of the health status of individuals or population groups. It includes household payments to public services, non-profit institutions or non-governmental organisations. It includes non-reimbursable cost-sharing, deductibles, co-payments and fee-for-service. It excludes payments made by enterprises that deliver medical and paramedical benefits, mandated by law or not, to their employees. It excludes payments for overseas treatment. Source: WHO European Health for All Database (HFA – DB).
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