Restructuring health systems for an era of prolonged austerity: an essay by Richard B Saltman and Zachary Cahn

The present economic crisis in the developed world is nearly five years old. Since the autumn of 2008, governments in Europe have struggled with flat growth rates and soaring unemployment. The European Commission has now forecast that the Eurozone’s gross domestic product (GDP) will drop a further 0.3% in 2013.1 In the UK, the British economy is 3.3% smaller in 2013 than it was in the first quarter of 20082 and the US bond rating service Moody’s forecast in early 2013 that deterioration in the British government’s balance sheet was unlikely to be reversed before 2016.3

To date, there has been little public discussion about how health policymakers should respond to these straitened circumstances. Even if current levels of health spending are maintained there will be effective cuts in services because the costs of current levels of provision are projected to rise considerably. Demand for services from an ageing population and increased costs created by new clinical, pharmacological, pharmacogenetic, and information technologies, will all put upward pressure on health spending (for UK projections see Appleby4). Below we review the reasons behind Europe’s lack of growth and examine some of the policy options that health systems may need to adopt.