Christmas 2011: Food for Thought

The assault on universalism: how to destroy the welfare state

BMJ 2011; 343 doi: http://dx.doi.org/10.1136/bmj.d7973 (Published 20 December 2011)
Cite this as: BMJ 2011;343:d7973

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The economic crisis is being accompanied by a series of profound reforms in the health sector that are having a significant impact on the population’s well-being. One of the most substantial issues, and in recent weeks one of the most hotly debated in Spain, revolves around the issue of co-payments for prescription drugs.

Pharmaceutical expenditure in Spain is characterized by several paradoxes: while the average price of drugs tends to be lower in comparison to other European countries (1), Spain’s per capita expenditure is one of Europe’s highest (2), due largely to the elevated number of prescriptions per patient and year (3). As it is said from the health economics` perspective, we have a demand-side problem not a supply-side problem.

Recent reforms in drug co-payment regulations aim at tackling the root causes of this problem. For example, retirees who until now were exempt from paying for their medications will now have to assume some out-of-pocket costs. Individual contributions for retirees will now be based on a sliding scale linked to income levels. The additional monthly cost for most pensioners will range between 8 and 18 Euros, although for those with pensions over 100,000 Euros the cost could ascend to as much as 60 Euros a month. Those at the lowest end of the income scale are exempt from these measures.
This reform also represents the transition from a government-financed model to one based on reimbursements: patients will now have to pay the initial cost of drugs up front and then wait up to six moths for their reimbursement.

The working population will also be affected by changes brought on by the new regulations. Under the model in place until now workers paid 40% of a drug’s cost; the new model will require them to pay up to 60% of that cost (with no monthly limit). The country’s technical capacity to implement this system so quickly has been seriously questioned (the measures are set to take effect in early July). Serious concerns also exist about possible incentives to increase the levels of fraud, as people attempt to avoid higher co-pays.

One of the reform’s most positive aspects is that it will exempt unemployed workers lacking public benefits from having to make co-payments, a condition which is the norm in Europe (exemption from co-payment due to low income level) (4) but one that Spain had not adopted.

Reforms affecting drug co-payments are generating many doubts and uncertainties. They raise questions as to why, in attempting to contain public expenditures on drugs from the demand side, little is being done to modify the actions of another key figure, the doctor, who is actually at the head of the demand chain. Some are also asking whether the supply of drugs should be reduced since Spain is one of the countries with the greatest number of financed drugs (5), many of them not contributing anything new to treatment.(6)

Clearly, no one remains indifferent to this reform and hopefully the government will not overlook some of the main drawbacks outlined years ago in the RAND study : the reduction of services – not just the unnecessary ones, but those that are necessary as well. If not, there is a risk that patients unable to pay for their own medications will turn to hospital services in search of treatment, a much more expensive alternative than receiving pharmaceutical treatments. Time will tell whether that cautionary note was remembered or overlooked.

(1) Konijn P, 2007, Pharmaceutical products – comparative price levels in 33 European countries in 2005, Eurostat Statistics in Focus economy and finance 45/2007.
(2) OECD, 2008, Pharmaceutical pricing policies in a global market
http://phis.goeg.at/ - PHIS Database
(3) Espín J, Rovira J. Analysis of differences and commonalities in pricing and reimbursement systems in Europe. A study funded by DG Enterprise and Industry of the European Commission, EASP Final Report, June 2007.
(4) Vogler S, Espin J, Habl C. Pharmaceutical Pricing and Reimbursement Information (PPRI) – New PPRI analysis including Spain. Pharmaceutical Policy and Law. Volumen: 11 Pages – 213- 234. 2009.
(5) Jönsson B, Staginnus U, Wilking N. Acceso de los pacientes a los fármacos contra el cáncer en España. Rev Esp Econ Salud. 2007; 6:175-83.
(6) Health insurance and demand for medical care: evidence from a randomized experiment. American Economic Review, 77(3): 251-277.

Competing interests: None declared

Jaime Espin, Professor

Clara Bermúdez-Tamayo

Andalusian School or Public Health, Hospital Universitario Virgen de las Nieves, CIBERESP Ciber de Epidemiología y Salud Pública, Campus Universitario de Cartuja. 18080 Granada - Spain

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CITIZEN OR INSURED? THE ASSAULT ON UNIVERSALISM IN SPAIN

Martin McKee and David Stückle (1) published recently an important article about strategies on how to destroy the welfare state, which -as they pointed out- are seeking inspiration from a social model (the American) in which poverty is never a consequence of misfortune, but idleness.

Such strategies have also reached Spain (2) being justified by the serious economic situation facing the country. Under the pretext of trying means of saving money in health care, the Spanish conservative government has approved a Royal Decree Law (a legislative instrument only used exclusively in emergency situations) that radically undermines the foundations of our national health system, as much regarding citizens' rights as in relation to the structure of services portfolio (3).

The passing of the General Health Law of 1986 (14/86 April 25) represented an historical change in the Spanish health system. The country changed from a system funded through contributions from affiliated members to the Social Security (Bismarckian model) into a universal system, financed through taxes, and free at the time of delivery. In short, a health care system clearly inspired by other national health models, such as the NHS.

The General Health Law recognized the right to health protection and health care of all Spanish citizens, as well as foreigners with established residence in the country. In contrast, the new Royal Decree Law substantially modifies the right of subjects to receive health care in Spain, which changes now to be not “the citizen” any more, but "the insured”, clearly defining what is meant by this.

The word Assured and the concept of Assurance are not accidental. Neither is the establishment of four modes of services portfolio for the “new” national health system: basic, supplementary and ancillary. In addition, the combination of both dimensions facilitates future opportunities of health service provision in Spain by different types of providers, public and private. Ultimately, it means a mutation from a tax funded health service towards a insuree´s state of health.

The Spanish government justifies the reform as necessary to improve health outcomes and the costliness of the health service. This kind of misinformation is one of the tactics recommended by Oliver Letwin (4) –currently Minister of State of th British Government- for privatizing public assets against the wishes of the electorate, as Reynolds et al have cleverly described (5).

As in the United Kingdom, the beginning of the end of the national health service in Spain may be getting even closer. More than ever we must remember the famous Tolstoy´s quote: “There are no conditions of life to which a man cannot get accustomed, especially if he sees them accepted by everyone around him”.

(1) McKee M, Stuckler D. The assault on universalism: how to destroy the welfare state. BMJ 2011;343:d7973 doi.

(2) Rajmil L, Fernández MJ. Destruction of a less developed welfare state and impact on the weakest, the youths. Available at: http://www.bmj.com/content/343/bmj.d7973?tab=responses

(3) Real Decreto-Ley 16/2012, de 20 de Abril, de medidas urgentes para garantizar la sostenibilidad del Sistema Nacional de Salud y mejorar la calidad y seguridad de sus prestaciones. Available at: http://www.boe.es/boe/dias/2012/04/24/

(4) Letwin O. Privatising the World: a study of international privatisation in theory and practice. London: Casell Educational Ltd, 1988; pp 63-73. ISBN 0304315273

(5) Reynolds L, Lister J, Scott-Samuel A, McKee M. Liberating the NHS: source and destination of the Lansley reform. 29 August 2011.
Available at: http://pcwww.liv.ac.uk/~alexss/nhs.pdf

Competing interests: None declared

Sergio Minué-Lorenzo, Senior Lecturer

José Fco García Gutiérrez, Juan José Mercader-Casas

Andalusian School of Public Health , Campus Universitario de Cartuja. 18080 Granada - Spain

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Destruction of a less developed welfare state and impact on the weakest, the youths

The excellent article from McKee and Stuckler (1) on the history and opportunities for neoliberalism to destroy the welfare state in the UK, and creating conditions that attempted against social cohesion and solidarity reflects us on the situation in other European countries, such as Spain. Welfare state in Spain had begun to install more recently than in other western European countries. After a long dictatorship, the Spanish society and economy inherited a financial sector very protected and conservative, an insufficient and regressive fiscal system, and scarcity on social protection and benefits. In the end, there was a much less welfare state than in other European countries(2). In this situation any setback to the advance on the welfare state causes a probably greater backward movement than in other contexts.

The current crisis has affected the whole Europe’s economy, although the impact in each country depends on the starting point, mechanisms of social protection and social transfers, as well as measures adopted by governments on fighting the crisis. Reports have been published on the impact of this economic recession on population health and in the access and use of the healthcare services in some countries (3, 4). It was universally recognized that the most vulnerable population group in these situations is child population(5), and early child development was identified as one of the main factors that contribute to diminish or increase inequalities on the future adult’s health, depending on the extent of exposures and early interventions against stressful events at this stage in life(6).

Governmental economic measures that have been adopted in Spain to reduce deficits are indiscriminate and they do not focus on supporting or maintaining resources addressed to the child population. Current budgetary restriction is severely affecting the quality of public services. In Catalonia, a north-eastern region, and in the whole of Spain there have been no initiatives to evaluate the impact of the crisis on inequalities in child health, nor in family living conditions and access to healthcare, educational and social resources. We have analyzed changes in living conditions and social gradients of the child population in Catalonia. Available indicators on the Catalan child population have been compared between 2005 and 2010-11. Data on health outcomes such as perceived health or mental health were not analyzed, due to a lack of updated information at least until the middle of 2012. The Living Conditions Survey (LCS)(7) and the Household Budget Continuous Survey (HBS)(8) provided data on the family living conditions and risk of poverty. Infant mortality, perinatal mortality and life expectancy were also collected. Other sources were included, such as webpages from Non Governmental Organizations (NGO), and mass media publications and interviews.

The percentage of 0-16y children at risk of poverty has increased from 20.6% in 2005 to 23.7% in 2010 after social transfers (28.2% and 32.5% before social transfers, respectively). The latter is a 4% higher than the total population. Income inequalities have increased from 4.8 to 5.8 times (20% higher) between the higher and lower quintiles, and the population younger than 17y living in unemployed families has increased from 3.7% to 11.2% (3 times). Percentage of school dropouts diminished 4% (from 33% to 29%) between 2005 and 2010, while unemployment in people 16-24y has increased by over 2.5 times (15% to 40%). International adoptions have diminished from 1419 to 627. A recent report from Caritas (a Spanish NGO) shows that in Spain the number of requests they take care have increased from 900000 in 2007 to 1800000 in 2010. The most frequent demands from individuals and families were for foods, housing, looking for employment, legal advice, and psychological support. The indicators of mortality and life expectancy have not changed during the study period, although life expectancy at birth in the whole of Spain in the year 2010/2011 has decreased 0.03 to 81.7y, according to preliminary data (no data is available for Catalonia).

These results, although not significant from a statistical point of view, would represent -if confirmed- the first time this indicator drops in Spain in the last 50 years(9). Some positive aspects of the recession have been described (5). It is expected to decrease environmental pollution and traffic accidents. It is often said that crises are opportunities for change and improvement. This current crisis is being used not to improve, but to deepen the most neoliberal economic system and destroy the social welfare state1. This will result in an increase in social inequalities and a future generation of Catalan and Spanish adults with fewer opportunities for health and education. Rising unemployment has a higher impact on living conditions and it decreases access to housing. Health cuts increase the differences in access to health services resources, increase waiting lists and degrade the quality of public health systems, encouraging migration of the higher classes to private health care.

Future studies should analyze the impact of the recession on child health(10). Public health professionals, pediatricians and other professionals should document the human costs of the crisis, and the living conditions of children whose lives are being blighted by radical austerity and risky bank maneuvers(11). It is socially and ethically mandatory that governments should be transparent publishing data on the impact of this crisis on child health.

References
1 McKee M, Stuckler D. The assault on universalism: how to destroy the welfare state. BMJ 2011; 343: d7973 doi: 10.1136/bmj.d7973.

2 Navarro V, Torres López J, Garzón Espinosa A. Hay alternativas. Propuestas para crear empleo y bienestar en España. Madrid: Sequitur; 2011.

3 Kentikelenis A, Karanikolos M, Papanicolas I, Basu S, McKee M, Stuckler D. Health effects of financial crisis: omens of a Greek tragedy. Lancet 2011;378:457-8.

4 Kentikelenis A, Papanicolas I. Economic crisis, austerity and the Greek public health system. Eur J Public Health 2012;22:4-5.

5 Dávila-Quintana CD, González López-Valcarcel B. Crisis económica y salud. Gac Sanit 2009;23:261–265.

6 Early Child Development Knowledge Network (ECDKN). Early child development: a powerful equalizer. Final report of the Early Child Development Knowledge Network of the Commission on Social Determinants of Health. Geneva: World Health Organization; 2007.

7 Instituto Nacional de Estadística. The Living Conditions Survey. Madrid: INE; 2005. Available at: http://www.ine.es/en/daco/daco42/condivi/ecv_metodo_en.pdf

8 Instituto Nacional de Estadística. The Houselhold Budget Survey. Madrid Madrid: INE; 2005 http://www.ine.es/en/daco/daco43/metodo_ecpf_trimestral_en.pdf

9 Nogueira, Ch. Cae la esperanza de vida en España. El País; 19/01/2011. Available at: http://www.elpais.com/articulo/sociedad/Cae/esperanza/vida/Espana/elpepisoc/20120119elpepisoc_3/Tes

10 Department for Environment, Food and Rural Affairs. Family Food 2010. A National Statistics Publication by DEFRA. Available at: http://www.defra.gov.uk/statistics/files/defra-stats-foodfarm-food-familyfood-2010-1112131.pdf

11 Stuckler D, McKee M. There is an alternative: public health professionals must not remain silent at a time of financial crisis. Eur J Public Health 2012;22:2-3.

Competing interests: None declared

Luis Rajmil, Pediatrician and Public Health

María-José Fernández de Sanmamed

Institut Municipal d'Investigació Mèdica (IMIM- Parc de Salut Mar) , Dr Aiguader 88, Barcelona 08003 Spain

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One aim of welfare policy is to provide adequate income security to people when they are unable to work, either due to labour market conditions, illness, disability or old age.   Welfare benefits are an insurance against the adverse circumstances to which we are all at risk. As Mckee and Stuckler1 elaborate, one strand of the “assault on universalism” is to vilify certain groups who are receiving welfare support, in particular poor people out of work.

 

The argument put forward, by those who wish to reduce welfare support, is that: (1) the welfare bill is rising to unsustainable levels, (2) this is because of the number of people on out-of-work benefits* and (3) these benefits exacerbate poverty by disincentivising work, and therefore reducing their generosity and limiting access will actually benefit the poor. In debating the 2011 spending review, the Chancellor of the Exchequer, George Osborne, indicated that the extra £4 billion cut to out-of-work benefits was necessary because "The welfare bill has risen by 45% in the past 10 years”. He went on to imply that this was due to the fact that “5 million people are on out-of-work benefits”, which reward “social failure”2.

 

But what the Chancellor failed to say was that this 45% rise in welfare expenditure is not the result of increasing public expenditure on out-of-work benefits. It is largely due to greater expenditure on benefits to pensioners (including the basic state pension, pension credits and the winter fuel allowance). This increase is brought about in part by increases in life expectancy. Figure 1 (author’s own analysis) shows expenditure on benefits to pensioners and out of work benefits over the last 10 years in the most affluent 20% of local authorities in England as compared to the most deprived 20% of local authorities. The increase in expenditure on benefits for pensioners between 2000 and 2009 accounted for 56% of the total increase in expenditure on all benefits, whilst expenditure on out-of-work benefits has declined slightly over the past 10 years, particularly in the more deprived areas of the country (see Figure 1) 3.

 

The existence of health inequalities exacerbates the situation. There are large differences in life expectancy across the country. People retiring in the most affluent 20% of the country can expect on average to live for 2 years longer than in the most deprived 20% of areas of the country4. This means that the proportion of the population at pensionable age and consequently expenditure on benefits to pensioners is much greater and increasing at a faster rate in affluent areas relative to more deprived areas. If inequalities in life expectancy persist this trend will continue with an increasing proportion of welfare expenditure allocated to support the rapidly aging populations in more affluent areas (see Figure1). Spending on out-of-work benefits is unlikely to be affected by demographic change.  The sad truth maybe that rather than the poor being a drain on public resources, they actually save the state money in benefit payments, by dying earlier. 

Figure 1. Current and predicted expenditure on benefits to pensioners (basic state pension, pension credits and the winter fuel allowance) and out-of-work (OOW) benefits 2000-2034, adjusted for inflation to 2010 prices, for the least deprived (most affluent) 20% of local authorities (population weighted quintile) and the most deprived (least affluent) 20% of local authorities. Predicted level estimated by applying 2010 expenditure per person of pension age (or working age (16-65) in the case of OOW benefits) to Office of National Statistics population projections7 of the number of people in these age groups in each local authority.


Clearly the portrayal of the workless poor as the cause of unsustainable welfare spending is disingenuous. The government’s policy is to reduce the welfare bill by (1) reducing the number of people on out-of-work benefits and (2) increasing the state pension age.  The assumption is that by tightening eligibility requirements and reducing the generosity of out-of-work benefits, work disincentives will be removed and recipients will move into employment. However research indicates that such policies are likely to have only marginal effects on employment, whilst putting people at risk of poverty, potentially exacerbating health inequalities 5,6.  Increasing the state pension age will be unjust if the current trend in health inequalities is not reversed. As the Work and Pensions Select Committee, in 2006 stated, “the achievement of the health inequalities target needs to be a condition of a rise in the state pension age”.7 With youth unemployment at a record high, reducing the rate at which older people retire, without increasing the amount of employment in the economy, will only exacerbate this problem.

 

As Mckee and Stuckler demonstrate, the strategy of those who wish to dismantle the welfare state is to take each group of people receiving state support in turn and pit one against the other in a ‘blame’ game.  The point is that support for each group cannot been seen in isolation, disconnected from wider social impacts. Inequality in educational and employment opportunities for instance mean that greater welfare support is needed for those out of work in poorer areas, while the existence of health inequalities mean that greater resources are being directed to support people in old age in more affluent areas. The principle of the welfare state is that society as a whole benefits from a redistribution of support, both between groups and across the life course. Now more than ever we need such a system of mutual security and vigilance is needed to expose false claims that fuel destructive divisions in our society.




* Out-of-work benefits refers to those for which being out of work is one of the criteria on which eligibility is based, it includes Job Seekers Allowance (JSA), Employment Support Allowance (ESA), Incapacity Benefits (IB) and Income Support (IS).

1. McKee M, Stuckler D. The assault on universalism: how to destroy the welfare state. BMJ. 2011;343:d7973-d7973.

2. Parliamentary Debates. House of Commons- Monday 13 September 2010. 2010:Column 600. Available at: http://www.publications.parliament.uk/pa/cm201011/cmhansrd/cm100913/debt.... Accessed October 31, 2011.

3. Department for Work and Pensions RH. Benefit expenditure tables - DWP. Available at: http://research.dwp.gov.uk/asd/asd4/index.php?page=expenditure. Accessed November 1, 2011.

4. Office for National Statistics. Life Expectancies. Publication Hub Gateway to UK National Statistics. 2008. Available at: http://www.statistics.gov.uk/hub/population/deaths/life-expectancies. Accessed January 3, 2012.

5. Grogger J, Karoly LA. Welfare reform: effects of a decade of change. Havard: Harvard University Press; 2005.

6. Barr B, Clayton S, Whitehead M, et al. To what extent have relaxed eligibility requirements and increased generosity of disability benefits acted as disincentives for employment? A systematic review of evidence from countries with well-developed welfare systems. Journal of Epidemiology & Community Health. 2010;64(12):1106-1114.

7. Department of Work and Pensions. Report on Pension Reform. Government response to the Fourth Report of the Work and Pensions Select Committee, Session 2005-06 [HC 1068-1]. The Stationery Office; 2006.

 

 

Competing interests: None declared

Ben, R. Barr, Consultant in Public Health

University of Liverpool, Department of Public Health and Policy, Institute of Psychology, Health and Society, University of Liverpool, Whelan Building, Liverpool, L69 3GB

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This is an excellent article.

Moving away from universalism may seem attractive in a time of austerity. However, in my experience, services for poor people soon become poor services.

This coalition is taking us towards a society where the rich are encouraged to buy their way out of social solidarity and fence themselves into gated communities where the what happens to the poor is of no consequence to them.

How ironic that this is being made possible by the Liberals. What would Beveridge have made of that?

Competing interests: None declared

Peter Silvester, Public Health

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This is such a good article it should be published widely in as many main line newspapers as possible.

Evan L Lloyd

Competing interests: None declared

Evan L Lloyd, Retired

None, 72 Belgrave Road, Edinburgh EH12 6NQ

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