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Health Coverage Lessons From the Greek Meltdown

MANAGED CARE July 2013. © MediMedia USA
The Wider View

Health Coverage Lessons From the Greek Meltdown

The country’s catastrophic economic situation shrinks coverage, closes hospitals, and cuts physicians’ salaries — and that might be just the beginning

Robert Royce, PhD

London — The financial crisis that engulfed much of the world from 2008 onward had a significant impact on Europe, to the point where it can be regarded as the dominant issue for most health care systems. It has affected — in some cases fundamentally — the ability to pay for current services, both public and private.

Whereas in the United States (which has also had to cope with a deep recession) the focus appears to be on efforts to arrest continued growth in health care prices and total expenditure while increasing insurance coverage, some parts of Europe are looking to significantly reduce all three. This article focuses on the experiences of Greece because its catastrophic economic situation has had a similarly extreme impact on its health system.

Cuts, job losses, closures

The scale of the cuts can be gauged by reports of hospital budgets being reduced by 40%, accompanied by severe shortages of staff, medical supplies, and even food for patients as companies fed up with not being paid stop delivery of goods. Job losses are accompanied by recruitment freezes (commonly only one job post can be recruited for every five lost), while those who remain in work have to accept significant pay cuts — when they eventually get paid.

For example physicians’ wages have seen a 25% reduction. Alongside the job cuts have been closures of hospitals, specialist units, and bed reductions. The aim is to reduce the number from 133 hospitals to 83.

In 1983, Greece established a national health service; however, social funds, linked primarily to employment, have always played a significant role in covering the costs of certain types of care — ambulatory care in particular. Patients who depend purely on the public health system increasingly find that the care they require is not available, or at best they face significant delays.

This has gotten significantly worse as Greece’s social sector accounts for 33% of government spending and therefore the austerity measures forced upon the country by its perilous debt position have fallen heavily on the health system. The conditions attached to the bailout by the International Monetary Fund, the European Commission, and the European Central Bank (collectively known as “the troika”) are as eye-watering as the Greek debt level (170% of GDP in 2011). The troika has insisted that public spending on health not exceed 6% of GDP and so health care spending, both public and private, is declining. As a result, the focus is squarely on significant cost reductions and their consequences.

The funding of the Greek health system is a complex mix of public sector, social funds, and private health insurance. To this can be added a significant and growing “black” economy of informal payment directly to the caregiver, reflecting the large difference between official payment rates and what providers actually charge.

A 2008 survey in the journal Health Policy, using a sample of 4,738 people, noted that 36% of those treated in a hospital reported at least one informal payment to a doctor. Of these, 42% reported that the payment was given because of the fear of receiving substandard care and another 20% claimed that the doctor demanded a payment. No doubt if the surgery were repeated the situation now would be worse.

Historically, Greece had an unusual distribution of clinical staff in that it had a very high ratio of specialists to inhabitants compared to EU countries but also manages to have a low ratio of primary care physicians. One might therefore be unsurprised to learn that the Greek health system has always allowed direct access to specialists without reference to a primary care doctor. The relative weakness of the primary care sector is just one of a number of areas where health care reform is widely regarded as being required. However, Greece has a problem with implementing reform programs that transcend health care.

The formal private sector has also suffered badly as the economy has shrunk. Private hospital admissions are down while public hospital admissions are growing — which is further increasing the waiting lists for publicly funded treatment. Private hospital admissions are dropping while those in public hospitals have increased by 24% in 2010 compared to 2009.

A similar pattern of goods disappearing from the formal market can be found with drugs. There has been downward pressure on drug prices and Greece has secured lower prices for a lot of generic drugs. However, drug shortages are common as companies seek markets offering higher prices and quicker settlement of bills. Pharmacies are getting customers to pay up front for drugs because paying the pharmacies is taking so long.

User charges, with some exemptions, have also gone up from €3 to €5 (about $6) and apply to primary care and outpatient care. This may not seem that significant, but needs to be seen in the context of the average Greek’s low income. In addition, 25% of the costs of drugs are met by the patient, although there are exemptions including those with chronic illnesses. Likewise, a number of other services, such as laboratory tests, also have a copayment. What people pay depends on their economic status and what social fund, if any, they belong to.

Impact on health

How is all this affecting the health of the people of Greece? Despite a relatively low GDP per capita of $21,750, the life expectancy of the 11.2 million inhabitants is one of the highest among countries in the Organization for Economic Co-operation and Development (OECD) at 77.8 years for males and 82.5 years for females. Some negative public health implications are already becoming visible, but generally speaking, public health is marked by long time gaps before effects are measurable —if they are measured at all. Moreover the impact of an economic recession on health status is not necessarily all negative. For example, a reduction in traffic accidents has been recorded in many countries as a result of people switching to other means of transport and/or traveling less.

Academics speculate that the degree to which negative public health outcomes will result from a recession are in part a factor of the degree to which social cohesion and support networks, formal and informal, are maintained — and perhaps even strengthened.

In Greece a number of negative health consequences are already evident.

Suicides are up, mental health indicators are worsening, and self-reported general health indicators are deteriorating. One wonders what the long-term implications will be on the population if Greece’s economic troubles continue. The unemployment rate among 15- to 24-year-olds currently stands at 56.6%, and Greece’s jobless rate has almost tripled since September 2009. The current complaints about the health care impacts of the recession may prove to be merely the start of a wholesale reversal in health indicators in the coming years.

All of this sets a sobering context for the continued debate about the need for, and direction of, health care reform, both internationally and in the United States.

Robert Royce, PhD, is an independent health care consultant and writer in the United Kingdom. Earlier he was is director of strategy at Barking, Redbrige, and Havering University NHA Trust in Essex. Before that he was director of planning and operations at Abertawe Bro Morgannwg University NHS Trust from 2006 until 2009. Twitter: DRROBERTROYCE

For further reading

  • The Economist. The World in figures: Greece Nov 21, 2012.
  • Greek Finance Ministry in The Economist http://www.economist.com/node/21559373.
  • Karanikolos M et al. Financial crisis, austerity, and health in Europe. Lancet 2013;381(9874): 1323–1331.
  • Kentikelenis A et al. Health effects of financial crisis: Omens of a Greek tragedy. Lancet. 2011;378(9801):1457–1458.
  • Liaropoulos L et al. Informal payments in public hospitals in Greece. Health Policy. 2008;87(1):72–81.
  • The Telegraph (2013) Greek youth unemployment edges towards 60%. Jan 10 2013. http://bit.ly/12pzQEo