October 2013

Sustainable Health Systems for Inclusive Growth in Europe:
Session II Overview

A conference organised by the Lithuanian Presidency of the Council of the European Union, Vilnius, 19-20 November 2013.

Sustainable Economic Growth through Better Health

It’s time to dispel the austerity-era view of health care as a drain on Europe’s resources

The understanding that health is a precondition for economic prosperity – adding to human capital, creating jobs, increasing productivity, underpinning innovation, and creating and growing markets - is not new. As long ago as 1993 World Bank was promoting the relationship between health and wealth as a key to promoting economic growth in developing countries.

But in these times of austerity, there is a danger that rather than connecting health with wealth, the 15 per cent of public expenditure devoted to health care in Europe is perceived as an unaffordable overhead. Session II of the conference will provide a timely reminder of the major role that the health sector pays in Europe’s economies, highlighting the double dividend that public spending on health delivers, both in terms of a healthy, active population and as a source of economic growth.

The notion that health is just about expenditure, “Has to be considered a relic of the twentieth century,” Lithuania’s Health Minister Vytenis Povilas Andriukaitis, told the European Health Forum, in Gastein, Austria earlier in October. Now it is time to put the focus on health as an investment. “Growth of the health sector enriches the economy at large,” Andriukaitis told delegates. “A healthy workforce ensures productivity; increases in life expectancy - if correlated with a higher retirement age - helps to ensure social insurance funds are sustainable; and innovation in medicine ensures the competitiveness of European pharmaceutical and engineering companies, boosting science and technological progress in all sectors,” he said. 

Health spending is growth-friendly

Setting out priorities for the macroeconomic reforms it believes are needed to recover from the financial crisis, the European Commission’s Annual Growth Survey 2013 said it is essential for national governments to look at the overall efficiency and effectiveness of spending, recommending that, “reforms of healthcare systems should be undertaken to ensure cost-effectiveness and sustainability.”

Following on from this, in February 2013, the Commission underlined the view that health spending is “growth friendly” and contributes to the Europe 2020 objective of achieving smart, sustainable and inclusive growth in ‘Investing in Health’. This paper calls on member states to “spend smarter” to makes health care systems more efficient, for example, through investments in service reform and technologies to reduce the length of hospital stays, strengthening primary care and the use of health technology assessments to understand the precise value of new treatments .

As Paolo Testori Coggi, Director General of DG Health and Consumers at the European Commission, told the European Health Forum in Gastein, “Investments in health are an investment in European human capital and pay dividends in terms of jobs and productivity.” Poor health leads to productivity losses, with about a quarter of the people currently employed suffering from a chronic disease that restricts their daily activities, Testori Coggi noted.

Health care is also an important source of employment, with demand for health professionals growing at a time when Europe’s labour market as a whole is shrinking. Health and social care generated 1.5 million new jobs between 2008 – 2012, and has the potential to create far more employment between now and 2020, Testori Coggi told delegates in Gastein.

Focus on healthy ageing

In its European Partnership on Active and Healthy Ageing, the Commission has set the ambitious target of increasing by two years the ‘healthspan’ of Europeans by 2020. The partnership is putting the focus on disease prevention, screening and early diagnosis, and active ageing and independent living, as the means to achieve this.

The programme will involve research into new products, but it will also look at factors that drive their adoption, for example, considering business models and involving end users, clinicians, purchasers and carers in product and service design.

One powerful illustration of the potential comes from the largest randomised control trial of telehealth in the world, involving 236 general practitioners in the UK supporting 6,197 people with chronic obstructive pulmonary disease, congestive heart failure and diabetes. The headline findings of the study included a 45 per cent reduction in mortality, 20 per cent fewer emergency hospital admissions, 15 per cent fewer visits to Accident and Emergency Departments and a 14 per cent reduction in hospital bed days. Quality of life was broadly the same and patient satisfaction with telehealth was high.

No one wants to be in hospital if they can avoid it, but at present the 15 million people in England with long-term conditions account for 70 per cent of beds occupied in the National Health Service, at a cost of £70 billion per annum. This situation is replicated in health systems across Europe, highlighting how the types of products and services the European Partnership on Active and Healthy Ageing is aiming to develop and deploy could save health care costs, add to quality of life and foster the development of new markets.

Mobile health (mHealth) and fitness applications represent another example of an important new technology-driven market that is supported in part by health spending, and which motivates individuals to adopt - and sustain - healthy behaviours. According to Research2Guidance, a mobile apps market research company, the European mHealth market is booming and is forecasted to be worth €5.4 billion by 2017. Commenting on the rapid uptake of mHealth, Robert Madelin, Director-General at DG Communications Networks, Content and Technology at the European Commission told the European Health Forum in Gastein, “mHealth tools can empower citizens and help cut costs to ensure healthcare systems remain sustainable.” Mobile apps are a promising new channel of communication in the area of preventive medicine, presenting, “An excellent opportunity to convey health messages,” Madelin said.

Health and economic growth are self-reinforcing

Health is a form of human capital as well as being an input to human capital. Seen from this perspective, there is scope to generate a virtuous circle in which health and economic growth are self-reinforcing. One study by the OECD estimates that a one year increase in a population’s life expectancy could push up GDP by as much as 4 per cent.

In summary, health spending is not a trade-off against growth. Health and growth are complementary and synergistic. Better health equals more human capital, leading to sustainable economic growth.