Indirect costs in healthcare – an unlikely rationale for policy reform in Poland?

Polish policymakers have to face indirect costs of a healthcare system and implement reforms. But so far all arguments have been consistently ignored by the Ministry of Health officials, at least officially.
Indirect costs in healthcare - an unlikely rationale for policy reform in Poland?

(401(K) 2012, CC BY-SA)

At a very general level, Poland’s healthcare system is similar to those functioning in other European countries, at least in terms of challenges. Policymakers face rising costs that they struggle to keep in check, bound to keep an upward trend in the coming decades due to ageing populations and rising expectations of patients. Awareness of new drugs and therapies puts and unavoidable pressure on the politicians to deliver or face the backlash from their electorates. The recent attempts by European governments to negotiate the exuberant costs of so-called ‚1000-dollars-a-pill’ treatments for HCV is one example of such challenges.

Poland’s situation is comparable to other, except for the fact that the country’s spending on health care is still among the lowest of all OECD nations. With 6.3 per cent of GDP overall health spending and 4.5 per cent coming from public sources, Poland is far behind the OECD average of 8.9 per cent and 6.5 per cent, respectively. About 70 per cent of health spending in Poland comes from the National Health Fund (NFZ), which is financed from universal contributions, deducted from wages and pensions. Budget financing is marginal (limited to emergency services and special drug programs), thus hardwiring the health system to the condition of the economy – the health spending only rises as much as the wages and contributions of the citizens, while Polish politicians can neither cut nor significantly boost health spending.

For the past 8 years the ruling Civic Platform and Polish People’s Party coalition government had a convenient excuse for dodging the healthcare financing debate. The fact that NFZ’s budget has been pegged to the economy has been used as a final argument in discussions associated with inadequate access to health procedures (mainly the long waiting lists). At the same time, raising health contributions (currently fixed at 9 per cent of gross salary) has remained a taboo since it reached the current level in 2007. An on-going discussion about boosting the health budget with supplementary health insurances has borne no results for the lack of political will to reform the system.

Numerous attempts have been made to convince the decision-makers to reconsider the status quo and introduce measures to increase health funding. Most of these, however, have come from the private sector, chiefly the pharmaceutical industry. Perhaps the most consistent theme in these is the idea of social costs of disease.

Health is more than just a drag on resources

Social costs of illness are a fairly simple concept to grasp: a sick employee needs to see a doctor (generating direct costs of the health system), who upon examination issues a sick note (keeping the patient off work and generating additional costs for a social insurance system in form of sick benefits), while employee’s boss needs to either find a temporary replacement or face the consequences of not having a sick employee around (the lost productivity is likely to have a particular monetary value). One can also consider the lost utility of the employee (who cannot, due to the illness, e.g. socialize or go shopping), as well as the unpaid care leave of family (which can also incur extra costs, it is not uncommon for employees to take a leave to take care of a sick next of kin).

Even without going into the nitty-gritty of establishing the actual monetary value of each of these instances, it seems intuitive that there’s more to the cost of illness than just the doctor’s bill or a prescription. Still, a 2012 WHO volume entitled Health Systems, Health, Wealth and Societal Well-being. Assessing the case for investing in health systems heralds linking improving health to achieving better economic growth as „a new perspective on the health systems”. Indeed, this goes against the grain of the common approach of cost-containment in health care, recently exacerbated by the economic slowdown.

The authors of the WHO volume are, however, cautious with regards to cost-of-illness studies, as ‚they differ enormously in how and what they actually measure’. An earlier WHO publication („2006 WHO guide to identifying the economic consequences of disease and injury”) points out that there is little consistency in different meanings attributed to productivity losses and that the most popular ‘human capital’ approach to calculating them is ‘unrealistic in most settings’. Still, mainstreaming this approach was exactly what happened to the narrow public debate of health spending in Poland.

How big pharma ‚captured’ indirect costs

Probably the first major attempt at pushing indirect costs on the policy agenda in Poland was EY’s 2013 report, which proposed a methodology for calculating them. The report was commissioned by INFARMA, an association of multinational pharmaceutical companies operating in Poland, and quite unsurprisingly was focused on pharma economics, basically calling for consideration of indirect costs in health technology assessments, the gateway for putting drugs on reimbursement lists. The private interest behind these recommendations has been fairly obvious, still one should not downplay their justification – indeed, many innovative (and often costly) medicines have been effective in returning patients to the workforce faster and with better results. The report created some buzz around the topic in the mainstream media, however, it seems to have been ignored by the Ministry of Health.

In 2014 INFARMA commissioned a follow-up to EY’s report, this time focusing more narrowly on applying a proposed methodology to rheumatoid arthritis. The report was put together by HTA Consulting, a company specializing in analytical and advisory services, mainly for pharmaceutical companies. Besides analysis, its authors consulted policymakers in a series of workshops, and organized a panel debate at the launch of the report. The discussion gathered stakeholders, both public and private, but tellingly did not feature any representatives from the Ministry of Health.

Another attempt was made in 2013, when EY along with Domański Zakrzewski Palinka, a law firm, and the National Institute of Public Health proposed a national program to popularize vaccinations against flu. The report featured some estimations of costs, notably of the indirect ones. Interestingly, authors of the report did not specify how it was funded and it could be argued that it was not exactly impartial – representatives of INFARMA were present in a ‚Flu Working Group’, listed as one of the collaborators for the report, and all of the producers of flu vaccine are members of that organization.

A series of reports on indirect costs of major diseases has been produced by the Institute for Management in Health Care, attached to Uczelnia Łazarskiego, a private university. The reports published since 2014 focused on the of costs of i.a. hepatitis C, breast cancer, diabetes, Parkinson’s disease, depression and schizophrenia, each commissioned by one of the major pharmaceutical companies.

How to bring back a good idea?

In general, the continuing attempts at framing indirect costs in the context of health technology assessment has not influenced the state of play in health system reform. Arguments of business stakeholders have been consistently ignored by the Ministry of Health officials, at least officially. It can also be argued that the lack of strong voice by academic institutions and independent think-tanks has made indirect costs in healthcare a concept ‚captured’ and identified with the narrow interest of pharmaceutical companies.

In a recent interview, the head of the Polish HTA agency dodged a question about whether indirect costs would be included in analyses in the foreseeable future, saying that the policymakers are bound by political cycles and reluctant to consider the long-term effects of health expenditures. Still, he emphasized that such approach would be beneficial, particularly with regards to working-age patients, whose disabilities or premature deaths lead to productivity losses. No support for that idea have come from government officials though.

Perhaps the only ‚official’ attempt at popularizing the idea of indirect costs is the new legislation on public health, the first of its kind in modern Poland. The law will enable the National Health Program, a modestly-financed five-year plan for preventive care, focusing on causes of diseases of affluence such as obesity, tobacco and alcohol use or insufficient psychiatric care. The program’s authors, which include academics from the National Institute for Public Health, have acknowledged the social costs of ill health and have used figures on e.g. sickness benefits and disability allowances in the explanatory statement of the bill. However, the program focuses on a simpler idea of promoting healthy lifestyle, as well as early detection and treatment as a means to save public funds. Also, the legislation if it comes into force in the proposed shape, will have no influence on health system financing.

The idea of indirect costs in healthcare, as it stands right now in the public debate, would require a certain reformulation in order to have any impact on policy-making. It would be particularly useful in communicating any healthcare spending reform – the public generally seems to oppose any health contribution hikes often by pointing out the long waiting times for NFZ-funded procedures do not justify spending more. Breaking out of this flawed circular logic is a major challenge that could be helped by ‚re-capturing’ the idea of indirect costs.

However, no non-business stakeholders seem to be interested in, or capable of doing it. Public health scholars receive little publicity and there is no reputable independent health think-tank in Poland that could effectively animate the public debate in this area. It would also be naive to expect the change in approach from within the government administration. In the context of upcoming October parliamentary elections, it seems that there is some understanding of indirect costs paradigm among health experts of main political parties, however one should be cautious in expecting a shift in thinking about health spending in the nearest future.

(401(K) 2012, CC BY-SA)

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