COMMISSION STAFF WORKING DOCUMENT Investing in Health Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Towards Social Investment for Growth and Cohesion - including implementing the European Social Fund 2014-2020
Date: 2013-02-20
Institutions: European Commission
Subjects: economic and social cohesion, economic growth, health care, health costs, health expenditure, job creation, patient's rights, right to health

EUROPEAN 
COMMISSION 

Brussels, 20.2.2013  
SWD(2013) 43 final 

SOCIAL INVESTMENT PACKAGE 

COMMISSION STAFF WORKING DOCUMENT 

Investing in Health 

Accompanying the document 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Towards Social Investment for Growth and Cohesion - including implementing the 
European Social Fund 2014-2020 

{COM(2013) 83 final} 
{SWD(2013) 38 final} 
{SWD(2013) 39 final} 
{SWD(2013) 40 final} 
{SWD(2013) 41 final} 
{SWD(2013) 42 final} 
{SWD(2013) 44 final}

EN 

   EN 

 
 
 
 
 
  
 
 
Introduction 

This document complements the Commission Communication Towards Social Investment for Growth 
and Cohesion by showing how investing in health contributes to the Europe 2020 objective of smart, 
sustainable and inclusive growth.1 

In  line  with  that  Communication,  it  advocates  evaluating  and  modernising  current  social  policies  to 
optimise  their  effectiveness  and  efficiency.  It  also  highlights  the  need  for  better  targeted, 
individualised and integrated services and benefits. It looks at how health is incorporated into the main 
themes  of  the  Communication:  making  efficiency  gains  in  budgets,  taking  action  throughout  life, 
ensuring adequate livelihoods, activating and enabling policies, optimising social dividends and using 
EU funds. 

It also follows on from the 2013 Annual Growth Survey (AGS)2 which recognises the contribution of 
the healthcare sector to prepare a job-rich recovery. The AGS also acknowledges the sector’s role in 
promoting  social  inclusion  and  tackling  poverty  and  recognises  the  positive  effect  modernising  its 
public  administration  would  have.  It  recommends  reforming  health  systems  to  ensure  their  cost-
effectiveness  and  sustainability  and  assessing  their  performance  against  the  twin  aims  of  providing 
access to high-quality healthcare and using public resources more efficiently. 

This  document  establishes  the  role  of  health  as  part  of  the  Europe  2020  policy  framework.  It 
strengthens  the  link  between  European  health  policies  and  support  for  health  system  reforms  in  the 
context of the European Semester. Investing in health helps the EU rise to the challenges identified in 
its  Health  Strategy3 that  have  been  compounded  by  the  economic  crisis:  an  ageing  population,  an 
increase  in  chronic  diseases,  a  greater  demand  for  healthcare  and  the  high  cost  of  technological 
progress.   

Health  is  a  value  in  itself. 4  It  is  also  a  precondition  for  economic  prosperity.  People’s  health 
influences  economic  outcomes  in  terms  of  productivity,  labour  supply,  human  capital  and  public 
spending. 

Health  expenditure  is  recognised  as  growth-friendly  expenditure.  Cost-effective  and  efficient 
health expenditure can increase the quantity and the productivity of labour by increasing healthy life 

1 Commission Communication, Europe 2020 Strategy — COM(2010) 2020, 3.3.2010. 
2 Commission Communication, Annual Growth Survey 2013 — COM(2012) 750 final, 28.11.2012 . 
3 Commission White Paper ‘Together for Health: A Strategic Approach for the EU 2008-2013’ COM(2007) 
630 final, 23.10.2007. 
4 Council  Conclusions  on  Common  Values  and  Principles  in  European  Union  Health  Systems,  OJ  2006/C 
146/01, 22.6.2006. 

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expectancy. 5  However,  the  relatively  large  share  of  healthcare  spending  in  total  government 
expenditure,  combined  with  the  need  for  budgetary  consolidation  across  the  EU,  requires  more 
efficiency  and  cost-effectiveness  to  ensure  the  sustainability  of  current  health  system  models. 
Evidence suggests there is considerable potential for efficiency gains in the healthcare sector. 

Average  levels  of  health  have  been  improving  across  the  EU  for  many  years.  But  this  hides  major 
inequalities. Poorer and disadvantaged people die younger and suffer more often from disability and 
disease. 

In the following sections, ‘investing in health’ is further developed. 

1.  Investing  in  sustainable  health  systems  combines  innovative  reforms  aimed  at  improving  cost-
efficiency and reconciling fiscal consolidation targets with the continued provision of sufficient levels 
of public services. 

2.  Investing  in  people’s  health  as  human  capital  helps  improve  the  health  of  the  population  in 
general and reinforces employability, thus making active employment policies more effective, helping 
to secure adequate livelihoods and contributing to growth. 

3.  Investing  in  reducing  health  inequalities  contributes  to  social  cohesion  and  breaks  the  vicious 
spiral of poor health contributing to, and resulting from, poverty and exclusion. 

4. Investing in health through adequate support from EU funds. 

1.  Investing in sustainable health systems: Reform and Innovation 

Health  systems  in  Europe  are  at  the  core  of  its  high  level  of  social  protection  and  they  are  a 
cornerstone  of  the  European  social  market  economy.  The  healthcare  sector  accounts  for  8 %  of  the 
total European workforce and for 10 % of the EU’s GDP.6 The large share of healthcare costs in the 
EU  raises  the  issue  of  cost-effectiveness  and  the  financial  sustainability  of  health  systems.  The 
problems caused by the economic crisis, coupled with more structural changes in demography and the 
types  of  diseases  affecting  populations  in  Europe,  reinforce  the  necessity  to  reform  and  modernise 
those  systems.  The  EU  can  help  Member  States  do  so,  to  improve  cost-efficiency  through  sound 
innovation and contribute to a better assessment of the performance of health systems. 

1.1.  Sustainability of health systems 

Health is an important part of public budgets. It represents almost a third of social policy budgets. 
Public  expenditure  accounts  for  almost  80 %  of  healthcare  budgets.  In  2010,  public  spending  on 
healthcare accounted for almost 15 % of all government expenditure. In the decade before the crisis, it 

5  Commission,  Directorate-General  for  Economic  and  Financial  Affairs  (2012),  The  Quality  of  Public 
Expenditures in the EU, European Economy, Occasional Papers 125, December 2012 

http://ec.europa.eu/economy_finance/publications/occasional_paper/2012/pdf/ocp125_en.pdf . 
6 Its size varies widely between Member States: above 11 % of GDP in Austria, Denmark, France, Germany 
and the Netherlands; below 7 % of GDP in Estonia, Latvia and Romania. 

2 

 
 
                                                            
was  one  of  the  fastest  growing  spending  items  for  governments  in  almost  all  Member  States, 7 
considerably outpacing GDP growth. Public expenditure on healthcare and long-term care is expected 
to increase by one third by 2060. This is due to a number of factors. On the demand side, it is chiefly 
due to population size and structure, its health status, individual and national incomes and provisions 
regulating access to healthcare goods and services. On the supply side, the increase is driven by the 
availability of and distance from health services, technological progress and the framework regulating 
the provision of goods and services.8 The relatively large share of public healthcare spending in total 
government  expenditure,  combined  with  the  need  to  consolidate government  budget balances  across 
the EU, underscore the need to improve the sustainability of current health system models. Ensuring 
efficiency  and  making  the  provision  of  health  services  more  cost-effective  and  efficient  is  crucial  if 
countries are to ensure universal access to and equity in health services and their adequate and 
sustainable financing.9 It is therefore essential to address the financial sustainability of health systems 
to ensure they are sustainable in terms of continuity of service, universal coverage and a high level of 
quality. 

Financial  sustainability  may  require  budgetary  cuts,  including  cuts  in  healthcare  budgets. 
Several Member States also need to curtail health costs in the short term. As part of policy responses 
to  the  economic  crisis  between  2007  and  2011, 10  some  Member  States  reduced  their  healthcare 
budgets:  Bulgaria,  Estonia,  Hungary,  Ireland,  Italy,  Greece,  Latvia,  Romania,  Portugal  and  Spain. 
However,  sudden  significant  reductions  in  healthcare  budgets  risk  creating  new  inefficiencies, 
undermining access to and the quality of care, damaging health outcomes and ultimately jeopardising 
the  sustainability  of  the health  system  even  more  by increasing  costs.  A  careful  assessment  of  these 
measures should shed light on what policies are effective in the short and long terms. 

Evidence shows that the relationship between healthcare expenditure and health outcomes is not 
linear.  If  it  were,  any  additional  euro  spent  on  healthcare  would  result  in  a  corresponding 
improvement  in  the  population’s  health  status  (measured,  for  instance,  in  terms  of  healthy  life 
expectancy).  In  reality,  the  greater  the  expenditure,  the  lower  the  marginal  improvement  in  health 
status as a result of its increase.11 Countries also vary significantly in their ability to translate a similar 
level of resources into health outcomes. International comparisons show that the same amount of per 

7 Health spending grew by nearly 5 % per year in real terms in OECD countries from 2000 to 2009, but this 
was  followed  by  zero  growth  in  2010,  as  several  countries  started  implementing  budgetary  cuts.  In  fact, 
health spending per capita started declining in 2009 for countries that were hardest hit by the economic crisis 
(OECD Health Data 2012). See  
http://www.oecd.org/document/39/0 3746,en_21571361_44315115_50655591_1_1_1_1.00.html . 
8 Commission-EPC  (2012),  The  2012  Ageing  Report:  Economic  and  budgetary  projections  for  the  27  EU 
Member  States  (2010-2060).  The  report  projects  an  increase  between  2010  and  2060  of  2.6 %  of  GDP 
(percentage  points)  for  public  expenditure  on  healthcare  and  long-term  care,  a  proportional  increase  of 
around 
See  
2010 
http://ec.europa.eu/economy_finance/publications/european_economy/2012/pdf/ee-2012-2_en.pdf. 
9 Directorate-General for Economic and Financial Affairs (2012) The Quality of Public Expenditures in the 
EU, European Economy, Occasional Papers 125, December 2012 

of  GDP. 

compared 

reference 

29.2 % 

7.9 % 

level 

the 

of 

to 

http://ec.europa.eu/economy_finance/publications/occasional_paper/2012/pdf/ocp125_en.pdf. 
10  WHO  (2012)  Health  policy  responses  to  the  financial  crisis  in  Europe,  WHO  Policy  Summary  5 
http://www.euro.who.int/__data/assets/pdf_file/0009/170865/e96643.pdf. 
11 See  for  instance  Joumard  et  al.  ‘Health  Care  Systems:  Efficiency  and  Policy  Settings’,  OECD,  2010. 
http://search.oecd.org/officialdocuments/displaydocumentpdf/?cote=eco/wkp(2010)25&doclanguage=en 

3 

 
 
                                                            
capita healthcare expenditure can be associated with very different health outcomes even after taking 
into account the differences in lifestyle and socio-economic realities among countries12. 

It  is  not  only  how  much  money  is  spent,  but  also  how  it  is  spent,  that  determines  a  country’s 
health  status.  Present  budget  constraints  should  therefore  be  used  as  an  opportunity  to improve  the 
value  and  effectiveness  of  healthcare  spending.13 Health  system  reforms  and  improvements  in  the 
relative allocation of money can contain public spending and could result in large savings. The OECD 
has valued these savings at 2 % of GDP on average by 2017 for OECD countries.14  

At EU level, the Council has recognised the need to tackle these economic and budgetary difficulties 
by  reforming  health  systems,  while  balancing  the  need  to  provide  universal  healthcare15 and  take 
account of their implications in all relevant fields of EU economic policy coordination.16 

1.2.  Helping Member States design reforms and improving the efficiency 

of health systems 

Comparative international analysis shows that there is significant room for efficiency gains in health 
systems.17 The  Council  has  confirmed  this,  noting  that  in  many  Member  States  there  appears  to  be 
scope to improve the population’s health status without increasing health spending.18 Member States 
should  try  to  reap  those  gains  by  introducing  efficiency-enhancing  measures  as  part  of  the  overall 
prioritisation and evaluation of public expenditure and in the context of the European Semester. This 
would help reconcile financial consolidation targets with the continued provision of sufficient levels of 
public services. 

The Commission and the Economic Policy Committee identified a number of areas where structural 
reforms and efficiency gains could improve the sustainability of health systems:19 

of 

for 

cost 

‘The 

(2009) 

Lessons 

financial 

Network 

12 See  for  instance  Joumard  I.,  Andre,  C.  and  C,  Nicq,  ‘Health  care  systems  -  efficiency  and  institutions’, 
OECD, 2010, Working Paper No. 769. http://www.oecd.org/eco/economicsdepartmentworkingpapers.htm  
13 Better  implementation  of  policies  could  also  result  in  large  savings,  as  fraud  and  avoidable  errors  are 
estimated to represent an annual loss of 5.6 % for healthcare budgets. See European Healthcare Fraud and 
fraud’ 
Healthcare 
Corruption 
http://www.ehfcn.org/media/documents/The-Financial-Cost-of-Healthcare-Fraud---Final-(2).pdf. 
Please  note  that  the  savings  achieved  through  better  implementation  are  not  additional  to  the  figure  on 
potential savings given below. 
14 OECD, Economics Department IMF conference, 21 June 2011 ‘Public Health Care Reforms: Challenges 
and 
See: 
http://www.imf.org/external/np/seminars/eng/2011/paris/pdf/Joumard.pdf. 
15 Council Conclusions on the Joint Report on Health Systems in the EU, 3054th Council meeting, Economic 
and Financial affairs, 7.12.2010. 
16 Council  Conclusions  on  the  sustainability  of  public  finances  in  the  light  of  ageing  populations,  3167 
Council Meeting, Economic and Financial Affairs, 15.5.2012. 
17  Commission,  Directorate-General  for  Economic  and  Financial  Affairs  (2012)  The  Quality  of  Public 
Expenditures in the EU, European Economy, Occasional Papers 125, December 2012. 
18 Council Conclusions on the Joint Report on Health Systems in the EU, 3054th Council meeting, Economic 
and Financial Affairs, 7.12.2010. 
19  Joint  Report  on  health  systems  prepared  by  the  European  Commission  and  the  Economic  Policy 
Committee,  European  Economy.  Occasional  Papers.  74.  December  2010;  and  3054th  Council  meeting 
Economic and Financial Affairs Brussels, 7.12.2010. 

Advanced 

Emerging 

Europe. 

and 

4 

 
 
                                                            
o  encouraging  more  cost-effective  provision  and  use  of  health  services  through 

adequate incentives; this could involve 

(cid:131)  using  financial  incentives  to  encourage  patients  to  register  with  a  general 
practitioner  (GP)  or  family  doctor  and  using  a  referral  system20 to  define  a 
cost-effective  path  of  care:  from  GP,  to  outpatient  specialist,  to  hospital,  to 
emergency  care,  while  encouraging  patients  to  have  less  recourse  to 
unnecessary care and emergency services; 

(cid:131) 

introducing  activity-  and/or  quality-based  payment  for  diagnosis-related 
groups of cases or for hospital financing that, for example, increases the use 
of day surgery instead of in-patient surgery when this is not necessary; 

o  ensuring a balanced mix of staff skills and anticipating staff needs due to ageing; this 

could include 

(cid:131) 

(cid:131) 

(working 
improving  staff  motivation 
conditions, career advancement etc.) and encouraging continuous professional 
development; 

through  non-financial  aspects 

addressing  the  uneven  distribution  of  health  staff  across  regions  and 
developing  human  resources  planning  mechanisms  to  address  skill  mix 
shortcomings21 (see Section 2.1 on employment in the health sector); 

o  reducing  the  unnecessary  use  of  specialist  and  hospital  care  while  improving 
primary healthcare services; improving access to primary care for certain population 
groups  could  include  increasing  the  number  of  training  posts  and  making  general 
practice more attractive or developing new roles for other healthcare providers, such 
as advanced practice nurses, and encouraging the relocation of general practitioners to 
areas where there is a shortage of them;22 

o  better health promotion and disease prevention in and outside the health sector; 
this could include measures designed and implemented jointly with other sectors that 
impact  on  health,  such  as  education,  housing,  environment, 
have  a  major 

20 It is generally accepted, especially in recent years, that strengthening primary healthcare can help improve 
the  equity,  efficiency,  effectiveness,  and  responsiveness  of  health  systems.  Most  studies  analysing  the 
transfer of some services from secondary to primary care showed that primary care was more cost-effective. 
Evidence suggests (Fujisawa R. and Lafortune G., 2008, OECD) that in most countries the remuneration of 
specialists  is  higher  than  that  of  GPs.  The  share  of  GPs  as  a  percentage  of  all  practising  physicians  varies 
considerably across the EU, from 49 % in France to 7 % in Greece and Poland, with an EU average of 29 % in 
2006–07  and  nine  Member  States  where  GPs  constitute  less  than  20 %  of  all  doctors  (Bulgaria,  the  Czech 
Republic,  Greece,  Latvia,  Lithuania,  Poland,  Portugal,  Slovakia  and  Sweden).  This  may  be  relevant  for 
countries wishing to implement a primary care-led system with a referral system from primary to specialist 
and hospital care. 
21 Most countries with a relatively low number or uneven distribution of GPs have recognised the problem 
and  increased  the  number  of  GPs  in  the  last  two  decades.  Despite  an  increase  in  the  number  of  practising 
nurses  in  almost  all  Member  States,  except  Lithuania  and  Slovakia,  the  ratio  of  nurses  to  physicians  still 
varies  widely,  from  four  or  more  nurses  per  physician  in  Denmark,  Finland,  Ireland,  the  Netherlands  and 
Luxembourg  to  less  than  one  in  Italy  or  Greece.  Commission-OECD,  Health  at  a  glance:  Europe  2012; 
http://ec.europa.eu/health/reports/docs/health_glance_2012_en.pdf. 
22 Ibid. 

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employment 23  (see  Section  2.3  on  health  promotion  and  Section  3  on  health 
inequalities); 

o 

improving  data  collection  and  using  available  information  to  underpin  the 
improvement  of  the  performance  of  health  systems;  in  particular  the  collection  of 
health data using the European Community Health Indicators (ECHI) and developing 
tools  to  better  assess  the  efficiency  of  health  systems  (see  Section  1.4  on  health 
systems performance assessment); 

o  using  health  technology  assessment  more  systematically  for  decision-making 

processes (see Section 1.3 on health technology assessment); 

o  ensuring  the cost-effective  use  of  medicines;  this  includes  increasing  the  use  of  less 
expensive equivalent (generic) drugs24 for example through pricing measures (price 
limit,  lower  cost-sharing  rate),  their  prescription,  or  facilitating  their  access  to  the 
market,  as  well  as  improving  the  assessment  of  the  effectiveness  and  cost-
effectiveness  of  medicines  in  general  and  better  informing  patients,  healthcare  staff 
and insurers about their use and misuse; 

The recommendations above from the Commission/EPC report of 2010 are consistent with the WHO’s 
‘ten leading sources of inefficiency of health systems’25 and the OECD’s recommendations for health 
system reform.26 

Health system reform is also addressed: 

•  As  part  of  the  European  Semester,  Member  States  have  started  to  include  health  systems 
reform in their National Reform Programmes.27 Following the 2012 Annual Growth Survey,28 
six  country-specific  recommendations  on  health  29  were  issued  for  Austria  (implementing 
reforms  to  improve  the  organisation,  financing  and  efficiency  of  healthcare),  Belgium 
(improving the long-term sustainability of public finances by curbing age-related expenditure, 
including health expenditure), Bulgaria (doing more to improve the quality of public spending, 
particularly  in  the  education  and  health  sectors),  Cyprus  (completing  and  implementing  the 
national health system), Germany (continuing growth-friendly consolidation by doing more to 

 23 For an economic valuation of the health impact of social welfare spending and mortality, see D. Stuckler, 
S. Basu. M. McKee; Budget Crisis, Health and Social Welfare Programmes; BMJ 2010, 340. 
24 A recent study on forecasting EU pharmaceutical expenditure shows a consistent reduction (between 2 % 
and  10 %  depending  on  the  country)  in  pharmaceutical  expenditure  in  six  (France,  Germany,  Greece, 
Hungary, Portugal and the United Kingdom) out of seven countries studied (with the exception of Poland). 
The  study  concludes  that  the  best  ways  of  reducing  pharmaceutical  budgets  are  reducing  generic  prices, 
distributing biosimilars through the hospital chain and increasing the number of generic medicines. 
25 WHO,  The  World  Health  Report  —  Health  systems  financing:  the  path  to  universal  coverage  (2010). 
http://www.who.int/whr/2010/whr10_en.pdf. 
26 The  OECD  has  identified  several  system-level  reforms:  providing  comparative  performance  indication, 
reforming  provider  payment  mechanisms,  improving  the  patient’s  choice  and  provider  competition,  giving 
guidelines  on  good  practice  and  target,  audit  and  inspection  systems.  OECD,  Achieving  better  value  for 
money in healthcare (2009) and health ministerial meeting, 7-8 October 2010. See also Smith Peter C. What 
is the scope for health system efficiency gains to be achieved?, Eurohealth incorporating Euro Observer — 
vol.18, No 3 (2012). 
27 http://ec.europa.eu/economy_finance/economic_governance/sgp/convergence/programmes/2012_en.htm. 
28  Commission  Communication,  Annual  Growth  Survey  2012  —  COM(2011)  815  final,  23.11.2011. 
http://ec.europa.eu/europe2020/pdf/ags2012_en.pdf. 
29 http://ec.europa.eu/europe2020/making-it-happen/country-specific-recommendations/index_en.htm. 

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improve  the  efficiency  of  public  spending  on  healthcare  and  long-term  care)  and  the 
Netherlands  (implementing  the  planned  reform  of  long-term  care,  aimed  at  separating  the 
costs  of  medical  care  from  the  costs  of  assisted  living,  and  complementing  it  with  other 
measures  to  contain  the  increase  in  costs).  The  2013  Annual  Growth  Survey  recommends 
reforming  health  systems  to  ensure  their  cost-effectiveness  and  sustainability  and  assessing 
their  performance  against  the  twin  aims  of  providing  access  to  high-quality  healthcare  and 
using public resources more efficiently.30 

• 

In a reflection  process  as  a  follow-up  to  Council  conclusions  of  2010, Member States are 
currently  identifying  effective  ways  of  investing  in  health  for  modern,  responsive  and 
sustainable health systems. In this context, by the end of 2013, conclusions will be drawn on 
the following  areas of focus of the reflection process: health in the context of the Europe 2020 
Strategy and the European Semester; success factors for the effective use of Structural Funds 
for  health  investments;  responses  to  health  system  challenges,  in  particular  in  relation  to 
integrated care and the use of pharmaceuticals; measuring and monitoring the effectiveness of 
health investments.31  

To support these processes, the Commission is setting up a multisectoral, independent expert panel to 
advise  on  effective  ways  of  investing  in  health 32  and  commissioned  a  number  of  studies  on 
forecasting  EU  pharmaceutical  expenditure, 33  external  reference  pricing  of  medicinal  products, 
reimbursement systems of medicinal products, the economics of primary healthcare financing and the 
evaluation of public-private partnerships in healthcare delivery.34  

1.3.  Improving cost-efficiency through sound innovation 

New  technologies  are  widely  acknowledged  as  an  important  tool  for  boosting  innovation. 
Technological  developments  can  change  ways  of  delivering  and  organising  the  provision  of  health 
services and goods and, under certain conditions, help increase cost-efficiency. They can however be 
expensive to buy and operate and may be used inappropriately. Innovations in medical technology are 
considered  one  of  the  primary  drivers  of  healthcare  spending.  The  introduction  of  innovative 

30 Commission  Communication,  Annual  Growth  Survey  2013  —  COM(2012)  750  final,  28.11.2012,  and 
thematic  summary  on  health  and  healthcare  systems  relevant  for 
the  Europe  2020  Strategy: 
http://ec.europa.eu/europe2020/making-it-happen/key-areas/index_en.htm. 
31 Council  Conclusions:  Towards  modern,  responsive  and  sustainable  health  systems,  3095  Employment, 
Social Policy, Health and Consumer Affairs Council meeting, Luxembourg, 6. 6.2011. This process started in 
2011 under the auspices of the Working Party on Public Health at Senior Level and is expected to end at the 
end of 2013. 
32 Commission Decision 2012/C 198/06 of 5 July 2012 on setting up a multisectoral and independent expert 
panel to provide advice on effective ways of investing in health. 
33 Creativ-Ceutical (2012), EU Pharmaceutical expenditure forecast, final report 26 November 2012. 

http://ec.europa.eu/health/healthcare/docs/creativ_ceutical_eu_pharmaceutical_expenditure_forecast.pdf. 
34 As envisaged in the 2013 work plan of the Health Programme, Commission implementing decision of 28 
November  2012  concerning  the  adoption  of  the  2013  work  plan  (2012/C  —  378/07).  The  results  of  these 
studies financed by the EU Health programme are expected to become available in the course of 2014. 

7 

 
 
 
 
                                                            
technological solutions should therefore be thoroughly assessed in terms of their potential to improve 
efficiency and productivity.35 

Health  Technology  Assessment  (HTA)  is  the  main  tool  developed  to  assess  and  support  the  cost-
effective  use  of  new  technologies  and  innovation  in  healthcare.36 It  is  a  multidisciplinary  process 
firmly  rooted  in  research  and  the  scientific  method  that  summarises  information  about  the  medical, 
social,  economic  and  ethical  issues  related  to  the  use  of  a  health  technology  in  a  systematic, 
transparent and unbiased manner. It is an essential tool for informing decision-makers and assessing 
the  value  of  specific  actions  or  technologies,  thus  reducing  the  risk  of  implementing  measures  that 
negatively affect patient outcomes. 

At  EU  level, the Commission has been helping Member States exploit the full potential of HTA by 
fostering  cooperation  that  will  pool  expertise  and  prevent  the  duplication  of  work  as  set  out  in  the 
Directive on the application of patients’ rights in cross-border healthcare, through the European network 
for health technology assessment.37  

Health Technology Assessment examples 

In  Austria  and  Norway,  Health  Technology  Assessment  was  used  to  assess  the  introduction  of  the 
HPV  vaccine  in  national  vaccination  programmes.  Although  the  two  countries  had  similar  views  on 
the  effectiveness  of  the  measure,  other  context-specific  considerations,  such  as  different  cost 
considerations, led to different decisions regarding uptake. 

In the UK, the National Institute for Health and Clinical Excellence (NICE) issues recommendations 
based on HTA. One such recommendation is based on the comparison of different medicinal products 
used  as  the  primary  way  of  preventing  osteoporosis.  This  kind  of  report  provides  guidance  on  what 
products would be the preferred choice in different settings, based on a cost-effectiveness analysis. It 
thus serves as guidance for general practitioners in their practice, helping to avoid unnecessary, costly 
treatments. 

In Poland, the Agency for Health Technology Assessment (AHTAPol) was established in 2005 as an 
advisory  body  to  the  Ministry  of  Health.  It  prepares  recommendations  on  financing  all  healthcare 
services  from  public  funds,  notably  on  the  drug  reimbursement  list  (available  in  pharmacies); 
therapeutic  drugs  programmes  (expensive,  innovative  drugs)  and  the  hospital  chemotherapy  drug 
reimbursement  list;  non-drug  technologies  (medical  devices,  surgical  procedures  etc.);  national  and 
local  government  healthcare  programmes.  This  allows  for  a  more  holistic  approach  to  the  use  of 
limited public health budgets, taking the cost-effectiveness of different treatments into account. 

35 EC-EPC  (2012),  The  2012  Ageing  Report:  Economic  and  budgetary  projections  for  the  27  EU  Member 
States (2010-2060). 
36 Health technology means a medicinal product, a medical device or medical and surgical procedures as well 
as measures for disease prevention, diagnosis or treatment used in healthcare. 
37 Directive 2011/24/EU of 9 March 2011 on the application of patients’ rights in cross-border healthcare — 
in  particular  Article  15.  This  is  mainly  realised  through  the  European  network  for  health  technology 
assessment. See http://ec.europa.eu/health/technology_assessment/policy/index_en.htm 

8 

 
 
 
                                                            
E-health  covers  the  range  of  tools  that  can  be  used  to  assist  and  enhance  prevention,  diagnosis, 
treatment,  monitoring  and  management  concerning  health  and  lifestyle.  It  is  often  perceived  as 
substantially  increasing  productivity,  and  therefore  as  an  instrument  to  support  the  reform  of  health 
systems. Examples of successful  e-health developments include health information management and 
networks, electronic health records, telemedicine services, wearable and portable monitoring systems 
and  health  portals.  Developing  and  deploying  new technologies is  a  long-term  endeavour.  European 
research  programmes  have  been  supporting  the  development  of  e-health  for  the  last  15  years.  They 
have established a number of best practices that could be successfully replicated, for example e-health 
applications  improving  quality  of  life  and  reducing  hospitalisation  to  the  benefit  of  citizens,  their 
families and those involved in providing services.38 Support for the interoperability of health systems 
within and across national boundaries will improve the mobility and the safety of patients even more 
by ensuring continuity of care and innovation. 

The Commission also contributes to e-health through a range of actions and instruments, such as the 
Action Plan on e-Health39 and the newly created EU e-Health Network, as part of the implementation 
of the Directive on the application of patients’ rights in cross-border healthcare.40  

E-health project example 

The  delivery  of  e-prescriptions  in  Sweden  is  a  joint  initiative  between  each  county  council  and 
Apoteket,  Sweden’s  national  pharmacy.  Via  Sjunet,  the  Swedish  Information  and  Communication 
Technologies (ICT) network for healthcare, or using web-based prescriptions, 42 % of all prescriptions 
are electronically transferred from the doctor to the pharmacy. E-prescriptions increased the security 
and  quality  of  prescriptions  and  reduced  medication  errors  by  15 %.  They  also  enabled  healthcare 
providers  to  save  a  lot  of  time.  Patients  benefited  from  a  dedicated  drug  information  hotline  which 
improved their knowledge and safety and their flexibility to obtain their drugs in any pharmacy. The 
economic  evaluation  of  the  case-study  on  e-prescriptions  in  the  Stockholm  region  showed  that  this 
electronic service generated an estimated annual net economic benefit of over €
 95 m in the eight years 
of  its  implementation.  Five  years  after  planning  and  development  began,  the  net  benefit  was 
approximately €
 4 m 
for the whole period of eight years. Healthcare provider organisations get 80 % of the benefits, mainly 
from time savings and avoided costs of providing the same timeliness, convenience and reduction in 
errors  without  e-health.  Citizens  get  the  remaining  20 %,  chiefly  through  more  safety  thanks  to 
correctly issued prescriptions and better adherence to treatment.41 

 27 m. This is impressive, given the relatively low spending on ICT of less than €

1.4.  Developing tools to better assess the efficiency of health systems 

Increasing  the  return  on  health  investments  requires  a  solid  assessment  of  the  efficiency  and 
effectiveness of spending. Such an assessment faces three main methodological challenges. 

SIMPHS2, 

Luxembourg, 

38 See in particular Lluch, M. (2012), Evidence consolidation — Report on best practices and key drivers of 
success, 
Commission).  
http://is.jrc.ec.europa.eu/pages/TFS/documents/SIMPHS2D4.1FinalReportonEvidenceConsolidationrev2acc.
pdf. 
39 See http://ec.europa.eu/information_society/activities/health/policy/index_en.htm. 
40 Directive 2011/24/EU of 9 March 2011 on the application of patients’ rights in cross-border healthcare. 
41 E-health is Worth it. The economic benefits of implemented e-health solutions at ten European sites. Karl 
A. Stroetmann, Tom Jones, Alexander Dobrev, Veli N. Stroetmann, 2006. 

(European 

JRC 

9 

 
 
                                                            
The first is to verify that the evidence of efficiency gains and improvements in health obtained through 
better  use  of  healthcare  budgets  remains  valid  when  different  definitions  of  health  outcomes  are 
used.42 A  major  problem  is  that  much  of  the  evidence  focuses  on  crude  measurements  such  as  life 
expectancy, failing to consider the quality of the years of life gained. This is more clearly brought out 
by concepts such as Disability Adjusted Life Years (DALY), or Healthy Life Years (HLY). 

The  second  challenge  is  to  disentangle  the  relative  influence  of  health  systems  on  health  outcomes 
from the impact of other determinants of population health, especially living and working conditions, 
income, education and the most common lifestyle-related risk factors 

The  third  is  the  time  lags  between  policy  changes  and  their  impact  on health outcomes,43 a  problem 
that  may  involve  ‘false  savings’  because  they  may  lead  to  increased  costs  or  other  unintended 
consequences in the long term. 

Further  assessment  of  the  efficiency  of  health  systems  therefore  requires  a  refined  analytical 
framework, structured along three axes: 

(1)  the  definition  of  sound,  reliable  indicator(s)  of  health  outcomes,  building  on  the  existing 

European Community Health Indicators, 

(2)  a better understanding of the effects of health systems on health outcomes, as distinct from the 

impacts on health of other factors such as health determinants and lifestyles, and 

(3)  a  better  understanding  of  the  mechanisms,  and  therefore  the  timing,  of  how  health  policies 

affect health outcomes. 

The Commission will continue to support the work of Member States by improving  the  knowledge 
and evidence on health expenditure and health outcomes in the achievement of structural reforms. It 
will do so by working towards a sustainable health monitoring system in Europe, using the European 
Community  Health  Indicators  (ECHI),44 by  developing  a  sound  methodology  for  Health  System 
Performance  Assessment  and  by  assessing  the  cost-effectiveness  of  health  systems  through  Life 
Table  Analysis.  It  will  also  do  more  to  provide  much-needed  information  on  the  breakdown  of 
expenditure per disease in the EU.45 

42  OECD  (2008).  ‘Health  Status  Determinants:  Lifestyle,  Environment,  HealthCare  Resources  and 
Efficiency,’ OECD Economics Department Working Papers 627. 
43 See  Philipa  Mladovsky,  Divya  Srivastava,  Jonathan  Cylus,  Marina  Karanikolos,  Tamás  Evetovits,  Sarah 
Thomson, Martin McKee, Health policy responses to the financial crisis in Europe, WHO Policy Summary 5 
http://www.euro.who.int/__data/assets/pdf_file/0009/170865/e96643.pdf. 
44 A shortlist of 88 European Community Health Indicators (ECHI) has been developed under different EU 
Health Programmes and now provides a health monitoring system at EU level. It covers all aspects of health: 
health  status,  health  determinants,  healthcare  services,  health  promotion,  demography  and  socio-economic 
situation. 
45 Actions to be undertaken with the financial support of the Health Programme, Commission implementing 
decision of 28 November 2012 concerning the adoption of the 2013 work plan (2012/C — 378/07). 

10 

 
 
 
 
                                                            
2.   Health as an investment in human capital 

Cost-effective  and  efficient  health  spending  is  a  productive  or  growth-friendly  type  of 
expenditure.  It  helps  increase  the  economy’s  production  assets  (labour,  capital  and  knowledge).  It 
increases the quantity and the productivity of labour by increasing healthy life expectancy.46Investing 
in the health of people of working age and enabling people to remain active and in better health for 
longer helps optimise the ‘social dividend’. Investing in health also helps limit future costs related to 
the  treatment  of  preventable  diseases.  And  finally,  investing  in  health  also  means  investing  in  an 
efficient health workforce47. 

2.1.  Contributing to employability and enabling people to remain active 

for longer 

The  health  status  of  individuals  strongly  influences  their  labour  market  participation.  For 
example,  early  labour  market  exit  is  often  the  result  of  health-related  problems. 48  Depression, 
musculoskeletal  diseases  and  unhealthy  lifestyle  factors  (e.g.  obesity  and  physical  inactivity),  are 
associated with reduced on-the-job productivity. Evidence suggests that ill-health in the population of 
working  age  leads  to  substantial  productivity  losses.  Poor  health  leads  to  absenteeism  (estimated 
absenteeism  rates  range  between  3 %  and  6 %  of  working  time,  representing  a  yearly  cost  of  about 
2.5 % of GDP49), job loss (10 % of the people who were previously employed left their job mainly for 
health reasons), premature retirement or premature mortality. Almost a quarter (23.5 %) of the people 
currently employed suffer from a chronic condition and have their daily activities restricted.50  

This adverse effect of ill-health is most significant in the later stages of life, when it contributes to a 
marked  decrease  in  participation  in  the  workforce.  In  2010,  the  employment  rate  of  people  over  65 
was 4.7 %, that of people aged 60-64 was 30.5 % and that of people aged 55-59 was 60.9 %.51 Elderly 
people  are  much  more  likely  to  suffer  from  multiple  diseases  (co-morbidity).  This  has  significant 
human  and  economic  implications  and  increases  the  pressure  on  health  systems  and  social  care 
structures in terms of demand for care52. 

46  Commission,  Directorate-General  for  Economic  and  Financial  Affairs  (2012),  The  Quality  of  Public 
Expenditures in the EU, European Economy, Occasional Papers 125, December 2012. 
47 Key  issues  pertaining  to  the  future  health  workforce  are  covered  in:  "Towards  a  job  rich  recovery", 
COM(2012) 173 final, notably  in the "Action Plan for the EU Health Workforce", SWD(2012) 93 final. 
48 See  for  instance  various  findings  from  the  large-scale  Health  and  Retirement  Study  project  collecting 
personal data in longitudinal follow-up.   
http://hrsonline.isr.umich.edu/sitedocs/databook/HRS_Text_WEB_Ch1.pdf. 
49 EUROFOUND (2010), Absence from work report. 
 http://www.eurofound.europa.eu/ewco/studies/tn0911039s/tn0911039s_5.htm. 
50 The  average  percentage  of  productivity  loss  at  work  among  workers  with  cardiovascular  diseases  is 
estimated at 7 %, compared with 15 % on average for workers with depression and 34 % among workers with 
upper extremity disorders, Oortwijn et al. (2011), Health of people of working age Report. 

http://ec.europa.eu/health/social_determinants/docs/final_full_ecorys_web.pdf. 
51 While several factors such as pension systems and age-management at work influence employment rates, 
people’s health status also affects their ability to continue working. Commission (2012) data. 

http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/3-13012012-BP/EN/3-13012012-BP-EN.PDF. 
52 For more details, and notably on the need for long-term care, see the Staff Working Document on "Long-
term care in ageing societies – Challenges and policy options" adopted as part of this package. 

11 

 
 
                                                            
Longer  lives  are  not  lived  without  disability.  Europeans  are  expected  to  live  on  average  almost  20 
years with an activity limitation. The levels of healthy life expectancy in the EU are at 62.2 healthy 
life years (HLY) for women and 61 HLY for men,53  

It is therefore possible to boost economic growth by improving the health status of the population 
and enabling people to remain active and in better health for longer Access to quality health care 
is  a  constituent  part  of  the  maintenance  of  a  productive  workforce  and  an  integral  part  of  the 
flexicurity setup54. There is scope for creating a cycle in which improvements in health and prosperity 
are  mutually  reinforcing.55 Improving  the  population’s  health  status  leads  to  positive  economic 
outcomes. An OECD study estimates that for every year of increase in a population’s life expectancy 
GDP could go up as much as 4 %.56 Occupational health plays a key role in that context.  

However,  the  potential  benefits  from  health  investments  through  increased  population 
employability are currently not understood well enough. The current cost of occupational accidents 
and  work-related  diseases  amounts  to  between  2,6-3,8%  of  EU  GDP 57.  Poor  working  conditions 
impact not only on the work-force employability, but also on the sustainability of national healthcare 
systems.  By  reducing  the  workers'  exposure  to  risk  factors,  well-designed  OSH-policies  increase 
productivity  and  limit  the  cost  of  work-related  accidents  and  ill  health.    European  regulation  and 
strategies    have  helped  reduce  the  incidence  of  accidents    and  have  played  an  important  role  in 
preventing  occupational  diseases.  However,  there  is  a  continuous  need  to  improve  the  workplace 
environment by investing in prevention of accidents and diseases caused by work.  It should also take 
into  consideration  the  economic  context  of  the  labour  market  in  question.  For  example, 
musculoskeletal conditions would have a greater impact on the ability to work and on employability in 
the blue-collar manual jobs industry than in the white-collar service sector. 

One  example  of  a  tool  to  assess  the  effect  of  alternative  policy  outcomes  on  long-term  social 
expenditure  is  the  social  expenditure  projection  model  (SOME 58)  developed  in  Finland.  Explicit 
consideration is given to the impact of population health and beneficial employment effects. This way, 
future benefits associated with health investments can be better understood. 

53

 Commission-OECD 

(2012),  Health 
http://dx.doi.org/10.1787/9789264183896-en. 
54   See "Towards a job rich recovery", COM(2012) 173 final, notably "Open, dynamic and inclusive labour 
markets", SWD(2012) 97 final. 
55 Martin McKee and Marc Suhrcke (2010), Investing in Health: A Contribution to the Achievement of the 
Lisbon Agenda, European Review/Volume 18/Issue 01/February 2010. 

2012,  OECD  Publishing. 

a  Glance:  Europe 

at 

in  NCDs 

http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=6906144. 
56  Bloom,  Canning,  Sevilla  (2004),  The  Effect  of  Health  on  Economic  Growth:  a  production  function 
approach, World Development, Vol. 32, No 1 (http://qcpages.qc.cuny.edu/~redwards/GC-Econ71100/bloom-
etal-wd04.pdf).  The WHO  2010 Global  Report on  Non-Communicable  Diseases recognises  that  each  10 % 
rise 
associated  with 
growth 
rates 
(http://whqlibdoc.who.int/publications/2011/9789240686458_eng.pdf). 
57 https://osha.europa.eu/en/safety-health-in-figures 
58 Ministry of Social Affairs and Health, Finland Social expenditure scenarios — effects of health promotion 
and  a  presentation  of  the  analysis  model,  Reports  of  the  Ministry  of  Social  Affairs  and  Health  2009:7,  13 
February 2009. 

economic 

annual 

lower 

0.5 % 

of 

is 

12 

 
 
 
                                                            
Health status of individuals and labour market participation: example of diabetes type 2 

A  striking  example  of  how  prevention  can  increase  labour  market  participation  is  the  avoidable 
negative effects of diabetes type 2, which currently affects 7 % of Europeans. A French longitudinal 
study59 found  that  diabetes  type  2  patients  lost  an  estimated  mean  time  of  1.1 year  in  the  workforce 
between the ages of 35 and 60. 

More  generally  available  statistical  data60 seem  to  show  that  chronic  conditions  have  an  important 
impact  on  several  dimensions  of  social  inclusion.  Comparing  to  a  healthy  individual,  the  impact  of 
diabetes type 2 for a 50-year old single man is significant. It represents almost 3 % of career lost (in 
terms  of  years  of  working  life).  It  also  has  significant  individual  consequences,  as  it  shortens  the 
lifespan by 2.3 % and increases the chance of being at risk of poverty by more than 5 %. 

Another way to enable people to remain active and in better health for longer is to help people with 
chronic  conditions  that  do  not  require  hospitalisation  to  function  actively  in  society  and  at  home  by 
empowering  them  to  take  care  of  their  health  in  close  collaboration  with  healthcare  providers. 
Learning  to  manage  their  own  condition  should  help  people  to  remain  integrated  in  society  and  the 
workforce. 

The idea of patient empowerment is often considered an important and promising aspect of chronic 
disease  management,  that  can  help  people  lead  more  proactive  and  fulfilling  lives.  Some  evidence 
suggests  that  self-management  (supported  for  example  by  e-health  applications61)  can  be  effective 
through  behavioural  change,  especially  for  people  with  long-term  conditions.  It  may  improve  their 
health  status  and  reduce  their  drug  treatment  costs  and  the  time  they  spend  in  hospital. 62 
Empowerment should not substitute professional acute care. However, various patient empowerment 
models can be applied. More research needs to be done to assess the efficiency and efficacy of these 
models, and find out how to reach and include specific target groups such as vulnerable populations.   

The European Innovation Partnership (EIP) on Active and Healthy Ageing will help citizens to 
lead  healthier,  more  active  and  independent  lives  while  ageing.  It  aims  to  increase  the  number  of 
healthy  life  years  of  Europeans  by  two  years  by  2020.  It  applies  an  innovative  approach  to 
policy-making  in  the  EU  by  bringing  together  key  stakeholders  (end  users,  public  authorities,  and 
industry) and providing a forum for cooperation, the identification of potential innovation barriers and 
the mobilisation of funding instruments. It aims to improve the framework conditions for the uptake of 
innovation,  leveraging  financing  and  investments  in  innovation  and  improving  coordination  and 

59 See http://www.hal.inserm.fr/docs/00/59/35/06/PDF/Diabetes_Care_May_2011.pdf. 
60 Sources: Commission data for Poverty Rates, Life Expectancy, Population, GDP, labour market, healthcare 
expenditure. International  Diabetes Federation  (IDF)  for Diabetes  Type  2  epidemiology  and direct medical 
cost, peer-reviewed journal publications for Quality of Life (QoL). 
61 See  Lluch,  M.  (2012),  Evidence  consolidation  —  Report  on  best  practices  and  key  drivers  of  success, 
SIMPHS2, Luxembourg JRC (European Commission). 
http://is.jrc.ec.europa.eu/pages/TFS/documents/SIMPHS2D4.1FinalReportonEvidenceConsolidationrev2acc.
pdf. 
62 See  Rijken,  M.,  M.  Jones,  et  al.  (2008),  Supporting  self-management.  Caring  for  people  with  chronic 
conditions:  A  health  system  perspective,  E.  Nolte  and  M.  McKee,  Maidenhead,  Open  University  press  (in 
cooperation with World Health Organisation 2008 on behalf of the European Observatory on Health Systems 
and Policies). 

 Available at 

13 

 
 
                                                            
 
coherence between funding for research and innovation at European, national and regional level in the 
European Union. 

The  EIP  focuses  on  the  following  areas  throughout  a  person’s  life:  prevention,  screening  and 
early diagnosis; care and cure; active ageing and independent living. Between now and 2015, 261 
commitments, made by over 3 000 stakeholders and grouped in six action plans, will be implemented, 
focusing on the following:63  

•  prescription and adherence to treatment; 
•  personal health management, starting with an initiative to prevent old people from falling; 
•  prevention and early diagnosis of functional decline and frailty; 
• 
replicating and tutoring integrated care for chronic diseases, including remote monitoring; 
•  developing  interoperable  independent  living  solutions,  including  guidelines  for  business 

models; and 
innovating for age-friendly buildings, cities and environments. 

• 

Example  of  a  project  developed  under  the  European  Innovation  Partnership  on  Active  and 
Healthy Ageing — Feelgood Factory Agenda 

This  project  helps  people  to  monitor  their  health  and  receive  advice  through  the  television.  Results 
show that patients who were in and out of the hospital every week now go to the hospital only once or 
twice a year. 

Liverpool Primary Care Trust (PCT) in the UK is the Feelgood Factory Agenda’s lead partner. Much 
of  the  focus  is  on  people  who  are  older  and  have  long-term  conditions  (143 000  in  Liverpool).  One 
hundred  and fifty  ‘community health  champions’ have  been  recruited  to  design  packages for  people 
with  long-term  conditions.  The  packages  include  lifestyle  advice,  self-management  advice  and 
equipment. Voluntary champion roles might motivate people to work in the emergency care sector, or 
up-skill  unemployed  people.  Liverpool  PCT  will  target  50 000  members,  3 500  users  of  telehealth, 
5 000  users  of  Life  Enhancing  Technologies  (LETs)  and  3 500  users  of  integrated  LETs  and  social 
services. Financial and human resources allocated to the initiative include a €
 21 million programme, 
 6  million  in  human  resources, 
consisting  of  a  direct  financial  contribution  of  €
expertise, the provision of equipment and the use of existing services and infrastructure. 

 15.6  million  and  €

The  following  areas  have  proved  particularly  important  in  bringing  about  added  value  in  improving 
cost-effectiveness  and  efficiency  in  health  care  and  t  the  Commission  intends  to  continue  to  pursue 
action to64 

• 

support  research  into  the  effects  of  health  investments  on  employability;  better 
understanding the relationship between the two could facilitate the identification and exchange 
of good practice; 

63  Commission  Communication,  Taking  forward  the  Strategic  Implementation  Plan  of  the  European 
Innovation Partnership on Active and Healthy Ageing — COM(2012) 83 final. 
64 Through financing from the Health Programme, Commission implementing decision of 28 November 2012 
concerning the adoption of the 2013 Health Programme work plan (2012/C — 378/07). 

14 

 
 
 
 
                                                            
• 

contribute to the practical  understanding  of  patient  empowerment and support exchanges 
of  experience  in  this  field  by  launching  a  mapping  of  current  policies  and  evidence;  such  a 
mapping  would  clarify  the  scope  of  patient  empowerment  and  identify  potential  advantages 
and barriers. 

• 

continue to encourage cooperation in the European Innovation Partnership on Active and 
Healthy Ageing. 

2.2.  Promoting good health 

Tackling  the  problem  of  chronic  diseases  and  addressing  the  main  risk  factors  that  determine 
population  health  will  help  increase  people’s  employability  and  enable  them  to  stay  longer  in  the 
workforce.  The  human  and  economic  burdens  of  chronic  diseases  can  be  contained  by  devoting 
resources directly or indirectly to prevention, screening, treatment and care. It is important to do so by 
targeting  the  different  age  groups  throughout  their  lives. 65 A  large  amount  of  health  spending, 
including  in  particular  disease  prevention  and  health  promotion,  is  regarded  as  an  investment 
that yields a handsome rate of return.66 Focusing on disease prevention can reduce high long-term 
treatment costs and improve health outcomes by avoiding tens of thousands of premature deaths 
and  chronic diseases.67 However, little relative importance is currently given to health promotion in 
budgetary terms. Only about 3 % of current health expenditure is allocated to public health and 
prevention  programmes.  In  other  words,  most  Member  States  do  not  use  the  opportunities  for 
substantial  gains  in  prevention  and  health  promotion,  particularly  through  the  health-in-all-policies 
approach,  which  aims  to  influence  the  environmental,  economic  and  social  determinants  of  health. 
Given the potential to contain the burden and cost of disease in the long term, the importance given to 
disease prevention and health promotion should be reassessed. 

A recent study68 showed that evidence-based workplace interventions to promote mental health could 
help save up to €

 135 billion a year by reducing absenteeism and early retirement. 

There is  a  wide  array  of  health  promotion  and  disease  prevention  measures authorities can and 
should  make  use  of  in  many  different  settings  (at  work,  at  school  and  in  health  institutions).  These 
range  from  public  information  campaigns  in  the  media,  excise  taxes  on  certain  products  such  as 

65 Council Conclusions on Healthy Ageing across the Lifecycle, 7.12.2012. 
66 World Economic Forum, Harvard School of Public Health (2011), The Global Economic Burden of Non-
Communicable Diseases. 
67 OECD (2010), ‘Obesity and the economics of prevention: Fit not fat’. 
68 Matrix  Insight  (2012),  ‘Economic  analysis  of  workplace  mental  health  promotion  and  mental  disorder 
prevention  programmes  and  of  their  potential  contributions  to  EU  health,  social  and  economic  policy 
objectives  —  final  report’.  See  also  OECD  (2011),  ‘Sick  on  the  Job.  Myths  and  Realities  about  Mental 
Health  and  Work’  and  Knapp,  McDaid,  Parsonage  (2011),  ‘Mental  health  promotion  and  mental  disorder 
prevention. The economic case’. 

15 

 
 
 
 
                                                            
tobacco  or  alcohol,  bans  and  stricter  regulation  on  labelling,  advertising  and  selling,  to  health 
education on school curricula and financial incentives for consumers, patients and providers.69  

The  World  Health  Organisation  has  also  identified  a  number  of  ‘best  buys’  in  chronic 
non-communicable  disease  prevention:  incentive  fiscal  measures,  food  product  reformulation, 
detection and treatment of those at high risk of a heart attack, including early detection and treatment 
of high blood pressure.70    

The  Member  States  began  a  reflection  process  aimed  to  identify  innovative  approaches  to  address 
chronic  diseases.71 This  could  include  setting  up  best  practice  mechanisms  at  EU  level  to  identify, 
validate  and  disseminate  good  practice  and  information  on  policies    and  measures  to  tackle  the 
problem of chronic diseases, including the development of quality control instruments. The reflection 
process on chronic diseases is expected to yield conclusions by the end of 2013.72  

2.3. Employment in the health sector 

Investing  in  health  also  means  investing  in  the  health  workforce.  The  health  and  social  work 
sector73 has  in  recent  years  been  the  single  largest  contributor  to  employment,  accounting  today  for 
about 10 % of employment. The sector also generates high-skilled jobs. Almost 40 % of workers in the 
health and social work sector have tertiary qualifications. This is much higher than the 26 % average 
across all sectors.74 While the European Union lost more than two and half million jobs between 2008 
and 2011, the sector generated over 2.8 million new jobs during the same period. Population ageing is 
likely  to  increase  that  trend.  Assuming  a  constant  share  of  labour  in  this  area,  this  would  mean  a 
regular increase of up to eight million job vacancies by 2020,75 although the impact of health reforms 
and  organisational  and  technological  changes  on  staff  needs  remains  uncertain.  The  2013  Annual 
Growth  Survey  highlights  the  potential  that  can  be  tapped  in  this  sector,  through  a  future-oriented, 

(2011), 

‘Global  status 

report  on  non  communicable  diseases’, 

69  Joint  Report  on  health  systems  prepared  by  the  European  Commission  and  the  Economic  Policy 
Committee, European Economy, Occasional Papers 74, December 2010. 
70  World  Health  Organisation 
http://whqlibdoc.who.int/publications/2011/9789240686458_eng.pdf. 
71  Council  Conclusions  on  ‘Innovative  approaches  for  chronic  diseases  in  public  health  and  healthcare 
systems’ Brussels, 7.12.2010. 
72 As  foreseen  in  the  2013  work  plan  of  the  Health  Programme  ,  this  process  will  be  supported  by  a  joint 
action on chronic diseases that will address preventing and delaying the onset of chronic diseases throughout 
the life cycle and aspects of the secondary prevention, screening, early diagnosis, and treatment of diabetes 
type 2, and develop innovative, cost-efficient and patient-centred approaches for the management of patients 
with multiple chronic conditions. 
73 The  ‘Health  and  social  work’  sector  includes  three  sub-sectors:  ‘human  health’,  ‘residential  care’,  and 
‘non-residential social work’. For some statistics no breakdown is available; in order to present comparable 
data it is therefore necessary to present the aggregate value for the whole sector. 
74 Commission services estimate. 
75 The last CEDEFOP skills forecast expects employment to increase by one million between 2010 and 2020. 
Increasing  healthcare  needs  and  the  ageing  of  healthcare  professionals  should  result  in  seven  million 
vacancies due to replacement needs. Therefore, together with net employment change, around eight million 
job vacancies in  total  are  projected. See  CEDEFOP  (2010),  Skills  supply  and demand  in  Europe  Medium-
term  forecast  up  to  2020  and  http://www.cedefop.europa.eu/EN/about-cedefop/projects/forecasting-skill-
demand-and-supply/skills-forecasts.aspx. 

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reliable legal framework, the development of adequate skills and targeted, fiscally sustainable public 
support.76  

Nevertheless,  as  part  of  the  process  of  modernising  public  administration,  the  possible  increase  in 
employment  in  the  health  and  social  work  sector  must  be  carefully  balanced  against  the 
potential  increase  in  public  expenditure  on  health  and  overall  public  expenditure  and  must  not 
compromise the attainment of fiscal sustainability. Future needs related to an ageing population must 
be met by exploiting the extensive margin for efficiency gain and better productivity. 

The Action Plan for the EU health workforce,  which  is  part  of  the  Employment  Package  of  Spring 
2012  "Towards a Job Rich Recovery"77 supports cooperation to help improve workforce planning and 
forecasting  and  the  recruitment  and  retention  of  health  professionals.  An  EU  joint  action 78  on 
forecasting  health  workforce  needs  for  effective  planning  in  the  EU  will  create  a  partnership  of 
Member States and professional organisations to share good practice and develop methodologies. 

3.  Reducing inequalities in health 

Health  outcomes  vary  considerably  within  and  between  Member  States. In 2010, the gap in life 
expectancy at birth between the highest and lowest values for EU-27 Member States was 11.6 years 
for males and 7.9 years for females. People with a lower income and less education die younger and 
their  health  is  worse.  For  example,  differences  in  life  expectancy  at  age  30  between  those  in  higher 
education and those with basic secondary education or less exceed 10 years in many Member States.79 

Across the EU the level of disability, in terms of reported restrictions on daily living activities, is more 
than  twice  as  high  in  the  lowest  income  quintile  as  in  the  highest  income  quintile.80 Even  larger 
health  inequalities  exist  for  some  vulnerable  groups  such  as  some  ethnic  minorities  (Roma)  and 
some migrant groups. 

These  health  inequalities  represent  not  only  a  waste  of  human  potential,  but  also  a  huge 
potential economic loss — conservatively estimated at between 1.5 % and 9.5 % of GDP according to 
a report written for the Commission.81    

Reasons  for  these  differences  include  barriers  in  access  to  healthcare,  which  is  often  worse  for 
disadvantaged  groups/  persons  in  vulnerable  situations82 and in less wealthy Member States,83 as 

76 Commission Communication, Annual Growth Survey 2013 — COM(2012) 750 final, 28.11.2012. 
77 Commission Staff Working Document on an Action Plan for the EU Health Workforce — SWD(2012) 93 
final attached to the Commission Communication, Towards a Job Rich Recovery — COM(2012) 173 final, 
April 2012. 
78 To  be  financed by  the  EU Health programme,  see  Commission Implementing Decision  of 28 November 
2012 on the Health programme work plan for 2013 (2011/C/ 358/06). 
79 Eurostat statistics in focus 24/2010. 
80 EU Statistics on Income and Living Conditions. 
81 Economic  implications  of  socio-economic  inequalities  in  health  in  the  European  Union,  Mackenbach  J, 
Meerding W, Kunst A., Directorate-General for Health and Consumers 2007. 

17 

 
 
                                                            
well  as  poorer  diets,  housing,  living  and  working  conditions,  and  higher  levels  of  health-damaging 
behaviours. The impact of the current crisis on these factors threatens to increase health inequalities 
between social groups and between Member States. 

As  stated  in  the  2013  AGS,  ‘additional  efforts  are  needed  to  ensure  the  effectiveness  of  social 
protection  systems  in  countering  the  effects  of  the  crisis,  to  promote  social  inclusion  and  to  prevent 
poverty’,  including  by  providing  broad  access  to  affordable,  high-quality  health  services. 84 
Investments to reduce inequalities in health should therefore also make a positive contribution 
towards reaching the Europe 2020 poverty and social exclusion target. 

A  multisectoral  approach  is  required,  with  a  focus  on  achieving  greater  gains  in  less  advantaged 
groups than the average in order to close gaps.85 Key measures are to prioritise less advantaged groups 
in  policies  to  improve  the  quality  of  and  access  to  health  systems,  to  address  the  underlying  risk 
factors in health behaviours and to ensure adequate incomes and living and working conditions.86 Such 
measures are underpinned by the fundamental values and commitments the EU and its Member States 
have  agreed  on  with  regard  to  human  rights,  equal  opportunities,  social  and  economic  cohesion  and 
solidarity.  Specific  EU  action  on  health  inequalities  is  set  out  in  the  2009  Commission 
Communication  on  health  inequalities,  Solidarity  in  Health.  A  progress  report  on  the  health 
inequalities situation and the actions set out in the Communication will be published in 2013. 

Data on the effects of social transfers on the at-risk-of-poverty rate suggests that healthcare plays a 
significant role in reducing the at-risk-of-poverty rate. Access to affordable healthcare is therefore 
necessary for adequate livelihoods. Fiscal consolidation measures applied to health systems should not 
compromise the access of poor, vulnerable populations to high-quality healthcare. 

According  to  a  study  of  policy  responses  to  the  economic  crisis,87 several  countries  have  increased 
user  charges  for  essential  services,  while  in  some  cases  also  allowing  more  income-based 

82 Devaux  M,  de  Looper  M,  Income-related  inequalities  in  health  service  utilisation  in  19  OECD  countries 
2008-2009, OECD Health working papers 58, 2012. 
83 Citizens  from  central  and  eastern  Europe,  as  shown  by  the  FP7  Research  Project  ASSPRO  CEE  2007 
(http://www.assprocee2007.com/),  are  often  confronted  with  informal  patient  payments  for  healthcare 
services.  These  range  from  the  ex-ante  cash  payment  to  the  ex-post  gift  in  kind.  The  causes  of  informal 
payments need to be tackled for these reforms to be successful and to guarantee equal access to healthcare. 
Vulnerable groups or households with a chronically ill member are less protected against informal payments 
and are most likely to forego treatment or to experience catastrophic, impoverishing effects due to formal and 
informal out-of-pocket payments. 
84 Commission Communication — Annual Growth Survey 2013 — COM(2012) 750 final, 28.11.2012. 
85 Two  documents  accompanying  this  package  address  in  particular  children,  as  investments  in  prevention 
during early childhood are likely to bring substantial benefits over the whole lifespan, and homelessness, as 
health  problems  are  both  a  triggering  factor  and  a  consequence  of  homelessness.  See  the  Commission 
Recommendation on "Investing in children: breaking the cycle of disadvantage", and the Commission Staff 
Working Document on "Confronting Homelessness in the European Union" adopted as part of this package.. 
86 On the importance of access to quality services, and notably health services, as part of an active inclusion 
strategy, see the Commission Staff Working Document on "the Follow-up on the implementation by Member 
States of the 2008 European Commission recommendation on active inclusion of people excluded from the 
labour market" adopted as part of this package. 
87 Philipa  Mladovsky  et  al.  (2012),  Health  policy  responses  to  the  financial  crisis  in  Europe,  WHO  Policy 
Summary 5. http://www.euro.who.int/__data/assets/pdf_file/0009/170865/e96643.pdf. 

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exemptions. 88  Given  that  vulnerable  populations  are  already  disproportionately  affected  by  the 
economic crisis and that ill health has negative outcomes on employability, possible effects on those 
populations should be carefully assessed. Healthcare coverage can help reduce poverty.  Measures 
such as those that increase co-payments risk aggravating the economic hardship borne by vulnerable 
populations by reducing access to healthcare.89  

Increasing knowledge of the effects of healthcare coverage on poverty, as measured at household 
level, should take the following into account. 

•  Evidence suggesting that a large amount of total spending on healthcare during a person’s life 
is  concentrated  in  the  final  year(s)  of  life. 90  Health  expenditure  comparisons  between 
individuals would therefore ideally be based on lifetime analyses and not be limited to a given 
year. 

•  The  inherent  complexity  of  interactions  among  several  causal  factors  and  variables,  such  as 
the likelihood of similarity in the socio-economic backgrounds of spouses and feedback loops 
in causal pathways between health and poverty. 

Good practice example — analysis of the redistributive impact of public health expenditure 

A  2011  paper  by  Spadaro  et  al.91 shows  how  data  collected  for  the  Eurostat  Survey  of  Income  and 
Living Conditions (SILC) can be used to analyse the redistributive impact of public health expenditure 
in Spain. This is done using an insurance value approach to take account of the effect of  healthcare 
expenditure  on  household  budgets.  The  equivalent  household  income  complemented  by  public 
healthcare  coverage  is  assessed  and  compared  with  household  disposable  income.  It  is  found  that 
public  healthcare  coverage  is  likely  to  keep  families  out  of  poverty.  Extending  the  analysis  to 
incorporate the household income foregone due to healthcare-related tax transfers would allow the net 
impact of public healthcare coverage to be estimated in terms of the percentage of poverty avoided. 
This  could  be  calculated  as  the  added  number  of  covered  residents  that  would  fall  below  a  given 
poverty threshold in the hypothetical absence of healthcare coverage. 

Spain  recently  introduced  reforms  of  its  co-payment  system  for  medicines.    The  reforms  take  into 
account the redistributive impact of the co-payment system by linking it to the level of income, thus 
making it more progressive. 

The Commission will continue to support measures to address health inequalities within and between 
Member  States  by  implementing  the  2009  Communication  Solidarity  in  Health:  Reducing  Health 

88 This is however unlikely to lead to substantial savings in budgets as health spending is concentrated on a 
section of the population that does not necessarily overlap with the poorest section (lowest income quintile), 
and protects against catastrophic health expenditure (the inability of individuals to pay for healthcare services 
—  in  itself  not  necessarily  synonymous  with  high  healthcare  costs).  This  suggests  that  income-based 
exemptions should be coupled with co-payment ceilings. 
89 HOPE, the European Hospital and Healthcare Federation reports a marked increase in emergency services 
lists. 
activities 
http://www.hope.be/05eventsandpublications/docpublications/86_crisis/86_HOPE-
The_Crisis_Hospitals_Healthcare_April_2011.pdf. 
90 Commission,  2009  Ageing  report,  Economic  and  budgetary  projections  for  the  EU-27  Member  States 
2008-2060. http://ec.europa.eu/economy_finance/publications/publication14992_en.pdf. 
91 http://www.ief.es/documentos/investigacion/seminarios/economia_publica/2011_18MayoPPT.pdf. 

waiting 

waiting 

longer 

time 

and 

and 

19 

 
 
 
                                                            
Inequalities in the EU.92 It plans to increase knowledge and evidence to facilitate the exchange of best 
practice and share understanding of the effects of health investments on social exclusion and poverty 
reduction. This must include tackling the methodological difficulty of valuing benefits in kind. 

4.    European financial instruments for investing in health  

As  a  follow-up  to  the  current  EU  Health  Programme,  and  as  part  of  the  Multiannual  Financial 
Framework  2014–20,  the  Commission  put  forward  a  proposal  for  a  new  Health  Programme.  It 
strengthens  the  link  between  economic  growth  and  a  healthy  population  and  is  geared  towards 
measures in line with the Europe 2020 objectives. The programme has four objectives: 

• 

• 

• 

to contribute to innovative and sustainable health systems; 

to increase access to better and safer healthcare for all EU citizens; 

to  promote  good  health  and  prevent  diseases  by  addressing  the  risk  factors  of  most 
diseases; 

• 

to protect people from cross-border health threats.   

The  EU’s  Cohesion  Policy  and  its  funds93 are  also  powerful  instruments  to  help  Member  States 
invest in sustainable, innovative and reformed health systems, in people’s health for employability and 
in  reducing  health  inequalities.  The  Member  States  allocated  over  five  billion  euro  on  health 
infrastructure  from  2007  to  2013.  Using  structural  funds  for  non-direct  health  investments  such  as 
urban regeneration, transport, environment, employment, social inclusion and housing can also have 
positive impacts on  population’s health.94 

The Commission proposals for the next programming period (2014–2020) provide for the support of 
the  Cohesion  and  Structural  Funds  to  the  Member  States’  investments  in  health.  Health  is  also 
included in most of the thematic objectives of the Common Strategic Framework.95 The EU Cohesion 
and  Structural  Funds  should  co-finance  investments  in  health  by  the  Member  States  that  follow  a 
coherent, strategic policy approach by 

• 

• 

• 

investing in health infrastructure that fosters a transformational change in the health system, in 
particular  reinforcing  the  shift  from  a  hospital-centred  model  to  community-based  care  and 
integrated services; 
improving  access  to  affordable,  sustainable  and  high-quality  healthcare,  in  particular  with  a 
view  to  reducing  health  inequalities  between  regions  and  giving  disadvantaged  groups  and 
marginalised communities better access to healthcare; 
supporting the adaptation, up-skilling and life-long learning of the health workforce; 

92 COM(2009) 567 final. The Communication is implemented in particular through a Joint Action supported 
by  the  Health  Programme:  http://ec.europa.eu/eahc/projects/database.html?prjno=20102203.  A  progress 
report on the implementation of the Communication is to be published in 2013. 
93 For the specific role of the European Social Fund, see European Commission Staff Working Document - 
Social investment through the European Social Fund, SWD(2013) 44, adopted as part of this package. 
94 For more information on health gains through structural funds see  http://www.healthgain.eu/  
95 Commission proposal for a regulation laying down common provisions and creating a common strategic 
framework, in particular Annex IV — COM(2011) 615 final/2, 2011/0276 (COD). 

20 

 
 
                                                            
• 

fostering active, healthy ageing to promote employability and employment and enable people 
to stay active for longer. 

The Seventh Framework Programme  and the EU programme for research and innovation for 2014 to 
2020  (Horizon  2020)96 also  provide  financial  opportunities  to  address  the  societal  challenge  of  an 
ageing population and harness innovation in public health and the management of health systems. 

Conclusion 

Getting more value for money through reforms and investments is crucial. Investing in health can lead 
to smarter spending — not more spending — that brings savings or secures better health outcomes. It 
may  take  different  forms,  such  as  change  in  the  management  of  care  to  improve  efficiency  while 
improving  health  outcomes,  investment  in  healthcare  staff,  training  or  equipment  and  initiatives  to 
promote good health and prevent diseases.. The avoidable morbidity and mortality underlying health 
inequalities represent a waste of human capital that must be reduced. 

Universal access to safe, high-quality, efficient healthcare services, better cooperation between social 
and  healthcare  services  and  effective  public  health  policies  to  prevent  chronic  disease  can  make  an 
important contribution to economic productivity and social inclusion. Reforms complemented by the 
above mentioned targeted investments should foster cost-effective innovation to achieve good health 
outcomes  and  aim  to  avoid  increasing  disease  and  financial  burdens  in  the  long  term.  Financial 
consolidation  and  structural  reform  of  health  systems  must  go  hand  in  hand  to  continue 
delivering on public policy goals and ensure that efficiency gains will guarantee universal access 
and increase the quality of healthcare. They should be addressed as part of the wider agenda of 
structural reforms within the context of Europe 2020 and the European Semester.   

96 Proposal  for  a  Regulation  of  the  European  Parliament  and  Council  establishing  Horizon  2020  —  the 
Framework Programme for Research and Innovation (2014–20), COM(2011) 809 final. 

21