Malta’s demographic structure, which is showing an ageing population, as well as increased life expectancy, is going to demand more of the country’s health service. This means that we need an honest debate about funding. The funding of a health service may be placed within the realm of a social debate. However, while we cannot ignore the implications on our society resulting from any decision on the funding of a health service, we need to appreciate that we must also take account of economic considerations.
To understand better the dimensions of the issue, one can look at the 2014 estimates approved by Parliament for the Ministry of Health. Parliament had approved an estimate of just over €383 million for recurrent expenditure and an estimate of over €60 million for capital expenditure. Estimated revenue amounts to €2.4 million.
Forty-nine per cent of estimated recurrent expenditure goes to personal emoluments while 20 per cent goes to the purchase of medicines and surgical materials. The total of €443 million represents 13 per cent of total estimated government expenditure for 2014.
We need to reduce health inequality and target the more vulnerable segments of the population and help them have a healthier lifestyle
In addition to public expenditure, one must also take account of private expenditure at private hospitals and clinics and at consultation visits.
When discussing welfare economics (and the funding of a country’s health service is one aspect of welfare economics), economists make reference to the ability to pay principle and the beneficiary principle.
The ability to pay principle is based on the principle of progressive taxation, that is, the more one earns, the higher should be the percentage one pays in taxes. So, access to public services such as healthcare should be open to all for free as those who earn more are already paying for it through the taxes they pay. On the other hand, the beneficial principle is based on the concept that the person who benefits from a public service should be made to pay for it.
The principle we have always adopted with regard to heathcare is the ability to pay principle. If we were to adopt the beneficial principle, segments of the population would be barred access to health services because they would not be able to afford it.
We also need to take a long-term view of the situation. As I have already highlighted, the country will be demanding more of its health service. As people live longer, there will actually be a greater demand in terms of numbers. Moreover, as developments in healthcare occur, the qualitative aspect of healthcare will also need to be improved. All this must mean higher expenditure. Will such an increase in expenditure be greater than the increase in total government expenditure and the increase in national income?
The answer to these questions can only be arrived at through some form of economic modelling. However, if the answer turns out to be a yes, the government would be faced with having to make choices. Yes, any student of economics would tell you that the fundamental problem is scarcity of resources, choice and opportunity cost. The options could be several, starting from cutting down expenditure elsewhere or asking those with higher incomes to pay for the health services provided by the public sector to finding alternative means of funding.
The health service is not just about providing healthcare. It also has to do with people having a healthy lifestyle. So prevention of ill-health is just as important as providing good institutional care. If we accept that health services should be accessible to all, then we must also agree that we need to reduce health inequality and target the more vulnerable segments of the population and help them have a healthier lifestyle. This in itself may require more financial resources.
The question which arises is whether we need to reform our health services to make them more financially sustainable. There is no doubt that over the decades (yes it is decades) there have been great attempts at improving these services and improving access to them. We know we need to continue improving them. However, in order to make them financially sustainable, we may have to go through a reform process. What shape this reform needs to take is up to the experts. Starting to debate it now may help us avoid crises in the future.