Beyond iniquity

Beyond iniquity


by Francesco Logo and Mario Del Vecchio, Cergas SDA Bocconi
Translated by Alex Foti

Italy is one of the countries with the lowest birth rates in the world (1.2 children per woman; a rate of 2.2 would be needed to keep the population stable) and one with the highest life expectancies. In 2019, Italy had 25.9 million people in employment and 13.8 million retirees. ISTAT, the Italian national statistical agency, predicts 22 million workers and 19 million retirees by 2039, a relationship that is not sustainable from a social, economic and political point of view. The repercussions fall squarely on the Italian National Health Service (SSN), with an inevitable and progressive reduction of the tax base – and therefore of public resources available for spending – combined increasing needs due to aging. Despite growing needs, it’s public finance that constrains the choices. Government planning foresees a 6.2% ceiling on public expenditure in health with respect to GDP from 2025. In European comparative terms, Italian public spending on health is parsimonious, at 50% less than French and German spending (public health spending: 9.5% of GDP).
The Italian national health service is characterized by substantial fragmentation and inequity in access generated by the €40 billion of private spending disbursed by families, to which €9.6 billion out-of-pocket payments to assist 3.8 million disabled people must be added, as well as INPS social security transfers for another €9.1 billion (assistance-to-the-disabled checks) that go to feed the private market for care workers. If we compare the total (about €58 billion) of health care expenses incurred by families with the €126 billion spending of the Italian national health service, it is clear that this ratio of one to two is far from the universalistic logic that inspires the latter. Furthermore, current economic policy debate continues to favor the support of private spending through monetary transfers to families, sacrificing the hypothesis of an increase in real welfare services such as the national health service.

The inequity is explained by the non-correlation of private spending with the shortcomings of the public system, which is instead correlated with the income of territories and households. It is the richer regions of the north, which have the best performing public systems, that have the highest level of private spending. Similarly, wealthier families, already more capable in accessing public health care, spend more on private services.
What is the €40 billion in health spending by households made up of? Private health care expenditure, as reported by the SDA Bocconi Observatory on Private Health Consumption, is largely out of pocket with €568 per inhabitant (2020), while spending brokered by funds, mutual funds or insurance policies amounts to €70 per inhabitant. It is distributed along the entire supply chain with a concentration on outpatient services (about 50%), on drugs and medical devices (38-40%), with the remainder for hospitalization (10-12%), which remains covered by national health service. While during the COVID period there was a slight contraction in private spending, the current difficulty the Italian national health service in disposing of the waiting lists generated by the pandemic feeds the private market.
Despite controlling only 2/3 of total resources, the Italian national health service continues to portray itself as a self-sufficient institution and defines large part of private spending as inappropriate or unnecessary in a self-absolving way. In reality, families, when they perceive a need, turn to both public health care and the private and informal care market to understand which is the most reasonable one for obtaining a service. A significant part of the services purchased by citizens are linked to services that the national health service explicitly does not offer (dentistry), or offers according to insufficient standards (personal medical devices), or in insufficient quantities (rehabilitation).

The fragmentation of services and the lack of integration of the public and private markets, accompanied by the falsely universalistic rhetoric of the national health service, confuse Italian citizens as to which services are truly exigible, while forcing them to do cherry picking in order to recompose services with respect to needs. These phenomena increase inequity, favoring families with greater literacy and resources in the arbitration and integration of the two markets.

What to do? The SSN, in addition to acquiring a mature awareness of its real role in the scenario, should first of all question itself on how to increase the country's aggregate health expenditure to ensure greater equity by sustaining, in the short term, an increase in expenditure brokered by intermediaries to the detriment of out-of-pocket payments for large sections of the population. Secondly, becoming a credible health provider in the paid market, offering appropriate services at a high quality, with controlled prices: being the embodiment of good practices in the paid market. Third, integrating the services obtained from the various markets, by supporting families in the recomposing arbitration process (a positive note: personal health files now report also medical records from private care). Finally, verifying with greater rigor the absence of distortions in priority of access to the SSN, due to services purchased on the free market for health professionals.

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