Health cost inflation

Healthcare is an expensive service and becoming more so. Data show that total spending on it has more than doubled in the last decade. This trend refers not only to public, but also (and mainly) to private healthcare in Greece, which as a proportion of the total is now more than twice as high as the European Union average and ahead of all other partners. Despite the marginal decline in the last decade, the percentage of private spending on health is, according to available data, above 47 percent, against an average in the old 15 EU members of 22.8 percent. This creates worries about the cost of the services offered, more so because this is not proportionate to the quality of those services, says Panayiotis Dimitriou, president of the Health Committee of the Association of Insurance Companies-Greece (EAEE). This medical inflation – more than twice as high as the consumer price index – is a permanent problem that pushes private sector spending much higher, to exceptionally high levels. The initiatives EAEE has taken to date through agreements with major private hospitals for limiting spending on health are the basis for intensifying these efforts. The main objective is to reduce the cost of services offered, and therefore of health insurance programs. Figures show considerable margins for such a reduction. That effort, which started two years ago, is still in its early stages, as early data suggest that payouts by insurance companies also rose in 2004, up to 330 million euros against 280 million euros in 2003. Expensive diagnosis Besides major clinics, from September interest will focus on diagnostic centers, which take a large share in expenses, believed to be over 15 percent of all health spending in the insurance sector. The main goal of the EAEE’s Health Committee is a deal with the 250 diagnostic centers in Greece for limiting prices to affordable levels for the insurers’ clients. Margins for a price drop in this domain appear great, since there are massive differences between major diagnostic centers for basic test categories. In some cases, the differences are extreme, as a survey by Kathimerini through the official price lists of clinics shows rates as high as 20 times more than those justified by state social security funds for biochemical tests. To test one’s uric acid, for example, the state justifies expenses of 2.88 euros, while prices in three diagnostic centers range from 9.11 to 12.50 euros, while the official rate of a major private hospital is no less than 69 euros. Similar differences, if not always as extreme, are recorded in all tests made both by the diagnostic centers and the private hospitals, illustrating the huge margins for reducing prices to more rational levels. Even without the state’s evaluation as a yardstick, those price differences noted among three major diagnostic centers range in average from 30 to 100 percent. If we compare them with the major well-known hospitals then the figures spiral out of any logic, with differences ranging from 200 to 300 percent. The big hospitals claim that official price lists are not representative and contracts with insurance companies incorporate major rises of up to 50 percent. Yet this does not change the main conclusion about unacceptable charges in several cases. Another such example is the Pap test, which costs between 30 and 38 euros in diagnostic centers, but 50.95 euros in a hospital. The list is very long and confirms the great waste in the health sector, whose cost does not only burden insurance companies. Dimitriou notes that the big rises in health sector premiums, which several companies were forced to impose in recent years, are nothing but the direct effect of those developments, while in several cases companies were burdened themselves by extortionate pricing of medical services, recording heavy losses. The rationalization of health costs toward acceptable levels will be to the benefit not just of the insurance sector, but also of its clients as well as the health service providers, as broadening the reach of the «market» will favor all parties involved.