Vilnius Lithuania, November 19/20th, 2013

“health forum"

The Economic and the Health Dividend of the Health Care System Klaus-Dirk Henke, Technical University of Berlin

Outline

1. A new understanding of health 2. The economic dividend of the health economy 3. The health dividend of the health economy 4. Summary

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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1. Introduction: A new understanding of health A new understanding of health – Towards an open health society

OLD UNDERSTANDING

NEW UNDERSTANDING

Part of healthcare

is the health economy and its economic footprint

Instead of mainly public financing

second health market; new forms of insurances and paying

Instead of input orientation

better quality, more outcome orientation

Instead of health care as cost factor

growing sectors, increasing work forces, new career opportunities

Instead of healthcare consumption

investment in health to promote growth and productivity

Instead of separate silos, e.g. the Statutory health insurance

health in all areas of life and lifelong; less fragmentation

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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Outline

1. A new understanding of health 2. The economic dividend of the health economy 3. The health dividend of the health economy 4. Summary

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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2. The economic dividend of the health economy German Health Satellite Account »

The technical university of Berlin together with Roland Berger and BASYS / WifOR and in close cooperation with the Federal Statistical Office was commissioned by the Federal Ministry of Economics and Technology (BMWi) to create a satellite account.

»

The following requirements have been described for that purpose by BMWi. The satellite account shows → gross value added → employment figures → interrelationships within the health economy and with other industries → imports /exports → and other economic indicators based on a justifiable definition of the health economy.

»

These data are available for 2005 and were completed until 2012

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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2. The economic dividend of the health economy System of Health Accounts

» With the help of the Satellite Account it is now possible to identify following economic indicators: On the production side » » » » »

Gross value added Inputs Production cost Imports Supplies of products at manufacturer prices

On the expenditure side » Final consumption expenditure at market prices » Exports » Investments » Intermediaries use

» The main result of the Satellite Account is the health input-output table. It was integrated into the National Accounts and allows direct comparison of health expenditure accounts and the internationally used "System of Health Accounts "(SHA). It was first identified in this form for the health economy”. Source: Henke, K.-D., Neumann, K., Schneider, M. et al., Erstellung eines Satellitenkontos für die Gesundheitswirtschaft in Deutschland, Baden-Baden 2010, p. 171 © 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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2. The economic dividend of the health economy The new view: Satellite account

Compulsory and voluntary financing

The four consumption sectors in the health economy in real terms Health products and services

Core health sector

Extended health sector

Compulsory coverage through private or statutory health insurance

Voluntary coverage through out-of-pocket expenditures and voluntary insurance

Primary sector

Secondary market

e.g. Reimbursable inand outpatient services

e.g. OTC drugs, individual health care services

e.g. instrumental assisted daily living (IADL) activity, research, vocational training

e.g. „healthy“ spas, relaxation, food, clothing

Source: Henke, K.-D., Neumann, K., Schneider, M. et al., 2010.

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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2. The economic dividend of the health economy Bundling of health products into 14 groups No.

Text

CPA71 No.

Core health sector G_1 G_2 G_3 G_4 G_5 G_6 G_7 G_8 G_9

Pharmaceutical products Medical equipment Other goods in the core health sector Retail sales in the core health sector Private insurance policies covering health risks Health-related social insurance and administrative services Services provided by inpatient institutions Services provided by non-inpatient institutions Other services in the core health sector

Extended health sector G_10 Home help services in private households G_11 Organic and functional foodstuffs G_12 Other health-related goods in the extended sector G_13 G_14

Services for sports, fitness, spas and relaxation Other health-related services in the extended sector

24.4 33 24R; 35 52 66 75.1-2; 75.3 85 85 51; 60.1; 60.2-3; 73; 80; 91

95 01; 15.1-8; 15.9 17; 18; 19; 22.1; 24R; 25.1; 26.1; 29; 31; 33; 36 55; 92 51; 52; 60.2-3; 63; 66; 72; 74;80; 85; 91; 93

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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2. High productivity can be found predominantly in the industrial health economy Core and extended health sector Branches (CPA) Pharmaceuticals Medical equipment Other products CHS Retail services CHS CHS Private insurance Social insurance/administration Services in inpatient institutions Services in non-inpatient institutions Other services CHS Private household services Organic and functional food EHS Other health-related products EHS Fitness, spas and relaxation Other services EHS

No. of employees Gross value added per employee ['000] [EUR '000, 2007] 125

80 63

137

94

3

25

327

71

19 45

196

39

1.590 1.750

34 57

107 10

34

23

98

79

54 34

151

886

36

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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2. The economic dividend of the health economy Health economy between 2005 and 2012

Between 2005 and 2012 the health economy was responsible for

around 11% of gross value added,

around 7% of export,

around 20% of final consumption and

around 15% of total employment. Source: Ostwald, D.A., Henke, K.-D., Kim, Z.-G. (2013).

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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2. The economic dividend of the health economy

259,2

251,1

229,4

214,6

220

208,8

240

203,2

260

223,7

280

240,6

300

30% 25% 20%

200

15% 11,1%

10,8%

10,8%

10,7%

10,1%

120

9,9%

140

10,0%

160

10,0%

180

100

10% 5%

Share of the national economy

Gross value added [billion EUR]

Development of the health economy‘s gross value added

0% 2005

2006

2007

Gross value added

2008

2009

2010

2011

2012

Share of the national economy

Source: GGR, 2013; Database: Destatis; Calculation and figure: WifOR, 2013; Values at current prices.

The gross value added increased from 2005 to 2012 by nearly EUR 60 billion. In 2012 the health economy‘s gross value added amounts to EUR 260 billion. © 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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2. The economic dividend of the health economy Development of the health economy‘s gross value added

Compound annual growth rate from 2006 to 2011 Health economy

3,8%

Manufacturing sector

2,0%

Service sector

1,9%

National economy 0,0%

2,1% 0,5%

1,0%

1,5%

2,0%

2,5%

3,0%

3,5%

4,0%

Source: GGR, 2013; Database: Destatis; Calculation and figure: WifOR, 2013; Values at current prices.

From 2006 to 2011 the health economy grew nearly twice as fast as the national economy in Germany. © 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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2. The economic dividend of the health economy The health economy as stabilizing factor

5% 4% 3% 2% 1% 0% -1% -2% -3% -4% -5%

4,2%

3,8%

3,6% 2,7%

2006

2,8%

2007

2,5%

2,2%

2009

2008

-3,8% National economy

Health economy

Source: GGR, 2013; Database: Destatis; Calculation and figure: BMWi / WifOR, 2013; Values at current prices.

The health economy is a stabilizing factor during economic slow-downs. © 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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2. The economic dividend of the health economy Development of the health economy‘s employment effects

6,0

5,9

5,8

5,6

5,4

5,3

5,3

5,5

40% 30%

14,5%

14,4%

14,3%

14,2%

13,9%

13,7%

5,0

13,7%

20% 13,7%

Jobs [in million]

6,0

5,7

50%

4,5

10% 0%

2005

2006

2007 Jobs

2008

2009

2010

2011

Share of the national economy

6,5

2012

Share of the national economy

Source: GGR, 2013; Database: Destatis; Calculation and figure: WifOR, 2013.

More than 6 million jobs in 2012, i.e. every 7th German is working in the health economy. In the health economy 700,000 new jobs were created since 2005. © 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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2. The economic dividend of the health economy Development of the health economy‘s employment effects

Compound annual growth rate from 2006 to 2011 Health economy Manufacturing sector

2,0% 0,2%

Service sector

1,2%

National economy 0,0%

1,0% 0,5%

1,0%

1,5%

2,0%

2,5%

Source: GGR, 2013; Database: Destatis; Calculation and figure: WifOR, 2013.

From 2006 to 2011 annually 2% additional jobs were created, i.e. 10 times more than in the manufacturing sector. © 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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2. The economic dividend of the health economy Simplified illustration of the formation of spillover effects

Direct effects Direct economic impact of the health economy

Indirect effects Result of contracting with suppliers

Induced effects Caused by spending of generated income

Production, value added and employment effects

Fiscal effects as result of economic effects Direct, indirect and induced tax payments and social security contributions Source: own illustration.

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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2. The economic dividend of the health economy Generation of considerable indirect and induced effects (2009) Value added effects1) [EUR bn.]

Induced effects

85 92

Indirect effects

86

Direct effects

Value added effects

229 or 214 or 10,7% 9,86%

407

» Through the value added of the health economy, additional indirect and induced effects are generated

1.39

1.77

» The multiplier for the indirect value added effects (including the direct ones) is 1.39, i.e. one Euro produced in the health economy generates an additional production of 0.39 EUR in the upstream industries » By taking the consumption of generated incomes into account the multiplier rises to 1.77

1) Model calculations based on the 2007 HIOT domestic production (excluding imports and processing of production)

Source: HETA

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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2. The economic dividend of the health economy Value added and employment of the health economy (2009)

Core health sector

Extended health sector

Value added [in billion EUR]

Employment [in million]

175,9

4,48

76,7%

78,2%

8,2% of GDP

11,1% of EP

52,5

1,25

23,3%

21,8%

2,5% of GDP

3,1% of EP

229,4

5,73

100%

100%

10,7% of GDP

14,2% of EP

Total Absolute Share of the health economy [in %] Share of the total economy [in %] Source: Own calculation and Destatis.

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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Outline

1. Introduction: A new understanding of health 2. The economic dividend of the health economy 3. The health dividend of the health economy 4. Summary

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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3. The health dividend of the health economy a) economic dividend, b) health dividend, c) personal and social dividend

a) From the economic benefits of the health economy b) to a better health status of the population and c) from the healthier population to individual, collective, social and economic benefits.

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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3. The health dividend of the health economy And its advantages

» The health dividend is the value added through the health economy by reducing morbidity, invalidity and mortality. » Through a new therapy, a new drug or a new technical device, i.e. through innovation in health care, the level of health of the population can be improved. » A healthier population will improve the productivity and the efficiency of the workforce.

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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3. The health dividend of the health economy A positive correlation between health and growth

Three key hypotheses Healthy aging raises productivity and thus gives a supply-side boost to quality of life and growth

Healthy aging gives a demand-side boost by increasing private demand for non-reimbursable health-related goods and services (Second health market)

A healthy society saves money on treatment, rehabilitation and nursing care

The fiscal impact of the secondary health market requires further investigation

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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Outline

1. A new understanding of health 2. The economic dividend of the health economy 3. The health dividend of the health economy 4. Summary

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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4. Summary and future research Repetition and conclusion

» Shift in the understanding of health care: Instead of a cost factor, the health economy is seen as a growing market and a macroeconomic driver.

» The economic dividend of the health economy (value added, employment, export, consumption, etc.) should be measured regularly on the basis of the National Accounts.

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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4. Summary and future research On the way to a European health economy

German health economy » Research project of the Federal Ministry of Economics and Technology: Analysis of the economic effects of the health care industry » Database: Extensive data by the Federal Statistical Office (Destatis) » Result: Direct, indirect, induced economic and fiscal effects and development of a health input-output table

European health economy » Database: Eurostat (input-output tables), OECD etc.  Open questions: • Which scope is required to calculate the European health economy • Analysis of the health economy in selected markets (e.g. UK, France etc.

• Analysis of the health economy in the entire EU

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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4) Repetition and conclusion Summary: The health economy as a leading economic / industrial sector

What is the health economy after all? In the National Accounting Systems it is an economic sector as many others. » The health economy is the biggest industry in Germany » The so-called first health “market” is characterized by legally fixed prices » The second health market is ruled by market prices and supports the first health “market” financially Critics and open questions. The macroeconomic figures of the contribution to employment and growth don´t say much about the efficiency/outcome of the health economy. But this is true for other economic sectors as well.

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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Selected literature BADURA, B., DUCKI, A., SCHRÖDER, H., KLOSE, J., MEYER, M. (HRSG.) (2012): Fehlzeiten-Report 2012: Gesundheit in der flexiblen Arbeitswelt: Chancen nutzen – Risiken minimieren, Berlin, Heidelberg. BLOOM, D., CANNING, D., FINK, G. (2011): Implications of Population Aging for Economic Growth. In: The WDA – HSG Discussion Paper Series, No. 2011/2. BÖRSCH-SUPAN, A., ET AL. (2009): Produktivität alternder Gesellschaften, Stuttgart. DIERKS, C., HENKE, K.-D., FRANK, J., HENSMANN, J., WILKENS, H. (2011): Bürgerzentriertes Gesundheitswesen, Baden-Baden.

FACHINGER, U., ET AL., (2012): Ökonomische Potenziale altersgerechter Assistenzsysteme: Ergebnisse der Studie zu Ökonomischen Potenzialen und neuartigen Geschäfts-modellen im Bereich Altersgerechte Assistenzsysteme. FACHINGER, U., UND ERDMANN, B. (2010): Determinanten des Nachfrageverhaltens privater Haushalte nach assistierenden Technologien - ein Überblick, in: Fachinger, U., und Henke, K.-D. (Hrsg.): Der private Haushalt als Gesundheitsstandort. Theoretische und empirische Analysen, Baden-Baden, S. 147-162. FACHINGER, U., ET AL. (2012): Systematischer Überblick über bestehende Geschäftsmodelle, Vechta. GERSCH, M., UND SCHRÖDER, S. (2011): Erlös- und Finanzierungssysteme vernetzter AAL-Systeme auf dem Ersten und Zweiten Gesundheitsmarkt. Erste empirische Ergebnisse sowie erkennbare ökonomische Konsequenzen. 4. Deutscher AAL-Kongress, 25./26.01.2011, Berlin.

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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Selected literature

HENKE, K.-D. (2006): The Funding and Purchasing of Health Care - A Book with Seven Seals, in : Journal of Public Health , Bd. 14, Nr. 6, 385-390. HENKE, K.-D., UND OSTWALD, D. A. (2012): Health satellite account: the first step, in: Behavioural and Healthcare Research, Bd.3, H.1., S. 91 - 105. HENKE, K.-D., BRAESEKE, G., ET AL. (2012): Die volkswirtschaftliche Bedeutung der Gesundheitswirtschaft, Innovationen, Branchenverflechtung, Arbeitsmarkt, Baden-Baden. HENKE,

K.-D., TROPPENS, S. (2009): „Volkskrankheiten“ – Begriffsbestimmungen aus Sicht Gesundheitsökonomie, in: Volkskrankheiten – Gesundheitliche Herausforderungen in Wohlstandsgesellschaft, S. 98-111.

der der

JOUMARD, I., ANDRÉ,C., AND NICQ, CH.: Health Care Systems: Efficiency and Institutions, Economics Department Working Papers No. 769. KICKBUSCH, I. (2009): Policy Innovation for Health, Berlin. KRÄMER, W. (2002): Statistik für die Westentasche, Münster. OECD (2010): Health Policy Studies, Value for Money in Health Spending. OROSZ, E. AND MORGAN, D. (2004): “SHA - Based National Health Accounts in Thirteen OECD Countries: A Comparative Analysis”, OECD Health Working Papers, No. 16.

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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Selected literature

OSTWALD, D. A., HENKE, K.-D., KIM, Z-G. ET AL. (2013): Nutzung und Weiterentwicklung des deutschen Gesundheitssatellitenkontos (GSK) zu einer Gesundheitswirtschaftlichen Gesamtrechnung (GGR), Forschungsprojekt im Auftrag des BMWi, in Druck. OSTWALD, D. A. (2008): Wachstums- und Beschäftigungseffekte der Gesundheitswirtschaft in Deutschland, Berlin. PARIS, V., M. DEVAUX AND L. WEI (2010): “Health Systems Institutional Characteristics: A Survey of 29 OECD Countries”, OECD Health Working Papers, No. 50, OECD. PHILIPS CENTER FOR HEALTH AND WELL-BEING (2012): The New Promise of Longevity, August 2012 Special Report. PORTER, M.E.: What is the Value in Health Care, Nengl.J.Med 363; 26; p. 2477-2481. PW C, WIFOR (2012): 112 – und niemand hilft, September 2012. SCHICK, A. (2009): Budgeting for Fiscal Space, OECD Journal on Budgeting, Vol. 2009/2. STATISTISCHES BUNDESAMT (2013a): Gesundheitsausgabenrechnung, in: Gesundheitsausgabenrechnung des Bundes. STATISTISCHES BUNDESAMT (2013b): Gesundheitspersonalrechnung, in: Gesundheitsausgabenrechnung des Bundes.

STATISTISCHES BUNDESAMT (2012a): Volkswirtschaftliche Gesamtrechnungen, Detaillierte Jahresergebnisse. STATISTISCHES BUNDESAMT (2012b): Beschäftigung und Umsatz der Betriebe des Verarbeitenden Gewerbes sowie des Bergbaus und der Gewinnung von Steinen und Erden, Fachserie 4 Reihe 4.1.1.

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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Selected literature STIFTERVERBAND FÜR DIE DEUTSCHE WISSENSCHAFT (2011): FuE-Datenreport 2011 - Tabellen und Daten.

TANDON, A. AND CASHIN, C.: Assessing Public Expenditure on Health From a Fiscal Space Perspective. WHO, REGIONALBÜRO FÜR EUROPA (2012): Handlungskonzepte und vorrangige Interventionen für ein gesundes Altern.

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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4. Summary and future research Health impact assessment (HIA) as a major scientific challenge

An HIA helps policy-makers to identify the likely health impacts of a decision in other fields – such as » building a major roadway, » planning for a city’s growth, or » developing a school curriculum. HIAs can help decision-makers identify » » » »

unintended health risks, reduce unnecessary costs, find practical solutions and leverage opportunities to improve the well-being of the community.

© 2013 WifOR | Prof. Dr. Klaus-Dirk Henke | The Economic and Health Dividend of Health Care and Health

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WifOR Darmstadt Rheinstraße 22 64283 Darmstadt Prof. Dr. Klaus-Dirk Henke Scientific Advisor

Dipl.-Wirtsch.-Ing. Julian Knippel Research Associate

WifOR Berlin c/o TU Berlin Steinplatz 2 10623 Berlin Phone Fax E-Mail Web

+49 6151 50155-0 +49 6151 50155-29 [email protected] www.wifor.de