45
3. Health Politics under Suspicion – a Public Choice
Perspective
3.1. Introduction
Health care reform acts are always a ? ne balance for politicians. Due to the fact that
“health” is the most valuable good in human life, people have highly sensitive reactions to reductions in health care provision. Moreover, the false understanding of
health care as a public good results in negative attitudes towards co-payments or increasing contribution rates. For these reasons, politicians are caught in a dilemma of
interests: on the one hand, votes-maximizing politicians should aspire to a comprehensive health care provision without placing a higher burden on the population. On the
other hand, the ageing demographics as well as technological progress escalate costs
and necessitate higher ? nancial funding or lower service offered, what in turn worsens
re-election chances. The question arises of how politicians deal with this dilemma of
interests.
Obviously, if changes in policy to the disadvantage of the insurants are associated
with the loss of votes, politicians should favour cost cuttings at the expense of health
care suppliers. But the medical fraternity has especially close relationships to patients
and act as opinion multipliers. Accordingly, burdening physicians could hardly be
used as a votes-maximizing strategy. In contrast, pharmaceutical business companies
possess only minor in? uence on public opinion and in fact have a bad reputation
among broad population demographics. It can be supposed that savings at the expense
of the pharmaceutical industry are more likely to gain votes than bene? t cuts or increasing contribution rates. But again politicians are caught in a trap because the pharmaceutical industry is one of the most important economic sectors in Germany and a
key industry for economical prosperity.
This chapter tries to evaluate how politics deals with these problems. Empirical
data will be presented and econometric tests will show the existence of interrelations
between pharmaceutical expenditure and the elections for the German Bundestag
(Lower House of German Parliament). The results presented give rise to the hypothesis that politicians deliberately use health policy for pursuing votes and clientele oriented interests.
The chapter is organised as follows: section 3.2 gives a short outline of the development of drug expenditure in Germany in the past. The almost linear growth trend
proves that governments had obviously failed to achieve the of? cial declared goal of
cost-containment. In scienti? c literature, this political ineffectiveness is usually explained with the theory of “negotiation democracy”, which is presented in section 3.3.
We augment this approach by introducing the public choice view in section 3.4. To test
the hypothesis that health politics is in? uenced by politicians’ own interests, in section
3.5 an econometric model is speci? ed. We run two regressions, an ordinary least
squares (OLS) regression and an error correction model (ECM). Section 3.6 checks if
46
the attained results correspond with empirical observations. Finally, section 3.7 will
state the conclusion.
3.2. Development of Drug Expenditure
With around € 25 billion, the drug sales volume29 of the “German Statutory Health
Insurance System” (SHI) once again reached a record high in 2005.30 Between 1983
and 2005 drug disbursements have increased by more than 230 %. In contrast, German
GDP has increased by only 160 % (nominal values). Especially within the last decade,
the drug expenditure development has become more dynamic. As a consequence the
ratio of drug expenditure to total SHI expenditure has grown from 13.9 % in 1993 to
17 % in 2005. The comparably strong rise of drug costs motivated the legislator to introduce a series of reform acts and to establish a complex regulatory framework.31
Figure 3.1 delivers an overview of cost development and the most important reforms.
Figure 3.1: SHI Drug Expenditure 1983 - 2005 and Health Care Reform Acts (selection).
100
150
200
250
300
198
3
198
5
198
7
198
9
19
91
19
93
19
95
19
97
19
99
20
01
20
03
20
05
Index (1983 = 100
%
)
Year
Health Care
Modernisation Act
7th Health Care System
Modification Act
Drug Budget
Replacement Act
Health Care
Reform Act
Health Care
Structure Act
Source: Based on data from the Federal Statistical Of? ce and Schwabe/Paffrath (several volumes).
From 1992 inclusive the new German Laender.
29 The drug sales volume is the gross turnover of pharmacies with reimbursed, ? nished product
pharmaceuticals.
30 The data from this section are taken from the SHI-Drug-Index of the Scienti? c Institute of the
Health Care Fund (WIdO), published in Schwabe & Paffrath (volumes 1985 - 2006) and from
the Ministry of Health (2006a).
31 For detailed information about the regulatory framework see Schreyögg et al. (2004).
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References
Zusammenfassung
Der Arzneimittelsektor der Gesetzlichen Krankenversicherung stand wiederholt im Fokus zahlreicher Gesundheitsreformen. Dennoch ist es bislang nicht gelungen, den Trend steigender Ausgaben nachhaltig zu bremsen. Die vorliegende Untersuchung leistet einen Beitrag dazu, die Ursachen dieser Entwicklung zu erklären und Lösungsansätze aufzuzeigen. Mittels Hauptkomponenten- und Cluster-Analyse wurden Gruppen von Arzneimitteln mit vergleichbaren Konsumeigenschaften gebildet. Jede Gruppe wurde auf den Einfluss der Altersabhängigkeit und des technologischen Fortschritts hin analysiert. Aufbauend auf diesen Ergebnissen wurde eine Prognose der zukünftigen Ausgabenentwicklung bis zum Jahr 2050 erstellt. Obwohl die Hauptkostenfaktoren exogen sind, steht der Gesetzgeber dem vorhergesagten ansteigenden Kostenpfad nicht hilflos gegenüber. Im Gegenteil: Anhand ökonometrischer Tests wird gezeigt, dass die Gesundheitspolitik in der Vergangenheit durch wahl- und klientelorientierte Interessendurchsetzung geprägt war. Mehr Effizienz in der Arzneimittelversorgung könnte durch die Einführung individueller Gesundheitssparkonten erzielt werden. Dies bestätigen die Resultate eines vertikal differenzierten Wettbewerbsmodells.