Massimo Bordignon, Buso M, Rossella Levaggi, Gilberto Turati. (2020).

Chapter 2: Health Policy, Private investment with social benefits under uncertainty: The dark side of public financing. in European Parliament, Directorate-General for Parliamentary Research Services, Saulnier, J., Improving the quality of public spending in Europe – Budgetary ‘waste rates’ in EU Member States, European Parliament, 2020 Available at op.europa.eu.

Main findings

• Economies of scale and spill-overs cannot be used as efficiency arguments to justify a reallocation of core competences (curative and long-term care) at the EU level. However, the EU intervention may still be justified on equity ground since healthy life years across MS are still very heterogeneous.
• On the other hand, for the procurement and the prevention sub-functions, countries average efficiency scores are much lower and this inefficiency is due to both scale inefficiency and cross-border spill-over effects. In other words, these competences could be better managed at the EU level.
• According to our estimations, a reallocation of competences to the EUlevel would imply for procurement an average increase in Member States’ efficiency scores by 12%, saving 17 billion € and for prevention, an improvement in efficiency of 13%, saving 3.5 billion €. These estimates take into account differences in purchasing power among countres.
• In terms of budgetary consequences, allocating the entire current MS spending on procurement and prevention at the EU level would imply an additional spending at this level by 1.4% of GDP per year.
• Procurement and prevention spending also present important cross-border spill-over effects, which lead to inefficiency. For procurement, countries increase their spending in neighbouring countries are spending more; for prevention, a higher spending from neighbouring countries decreases the percentage of total internal deaths due to infectious disease, but also the percentage of people aged 65 and over that decide to vaccinate against influenza.
• The coordination of policies in the prevention and procurement fields would allow Member States to exploit economies of scale and internalize spill-overs, choosing more efficiently the optimal level of spending.
• For R&D spending, data are not sufficient to run a formal analysis. However, the COVID-19 pandemic has shown that managing research (especially when it concerns vaccines and new drugs) at the EU level may be beneficial for Member States and may help to reduce inequalities in access to health care.