The Portugal System

Today we lay out the case for the Portugal Healthcare system referred to in the CATO institute report. The Grass Is Not Always Greener: A Look at National Health Care Systems Around the World Michael D. Tanner Cato Institute: Policy Analysis

Portugal

The Portuguese health care system is a classic, universal, centrally run National Health System, a single-payer system funded through taxes with comprehensive benefits provided free or with little cost at the point of service.(171) Also, a number of occupation-related health insurance schemes—originally intended to be integrated into the NHS—now coexist with it.

The primary source of care is the NHS, which is funded primarily through general tax revenues, accounting for approximately 13 percent of all government expenditures.(172) In theory, the NHS operates within an annual global budget for health care spending. In reality, it regularly exceeds this budget by a wide margin, necessitating supplemental funding. Portugal is one of the few OECD countries where public health care spending has been rising as a proportion of total health spending, up more than four percentage points since 1997.(173)

Theoretically, benefits under the NHS include all necessary inpatient and outpatient health care services including specialists, diagnostic tests, mother and child care, and prescription drugs. On paper, no health-related expense is specifically excluded from coverage by the NHS, though in reality services such as dental care and rehabilitation therapy are seldom provided.(174) Copayments are required for diagnostic tests, hospital admissions, consultations with specialists, and prescription drugs, where copayments can run to 40 percent or higher.(175)

Primary care physicians and hospitalbased physicians are public employees, paid directly by the NHS. However, NHS doctors are permitted to practice privately as well, and roughly half do so.(176) Specialists are often in private practice and are reimbursed by the NHS on a contractual basis.

About 25 percent of the population, mostly government workers, military, telecommunication workers, and their families, remain under a series of industry or occupation-based insurance schemes, known collectively as “subsystems,” which are a legacy of the country’s pre-NHS health care system.(177) These plans were originally intended to be incorporated into the NHS, but their powerful constituencies have prevented that from occurring. Participants in the subsystems pay a premium equal to approximately 1 percent of their salary. Benefits are generally superior to those offered through the NHS.(178) Not surprisingly, premiums fall far short of what is needed to finance benefits. The resulting shortfall is shifted to the NHS.

In addition, approximately 10 percent of the population has private insurance, usually through their employer.(179) Private insurance generally pays for hospital and specialty care but not for primary care physicians. Policies are medically underwritten and have no requirement for renewability, meaning insurers can raise premiums or drop customers with extremely high claims.(180)

Choice of provider is heavily constrained under the NHS. Every citizen must choose a primary care physician from a list of those available within a specified geographic area. This area is usually based on the person’s area of residence but may be based on the area of employment. The average general practitioner serves as many as 1,500 people, though some may have more than 2,000 patients, leading to long waits and difficulties in getting appointments. People may change GPs only by applying in writing to the NHS and explaining their reasons.(181)

Access to specialists or hospital care, except in emergencies, requires referral from the patient’s GP. Since this is often difficult to secure in a timely manner, patients often seek care through hospital emergency rooms. By some estimates, at least 25 percent of emergency room patients do not need immediate treatment.(182)

Despite guarantees of “universal coverage,” access to care remains a serious problem. Waiting lists are so long and so prevalent that the European Observatory on Health Systems says that they veer toward “de facto rationing.”(183) Currently, more than 150,000 Portuguese are on waiting lists for surgery, out of a population of just 10.6 million.(184) However, that may understate the problem in poorer and rural areas, which have fewer health resources and less access to care.(185) Modern health technology is far less available than in the United States. The United States has almost seven times more MRI units per million people, and 20 percent more CT scanners.(186)

To avoid waiting lists, Portuguese patients frequently pay out of pocket to see physicians in private practice. In some cases, Portuguese patients have crossed the border to receive treatment in Spain.(187)

While there appears to be a consensus in Portugal that the system needs some kind of reform, weak governments and strong structural interest groups have combined to prevent the development of any consensus over the direction reform should take.(188) For the moment, Portugal drifts.