Health expenditures. What about the N-2 methodology?

On the eve of the government meeting at which the draft budget for 2024 is expected to be adopted, FPP published another, the eighth Health Care Financing Monitor, and Lukasz Kozlowski, FPP's chief economist, presented the outlook for health care financing in the next four years, primarily in relation to the feasibility of implementing the 7% of GDP health law - in its current form (i.e., using the N-2 methodology, which relates current health spending to GDP two years ago).

- If we look at local government hospitals, whose reports are included in the Ministry of Health's aggregate statistics, we see that between 2017 and 2022 the share of wages in the total costs of these units increased 64 to 70 percent. The pool that pertains to items other than wages decreased by one-fifth in real terms," said Lukasz Kozlowski.

As he explained, costs in the health care system and medical entities have increased in every area. But while the cost of food, for example, has risen by a third and medicine by 39 percent, the cost of salaries of full-time employees has already risen by 59 percent, and those of medical workers who work under contracts by 88 percent.

The outlook for health expenditures for the coming year is alarming. In the year that is ending, using statutory methodology, we are spending well over 7 percent of GDP on health (although the statutory minimum target is 6 percent). Next year - counting the same - we assume spending only 6.21 percent of GDP (the statutory target is 6.2 percent). Realistically, it's 5.5 percent and 5.07 percent, respectively. Whichever way you look at it, medical entities will suffer a real decrease in funding.

It is worth remembering that over the past four years, the parties forming the government majority today have promised to remove the N-2 methodology from the law (and some coalition partners even announced an immediate increase in health spending to 7 or even 8 percent of GDP). Meanwhile, experts point to a massive loophole that makes it impossible - for the moment - to even remove the N-2 provision from the law. "In order for public health spending to be 7% of GDP in real terms in 2027, health spending should rise to at least PLN 317 billion. Meanwhile, taking into account the current rate and base of the health contribution and the level of budget subsidies provided so far in relation to GDP, the level of health financing can be expected to rise to PLN 229.1 billion, Lukasz Kozlowski calculated.