The European union has a health-care headache

December 1, 2004

Free Market Foundation

Recently the European Union proposed to remove market barriers in an effort to legislate a single market for services, particularly in health care. This proposal comes after the European Court of Justice, Europe’s highest court, ruled in favour of a German civil servant demanding medical reimbursement after travelling to Italy for health care.

The court said individual countries can choose their own social-security and health-care systems, but they must do so in a way that is compatible with EU law, meaning without creating national barriers for services:

EU health care systems don’t have much competition at the moment, and competition is a major source of quick implementation of new innovations, says one European health official.

With the euro-zone economy growing at a tepid 1.7 percent and unemployment at 9 percent, legislators in Brussels are interested in eliminating state barriers to boost European competitiveness and economic growth.

Non-manufacturing services account for more than 50 percent of Europe’s gross domestic product and 60 percent of employment; social services like health care are a big part of that, say observers.

The European health care industry hopes erasing such borders can spur demand for new medical technology and improve care. However, in a bloc with 25 different health care systems and pricing schemes, countries fear that allowing people to shop around for health services could be messy, or worse.

Source: Hannah Karp, EU Has Health-Care Headache, Wall Street Journal, November 12, 2004.

For WSJ text (subscription required) http://online.wsj.com/article/0,,SB110012391199170570-search,00.html

For more on Health Care Systems of Other Countrieshttp://www.ncpa.org/iss/hea/

FMF Policy Bulletin/ 23 November 2004