Publication: October 2021
Short link to this post: https://bit.ly/3mDKJFx
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Author: Stephan DIETZEN

Key findings
  • As the EU’s main investment policy, Cohesion Policy can play a vital role in promoting health, improving access to health infrastructure and reducing health inequalities.
  • Around EUR 9 billion in ERDF and ESF funding were foreseen for health-related investments in the 2014-2020 period. Health infrastructure and access to healthcare were the main priorities. 39 million people benefited from new or modernised health services in the EU thanks to Cohesion Policy funding by the end of 2019.
  • Member States from Central and Eastern Europe were initially the biggest beneficiaries. Cohesion Policy funds were used for the modernisation of national healthcare systems.
  • The COVID-19 pandemic led to a sharp increase in allocations to the health sector: through the Coronavirus Response Investment Initiative (CRI) and the Coronavirus Response Initiative Plus (CRI+), EUR 7.4 billion have been reprogrammed to date.
  • In addition, EUR 4.3 billion has been allocated to date in support of health systems under REACT-EU. Overall, funding allocations for health are set to increase in 2021 and 2022.
  • COVID-related investments supported by the ERDF and ESF include the financing of medical and protective equipment, such as ventilators and masks, testing and treatment facilities as well as training and wage support for health personal and vulnerable groups. Spain and Italy, the EU Member States with the highest excess mortality rates due to COVID, have been the biggest beneficiaries so far.
  • Cohesion Policy will continue to promote health-related investments in the 2021-2027 period. As a lesson from the pandemic, the new ERDF and ESF regulations place a stronger focus on the resilience of national healthcare systems, including the purchase of critical medical supplies.
  • A key issue in the 2021-2027 period will be ensuring the synergies between Cohesion Policy and other EU funding programmes and instruments, such as the EU4Health programme and RescEU.
Introduction

Cohesion Policy is the EU’s main investment tool. In the 2021-2027 period, EUR 392 billion (in current prices) will be delivered through the European Regional Development Fund (ERDF), the Cohesion Fund (CF), the European Social Fund Plus (ESF+) and the Just Transition Fund (JTF). Cohesion Policy also represents a major source of public investment, in particular in the less-developed regions of Central, Eastern and Southern Europe. In line with its objective of promoting economic, territorial and social cohesion, Cohesion Policy can contribute to promoting health and to reducing existing health inequalities. This briefing first reviews the role of Cohesion Policy with regard to health in the 2014-2020 period before exploring the prospects and challenges that lie ahead. Particular attention is paid to the impact of the COVID-19 pandemic.

Context

Article 168 of the Treaty on the Functioning of the European Union (TFEU) stipulates that “a high level of human health protection shall be ensured in the definition and implementation of all Community policies and activities”. However, primary responsibility for health protection and healthcare systems in the EU lies with the Member States. In about two thirds of them, the design, delivery, management or funding of health services has been decentralised. EU health policy mainly serves to complement national policies, including through preventing and managing diseases, combating major health scourges, and promoting coordination among the Member States through the establishment of guidelines and indicators or exchange of best practices. One of the few areas in which the EU can act more independently include the safety of medicines and medical devices.

Health matters have gained prominence in recent years. The economic crisis in 2008 triggered debates on public spending and adequate levels of social protection. However, the pressure to reform national health systems had been building up well before the economic crisis took hold, due to an ageing population, the burden of chronic diseases, the cost of new technologies, and an overall increase in demand for healthcare. The COVID-19 pandemic has catapulted public health to the top of the EU’s policy agenda. It also highlighted the need to strengthen the resilience of national healthcare systems and for a stronger EU policy response.

The latest OECD “Health at a Glance: Europe 2020” report demonstrates that there are considerable differences in health indicators across the EU such as life expectancy, birth and mortality rates, chronic diseases, access to healthcare and infrastructure, the number and availability of doctors and healthcare professionals or the level of healthcare expenditure, as shown in Figure 1 below. Studies also show that health inequalities between EU countries and population groups continue to persist, with social determinants such as employment, income, education and ethnicity playing a key role.

Figure 1: Healthcare expenditure by inhabitant in 2018 (in Euros and Purchasing Power Standard - PPS)

While globally Europeans today live longer and healthier than their forefathers, substantial inequalities persist both between the Member States, (in particular an West vs. East divide) and within their populations (rich vs. poor). The latter are found in all Member States, across gender and age groups: the higher the social position (approximated by level of education, occupation, or position in the income distribution), the better the health. Health inequalities affect individuals and undermine societal well-being, as they put a greater demand on health care systems and other public services and reduce social cohesion.

The health sector is often portrayed as an “expenditure” rather than a key asset for regional development and competitiveness, which can help to reduce economic and social disparities. Health spending accounts for almost 10% of the GDP in the EU. Around 15% of the EU workforce is active in the sector3. The sector is vital to ensure the health and wellbeing of EU citizens as well as a leading position of the EU in the field of medical research and innovation.
As the EU’s main investment policy, Cohesion Policy can play a key role in promoting health-related investments and reducing health disparities, in line with its objective of promoting economic, territorial and social cohesion.

Cohesion policy and health in the 2014-2020 period

In the 2014-2020 period, health-related investments were supported under seven of Cohesion Policy’s eleven thematic objectives. Five thematic objectives (2-ICT; 3-SMEs; 8-Employment; 9-Social Inclusion; 11-institutional Capacity) explicitly include health interventions as key priorities for the ERDF and ESF.

Article 5 of the ERDF-Regulation lists the health-related investment priorities.

A Commission thematic guidance note further details the main types of actions that could be financed from the ERDF in the 2014-2020 period. These are:

  • Investments in health and social infrastructure to improve access to health and social services and reduce health inequalities;
  • Investments contributing to the modernisation of health systems, including e-health;
  • Targeted infrastructure investments to support the transition from institutional to community-based care;
  • Support for the physical and economic regeneration of deprived urban and rural communities including the Roma;
  • SMEs’ competitiveness in health services and products, including social innovation in the area of active and healthy ageing;
  • Cross-border cooperation in healthcare.

The latter is funded under the European Territorial Cooperation goal through Interreg-programmes, covering areas such as the cross-border mobility of patients and healthcare professionals, the access to high-quality healthcare (e.g. health and emergency services or joint hospitals for citizens living on both sides of the border), cross-border governance and research. In the 2014-2020 programming period, a total number of 169 healthcare-related projects was funded through Interreg-programmes, which is a substantial increase compared to the 2007-2013 programming period.

Article 3 of the ESF-Regulation lists the main health-related priorities for the ESF. These are further broken down in the Commission’s above-mentioned guidance note and include:

  • Measures to promote healthy lifestyles and tackle health risk factors;
  • Promoting active and healthy ageing;
  • Improving health and safety at work;
  • Support to the health workforce;
  • Enhancing access to affordable, sustainable and high-quality healthcare services.

In order to benefit from ERDF and ESF funding Member States had to demonstrate the existence of a national or regional strategic policy framework for health, as well as a dedicated budget and monitoring framework. Health-related investments also had to be based on a needs assessment and the principle of cost-effectiveness. The following intervention fields are used to track health-related investments from the ERDF and ESF:

Health-related intervention fields to track investments under ERDF and ESF in the 2014-2020 period

Initially, allocations for health-related investments from the ERDF and the ESF in the 2014-2020 period amounted to around EUR 9 billion. As shown in the below figure, the bulk of funding was foreseen for investments in health infrastructure (EUR 3.96 billion from ERDF), and access to health services including healthcare (EUR 3.71 billion, from ESF), followed by ICT solutions for health (EUR 979 million, ERDF) and active and healthy ageing (EUR 533 million, ESF).

Figure 2: Health-related allocations in the 2014-2020 period from ERDF and ESF

However, not all Member States planned significant EU investments in health initially. Figures show that it is mainly those from Central and Eastern Europe, countries with low levels of per capita expenditure for healthcare, who mobilised Cohesion Policy funds to invest in health infrastructure and access to healthcare, such as Poland and Romania. A case in point is Bulgaria, which was granted more than EUR 71 million from the ERDF for the modernisation of its emergency healthcare services in 2018 (see figure 3 below).

Figure 3: ERDF funding for the modernisation of emergency healthcare services in Bulgaria

By contrast, the richer EU Member States have significant national budgets for health and lower per capita EU funding. Thus, they prioritise their investments in other areas such as research and competitiveness. In some EU Member States, such as Spain, ESF funding was also used to support the implementation of the country-specific recommendations (CSRs) in the framework of the European Semester, including on the reform of national healthcare systems.

According to the Commission, 39 million people benefited from new or modernised health services in the EU thanks to Cohesion Policy funding by the end of 2019. However, this figure needs to be treated with caution as it is still too early to measure the impact of Cohesion Policy spending. An ex-post evaluation to assess the effectiveness of Cohesion Policy spending will only be carried out in 2024, with the Commission synthezising these evaluations in 2025. The below figure shows that a large portion of the funds for health-related investments has already been committed by national authorities but not yet spent; Member States have until the end of 2023 to do so.

Figure 4: Progress in Cohesion Policy investments in health services, In billion EUR (31 December 2020)
The COVID-19 pandemic and the CRI/ CRI + measures

The outbreak of the COVID-19 pandemic underscored the crucial importance of the health sector. In March and April 2021, the Commission presented the Coronavirus Response Investment Initiative (CRII) and the Coronavirus Response Investment Initiative Plus (CRII+) to mobilise support from EU Cohesion Policy in the face of the crisis. Both packages, which were swiftly approved by Parliament and Council, do not offer any new funds; they rather provide for more flexibility to use existing, unspent resources and redirect them where they are needed most, including through transfers across Cohesion Policy funds and programmes. By 21 September 2021, these reallocations had resulted in an increase of EUR 7.4 billion for health actions at EU level.

COVID-19 related investments include the financing of health and medical equipment such as ventilators and masks, medicines, testing and treatment facilities, training and supplementary wage support to health personal and vulnerable groups (e.g. medical assistance by home care services). By far the biggest beneficiaries were Spain and Italy, the EU Member States with the highest excess mortality rates due to COVID-19. Both countries also experienced significant spending cuts in healthcare in the wake of the 2008 economic and financial crisis. For concrete examples on how Member States and regions used Cohesion Policy support for health-related investments, see the box below.

Cohesion Policy and COVID-19: Examples

The Commission has defined specific COVID-19 related targets to be achieved by Member States. These include for instance the purchasing of 2.3 billion items of personal protective equipment for health services; 4500 ventilators; the creation of 5000 additional beds and 246 additional ambulances.

Impact of REACT-EU

The “Recovery Assistance for Cohesion and the Territories of Europe” or “REACT-EU” provides EUR 50.6 billion (current prices) in additional resources to existing Cohesion Policy programmes for the years 2021 and 2022. It is funded from the EU Recovery Plan – “Next Generation EU” and focuses on crisis repair and recovery measures linked to the COVID-19 pandemic, including in the healthsector.

The majority of funding is available for programming in 2021 (EUR 39.8 billion), the rest in 2022 (EUR 10.8 billion). By 15 September 2021, an additional EUR 4.3 billion were allocated in support of healthcare systems from the ERDF under REACT-EU. By far the biggest beneficiary (EUR 2.59 billion) was Spain.

Figure 5: Additional ERDF allocations to healthcare under REACT-EU, in billion EUR (15 September 2021)
Cohesion policy and health in the 2021-2027 period

Cohesion Policy will continue to support health-related investments also in the period 2021-2027. Article 3 of the Regulation on the ERDF and Cohesion Fund lists “ensuring equal access to health care and fostering resilience of health systems, including primary care” as well as “promoting the transition from institutional to family-based and community-based care” as specific objectives for the ERDF. As a lesson from the COVID-19 pandemic, the ERDF places a stronger emphasis on the resilience of national healthcare systems and on strengthening the capability of public health systems to prevent, respond to, and recover from health emergencies. According to Article 5, the scope of support from the ERDF is broadened to allow for the purchase of critical medical supplies and equipment. The regulation also lays down a number of common output and result indicators for health-related investments to measure performance, including the capacity of health care facilities and the number of annual users of health care services.

The ERDF will also continue to support health-related actions in a cross-border context (Interreg-programmes), including under the new strand on outermost regions.

The new European Social Fund Plus (ESF+) will focus on enhancing “active and healthy ageing and a healthy and well-adapted working environment”, “equal and timely access to quality, sustainable and affordable healthcare services, and “the effectiveness and resilience of healthcare systems and long-term care”, according to Article 4 of the ESF+ Regulation. The ESF+ will also support policy and system reforms, including in access to healthcare, and the implementation of relevant country-specific recommendations in the framework of the European Semester.

In addition, the new Just Transition Fund, equipped with EUR 17.5 billion, may address the health-related impacts of the transition to a climate neutral economy.

The Common Provisions Regulation lays down the following health-related intervention fields, which will be used by Member States to categorise their expenditure and report to the Commission:

Intervention fields to track health-related investments under the ERDF, the ESF+ and the JTF in the 2021-2027 period

The level of funding dedicated to healthcare in the 2021-27 period is not yet known. Member States and regions are currently in the process of drafting Partnership Agreements and operational programmes, which will set out their needs, priorities and strategies, including in the area of health.

Synergies with other EU funding programmes

Apart from Cohesion Policy, other EU funding programmes and instruments will provide funding for health in the 2021-2027 period. There are certain thematic overlaps with Cohesion Policy, and both the ERDF and the ESF+ Regulations highlight the need for ensuring synergies and complementarities with Cohesion Policy funding. This applies in particular to the EU4Health Programme and RescEU.

The EU4Health programme will invest EUR 5.3 billion in creating a comprehensive framework for EU health crisis prevention, preparedness and response to help ensure that the EU is equipped with the critical capacity to react to future health crises rapidly. Funding will be provided, among others, to strengthening the resilience of national healthcare systems, improving medicinal products and addressing cross-border health threats.

The “RescEU medical reserve” in the framework of the EU Civil Protection Mechanism supports the creation and the swift delivery of stockpiles for emergency medical supplies. The stockpile, currently hosted by 9 EU Member States (Belgium, Denmark, Germany, Greece, Hungary, Romania, Slovenia, Sweden, and The Netherlands), allows the EU to react to health crises more quickly. In the context of the COVID-19 pandemic, more than 3.5 million protective masks, along with ventilators and other equipment were distributed to countries most in need. The Regulation on the ERDF and the Cohesion Fund stresses that the purchasing of medical supplies through the ERDF must not go beyond national health strategies and ensure complementarity with the EU4Health programme and RescEU.

Other EU funding instruments relevant for health in the 2021-2027 period are the European Union Solidarity Fund (EUSF), whose scope has been extended in April 2020 to encompass major public health emergencies; Horizon Europe, for actions relating to health research, including on cancer; the Digital Europe Programme and the Connecting Europe Facility, for actions relating to digital infrastructure and digital health; and last but not least the Recovery and Resilience Facility (RRF), the centrepiece of Next Generation EU, which allows for investments promoting “health, and economic, social and institutional resilience”. The latter may include health infrastructure, health equipment, health mobile assets, digitalisation in healthcare, measures encouraging active and healthy aging, improving the accessibility, effectiveness and resilience of healthcare systems, and e-health services and applications.

The role of the European Parliament

The European Parliament has consistently promoted the use of Cohesion Policy funds for health-related investments, both through its role as a legislator and as a budgetary authority. The Parliament highlighted the importance of investing in health infrastructure and healthcare in its positions on the 2021-2027 Cohesion Policy Regulations. In the wake of the outbreak of the COVID-19 pandemic, Parliament underlined the need for channelling available Cohesion Policy funds, including for healthcare, quickly to citizens, regions and countries hit hardest by the pandemic. Following the adoption of the CRI and CRI+ packages by the Commission, the Committee on Regional Development (REGI) took the lead and requested the use of the “urgent procedure”, referring the Commission’s proposal to plenary without amendments, so that implementation could start quickly. The REGI committee also reinforced the REACT-EU package, defending it against the budgetary cuts proposed by the Council. In this context, Members insisted that resources must reach the most affected regions and underlined the crucial importance of investments focusing on health and social infrastructure, health systems and services for all, including in cross-border areas. Finally, the Parliament also supported the extension of the scope of the European Solidarity Fund to also cover public health emergencies.

Link to the full publication: https://bit.ly/690-903

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