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Health insurance in Europe Social health insurance - in Germany

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					 Health insurance in Europe:
 Social health insurance - in
Germany, western Europe, CEE

    Reinhard Busse, Prof. Dr. med. MPH
         Professor of Health Care Management,
             Technische Universität Berlin
             Associate Research Director,
     European Observatory on Health Care Systems
• Social health
insurance countries
in western Europe
• Central and
eastern Europe
(Semashko to SHI)
• Tax-based
systems in western
Europe
     Social Health Insurance or Bismarckian
           countries in western Europe


• SHI definition
• Commonalities and
variations between
countries
•In-depth description
of Germany
     What makes a health system a SHI system?
        Contribution Third-party payer
         collector
Not (health) risk-, but
usually wage-related
contribution




  Population                      Providers
   A reminder to the session on
       funding health care:
• Taxes on income (usually progressive) and on goods
  and services (VAT; proportional):
  not earmarked, no link to benefits = NHS
• Contributions on income (proportional; often only on
  wages, sometimes capped = regressive):
  earmarked, weak/ no link to benefits = SHI
           • Fixed premium per head: „community rating“
• Premiums depending on age, sex, pre-existing illness
  etc. (usually regressive): earmarked, link to individual
  benefits = PHI
               • Out-of-pocket
    What makes a health system a SHI system?
       Contribution Third-party payer
        collector   = sickness funds
                             bipartite self-government
Not (health) risk-, but
usually wage-related
contribution            Limited
                      government
                        control


  Population                        Providers
   Principal organisational forms
         of sickness funds
• One national monopoly fund
• Several regional monopoly funds
• Several monopoly funds organised on other principles
  (e.g. occupation)
• Several funds in competition
                   • Bi-partite: self-government is shared
                         between employers and employees
                                  – government supervises
           (tri-partite = government participates directly)
    What makes a health system a SHI system?
       Contribution Third-party payer
        collector   = sickness funds
                             bipartite self-government
Not (health) risk-, but
usually wage-related
contribution            Limited
                      government
 Choice of fund         control


  Population                        Providers
Mandatory insurance                 Public-private mix
  Public-private ownership in
    Bismarckian countries
              Public   Not-for-   For profit
                       profit
Austria       69%      26%        5%
Belgium       60%      40%
France        65%      15%        20%
Germany       55%      38%        7%
Luxembourg    50%      50%
Netherlands            100%
    What makes a health system a SHI system?
       Contribution Third-party payer
        collector   = sickness funds
                             bipartite self-government
Not (health) risk-, but
usually wage-related
contribution            Limited
                                   Contracts
                      government
 Choice of fund         control

                    Free access
  Population                        Providers
Mandatory insurance                 Public-private mix
      Contribution collector   Payer




     Insured                           Provider


• 100% population coverage in Austria, Belgium,
  France, Luxembourg, Switzerland (since 1996!)
• 75% mandatory and 13% voluntary coverage in
  Germany (choice between SHI and PHI)
• 65% coverage in Netherlands (no choice!)
       Contribution collector   Payer




      Insured                           Provider

• Government (Belgium, France, Netherlands)
• Union of sickness funds (Luxembourg)
• Individual sickness funds (Austria, Germany,
  Switzerland)
       Contribution collector   Payer




      Insured                           Provider


• Pre-determined membership in Austria, France,
  Germany (until 1995) and Luxembourg
• Free choice of fund in Belgium, Netherlands
  (1993-), Germany (1996-) and Switzerland
           Contribution collector     Payer




         Insured                              Provider
• Uniform rate in Austria, Belgium, France, Luxembourg and
  Netherlands (+ differing per-capita premium); differing rate
  in Germany; per-capita premium in Switzerland.
• Contribution cap in Austria and Germany but not in
  Belgium and France.
• France: in 1999 change from income-related contribution
  (8.9%) to tax on total income (8,25%)
• In the Netherlands, privately insured subsidise SHI, in
  Germany not.
      Contribution collector         Payer




     Insured                                 Provider

            Number of sickness funds
       A*      B*      CH      D*    F*      L*    NL
1992 26        127     191     1223 19       9     27
2002 24        100     93      355   18      9     24

 * typical bi-partite government
          Contribution collector   Payer




     Insured/ patient                      Provider

• allocation (Belgium, Netherlands) or re-allocation
  (Germany, Switzerland)
• area of allocation: nation vs. region (Switzerland),
  degree of retrospective compensation (not in
  Germany and Switzerland), differing factors in the
  formulas (e.g. region in NL), different types of
  expenditure included, use of high-risk pool
         Contribution collector   Payer




    Insured/ patient                      Provider
• all SHI systems are traditionally multi-payer
  systems – problem: weak cost-control
• solutions: budgets – via state (Austria, France) or
             collective contracts
  (problem: contradict competition between funds)
• Netherlands: collective contracts will be illegal –
  but: funds hardly use selective contracts and
  reimbursement at lower than maximum rates
        Contribution collector   Payer




       Patient                           Provider

• Free access = feature of SHI systems (except NL):
  Gatekeeping = more effective, cheaper, but less
  popular?
• Attempts in the Netherlands to separate “core”
  benefits from others (to be paid for privately) has
  failed: dental care was partly re-introduced; not
  covered services make up only 3% of expenditure
But SHI are more                        supra-national institutions
complicated
...                                                  SHI risk
                                                      pooler
                              SHI                                         SHI payer =
                            revenue                                        sickness
                            collector                                        funds

                                                     Tax collector


                                                    Private
                                                  insurance
government




                                           Other social




                                                                                                   courts
                                            insurance




                                                                Public
                                                                Health
             Insurees and                                        pro-
                                                                viders   Acute care
             employers
                                                                         providers      Long-
                                                                                         term
                                                                                         care
                    Patients
                                                                                         pro-
                                                                                        viders    and
                                                                                             currently
                                                                                        studied by the
                                                   parliament
                                                                                 European Observatory
      Case study
    Germany
More information and
 full report available
          at:
 www.observatory.dk
Federalism,
German-style:
• Not devolved,
but „bottom-up“
•Powers not explicitly
given to the federal level
remain with the „Länder“
•Länder have
considerable power
through Federal Council
Germany: A note on terminology

We will speak mainly about
statutory (or social) health insurance [SHI],
even though it
covers “only“ 89% of the population (75%
mandatorily and 14% voluntarily) and
spends around 60% of all health care
expenditure.
              Third-party payer
                             = sickness funds
   Not (health) risk-,         with self-government,
   but wage-related               organised in associations

   contribution          Strong
                                         Contracts,
                       delegation
 Choice of fund                          mostly collective
                        & limited
                governmental control
                      Free access
 Population                            Providers
Mandatory SHI for                      Public-private mix,
75%, open for others                   organised in associations
    Federal Ministry                       Proposal for health                                                              Federal Parliament
                                              reform acts
       of Health                                                                                                                                                                                                                                representation            State Ministries
                                                                         Fed. Assembly (Bundestag)                                                                            Federal Council (Bundesrat)                                                              responsible for health
                                                                                                                                                                                                                            supervision

                                                                                                                    Legislative frame




                                                                                                                                                                                                                                                                                       Hospital plan
                                                                                                                                                                                                                          Obligation to secure hospital care



                                                                         t
                                                                                                                            Insuree/ Patient                                                                                 Ob
                                                                                                                                                                                                                                liga
                                                                     re a             se                                                                                                                             Fre             tion
                                                                to t              hoo                                                                                                                                    edo
                                                                                                                                                                                                                            mt            to t
                                                           tion              to c                                                                                                                                              oc              re a
                                                      lig a           edo
                                                                           m                                                                                                                                                      hoo               t
                                                    Ob           Fre                                                                                                                                                                   se
                                                                                                                        re
                                                                                                                      cu
                                                                                                                    se
                                                                                                                  to care
                                                                                                                 n ry
                                                                                                              tio




                                                                                                                                                     Obligation to contract
                                                                                                            ga ato




                                                                                                                                 Freedom to choose
                                         Physician                                                       bli bul
                                                                                                        O m                                                                                                                                      Hospital




                                                                                                                                                                                             Financial negotiation
                                                                                                           a

                                (Regional) Physicians’                                                                                                                                                                                   Regional Hospital




                                                                                           Financial negotiation
                                    Associations                                                                                                                                                                                           Organization
                             Federal Association of SHI                                                                                                                                                                                   Federal Hospital
       Supervision                  Physicians                                                                                                                                                                                             Organization

                     Supervision of country-wide funds (via Federal Insurance                                                                                                                                                          Supervision of regional funds
                                              Office)                                                                       Sickness fund
                                                                                                                    Sickness funds in one region                                                                                                                  Supervision
                             Supervision
                                                                                                                   Federal associations of sickness
                        Fed. Com. of Physicians and
                                                                                                                               funds
Supervision
                        Sickness Funds: Decisions on
                             ambulatory benefits

                            Valuation Committee:
                        Setting of relative point values




                                                                                                                                                     Statutory health insurance 1998
    Federal Ministry                       Proposal for health                                                              Federal Parliament
                                              reform acts
       of Health                                                                                                                                                                                                                                representation            State Ministries
                                                                         Fed. Assembly (Bundestag)                                                                            Federal Council (Bundesrat)                                                              responsible for health
                                                                                                                                                                                                                            supervision

                                                                                                                    Legislative frame




                                                                                                                                                                                                                                                                                       Hospital plan
                                                                                                                                                                                                                          Obligation to secure hospital care



                                                                         t
                                                                                                                            Insuree/ Patient                                                                                 Ob
                                                                                                                                                                                                                                liga
                                                                     re a             se                                                                                                                             Fre             tion
                                                                to t              hoo                                                                                                                                    edo
                                                                                                                                                                                                                            mt            to t
                                                           tion              to c                                                                                                                                              oc              re a
                                                      lig a           edo
                                                                           m                                                                                                                                                      hoo               t
                                                    Ob           Fre                                                                                                                                                                   se
                                                                                                                        re
                                                                                                                      cu
                                                                                                                    se
                                                                                                                  to care
                                                                                                                 n ry
                                                                                                              tio




                                                                                                                                                     Obligation to contract
                                                                                                            ga ato




                                                                                                                                 Freedom to choose
                                         Physician                                                       bli bul
                                                                                                        O m                                                                                                                                      Hospital




                                                                                                                                                                                             Financial negotiation
                                                                                                           a

                                (Regional) Physicians’                                                                                                                                                                                   Regional Hospital




                                                                                           Financial negotiation
                                    Associations                                                                                                                                                                                           Organization
                             Federal Association of SHI                                                                                                                                                                                   Federal Hospital
       Supervision                  Physicians                                                                                                                                                                                             Organization

                     Supervision of country-wide funds (via Federal Insurance                                                                                                                                                          Supervision of regional funds
                                              Office)                                                                       Sickness fund
                                                                                                                    Sickness funds in one region                                                                                                                  Supervision
                             Supervision
                                                                                                                   Federal associations of sickness
                        Fed. Com. of Physicians and
                                                                                                                               funds
Supervision
                        Sickness Funds: Decisions on
                             ambulatory benefits

                            Valuation Committee:                            Federal level
                        Setting of relative point values




                                                                                                                                                     Statutory health insurance 1998
• An important aspect of self-regulation is termed "joint self-
  regulation" by (at least) two different actors. This type comes
  in two different forms: 1. Negotiations followed by contracts
  and 2. decisions by joint committees. While some delegated
  tasks always require decisions by joint committees (e.g.
  defining the benefits), others are only decided by joint com-
  mittees if no agreement can be found in open negotiations
  (e.g. on the budget for ambulatory care). In still others, a
  joint committee is the first level of appeal against decisions
  of another joint com-mittee (e.g. in the case of claims
  review).
• On the federal level, joint self-regulatory institutions in the
  German system include the Federal Committee of Physicians
  and Sickness Funds, the Federal Committee of Dentists and
  Sickness Funds, the Valuation Committee, the Extended
  Valuation Committee.
      A substantial list of tasks is legally delegated to self-
                          regulatory bodies:
•   · defining the ambulatory benefits catalogue in detail;
•   · defining rules for physicians’ service delivery;
•   · setting the relative weight for reimbursement to outpatient physicians;
•   · determining the budget for ambulatory care and the spending cap for
    pharmaceuticals;
•   · setting the rules for opening new physicians‘ practices ("needs-based
    planning") and deciding upon the actual opening of new practices;
•   · defining the rules for and conducting the evaluation of appropriateness,
    quality and efficiency of the service delivery of physicians (utilisation
    review);
•   · selecting appropriate groups of pharmaceuticals for reference price-
    setting and determining the actual reference prices;
•   · defining the prescription chain for outpatient pharmaceuticals among
    sickness fund, physician, patient, and pharmacy;
•   · defining benefits, prices and conditions for service delivery in the areas
    of medical devices, non-physicians services, nursing care at home,
    ambulance transportation, ambulatory rehabilitation.
   Problem 1: sectorisation of
      health care delivery
• state-run public health service: decreasing as
  many activities (immunizations, screening ...)
  have moved to ambulatory sector
• office-based ambulatory care: powerful and
  still growing with full range of specialties
• hospitals concentrating on inpatient care (no
  regular out-patient departments)
• plus rehabilitation etc.
          Why this separation?
  different history, development and legislative
  framework:
• ambulatory care = “battle-field“ between
  physicians and sickness funds resulting in
  delivery monopoly for physicians´ associations
  but joint decision-making under federal law
• hospitals = originally not included in constitution,
  i.e. in responsibility of states, later transferred
  into joint federal-state responsibility
      Differences in planning,
      regulation and financing
• Benefits: A = decided jointly by physicians and
  sickness funds, H = not explicit
• Capacity planning & accreditation: A = jointly
  by physicians and sickness funds, H = by states
• Reimbursement: A = according to uniform fee
  schedule but depending on overall utilization,
  H = mainly by per-diems, differing from hospital
  to hospital (DRGs from 2003); both under
  separate budgets
  Problem 2: Rising expenditure
and attempts to solve the problem
• Attempt 1: budgets and spending caps (1989-
  1996/7 and 1999ff)
• Attempt 2: regulated competition among sickness
  funds (1993ff)
• Attempt 3: higher co-payments, exclusion of
  benefits, “privatisation“ of patient-provider-
  relationship (1997/98; abolished; discussed again)
                    • Recently, attention is focussing
                 at least as much on the income side.
       Budgets and spending caps since 1989
       A m b u la to ry c a re                               H o s p ita ls                                             P h a rm a c e u tic a ls
1989

to     n e g o tia te d re g io n a l                        n e g o tia te d                                           no budget or

1992   fix e d b u d g e ts                                  ta rg e t b u d g e ts a t h o s p ita l le v e l          s p e n d in g c a p



1993                                                                                                                    le g a lly s e t n a tio n a l
                                                                                                                        s p e n d in g c a p

1994   le g a lly s e t re g io n a l

       fix e d b u d g e ts                                  le g a lly s e t

1995                                                         fix e d b u d g e ts a t h o s p ita l le v e l
                                                                                                                        n e g o tia te d re g io n a l

1996                                                                                                                    s p e n d in g c a p s
       n e g o tia te d re g io n a l

1997   fix e d b u d g e ts
                                                             n e g o tia te d

1998   (ta rg e t v o lu m e s                               ta rg e t b u d g e ts a t h o s p ita l le v e l          n e g o tia te d ta rg e t v o lu m e s

       fo r in d iv id u a l p ra c tic e )                                                                             fo r in d iv id u a l p ra c tic e s

1999                                                                                                                    le g a lly s e t re g io n a l
              Failed attempt to introduce global budget                                                                 s p e n d in g c a p s

2000   n e g o tia te d re g io n a l fix e d b u d g e ts   n e g o tia te d ta rg e t b u d g e ts                    n e g o tia te d re g io n a l
       w ith le g a lly s e t lim it                         a t h o s p ita l le v e l w ith le g a lly s e t lim it   s p e n d in g c a p s

2001                                                                                                                    n e g o tia te d ta rg e t v o lu m e s

                                                                                                                        fo r in d iv id u a l p ra c tic e s
Free choice among sickness funds
 but “risk structure compensation“
 • sickness funds = contribution collectors;
 • therefore re-distribution of money is more
   difficult than in all other countries as
 • 1. funds look at contributions as “theirs“
 • 2. both income of funds and
   “standardised“ expenditure (by sex, age and
   incapacity to work) vary.
       Development of contribution rates in the West
     (in %) before and after the introduction of the risk
             structure compensation in 1994/95
15


14                                                          Mean
                                                            AOK
                                                            BKK
13
                                                            IKK
                                                            EAR
12                                                          EAN


11
       1993   1994   1995   1996   1997   1998   1999
                                                 WEST 1.1.1998-1.1.1999
                           500
                           400
Net loss/gain in members




                           300
                                                                                                                EAN
                           200
        (X 1,000)




                                                                                                                AOK
                           100                                                                                  EAR
                                                                                                                IKK
                             0
                                                                                                                Overall
                           -100
                                                                                                                BKK
                           -200
                           -300
                                  -1   -0,8   -0,6    -0,4    -0,2      0     0,2     0,4       0,6   0,8   1
                                                     Deviation from average contribution rate
                                                              (in percentage points)

                                          Gains/ losses in sickness fund membership
                             in the western part of Germany in relationship to contribution rate
           Transferred money through
          “risk structure compensation“
       West                               East                                    Germany
           1      2
       RSC / exp.      RSCas %of          RSC/ exp.           RSCas %of           RSC/ exp.       RSCas %of
       (billion DM)    expenditure        (billion DM)        expenditure         (billion DM)    expenditure
1995   13.49/ 190.29   7.1%               4.61/ 38.53         12.0%               18.05/ 228.82   7.9%

1996   14.22/ 196.39   7.2%               4.90/ 40.03         12.2%               19.12/ 236.42   8.1%

                         - 1 January 1997: First opportunity to change between funds -

1997   15.07/ 192.13   7.8%               5.15/ 39.22         13.1%               20.22/ 231.35   8.7%

                       - 1 January 1998: Second opportunity to change between funds -

1998   16.07/ 195.07   8.2%               5.47/ 39.06         14.0%               21.54/ 234.13   9.2%

                         - 1 January 1999: Third opportunity to change between funds -

1999   16.24/ 200.83   8.1%(8.7%)*        6.44/ 40.14         16.0%(13.0%)*       22.68/ 240.97   9.4%

                        - 1 January 2000: Fourth opportunity to change between funds -

2000   16.23/ 205.46   7.9%(9.2%)*        7.29/ 40.86         17.8%(11.1%)*       23.52/ 246.32   9.6%
 The dilemma of equality vs. competition
• 1989: equalisation of benefits and health care
  provision between sickness funds
• 1994/95: minimisation of contribution rate
  differences through ”risk compensation scheme”
• 1996: free choice of sickness fund for (almost)
  everybody
> How to compete with (almost) identical benefit
  baskets, an (almost) identical system of health care
  provision and similar contribution rates?
> Selective contracting!?
     Problem 3: Quality and cost-
            effectiveness
• Benefit catalogue is generous and
  includes services of unproven effectiveness
  > Health Technology Assessment
• Financial incentives and insufficient knowledge
  lead to inapproriate services
  > guidelines & “disease management programmes“
• In international comparison, health care is
  expensive and only of average quality = low cost-
  effectiveness > more state intervention required?
        Reform Act of SHI 2000
• change to a uniform, DRG-based reimbursement
  system for hospitals from 2003/04 - thereby also
  making the benefits catalogue explicit
• introduction of a coordinating committee, e.g. to pass
  guidelines for care across sectors
• GP role strenghtened: budget separated from specialists
  and option for gatekeeping
• possibility for sickness funds to contract with trans-
  sectoral groups of providers which receive their own
  budget
                                             Proposals                                                                                                                                                                                                Repre-
    Federal Ministry                         for health                                                                         Federal Parliament                                                                                                     sen-
       of Health                            reform acts                                                                                                                                                                                               tation               State Ministries
                                                                               Federal Assembly                                                                                        Federal Council                                                                  responsible for health
                                                                                 (Bundestag)                                                                                            (Bundesrat)

                                                                                                                      Legislative frame                                                                                     Supervision




                                                                                                                                                                                                                                                                                        Enlistment in hospital plans
                                                                                                                                                                                                                           Obligation to secure hospital care


                                                                                                                                Insuree/ Patient
                                                                                                                                                                                                                                  Ob
                                                                      t                                                                                                                                                Fre          liga
                                                                tr e a            ose                                                                                                                                      edo          tion
                                                              to              cho                                                                                                                                             m              to t
                                                         tion          mt
                                                                          o                                                                                                                                                       to c            re a
                                                    liga           edo                                                                                                                                                                hoo             t
                                                  Ob           Fre                                                                                                                                                                        se

                                                                                                                                 ure
                                                                                                                             sec




                                                                                                                                                              Obligation to contract
                                                                                                                         n to care




                                                                                                                                          Freedom to choose
                                         Physician                                                                    tio ory                                                                                                                      Hospital
                                                                                                                  liga     t




                                                                                                                                                                                               Financial negotiation
                                                                                                                Ob bula
                                                                                                                  a m
                              23 (Regional) Physicians’                                                                                                                                                                                 16 Regional Hospital




                                                                                        Financial negotiation
                                    Associations                                                                                                                                                                                           Organizations
                             Federal Association of SHI
       Supervision                                                                                                                                                                                                                          Federal Hospital
                                    Physicians
                                                                                                                                                                                                                                             Organization

                     Supervision of country-wide funds (via Federal Insurance                                                                                                                                                           Supervision of regional funds
                                              Office)                                                                            Sickness fund
                                                                                                                      Sickness funds in one region
                                                                                                                                                                                                                                                                   Supervision
                          Supervision
                                                                                                                             Federal associations
                                                                                                                              of sickness funds
                        Fed. Com. of Physicians and                                                                                                                                                                                              Fed. Com. for Hospital
Supervision
                        Sickness Funds: Decisions on                                                                                                                                                                                              Care: Decisions on
                             ambulatory benefits                                                                           Coordinating Committee                                                                                                  in-patient benefits
                            Valuation Committee:                                                                                                                                                                                                 DRGs: Decision about
                        Setting of relative point values                                                                                                                                                                                          types and valuation




                                                                                                                                              Statutory health insurance 2000
• Act to Newly Regulate Choice of Sickness 2001
Fund
• Act to Introduce the Residency Principle
for Physicians’ and Dentists’
                                            Health
Reimbursement                                care
• Act to Reform the SHI Risk Adjustment     Reform
Mechanism                                     a la
• Act to Adjust Reference Price-Setting      Ulla
Regulations                                Schmidt
• Pharmaceutical Spending Cap Lifting Act
• Act to Limit SHI Pharmaceutical Spending 2002
• Act to Introduce a Case Fees-System in
Hospitals
                                             Proposals                                                                                                                                                                                                Repre-
    Federal Ministry                         for health                                                                         Federal Parliament                                                                                                     sen-
       of Health                            reform acts                                                                                                                                                                                               tation               State Ministries
                                                                               Federal Assembly                                                                                        Federal Council                                                                  responsible for health
                                                                                 (Bundestag)                                                                                            (Bundesrat)

                                                                                                                      Legislative frame                                                                                     Supervision




                                                                                                                                                                                                                                                                                        Enlistment in hospital plans
                                                                                                                                                                                                                           Obligation to secure hospital care


                                                                                                                                Insuree/ Patient
                                                                                                                                                                                                                                  Ob
                                                                      t                                                                                                                                                Fre          liga
                                                                tr e a            ose                                                                                                                                      edo          tion
                                                              to              cho                                                                                                                                             m              to t
                                                         tion          mt
                                                                          o                                                                                                                                                       to c            re a
                                                    liga           edo                                                                                                                                                                hoo             t
                                                  Ob           Fre                                                                                                                                                                        se

                                                                              Collective contracting                         sec
                                                                                                                                 ure




                                                                                                                                                              Obligation to contract
                                                                                                                         n to care




                                                                                                                                          Freedom to choose
                                         Physician                                                                    tio ory                                                                                                                      Hospital
                                                                                                                  liga     t




                                                                                                                                                                                               Financial negotiation
                                                                                                                Ob bula
                                                                                                                    m
                                   Family
                              23 (Regional) Physicians’
                                                         Ambulatory     In-patient
                                                                        16 Regional Hospital
                                                                                                                  a




                                                                                        Financial negotiation
                                    Associations                           Organizations

       Supervision
                                   medicine
                             Federal Association of SHI specialist care        care
                                                                          Federal Hospital
                                    Physicians
                                Integrated care (Disease Management Programmes)
                                                                            Organization

                     Supervision of country-wide funds (via Federal Insurance                                                                                                                                                           Supervision of regional funds
                                              Office)                                                                            Sickness fund

              Selective contracting                                                                                   Sickness funds in one region
                                                                                                                                                                                                                                                                   Supervision
                          Supervision
                                                                                                                             Federal associations
                                                                                                                              of sickness funds
                        Fed. Com. of Physicians and                                                                                                                                                                                              Fed. Com. for Hospital
Supervision
                        Sickness Funds: Decisions on                                                                                                                                                                                              Care: Decisions on
                             ambulatory benefits

                            Valuation Committee:
                                                                                                    Centre
                                                                                      GermanCommittee
                                                                                       Coordinating                                                                                                                                                in-patient benefits
                                                                                                                                                                                                                                                 DRGs: Decision about
                        Setting of relative point values
                                                                                  for Quality in Medicine                                                                                                                                         types and valuation




                        Proposed Health Care System
                          “Modernisation“ Act 2003
Central and eastern Europe
                  Bulgaria
                  Czech Republic
                  Estonia
                  Hungary
                  Latvia
                  Lithuania
                  Poland
                  Romania
                  Slovakia
                  Slovenia
 The health care systems in 1990
       Central government

                         Hierarchical
     General              subordination &
   taxation                 limited resource
                              allocation


Population     Limited    Public providers
               choice     (hospital bed numbers high,
                          provider incentives low)
  Reform strategies in the 1990s

• Dezentralization and privatization
• More money for health care,
  especially through introducing health insurance
• Planned reduction of capacities
No country has successfully tackled all three!
        • Often overlooked: population health
Dezentralization and privatization
• devolution to - newly created - regional levels
  (which often became responsible for hospitals)
• delegation to physician chambers, health
  insurance funds etc.
• privatization especially of ambulatory
  physicians, dentists and pharmacies
      • Problem: physicians were quite powerful
   in several countries, pushing for privatization,
                          forgetting public health
 From Semashko to Bismarck

• “Early wave” 1991/93: Czech Republic,
  Estonia, Hungary, Slovakia, Slovenia
  (“Back to Europe - back to Bismarck”)
• “Late wave” 1998/99: Bulgaria, Lithuania,
  Poland, Romania
• not yet (funds are still tax-funded): Latvia
  The health care systems in 2000
       Health insurance funds

                       Ressource alloc./
    Insurance            payments
contributions             based on
                            contracts

  Insured                   Providers:
population      Increased   public-
                  choice    private mix
   Health insurance variation
• Organization of funds (single, regional
  monopolies, competing)
• Governance: no board (Hungary), boards
  with limited to substantial powers
• Contributions: collection (state vs. funds),
  coverage of non-wage earners (free,
  reduced contribution, by state)
992701 Total health expenditure in PPP$ per capita
2000
                                                               1.00   Successes
1500
                                                                      Introduction of
                                                               0.65
                                                               0.60   insurance system
1000
                                                               0.50   and of funds was
       0.48                                                           generally smooth
500
       0.24                                                           and expenditure
       0.06                                                    0.08   did go up!
  0
   1990   1991   1992   1993   1994   1995     1996   1997   1998



                  Czech Republic             Slovenia
                  Portugal                   EU average
                  Romania
340102 Total health expenditure as % of GDP
  9
                                                                1.00
  8
                                                                0.89
             0.84
  7                                                             0.84

  6                                                             0.68
  5
             0.64
  4

  3
      0.36                                                      0.30
  2
  1990   1991   1992     1993   1994   1995     1996   1997   1998



                    Czech Republic            Slovenia
                    Luxembourg                EU average
                    Romania
           … and problems

• funding expectations partly not met due to
  evasion of employers and self-employed
  as well as government
• (re-)allocation of funds still insufficient
• competition among funds in CZ and SK
  - in conjunction with loose regulations -
  led to bankruptcies and deficits
992708 Pharmaceutic.expend.as %of total health exp
                                                  An often
 30
                                                  quoted problem:
                                                  pharmaceutical
 25                                               expenditure
                                                  expenditure is high - and
 20
                                                  often rising - but not
                                                  higher than in Portugal
 15
                                                  main problem: many
                                                  drugs are imported and
 10                                               OECD-priced
                                                  delisting & co-payments
  5                                               not without dangers
  1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
                                                  EUROASPIRE: good
                                                  hypertension control in
               Czech Republic     Romania         Czech Rep. & Hungary
               Denmark            Slovenia
               Portugal
992713 +Hosp.beds in acute care hospitals/100000         Hospital
1000
       1.74
                                                         capacity
900
                                                         reductions
       1.54
800
                                                       early capacity reduction
       1.39                                     1.55   only in Estonia and
700
                                                1.54   Romania (1992/93)
600                                                    in Czech Republic only
                                                1.32   in mid-90s after belief in
500                                                    markets had failed
                                                1.01
                                                1.00   no substantial reduction
400                                                    in Poland and Slovenia
   1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
                                                       as well as Slovakia (with
                                                       German level capacities)
               Estonia             Slovenia
               Germany             EU average
               Slovakia
060101 +Life expectancy at birth, in years
                                                             Usually
 80                                                      overlooked:
 78
                                         1.00             population
 76
                                         0.96
                                                               health
      0.97
 74
                                         0.95          1990: gap to EU
 72                                                    2.4 to 6.9 years
      0.93                               0.90
 70                                                    drop in Baltics by up
                                                       to 4 years until 1994,
 68
                                                       by ca. 1 year in Romania
                          0.87                         and Bulgaria in 1996/97
 66
   1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
                                                       1997: gap up to 8.9 years
                                                       only CZ improved vs. EU
               Czech Republic      Slovenia
               Estonia             EU average
               Portugal