10 Years of Health Care Reform

Tuesday, 02. December 2014, 20:50

Healthcare is one of the highly regulated sectors. Quality control has a major impact on the results it achieves. The reforms are aimed at altering regulatory instruments and their settings. The tenth anniversary of the Slovak health care reform is therefore primarily an anniversary of successful application of a comprehensive legislative change. There on this occasion, in Bratislava on 25 September 2014 we organized a major HPI conference with interesting guests. Former ministers Rudolf Zajac and Ivan Mikloš, former Czech Health Minister Tomáš Julínek, collaborators from the time of drafting the reform, directors of Slovak hospitals, managers of health insurance companies, pharmaceutical companies, supplier and graduates of the Health Management Academy, and many others joined us to celebrate.

Tomáš Szalay, co-founder of HPI: “After ten years we can still say that all of the then reform laws are still valid today. The vast majority of measures, institutions and instruments are kept until today. Despite the criticism, an alternative, perhaps better health system has still not been formulated. No one has been able to describe the system and transpose the change into a legislative proposal. ”

For the 10 years we have witnessed several attempts to change the legislative setting. Not even an idea of a major change, 2012 plan to monopolize health insurance, contain any concept of a new system. It did not make it into a public consultation stage. 2007 brought a suggestion to create a single public health insurance company, which would co-exist alongside the existing public limited companies. A draft of mandatory switch of the state insurees into a state insurance company reached the consultation procedure. However, all of these partial “solutions” out of context lacked a clear vision supported by the data.

The 2002 – 2006 health care reform was first described in detail in the so – called Blue Paper Strategy for Health Care Reform – Real Reform for a Citizen  by  Peter Pažitný and Rudolf Zajac (2001). Description of problems and solutions allowed for a professional discussion and later served as a substantive base for legislative changes.

The reform truly started in spring 2003 by the approval of the Triple Bill. After breaking the then President’s veto members of parliament supported the Triple Bill, as of June 2003 Slovak patients started to pay fees for services related to the health care. A fixed surcharge for medicines was introduced and speculative late fees, until then guaranteed by law in the creditable amount of 0.1% per day, were decreased.

Work on the reform bill continued until the end of 2003. The original intention to change only insurance laws soon proved unsatisfactory. Changes required a fundamental reconstruction of other health legislation. We created a so called reform laws puzzle, each of which governed a different part of the sector, but together created a harmonizing whole.

Reform puzzle – 6 reform laws

  1. Act No 576/2004 Coll. of 22 September 2004 on healthcare, healthcare-related services and on the amendment and supplementing of certain acts
  2. Act No 577/2004 Coll. of 21 October 2004 on the scope of healthcare covered by public health insurance and on the reimbursement of healthcare-related services, as amended by later regulations
  3. Act No 578/2004 Coll. of 21 October 2004 on healthcare providers, health workers and professional organizations in the health service, and amending and supplementing certain acts, as amended by later regulations;
  4. Act No 579/2004 Coll. of 21 October 2004 on the emergency medical service and amending and supplementing certain acts;
  5. Act No 580/2004 Coll. of 21 October 2004 on health insurance
  6. Act No 581/2004 of 21 October 2004 on health insurance companies and healthcare supervision, and amending and supplementing certain acts;

Laws alone (without attachments, further amended laws and implementing regulations) had 64,549 words. Consultation procedure then brought 3,288 comments, out of which 1,435 were substantive. 2,341 (71%), of which 1,017 were substantive were finally fully or partially accepted.

On 21 April 2004 the government approved the reform laws which saw the first reading in the Parliament. However its approval was deferred until the fall. On 21 and 22 September 2004 the Parliament approved the laws by a simple majority of all deputies. Law on emergency medical service got the highest number of votes (88 of the 150 members of parliament). Despite President Ivan Gasparovic’s veto of all six bills, after being sent again to the parliament for second voting, on 21 October 2004 they were approved by a qualified majority.

The first to become effective as of 1 November 2004 the , the Act on Health Insurance Companies  established the Healthcare Surveillance Authority, other laws followed as of 1 January 2005. Follow-up of individual steps was crucial for successful management of the transitive period. Effectiveness of individual provisions was therefore timed in detail.

Key reform changes (outside the drug policy)

  • introduction of services related to health care and the possibility of charges
  • tying state payments to the economically inactive insured persons and average wage
  • negative definition of an insuree of the state
  • change in redistribution of premiums
  • annual settlement
  • liberalization of network (eligibility for permits and licenses)
  • rules for selective contracting
  • independent oversight
  • reform of emergency medical services
  • transformation of health insurance companies into joint stock companies
  • transformation of hospitals into joint-stock companies
  • creating flexible tools for defining the scope of care

The 10 years have seen several changes. The six laws were amended together 144 times. Act no. 578/2004 Coll. on Health Insurance was amongst those most amended; 38 times. Although most of these amendments that were of a technical nature, 47 amendments primarily focused on substantive modifications. The first amendments took place before the effect of the new legislation, to correct some technical errors.

  • independence of HSA
  • amount of payments for services related to health care
  • transformation of hospitals into joint-stock companies
  • fixed and terminal hospital network
  • health insurance companies’ solvency
  • referrals to specialists
  • premium rate for insurees of the  state

These changes increased the scope of the laws from 64,549 to 118,406 words. The increase was caused mainly by amending and supplementing then valid provisions and measures. Some of the innovations are as follows:

  • Disclosure of contracts between health insurance companies and health care providers
  • Preparation for introduction of DRG payment mechanism
  • Redistribution of premiums reflecting the state of health of the insured (PCG)
  • Limit on drug co-financing

The Constitutional Court ruled in a number of issues in the healthcare legislation over the last 10 years. Four of them were directly related to the reform changes. In all four cases, the Constitutional Court ruled in favour of the reform:

  1. Payments for services related to the health care are in compliance with the Constitution (2004)
  2. Scope of health care can be defined by regulations (2008)
  3. Health insurance companies as joint stock companies do not jeopardize a guaranteed right for health care (2008)
  4. Limiting profit of health insurance companies is not in accordance with the Constitution (2011)

What has the health care reform brought to patients and consumers?

  • People can choose from three competing health insurance companies
  • Competition between them brought most fruit right after the health care reform was passed
  • Most of the insurees changed in 2006 – more than 710,000, after 2008 the number of those switching between the health insurance company oscilates between 120 000 and 180 000
  • Market concentration is very high (Herfindahl index = 0.5) with VšZP dominating it
  • The introduction of PCG in 2012 changed the motivation for health insurance companies, and chronic patients are becoming the focus of attention – health insurance strategy can thus focus on effective care for chronic patients
  • Annual settlement has brought justice to the amount of health insurance payments
  • In terms of implementation of insurees’ claim there is a slower progress and a lack of a legal definition of claim. However, first quality benchmarks were created, protective limit for drugs is in place, albeit not perfect and completely transparent but some definition of waiting lists exist
  • We live 2.5 years longer
  • The Healthcare Surveillance Authority is a stable element in the protection of patients’ rights, it receives approx. 1250 to 1650 complaints
  • Number of general practitioners has not changed, but they get significantly older
  • Outpatient care is still based on specialists, their number increased by 14%
  • Hospitals are gradually privatized and private stakeholders with a long-term vision and client-orientation join them (Svet zdravia, Agel, Unipharma, Medirex)
  • 3 cardio and 2 oncological institutions established as joint stock companies when Rudolf Zajac was a minister are amongst the top clinics hospitals
  • Average length of stay significantly decreased from 9.4 to 7.9 day – people spend 1.5 days in a hospital
  • Outpatient care facility (polyclinics) survived and are now operated by private businesses
  • Number of ambulance tripled from 92 to 273, the average door-to-door time is 12:20. The ambulance is of a high quality with a highly qualified personnel. This market is also predominantly operated by private players.
  • Number of pharmacies significantly increased from 1200 to 1931 with a considerably wider range of available goods.
  • Laboratory medicine has largely shifted to private operators, who now provide safe delivery, analysis and evaluation of the samples which now a patient receives very quickly.

HPI recommendations for the next 10 years:

  • Reduction of market concentration – division and sale of VšZP;
  • Expanding the redistribution by other parameters;
  • Definition of time availability of time;
  • Reasonable disclosure of agreements;
  • When contracting, focus on quality of services provided to the insurees and to support integrated health care;
  • Review of quality indicators and their understandable disclosure to insurees;
  • Introduction of DRG, updating the list of performances (with points), but maintaining the possibility for a health insurance company and a healthcare provider to agree otherwise;
  • Introduction of health insurance product and its price – nominal premium;
  • Extending the list of diseases for which a health insurance company is obliged to keep a waiting list;
  • Disclosure of consumer friendly and understandable quality rankings of providers;
  • Disclosure consumer friendly and understandable quality rankings of health insurance companies;
  • Continue liberalizing health markets;
  • Transform public hospitals into joint stock companies and not fear to offer their operation to private players;
  • Give back competences to general practitioners;
  • Define claims of insurees at three levels – financial, material and time.