October 2004MOH

Addressing the demand side problemsby Intelligent Co-payment Scheme

Contribution to the Roundtable discussion

Paying for the Health Systems of the Future

7th European Health Forum Gastein

Ing. Peter Pažitný, MSc.Analyst of M.E.S.A. 10

Advisor to the Minister of Health

October 2004

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... ??? ...We're lucky that the hole is not on our side

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Content

I. Introduction – Slovakia at the Glance

II. The design of The Intelligent Co-payment Scheme

III. Evidence from introduction of marginal costs in Slovakia

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I. Introduction - Slovakia

Population:5,4 million people

Living Standard: 51% of EU average

Middle income country

EUR 1 = SKK 40

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Slovakia at the Glance

Economic indicator 2002 2003 2004f 2005f

GDP growth 4,4 4,2 4,3 4,7

Unemployment rate 18,5 17,4 16,5 15,9

Inflation (CPI) 3,3 8,5 6,5 4,8

General Government Balance/GDP

- 7,5 -3,6 - 3,6 -3,4

Current Account/GDP

-8,0 -1,0 -2,6 -3,5

Source: M.E.S.A. 10

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Deficit of Public Finances (% of GDP)

-3,6 -3,4

-0,5-0,9 -0,9 -0,8

-0,6-0,3

-0,1

-5,3

-4,1

-2,0

-3,6 -3,6

-6,6-6,1

-7,5

-6,4

-8,0

-7,0

-6,0

-5,0

-4,0

-3,0

-2,0

-1,0

0,0

1999 2000 2001 2002 2003 2004 2005

GFS 86ESA 95Health care

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Slovakia the leader in Reforms

I. Tax Reform (2003) – Corporate and Personal Income Tax – 19 %

II. Pension Reform (2003) – Two pillars - public (50%) and private (50%)

III. Public Administration Reform (2004) – Fiscal Decentralization

IV. Labour Market Reform (2003) – Modern Labour Code

V. Health Care Reform - Stabilization (2003) - Reform Acts (2004)

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Health System in SlovakiaFinancing Competitive Social Insurance

Payroll tax (contributions) - 60 %Taxes – 30 %Out of pocket – 10 %

Payment mechanisms

Primary care – Capitation + Fee for serviceSecondary care – Capped fee for serviceTertiary care – Broad band DRG per CaseLong term care – BeddaysEmergency – Capitation and fee for service1-day Surgery – Per Case

Organization Primary care – 97 % privateSecondary care – 83 % privateTertiary care – 10 % privatePharmacies – 99 % private

Regulation Price regulation and Network regulation

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Generally, you have 4 types of problems

I. Demand side

II. Supply side

III. Financing

IV. Regulation (Role of the MOH)

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II. The design of Intelligent Co-payment Scheme

Act on Basic Benefit Package

Basic Principle:

Equal treatment to equal need.

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A European health politician (old type) speaks:

„I oppose higher co-payments because this instrument is not likely to reduce the demand for health care.

But in case that demand is effectively reduced by higher co-payments, I am also against this instrument because demand is effectively reduced.“

Source: Osterkamp, R., 2004

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Intelligent Co-payment Scheme (ICo-PS)

1. Separation of non-health care services (setting small, flat co-payments)

2. Define the national priority list (diagnosis with no co-payment) – The Basic Benefit Package

3. Establish catalogization committees (defines the catalogue of procedures)

4. Establish categorization committees (defines the financial co-payment)

5. Increase patient’s responsibility and involvement

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1. Application of marginal co-payments

Patient Health Insurance Fund

Provider (pharmacy)

Primary care 20 Sk 0 Sk 20 Sk

Secondary care 20 Sk 0 Sk 20 Sk

Accomodation and food in inpatient care

50 Sk 0 Sk 50 Sk

Transport 2 Sk/km

Prescription fee 20 Sk 15 Sk 5 Sk

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2. List of Citizens’ PrioritiesDisease %

Cardiovascular diseases 74.2

Cancer 68.8

Diabetes, metabolic disorders 26.2

Orthopaedic diseases 16.6

Mental, psychiatric, nerve disorders and stress 16.1

Influenza 12.1

Allergies 10.9

Respiratory diseases 8.6

Infection diseases, hepatitis, TBC and AIDS 6.3

Incorrect diet, obesity 6.2

Alcoholism, smoking, drug addictions 4.6

Dental problem 1.4

Skin diseases 0.9

Gynaecological diseases 0.8

Source: FOCUS,

January 2004

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123

...

cca 9 000

DISEASES

2. ICo-PS model in practice

Optimálna výška spoluúčasti

PARLIAMENT

- HIC coverage -patient’s participation

Critical Risks:

financial protection of patients against the risk of excessive costs

urgent care

chronic diseases

HIC

ExpertsMinistry

Vysoká miera spoluúčasti

Low participation

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5. Patient’s responsibility (§ 41)

HEALTH IS AN INDIVIDUAL GOOD (NOT A PUBLIC GOOD)

Materialized responsibility of the patient for prevention and treatment regime (compliance)

The Health Insurance Company is entitled to Increase the co-payment if the care had to be provided

due to a violation of the treatment regime or in result of a habit-forming substance abuse (no compliance),

Decrease the co-payment, if the insured regularly undertakes preventive examinations, preventive vaccination and leads a healthy way of life.

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Analyzer Tool

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Summary: Elements of an intelligent design of co-payments

Dr. Osterkamp, ifo Institute Munich, 2004:

1. High co-payments (may be 100%) for small, frequent, cheap and every day diseases

2. Low (or non) co-payments for rare, severe and costly diseases

3. Lower co-payments for the poor than for the wealthy.

4. Upper limit of health-care costs as a % of individual annual income

5. Disburdening the employer: once-and-for-all increase of wages by former employer contribution

MOH Draft

Yes

Yes

Yes

Partially

Not yet

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A European health politician (new type) speaks:

„On one hand I still oppose higher co-payments. But on the other:

our co-payment rates are rather low, not each health treatment is equally important,

Therefore, I shall try to convince the electorate that a moderate increase combined with a fair design of co-payments is in the interest of all.“

Source: Osterkamp, R., 2004

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III. Evidence: Impact of marginal co-payments

(Index 2003/2002)

0,8

0,9

1

1,1

1,2

Primary Care Dentists First aid Secondary Care Hospitals

1q

2q

3q

4q

Zdroj: VšZP, 2004Source: General HIC

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Dynamics of Drug Expenditures

-13

48

1611

15

9

19

-15

-10

-5

0

5

10

15

20

25

2000 2001 2002 2003 2004

HIC

Patients

Zdroj: MZ SR

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The access to care was not hurt

Did not visit doctor22,0%

Stopped1,5%

Less then before18,0%

The same behaviour as

before58,5%

Source: FOCUS January 2004

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The prescription of drugs was not hurt

Did not need doctor23,2%

Stopped2,1%

Less then before20,5%

The same behaviour as

before54,2%

Source: FOCUS January 2004

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Access to care was not decreased

The initial hypothesis came true, that

1. Only excessive demand felt down

2. The access to care was not decreased

3. The perception of corruption decreased (from 32 to 10%)

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Lessons learned

Reform requires many clear decisions on day-to-day basis

... but ....

you always have only imperfect data and information to support your decision

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Lessons learned

Whatever you do, according to the media and public

… you are always WRONG!

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Thank you for your kind attention

www.reformazdravotnictva.sk

www.health.gov.sk