October 2004MOH Addressing the demand side problems by 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

MOH2... ???... We're lucky that the hole is not on our side

October 2004MOH3 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

October 2004MOH4 I.Introduction - Slovakia Population:5,4 million people Living Standard:51% of EU average Middle income country EUR 1 = SKK 40

October 2004MOH5 Slovakia at the Glance Economic indicator f2005f GDP growth4,44,24,34,7 Unemployment rate18,517,416,515,9 Inflation (CPI)3,38,56,54,8 General Government Balance/GDP - 7,5-3,6 -3,4 Current Account/GDP -8,0-1,0-2,6-3,5 Source: M.E.S.A. 10

October 2004MOH6 Deficit of Public Finances (% of GDP)

October 2004MOH7 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)

October 2004MOH8 Health System in Slovakia FinancingCompetitive Social Insurance Payroll tax (contributions) - 60 % Taxes – 30 % Out of pocket – 10 % Payment mechanisms Primary care – Capitation + Fee for service Secondary care – Capped fee for service Tertiary care – Broad band DRG per Case Long term care – Beddays Emergency – Capitation and fee for service 1-day Surgery – Per Case OrganizationPrimary care – 97 % private Secondary care – 83 % private Tertiary care – 10 % private Pharmacies – 99 % private RegulationPrice regulation and Network regulation

October 2004MOH9 Generally, you have 4 types of problems I.Demand side II.Supply side III.Financing IV.Regulation (Role of the MOH)

October 2004MOH10 II. The design of Intelligent Co- payment Scheme Act on Basic Benefit Package Basic Principle: Equal treatment to equal need.

October 2004MOH11 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

October 2004MOH12 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

October 2004MOH13 1. Application of marginal co-payments PatientHealth Insurance Fund Provider (pharmacy) Primary care20 Sk0 Sk20 Sk Secondary care20 Sk0 Sk20 Sk Accomodation and food in inpatient care 50 Sk0 Sk50 Sk Transport2 Sk/km Prescription fee20 Sk15 Sk5 Sk

October 2004MOH14 2. List of Citizens’ Priorities Disease% Cardiovascular diseases74.2 Cancer68.8 Diabetes, metabolic disorders26.2 Orthopaedic diseases 16.6 Mental, psychiatric, nerve disorders and stress16.1 Influenza12.1 Allergies10.9 Respiratory diseases Infection diseases, hepatitis, TBC and AIDS Incorrect diet, obesity Alcoholism, smoking, drug addictions Dental problem Skin diseases Gynaecological diseases Source: FOCUS, January 2004

October 2004MOH cca 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 Experts Ministry Vysoká miera spoluúčasti    Low participation 

October 2004MOH 3. Catalogization of procedures DISEASE Determine standard diagnostic and therapy procedure (Health Care Act) Treatment procedures Diagnostical procedures HIC Experts Ministry

October 2004MOH17 4. Categorisation Criteria (§ 9) The following is considered when classifying diagnoses: disease severity, ability of the insured to participate in the treatment financially * - the co-payment f the insured can be determined according to indication restrictions, age, and health policy priorities. HIC Experts Ministry

October 2004MOH18 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.

October 2004MOH19 Analyzer Tool

October 2004MOH20 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 Partially Not yet

October 2004MOH21 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

October 2004MOH22 III. Evidence: Impact of marginal co- payments (Index 2003/2002) Zdroj: VšZP, 2004 Source: General HIC

October 2004MOH23 Dynamics of Drug Expenditures Zdroj: MZ SR

October 2004MOH24 The access to care was not hurt Source: FOCUS January 2004

October 2004MOH25 The prescription of drugs was not hurt Source: FOCUS January 2004

October 2004MOH26 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%)

October 2004MOH27 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

October 2004MOH28 Lessons learned Whatever you do, according to the media and public … you are always WRONG!

October 2004MOH29 Thank you for your kind attention