Health Care Financing in Bulgaria KEY PLAYERS IN DEFINING HEALTH EXPENDITURE Lyubomir Kamboshev Ministry of Finance Bulgaria
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Health Care Financing in Bulgaria
KEY PLAYERS IN DEFINING HEALTH EXPENDITURE
Lyubomir Kamboshev Ministry of Finance
Bulgaria
KEY PLAYERS IN DEFINING HEALTH EXPENDITURE
The National Assembly, which decides on the levels of total public spending, allocations between sectors, and within health, the MOH and NHIF budget;
The Government, including the Council of Ministers (COM), the Ministries of Health and Finance as well as numerous other Ministries and agencies;
The National Council on Prices and Reimbursement of Medicinal Products (the Pricing Council);
The NHIF and its 28 regional branches, municipalities, private voluntary insurers,
and of course individuals who purchase goods and services – the patients and consumers.
Presenter
Presentation Notes
The Minister of Health is the nationally responsible figure for the overall health system. In that capacity, The Minister is the primary administrator of the health care budget and has executive competences in managing the national health system. The minister carries out state health policy and develops and implements the national health care strategy. Furthermore, presents the annual National Health Report as well as the report on the implementation of the National Health Strategy to the National Assembly The Ministry of Health collaborates with the Ministry of Finance on matters related to the financing and distribution of funds within the system. In practice, this means that the Minister of Health cannot make a decision related to financial issues without the Minister of Finance’s approval. The National Health Insurance Fund (NHIF) is regulated by the Health Insurance Act (1998), which introduced the mandatory health insurance and regulates the supplementary health insurance in Bulgaria. It was founded as an independent public institution and has its own bodies of management. The NHIF budget is separated from the state budget. The National Assembly on an annual basis votes it. The NHIF Budget Act determines the amount of the health insurance contribution The NHIF carries out the obligatory health insurance in the country. VHI is provided by for-profit joint-stock companies (VHICs) intended for voluntary health insurance only. Beyond the package covered by the NHIF all citizens are free to purchase different insurance packages. VHICs can also cover the cost of services included in the basic benefit package guaranteed by the NHIF budget Supervising VHI companies is assigned to the Supervision Commission (FSC) at the National Assembly.
Health care system in Bulgaria
Health insured population Cov
erin
g
National Framework Contract
Collecting revenue mechanism
Risk sharing
Healthcare purchasing
Providing services
Subsidies from state budget
Health insurance contributions
Health care providers
National Health Insurance Fund
Presenter
Presentation Notes
The main purchaser of health services is a single payer, the NHIF. It is the only institution responsible for social health insurance in Bulgaria. The SHI contribution is 8% from monthly income, paid by the insured individuals, their employers or the state. Relations between the NHIF and health care providers are based on the contract model. The NHIF and the professional associations of physicians and dentists sign the NFC, which is intended to regulate the format and operational procedures of the compulsory health insurance system. Based on the NFC, providers sign individual contracts with the district branches of the NHIF (Regional Health Insurance Funds, RHIF). Providers are mainly paid prospectively for the services they will provide to the population on a fee-for-service and per capita basis
Focus on health financing
Presenter
Presentation Notes
Bulgaria has a mixed public–private health care financing system. Health care is financed from compulsory SHI contributions, taxes, OOP payments, corporate payments, donations and external funding
Public health expenditure as % GDP in selected countries in 2014
Sources: WHO, NHIF accounts and authors calculations
Presenter
Presentation Notes
According to public health expenditure, Bulgaria is slightly lower relative to other comparable health spending countries Most of the public spending is managed by the MOH. Expenditures cover programs for public health, for diagnostics and treatment, and for medical products and devices.
Health Expenditure - Bulgaria and Selected Countries (2014)
Sources: WHO, NHIF accounts and authors calculations
PublicHealth
expenditure(%GDP)
Total healthexpenditure(% of GDP)
Total Health Expenditure per Capita in US$
Out of Pocket Expenditure as
% of Total Health
Expenditure Belgium 8.2 10.6 4 884 18
Bulgaria 4.6 8.4 662 44
Czech Republic 6.3 7.4 1 379 14
Estonia 5.0 6.4 1 248 21
Germany 8.7 11.3 5 411 13
Greece 5.0 8.0 1 743 35
Italy 7.0 9.2 3 258 21
Latvia 4.0 6.0 921 35
Lithuania 4.0 7.0 1 063 31
Poland 5.0 6.0 910 23
Romania 4.0 6.0 557 19
Spain 6.0 9.0 2 658 24
Presenter
Presentation Notes
Compared with many countries in Europe, Bulgaria is investing relatively less of its public resources in health. The table presents data on total and public health expenditure for a group of European countries in 2014. In 2014, public health represented 4.6% of GDP and less than 10% of total public expenditure across all sectors in Bulgaria. Both of these figures are rather low by European standards. Conversely, private expenditure - and more specifically out-of-pocket payments (OOP) incurred by households when they need care - represents a large (44%) share of total expenditure. The high level of OOP payments considerably limits the financial protection of all
Health insurance payments in 2016
Sources: NHIF accounts and authors calculations
Presenter
Presentation Notes
In recent years the cost of hospital care increases. For 2016 the cost of hospital care nearly 50% of all healthcare payments without substantial changes in the health status of the population. There is unreasonably increase the number of hospitals; Existing hospitals also seek to open new wards in order to be contracted by the National Health insurance Fund (NHIF) for delivery of additional clinical care pathways (CCPs). There is an over-concentration of funding for hospital care - As a result of this the disproportions in the allocation of the healthcare funds by region, get bigger and therefrom - in the quality of the medical care in regions.
Milestones to be achieved
Implement a technically-driven hospital rationalization plan; Support this implementation by genuinely selective contracting
and, as relevant, strategically selected investments; Encourage consolidation and streamlining in areas of high
density by merging facilities into autonomous and fully financially accountable networks;
Introduce DRG-based payments and maintain strong incentives to limit volume escalation;
Generate, collect, use and publicize information on quality to support the rationalization process;
Strengthen quality assurance mechanisms.
Presenter
Presentation Notes
Bulgaria still faces enormous challenges in the rationalization and management of the hospital sector.
Financial flows between the central budget and NHIF
Sources: NHIF accounts and authors calculations
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Presentation Notes
One of the largest source of revenue is SHI contributions. These contributions are shared between employee and employer or paid individually by the self-employed or unemployed. For some insured, such as individuals receiving compensation for temporary capacity loss due to illness, pregnancy, childbirth or maternity leave, the contributions are paid only by the employer. The contribution is income related. In some cases, insured individuals declare which income their contributions should be based on. Initially, the compulsory health insurance contribution was 6%, shared between employers and employees at a ratio of 80:20. But this ratio has gradually been changed to 60:40. In 2009, the contribution rate increased to 8%
Focus on health financing
Sources: NHIF accounts and authors calculations
Presenter
Presentation Notes
In 2016, NHIF's budget will be balanced. Revenues and transfers are budgeted at 3,201,1billion leva and will equal to total amount of all expenditures.
Main problems affecting the financing and management of healthcare
The lack of competition in the market of health insurance; Significant amount of informal payments; Significant overcapacity in hospitals; Negotiating process with health care providers
Presenter
Presentation Notes
The lack of competition in the market of health insurance in the country is closing the whole system and does not allow higher efficiency of the expenditures and introduction of more effective forms of control to be achieved. The approach which is used for the organization and financial management of health care is inherently administrative, without considering the real benefits and opportunities of private health insurance mechanism. Significant amount of informal payments, which creates a huge problem on one hand with confidence in the institutions and the other - with the return of funds which are not invested in the health system. Significant overcapacity in hospitals - until its restructuring is postponed, the funds will continue to be scattered and insufficient. Negotiating process with health care providers. The NHIF is legally obliged to contract with all new providers (and all existing providers for accredited services), with minimal delay, which further encourages new entrants to seek this assured revenue flow. The law also stipulates that all hospitals with a majority ownership by the state must be contracted. In other words, only municipal and private hospitals can be excluded from contracting.
Reforming Health care system: way forward
To create conditions and incentives for the development of
voluntary health insurance; Options for mobilizing additional resources in the system; Changing the type and structure of financing mechanisms to
health care providers; Restructuring hospital sector; Direct negotiation of prices and volumes
Presenter
Presentation Notes
The following recommendations can be made for restructuring the model To create favorable conditions and incentives for the development of voluntary health insurance. This requires limiting the scope of the basic package of health services provided in order to create specific niche market development activities of the participants in this market. Options for mobilizing additional resources in the system. Social health insurance rely on limited revenue base that is dependent on the earnings of employed individuals, age structure of the population and the share of informal employment. This raises the need to introduce effective functioning, clearly regulated system of cost sharing between insurers and insured to relieve pressure on publicly funded system and prevent the need to repeatedly increase contribution levels. Changing the type and structure of the funding mechanisms of suppliers. The acceleration of the process of introducing a charge based on DRGs will facilitate the negotiation of price and volume of health services. Restructuring of the hospital sector. Direct negotiation of prices and volumes, taking into account the real needs of services. It is necessary to formulate a policy to limit induced costs and measures to contain the pressure from demand on the health system.
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