Governance of purchasing arrangements in Estonia

Governance of purchasing arrangements in Estonia

Triin Habicht Head of Department of Health System Development

Ministry of Social Affairs

OECD Joint Network on Fiscal Sustainability of Health Expenditure

4-5.02.2016 Paris

Public financial flows in health sector (1)

Source: National Health Accounts 2014

87% of total public funds is administered

by EHIF

State budget

MoSA

National Institute for

Health Development

Health Board

EHIF

Public financial flows in health sector (2)

• Vertical health care programs

• Health promotion

• Ambulance • Health system

preparedness • Capital investments • Emergency care for

uninsured • Centrally procured

vaccines and drugs • Services out of health

insurance schemed • Vertical health care

program(s) and services

IVF, adult dental care since 2017

• Health services and prescription drugs for insured

• Monetary benefits, incl. temporary sick leave benefits

4

Evolution of the organization of health insurance

First sickness funds in 1913

Re-established regional non-competing sickness funds in 1991/92 (22 in total)

Central sickness fund to coordinate regional funds in 1994

Estonian Health Insurance Fund in 2001, Currently with 4 regional departments

5

Legal status of the EHIF

• EHIF operates as public independent legal entity – Founded in the public interest by separate act – General public service regulation does not apply to

EHIF, e.g. applies private sector labor codes

• EHIF is fully liable for its obligations with all its assets

• Tripartite supervisory board with 15 members

– 5 state (incl. Minister of Health and Labor, Minister of Finance), 5 employer and 5 beneficiaries representatives

Health Insurance Fund revenues, expenditures and reserves

Source: EHIF, www.haigekassa.ee

The puzzle of public health funds (1)

• Health insurance revenue base is explicitly determined which gives incentive to optimize within the budget and to set explicit limits on the health insurance obligations

• Additional earmarked funds to health insurance to serve political priorities (e.g. IVF, dental care program)

– Broadening revenue base has been an issue since 2005 but no changes

• Changing role of health insurance reserves

The puzzle of public health funds (2)

• Other allocations from the state budget have to compete with priorities within MoSA as well as at Government level

– Explicit areas as ambulance and emergency care for uninsured are easy to protect

– Vertical public(?) health programs are easy to confuse with health insurance

– „Fixing the problems“ money

• External sources (e.g. EU funds) still play important role

Out of pocket payments in health sector

Source: National Health Accounts 2014

24% of total health funds

are out of pocket

payments

Summing up... • Majority of public funds is pooled to the EHIF

– Stable health insurance system and strong institutional design

• Still, existing fragmentation may lead to inefficiencies

− Differences in rules and power of purchasing

− Incentives to focus on „your own piece“ but not patient needs

− Not always clear who is responsible for what

• Program based funding rises the question of ownership and sustainability

• Easy to claim that there are unfunded mandates (....but this is the only way to increase the health sector funds)

• Who governs private out of pocket expenditures?

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