Social health insurance was seen as the solution to healthcare funding dilemmas in Central and Eastern Europe, but progress has been slow, says Charles Normand

Published: 24/01/2002, Volume II2, No. 5789 Page 27

The emerging democracies in Central and Eastern Europe inherited healthcare systems mainly funded from taxation. They had varying standards, low-paid staff with low morale and an ailing infrastructure. The desire for change was strong, and the chosen model in most countries was social health insurance (see cover feature, pages 24-26).

Countries that have introduced SHI include Hungary, Poland, Croatia, Slovenia, the Czech Republic and Slovakia. Reasons for choosing SHI included the success of the German healthcare system. It was not always understood that this was partly due to the strength of the German economy and the advantages of a well-resourced system.

A legacy of communism was widespread distrust of government, so another attraction of SHI was the autonomy enjoyed by SHI institutions. Patients and professionals saw it as a way of increasing healthcare funding. There was a (largely mistaken) perception that constraints on public spending would not apply.

A further reason for choosing SHI was transparency and a belief that the visible flow of funds from contributors to SHI, and then to providers of care, would give confidence and increase willingness to contribute.

Information was shared between countries and guidance provided.

1In most cases the management experience in hospitals was inadequate for providing services on contract. New systems were needed for accounting, accountability, controls, marketing and contracting. The new SHI organisations had to develop ways to collect, manage and disperse the funds. Systems were needed to check that treatments were provided to the right people and in the right ways.All this increased management and administration costs.

The Czech Republic was the first to implement SHI in 1992.The speed was impressive, and the final outcome good.But there were many problems. SHI brought improved rights of access to care, but the increase in demand was not matched by increased supply, and costs rose rapidly. Second, as the use of services increased, very soon the contributions were too low to meet all the costs.Access to care had to be restricted to get the scheme into balance.

The fact that contributions were much lower than expected, partly because of the rapid decline in formal sector employment, caused some difficulties.When employers fail to pay contributions, should their staff be excluded from access to services? Similarly, if self-employed people fail to register, should their children be excluded from care? And if there is no penalty for failing to pay, what is the incentive to do so?

Countries have found it easier to phase in SHI rather than introduce it in one go. In fact, experience suggests it is better to try to implement SHI quickly and for government subsidies to be paid through the SHI fund. In Korea, for example, there was rapid development of partial cover for all services for all people. SHI pays around half of the costs of care, leaving families and patients to pay the rest. Poorer people cannot afford most of the services, or even qualify for SHI funding.The accidental effect is a subsidy from poor to rich.

The lessons from countries that have introduced SHI are helpful. First, successful development requires significant preparation, including setting up legal frameworks, strengthening providers of care, introducing management systems, training staff and developing skills. It also calls for new systems for collecting and managing funds, contracting, paying and monitoring. Second, SHI raises expectations, normally more rapidly than they can be met.The hard reality is that better services have to be paid for, and all money comes ultimately from individuals.

SHI can be judged a success in the Czech Republic, Slovenia and Poland, and perhaps Croatia, but in some cases it has taken over 10 years from planning to implementation. Even then progress has been slow. Surveys suggest that countries with SHI have the highest levels of satisfaction with their healthcare system. In Central and Eastern Europe it is too soon to know, though signs are encouraging.But clearly SHI alone can solve only some of the problems of healthcare funding.

Charles Normand is professor of health economics, London School of Hygiene and Tropical Medicine.

REFERENCE 1Normand C, Weber A.

Social Health Insurance: a guidebook for planning.

Geneva: World Health Organisation and International Labour Office, 1994.