This system had several inherent flaws:
• A constant and serious imbalance between supply and demand
Since the right to such services was nominally universal and free, most people visited doctors and demanded treatment as much as they saw fit. Demand for comprehensive and more expensive services steadily grew, while the capacity to provide such services and the financial resources to support them were always limited. Naturally, long queues arose as a result, and waiting times for complex and expensive operations constantly increased. At the same time, the quality of almost all services deteriorated significantly.
• The principle of social solidarity failed because accessibility and quality of services were not the same for everyone
People who had money and/or connections, privileges or influence could receive medical services without queuing, using their power or authority or abusing them. In doing so, they demanded better service, which, given the limited amount of overall financial and human resources in the healthcare system, led to reduced accessibility and deterioration in the quality of medical services for ordinary citizens.
• The absence of a link between social insurance contributions and material benefits
Citizens, feeling that they had to pay for better quality services and faster service, began to question the expediency of paying taxes and fees deducted from their salaries. In the system of universal social insurance there was no personal accounting, meaning it was unclear who had paid for such services and who had not. Avoiding payment of social insurance contributions was easy and also justified for those who had neither connections nor money to bypass the queue. This further undermined the financial balance in the healthcare system and its ability to provide an impetus for the much-needed social equalization. The legitimacy of such a healthcare system was under threat.
2. Early healthcare reforms in the Visegrad Group countries
When the first democratically elected governments came to power, privatization was placed almost first among the policy directions on the agenda. However, privatization of social services, particularly in the healthcare system, was considered a debatable issue. Doctors themselves were also not unanimous about which part of their profession should be governed by market laws.
• "Privatization" of the profession of general practitioners
Reforms began with the "privatization" of the profession of general practitioners, the so-called "family doctors" – usually the first point of contact for patients with the healthcare system. For the most part, privatization did not require the physical sale of bulky equipment – only a system for licensing such activity was needed. It was believed that this first level of healthcare services was best provided by doctors licensed by the lowest-level local self-government bodies. Thus, the lowest-level local self-government bodies also received the right to issue licenses and auction off the right to practice medicine in cases where there was potentially more than one candidate for a position. The financing of general practitioners' activities changed for the better. Although doctors had to collect patients' insurance cards, which defined minimum and maximum service limits, doctors also received compensation from local self-government bodies for each patient. Now patients gained the right to choose among a sufficient number of certified doctors, which created a certain level of competition and thus stimulated improvement in the quality of services.
• Free admission of private capital to the healthcare system
Another important aspect of the early reforms was the possibility of creating new healthcare institutions providing services at any level: sole proprietorship institutions, partnership institutions, limited liability companies for general practitioners, private clinics for outpatient and inpatient treatment of patients. However, these new institutions remained on the sidelines of the healthcare system, because people did not have enough money to pay for all medical services, and most of those who could afford it could still use their connections and influence to receive services of quite acceptable quality in state healthcare institutions at the expense of the social insurance fund. However, private capital found market niches, especially in the field of high-tech outpatient and inpatient treatment of patients. Moreover, state social insurance funds began to partially pay for certain services offered by private clinics, because this eased the burden on state healthcare institutions that were already overloaded.
• Improvement of social insurance fund management
The rationalization of the work of medical institutions (for example, reducing the number of hospital beds, the final transformation of hospitals into sanatoriums and/or homes for the elderly) did not yield any tangible results (due to fierce political opposition and resistance from doctors themselves). In addition, most doctors resisted the loss of their legal status as civil servants with all the privileges and benefits that accompany this status. Despite this, the authorities successfully improved management and administration in health insurance funds, which are usually the largest extrabudgetary funds (after pension funds).
3. Co-payments as a way to limit excess demand
Only in Slovakia did the authorities manage to introduce a system of co-payments both for visits to general practitioners and for visits to institutions offering outpatient treatment, as well as for the daily fee for inpatient treatment in a hospital (a fixed flat fee for basic services). This turns out to be quite important for limiting unnecessary visits, medical examinations and prescriptions; this in itself leads to a reduction in drug abuse – a very common phenomenon in the Visegrad Group countries. According to the concept of co-payments, the amount of funds spent on the healthcare system is limited, because individual contributions are very symbolic and there are many exceptions, especially for the poor and the elderly. Such a system tries not to cover part of the costs but to make the population sensitive to costs in general. The Slovak system has already proven its advantages in this respect. Other countries, such as Poland and Hungary, have introduced systems of payment for better quality and more comfortable hospital accommodation (such as single rooms with a TV and telephone, etc.). Although the role of such payments in overall financing is limited, they can be important for some hospitals, and, of course, thanks to this system the use of production capacity has already been improved in many institutions.
4. Definition of basic and additional services
Recently, the Slovak parliament approved six basic legislative acts in this area. For the first time in the history of the transition economy, these laws attempt to separately define the so-called basic and additional services in the healthcare sector and ensure their provision through state tax-based financing and compulsory personal health insurance. And although at present this step remains a very difficult process and is not without significant political interference, the importance of this idea – separating these two sets of medical services – cannot be underestimated. For the first time, the general public is forced to accept the fact that the volume of medical services financed by the state is not unlimited, and the universal right to receive medical services does not mean an inherent right of citizens to receive all types of medical services free of charge. This part of the new legislation also has important implications for the Constitution, because the Constitution of Slovakia guarantees the rights of every citizen to healthcare very broadly.
5. Compilation of a catalogue and classification of medical services
Slovakia's new legislation gives the government the authority to create a commission that will describe all diseases, make diagnoses, and also determine a clear therapy in each individual case (in Slovakia this process is called catalogue compilation). This is necessary so that the insurance system (both state and private) has access to its ultimate financial obligations, and also so that doctors can calculate what amount of insurance income they are entitled to receive in each individual case of examination and treatment. The classification of medical services, in turn, is essential for patients – it will determine their share of payment (both through insurance and through co-payments). For the most part, medical services will be financed from several sources, namely: part of the cost will be paid by the state, another part will be covered by compulsory insurance, and the remainder through co-payments, which means private payments at the time and place of provision of medical services. This method of classifying services aims to find a dynamic balance not only in financial flows but, more importantly, between self-help and social solidarity.
6. A multi-tier system of financing medical services with compulsory private health insurance
Although reforms in Slovakia still fall short of creating an effective system of compulsory private insurance, governments developing long-term reform should consider such a step. This system could be analogous to the one that is already common practice in reformed pension systems: a multi-tier financing system offered by strong private institutions that protect patients' interests while competing for their money. Over time, as the newly created health insurance supervision system gains strength and experience, more and more of what is currently covered by state insurers can be transferred to competitive private health insurance companies. This should also strengthen the efficiency and effectiveness of state health insurance funds, because management and supervision methods that exist in the private sector can also be extended to the public sector.
7. Competition among inpatient and outpatient treatment institutions
Fierce debates are constantly ongoing about the privatization of hospitals and clinics offering outpatient treatment. This issue was central to the Hungarian government's proposals, but the new law on this matter, unfortunately, was quickly eliminated by a Constitutional Court ruling. It is important to emphasize that the issue of the form of ownership of secondary (specialist) and tertiary (intensive inpatient care) medicine institutions is less important than the issue of their financing. Without support for fierce competition among hospitals and clinics, it is impossible to improve the quality of services they provide; otherwise they will not be interested in controlling costs at all. Competition can be created through free entry into and exit from this market, as well as liberalization of ownership rights, provided that existing institutions providing medical services do not have to be privatized. Then patients will have freedom of choice among secondary and tertiary medicine institutions, while the latter should be obliged to accept all people who have properly insured their health and have the right to refuse all those who do not have proper insurance. (State health insurance funds will cover all costs of medical services in life-threatening situations, such as accidents, disasters, epidemics, terrorist acts, etc.)
8. Decentralization of secondary and tertiary medicine
Most hospitals and outpatient clinics will likely remain in the hands of either local or regional self-government bodies, because the provision of medical services has always been one of the most important principles of self-government (another principle being primary and secondary education). Such a result can only be reinforced by reforms of local self-government bodies, if these reforms are aimed at creating larger units at the lowest level of self-government bodies. In the Visegrad Group countries, particularly in Poland, the government decided to decentralize the management of state health insurance funds. As a result, hospitals and larger outpatient treatment units are now subordinate to local authorities. In smaller countries, such as Slovakia, Hungary and the Czech Republic, there is no such obvious level of attachment of management of larger medical institutions in the hierarchy of state administration, but decentralization is nevertheless possible and desirable (subsidiarity in the European Union).
9. Preliminary thoughts on healthcare reform in Ukraine
Ukraine is a large country, similar to Poland in population and economic potential, but without the prospect of joining the European Union in the near future. This both simplifies and at the same time complicates healthcare reform. Recently, Ukraine has quite successfully "recharged" the potential of its economy. Real growth has reached an unprecedentedly high level, financial balance has been largely restored. Now is the time to turn attention to structural issues in public finances, which can also support the financial situation in the long term.
Ukraine can now afford to spend much more funds on supporting and improving general standards in the state healthcare system, in particular the prevention of epidemics such as HIV/AIDS, tuberculosis, promoting smoking and alcohol cessation, etc. This is necessary to combat demographic decline, as well as to extend average life expectancy for new generations. Primary medicine should have better equipment for detecting serious diseases and more accurately determining the correct treatment for patients in secondary and tertiary medicine institutions.
It is also quite appropriate to consider introducing co-payments for doctor visits, however symbolic they may be. This step is important for preventing abuse of primary medicine and reducing the rate of growth in the use and abuse of prescription drugs. In addition, it must be said that further decentralization of financing of outpatient and inpatient treatment institutions is necessary in order to improve management and control over these institutions. After careful planning and analysis, the introduction of compulsory private health insurance can be considered. It should significantly improve public awareness of the cost of medical services and provide sufficient incentives for self-help. Privately financed and managed insurance companies should compete for patients' money, while secondary and tertiary medicine institutions should compete for contracts with insurers. If patients are backed by influential professionals, the position of patients in relation to doctors can be noticeably improved, and thus the quality of services should also significantly increase.
Healthcare financing must also change over time. Health contributions paid by employers need to be reduced, and the total amount of such contributions should correspond to the cost of providing basic medical services for the entire employed population. All citizens' incomes should be taxed at a single low tax rate for the healthcare system in order to maintain social solidarity in the system. In addition, all citizens should choose among competitive health insurers and purchase different levels of coverage of medical care costs for themselves and their families. The state budget, of course, will remain responsible for providing funds to state health insurance funds and private insurers on behalf of all people who have no permanent income, such as citizens on parental leave, etc.