June, 30 2004

HOW TO MAKE "MEDICAL" FUNDS WORK EFFECTIVELY?

As results of various sociological surveys testify, the unsatisfactory quality and limited availability of medical services appear among the social problems that have been disturbing the overwhelming majority of the population for many years.

A considerable amount of experts and politicians see the principal reason for it in insufficient financing of the healthcare system and, as a way out from the current situation, they suggest approval of the law on mandatory state social health insurance (LMSSHI). It is with implementation of this type of social insurance that they associate the opportunity of receiving additional target funds protected against political manipulations, which will provide financing of the public health sector.

However, Verhovna Rada of Ukraine for the third time during the last year appeared unable to approve this law. According to experts of the European Union Project "Health Financing and Management in Ukraine", this is caused by a few groups of reasons.

The first one is non-acceptance by the part of MPs who represent interests of employers of the draft law concept which provides for implementation of a new social due, i.e. a new kind of charges on salary, in addition to the already existing charges which are transferred to various funds of social insurance.

The second one is non-acceptance of the idea of mandatory medical insurance by the left segment of the political forces spectrum, who consider that implementation of such an insurance will represent infringement of citizens' constitutional right for free medical assistance.

The third one is the negative lobby on the part of commercial insurance companies that have recently been suffering losses in the market of voluntary health insurance and, in this connection, searching for an access to new funds, they opposed the idea of creating a uniform social health insurance fund and actually try to provide for implementation in Ukraine of the system of mandatory private health insurance which is based on the use of a number of competing insurers. Nevertheless, according to the opinion of experts of the above mentioned EU Project that is based on consideration of the experience of countries-members of the Organization of Economic Cooperation and Development and corresponding recommendations of this authoritative international institution, it is hardly expedient to regard implementation of mandatory private health insurance for the whole population as the model of the further reforming of the healthcare system. It is connected with that, as experience of other countries testifies, implementation of such a model has actually only one positive aspect which lies in the opportunity of a person's free choice of an insurance company. However, the specified positive aspect of mandatory private health insurance encounters a lot of negative characteristics of this model, the major of them being the following:

• the regressive character of financing, under which people with lower incomes will be compelled to pay into the system of health insurance a relatively bigger part of their incomes than prosperous persons;
• a lower level of justice and availability within the healthcare system, first of all for chronically diseased patients and elderly people.

The fourth reason for the recurrent rejection by the Parliament of the draft law on mandatory state social health insurance is presence in the draft law of certain technical and legal drawbacks connected first of all with the not quite precise definition of the status of the future Health Insurance Fund and mechanisms of its work.

Nevertheless, according to experts of the EU Project specified, it is this draft law that, under the condition of its appropriate revision, could become in the future the adequate basis for the further reforming of the national healthcare system. No doubt that its approval would contribute into attraction of new funds into the sector of public health, as well as into intensification of the process of transformation, quality enhancement and economic efficiency of this system. At the same time, the decision on approval or rejection of this draft law belongs to the category of internal political decisions of the Ukrainian Parliament.

But is it possible to achieve a higher quality and economic efficiency of the healthcare system without implementation of social health insurance, within the framework of the financial model which is based on general taxes - the one that is currently functioning in Ukraine?

Experience of a range of European countries testifies that it is quite possible. Since in approximately a half of countries-members of the European Union, as well as in Ukraine, they use the healthcare system model focused on financing at the expense of general taxes. Nevertheless, for this model, within the specified countries, a number of features which contribute into fulfillment of the above mentioned purpose are characteristic. These features provide for:

• a high degree of the administrative and financial autonomy of state and municipal medical facilities which have the status of non-profitable public enterprises;
• implementation of the system of the state (municipal) budgetary contracts for purchase of medical services, provision of which is guaranteed at the expense of public funds;
• the use of forms of payment for medical services which are oriented towards the final result of the supplier's activity and on their real cost (instead of maintenance of the infrastructure of a medical facility and its staff, as it is meanwhile done in Ukraine);
• implementation in practice of efficient medical technologies both from the clinical and the economic points of view which are grounded on principles of proof-based medicine;
• a significant role of local self-government and local authorities in assistance to implementation of the above mentioned mechanisms of functioning of the healthcare system.

These features represent the basic differences between healthcare systems of developed European countries which are financed at the expense of general taxes and the healthcare system of Ukraine.

Why did not Ukrainian members of the Parliament venture to accept the law on insurance medicine? How to make "medical" funds work effectively? Is it possible to transform state and municipal medical facilities into full-value subjects of economic activity? How to change forms of payment for medical services provided, so that the funds were used effectively? What can local authorities do for improvement of the situation in the sphere of public health? Is it true that all medical services must and may be free of charge?

Participants of the National press-club of reforms will try to find answer to these questions:

Head of the Committee of Verhovna Rada of Ukraine in issues of healthcare, motherhood and childhood Mykola Polіshchuk, Head of the Committee of Verhovna Rada of Ukraine in issues of social policy and labor Vasil Hara, the MP of Ukraine, Head of the subcommittee of Verhovna Rada of Ukraine in issues of healthcare, motherhood and childhood Lilya Grygorovich, the First Deputy Minister of healthcare of Ukraine in relations with Verhovna Rada Timur Pedchenko and Ukrainian Director of the European Union Project "Health Financing and Management in Ukraine" Volodymir Rudy.

	GVG/CII/ EPOS
This project is funded by the European Union Delegation of the European Commission to Ukraine, Moldova and Belarus 10 Kruhlo-Universytetska St, Kyiv, Ukraine, 01024 Tel: +38 (044) 462 00 10 Fax: +38 (044) 462 09 20	A project implemented by GVG/CII/ EPOS Project office Kiev 59-b, 40-letiya (sorokaletiya) Oktyabrya prospect Kiev local clinic hospital 10 Tel.: 380-44-265-32-83 380-44-257-24-42 Fax: 380- 44-257-36-76 www.healthfin.kiev.ua	This project is funded by the EUROPEAN UNION. The European Union numbers 25 Member States: 25 different nations deter-mined to shape their future closely together. Over a period of enlargement of 40 years, they have, together, built a zone of peace, stability, progress and solidarity. The European Union is a model for overcoming conflict and promoting reconciliation through close co-operation to achieve common goals, while respecting national sovereignty and territorial integrity. But the EU is not focused on itself: its ambition is to share its achievements and its values with countries and peoples beyond its borders. The European Commission is the EU's executive body.