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15 September 2023 | Policy Analysis
Complementary health insurance abolished -
01 May 2023 | Policy Analysis
New Health System Reform Strategy for Slovenia
3.5. Voluntary health insurance
To help cover high levels of OOP spending on co-payments (for co-insurance), more than 1.5 million inhabitants were enrolled in a complementary VHI scheme as of December 2018. Due to the high share of population covered by complementary VHI, it has been described as “compulsory” or “de facto essential” (Prevolnik Rupel, 2018) and is the main type of VHI in Slovenia.
The premium, which is a flat rate and equal for everyone, increased multiple times in the last decade. The largest increase was in 2012 when the share of co-insurance covered by complementary VHI for many health services in basic benefit package increased (within the limits defined in Article 23 of the Health Care and Health Insurance Act (1992)) to ensure financial sustainability of the compulsory health insurance scheme in the face of rising public expenditures on health. The complementary VHI premium has risen further since due to increases in wages and other health care costs. Currently, the average premium is €34 monthly in comparison to 2012, when it was €12.
Since 2006, the share of complementary VHI in total household consumption levelled around 2.9%. In 2012, the regressive nature of complementary VHI premiums was importantly limited, when automatic coverage of complementary VHI claims for all socially vulnerable population from central budget was introduced (Fig3.6).
Fig3.6
There are three main complementary VHI companies (Vzajemna, Generali, Triglav zdravje) that collect contributions in their respective pools. To ensure that they are not providing coverage to low-cost – e.g. healthy and young – individuals, they are obliged to participate in a risk-equalization scheme, which was prepared by the MoH, included in the Law on Changes and Amendments to the Health Care and Health Insurance Act (2005) and adopted by Parliament in September 2005. According to the scheme, contributions are reallocated among the complementary VHI companies based on level of costs (claims) paid, age and gender profiles of the insured. Based on these figures, the MoH calculates the hypothetical average of costs that would have occurred if VHI providers had identical portfolio structures. VHI providers with more favourable risk portfolios must contribute to a pool, from which compensation is paid to those VHI providers with less favourable portfolios, to equalize differences in risk structures. In contrast to the annual ZZZS budget, the budget for VHI is not capped, which means that VHI companies have to pay for all provided services covered by complementary VHI. VHI companies do not participate in the negotiation process to define the General Agreement and its annexes. They are obligated to pay providers the total value of benefits covered by complementary VHI. Individuals who have taken out supplementary VHI policies pay premiums to the companies, who in turn pay the full costs directly to the respective health care provider.
Since it is not possible to opt out of the compulsory scheme, there are no substitute voluntary schemes, though individuals not included in compulsory health insurance can purchase VHI for a variety of services. As the basic benefit package in the compulsory scheme comprises a wide range of services, there is little room for supplementary VHI. However, health insurance companies do offer such insurance to cover services that are included such as faster access to medical treatment, nonmedical services in hospitals, higher-quality materials and additional services in hospitals or health spas. Since 2017, the share of other VHI policies has been increasing, mostly due to ever-lengthening waiting lists in public health care system (see section 7.2). In 2019, supplementary and parallel insurance was purchased by 26% of the population (2011: 5.6 %; 2015: 18.9 %); their premiums represent a small share (4.55%) of all VHI premiums.
A central health policy of more than two decades was addressed this summer with the adoption of amendments to the Health Care and Health Insurance Act on 6 July 2023, which abolished the complementary health insurance (CoHI).
CoHI had been contested for various reasons by a large part of the political spectrum; however, many on the right and several experts remained unconvinced, stating that the CoHI was an important source of stable additional financing of health services. CoHI indeed bridged the gap in funding of compulsory health insurance during the austerity measures due to the financial crisis of 2009–2014.
The government has now decided to introduce a fixed compulsory contribution – currently €35 a month – that will be raised on all incomes by the Financial Administration (that is, IRS), starting 1 January 2024. The mechanism of potential future increases in this contribution seems more complicated than for the previous CoHI, and consequently, the Ministry of Finance will cover for potential “losses” on this insurance up to a total amount of €240 million. This limit was set according to EU regulations on containing public deficits.
What will happen with the insurance companies?
There are three CoHI companies. In real terms, only one, Vzajemna, is independent and covers almost exclusively CoHI. The others are subsidiaries or departments of larger insurance companies and represent one of the several items in their portfolios, including different types of supplementary insurances, mostly for queue skipping in outpatient specialist services and diagnostics. Vzajemna now faces a restructuring into a limited company. It is expected that the capital will be turned into shares and all the insured as well as the Health Insurance Institute of Slovenia, the single purchaser of public services, which has some funds invested, will become shareholders.
Challenges and issues?
One main concern about this new proposal is a gap in the offer of health services in the public sector, which is insufficient to meet the demand. This is coupled with poor incentives for (salaried) health professionals in the public sector, leading many to work either extra time or full-time with providers that mostly provide their services to the insured of the supplementary health insurance schemes. Further enhancement of these schemes could potentially challenge the equity of access, both in physical and economic terms.
References
The Prime Minister(PM)’s 22-member Advisory Board for the health system reform process has been meeting weekly to advance reform efforts. (See the policy analysis of 3 February 2023: “Whole-system Health Reform preparation formally launched in Slovenia”.) It has several subgroups, including medical faculties, primary care, financing of healthcare, health system governance, emergency medical services, and absenteeism. By the end of April 2023, it had prepared the following recommendations:
- Medical education – increase future admissions by at least 20%; enhance training capacity in regional hospitals and establish a possible third medical faculty.
- Absenteeism – address the current impasse, in which many patients experience a status between long-term sickness absence and disability.
- Primary care – clarify the status of patients not able to register with a GP of choice; incentivize junior doctors to choose primary care; revise completely the existing capitation formula, which has been applied since 2017 for workforce calculation, despite not being designed for this.
- Pharmacies – strengthen the role of pharmacies in local communities, potentially adding preventative services.
Additionally, three legal acts are under public discussion:
- Separate law for the Health Insurance Institute of Slovenia (HIIS): A separate law on the HIIS would reform the status, set-up and management of HIIS. HIIS would be registered as an insurance company, not a public institution. Rather than three management bodies – the CEO, the Management Board and the 45-member Assembly (25 insured representatives, 20 employers representatives) – the CEO and Board of three members – General CEO, vice-chair for compulsory health insurance and vice-chair for long-term insurance – would merge. The Assembly would also decrease to 11 members, representing the insured (6), employers (2), government (2), and employees of the HIIS (1).
- Law on digitalisation of the health information system: A special independent agency would be set up to oversee and implement the entire e-health and national reporting infrastructure. This would be managed by a special company and financed from a fixed percentage of the total health insurance budget. This is initially set at 3% and increased to 4.5% after three years; altogether, almost 10 times more money would be dedicated to e-health and digitalisation than currently, though there are some doubts to the feasibility of the funding source. Further, all national registries and data collection would transfer to five basic registries. It is unclear how these would be managed content-wise or by what methodology since the new agency would primarily oversee IT infrastructure. Nor is it clear how the complex international reporting obligations to Eurostat (legally binding), WHO and OECD would be fulfilled under this new system.
- Abolishment of complementary health insurance (CoHI) and corresponding amendments to the Health Care and Health Insurance Act (HCHIA): Triggered by a large increase in premiums by one CoHI company of almost 30% from 1 May 2023, the PM announced the future abolishment of CoHI. The proposal includes a freeze on premiums until September 2023 by which time the necessary amendments to the HCHIA should be adopted. This means that the present system of expansive CoHI would cease to exist by January 2024 at the latest. While this change may be an opportunity to (re)define the basic benefits basket and establish co-insurance for services not covered, it is unclear when and how this will occur.
References
- Law on the Health Insurance Institute of Slovenia, Draft law: https://e-uprava.gov.si/si/drzava-in-druzba/e-demokracija/predlogi-predpisov/predlog-predpisa.html?id=15438
- Law on the Health Information System: https://e-uprava.gov.si/si/drzava-in-druzba/e-demokracija/predlogi-predpisov/predlog-predpisa.html?id=15432