1. Tuzla, september 2007. godine Health Insurance Overview Salihbašić Šehzada, dipl.ecc. Mechanism for funding of healthcare services Technical Training for Rehabilitation Center Managers Economy and Funding of Health Care Systems Health System Economies and Financing

3. The circle of correlation between economic and health factors LOW PRODUCTION OF MATERIAL GOODS MORE ILL PATIENTS LIMITED INVESTMENTS IN PREVENTIVE MEDICINEI HIGH INVESTMENTS TREATMENT DISEASE LOW INCOME POOR NOURISHMENT POOR LIVING CONDITIONS LOW WORKING ABILITY

4. Frame used for analysis of healthcare systems

5. Financial sources Taxes Taxes Revenues Revenues Combined; taxes/revenues Combined; taxes/revenues Individual financing-voluntary insurance Individual financing-voluntary insurance Bonus Bonus Participation Participation Voluntary humanitarian funding and presents Voluntary humanitarian funding and presents

6. Financing of healthcare protection system State budget (Spain, Italy- Beveridge system) State budget (Spain, Italy- Beveridge system) National mixed or private insurance companies (Germany – Bismarck model) National mixed or private insurance companies (Germany – Bismarck model) Indirect payment method – marketing principle (America) Indirect payment method – marketing principle (America) Combined system (Sweden, BiH) Combined system (Sweden, BiH)

7. BEVERIDGE SYSTEM Originated in England and Wales in 1943 Originated in England and Wales in 1943 System of central taxation System of central taxation Along with other financial supplements, it is the system of universal use (disease, unemployment, invalidity, retirement) Along with other financial supplements, it is the system of universal use (disease, unemployment, invalidity, retirement) System uses prevention, diagnostics, and treatment System uses prevention, diagnostics, and treatment System includes the following types of healthcare protection: primary care, dental care, optical and pharmaceutical services, public healthcare services, hospital services, physical and mental conditions. System includes the following types of healthcare protection: primary care, dental care, optical and pharmaceutical services, public healthcare services, hospital services, physical and mental conditions.

8. BISMARCKIAM SYSTEM It was introduced in Austro-Hungarian Empire during the rule of Chancellor Bismarck; 19 th century. It was introduced in Austro-Hungarian Empire during the rule of Chancellor Bismarck; 19 th century. System of financial revenues paid from gross incomes of citizens who use the healthcare service and social insurance (hospital funds) System of financial revenues paid from gross incomes of citizens who use the healthcare service and social insurance (hospital funds) This system protects sick, unemployed, poor; it covers most of the population This system protects sick, unemployed, poor; it covers most of the population

9. Indirect Healthcare Payment System System used in America System used in America This system covers only a small part of population This system covers only a small part of population It depends on financial payments made by individuals It depends on financial payments made by individuals

10. Combined System /Sweden/ System which uses taxes and revenues in order to provide health insurance; it is part of overall social insurance System which uses taxes and revenues in order to provide health insurance; it is part of overall social insurance In 1800, people of Sweden created the associations known as “Assistance Hospital Treasuries”. In 1800, people of Sweden created the associations known as “Assistance Hospital Treasuries”. In 1931, the government of Sweden recognizes these associations. These associations become Hospital Treasuries In 1931, the government of Sweden recognizes these associations. These associations become Hospital Treasuries Constant social reforms take place in Sweden during the 20th century Constant social reforms take place in Sweden during the 20th century The following is insured: work benefits, hospital pay, hospital food and rehabilitation fee, handicap pay, assistance pay and so forth. The following is insured: work benefits, hospital pay, hospital food and rehabilitation fee, handicap pay, assistance pay and so forth.

11. System in BiH 1878 - 1918- development of social insurance is very slow and restrictive for local population (period of Austro-Hungarian rule) 1878 - 1918- development of social insurance is very slow and restrictive for local population (period of Austro-Hungarian rule) 1918- 1941- development of social insurance, creation of the hospital treasury and private insurance institutions 1918- 1941- development of social insurance, creation of the hospital treasury and private insurance institutions May 1945.- Law on Implementation of Social Insurance DFJ – Central Fund for Social Insurance founded; central office in Zagreb May 1945.- Law on Implementation of Social Insurance DFJ – Central Fund for Social Insurance founded; central office in Zagreb

12. System in BiH January 1947 – Law on social insurance of workers in Yugoslavia (coordination from the central office; the material and health protection is implemented as part of the social insurance; the number of insured people increases; revenues are introduced; the system of financing becomes part of the state system; money allocated from the budget of Yugoslavia; users have absolutely equal rights) January 1947 – Law on social insurance of workers in Yugoslavia (coordination from the central office; the material and health protection is implemented as part of the social insurance; the number of insured people increases; revenues are introduced; the system of financing becomes part of the state system; money allocated from the budget of Yugoslavia; users have absolutely equal rights) November 1954 - Law on healthcare insurance of workers and officials in Yugoslavia (wide range of equal rights for all, healthcare is divided on the basic and expanded care, insured persons separated regarding certain rights; creation of territorial funds) November 1954 - Law on healthcare insurance of workers and officials in Yugoslavia (wide range of equal rights for all, healthcare is divided on the basic and expanded care, insured persons separated regarding certain rights; creation of territorial funds)

13. System in BiH 1965-1967- the insurance law changes in order to stop deficiencies in the health field 1965-1967- the insurance law changes in order to stop deficiencies in the health field 1969.- new law passed; general law on health insurance and health protection; health care protection communities created; healthcare protection is separated from the social insurance system; the federation takes over the management of the system; new mandatory insurance is introduced; republics and provinces pass their own laws regarding this issue. 1969.- new law passed; general law on health insurance and health protection; health care protection communities created; healthcare protection is separated from the social insurance system; the federation takes over the management of the system; new mandatory insurance is introduced; republics and provinces pass their own laws regarding this issue.

14. System in BiH Constitution of 1974 represents the legal base for further changes, passing of new laws and establishment of “self-managing healthcare protection communities” Constitution of 1974 represents the legal base for further changes, passing of new laws and establishment of “self-managing healthcare protection communities” From June of 1975.- 11 social and healthcare protection funds in BiH are created (five for workers and six for farmers), administration expands; municipal healthcare communities created; provider-user negotiation in healthcare system becomes more complicated; the term “formal transformation” reappears; financial losses in healthcare institutions become reality. From June of 1975.- 11 social and healthcare protection funds in BiH are created (five for workers and six for farmers), administration expands; municipal healthcare communities created; provider-user negotiation in healthcare system becomes more complicated; the term “formal transformation” reappears; financial losses in healthcare institutions become reality.

15. System in BiH November 1990 – all the funds end to exist; new social fund in the area of health care is established, former funds become part of the new social fund of BiH. November 1990 – all the funds end to exist; new social fund in the area of health care is established, former funds become part of the new social fund of BiH.

16. Taxes EfficiencyStrict control of expenses EfficiencyStrict control of expenses Less administrative obstacles JusticeSolidarity JusticeSolidarity Complete coverage Equality regardless of ability to provide financing SustainabilityDepends on political will SustainabilityDepends on political will Depends on economical structures Understanding Complicated due to political dependency Understanding Complicated due to political dependency Insurance provider’s monopoly Means insured in advance Means insured in advance

17. Revenues Targeted collection of finances Targeted collection of finances Targeted allocation of finances Targeted allocation of finances Spending solidarity Spending solidarity It is not stimulating for employers because it increases the pay It is not stimulating for users because everyone gets the same healthcare protection regardless of the amount of pay It is not stimulating for employers because it increases the pay It is not stimulating for users because everyone gets the same healthcare protection regardless of the amount of pay It is a fair model with limited coverage It is a fair model with limited coverage

18. National health insurance Efficiency depends on the number of funds; weak control Efficiency depends on the number of funds; weak control It is harder to achieve complete coverage and justice It is harder to achieve complete coverage and justice It depends on the market, financial discipline, and control measures It depends on the market, financial discipline, and control measures

19. Voluntary health insurance The type of health insurance is selected and paid for either on individuals basis or by employers The type of health insurance is selected and paid for either on individuals basis or by employers This type of insurance can be offered by public or semi- public (mixed) funds or profitable or non-profitable organizations This type of insurance can be offered by public or semi- public (mixed) funds or profitable or non-profitable organizations Financing does not limit access Financing does not limit access

20. Private health insurance Due to insufficient control of expanses, it is not efficient enough Due to insufficient control of expanses, it is not efficient enough It is not fair due to insufficient coverage of all risks It is not fair due to insufficient coverage of all risks Access limited only to individuals are paying for the healthcare protection Access limited only to individuals are paying for the healthcare protection The insurance of risk depends on the amount of money paid The insurance of risk depends on the amount of money paid

21. Users’ expenses Participation- indirect participation of users in certain expanses of healthcare protection Participation- indirect participation of users in certain expanses of healthcare protection Additional insurance Additional insurance Users have to pay in advance before they become part of the insurance system Users have to pay in advance before they become part of the insurance system

22. Arguments supporting additional payments It controls financial demands and creates the feeling that everything costs It controls financial demands and creates the feeling that everything costs It increases income of service providers It increases income of service providers Tuzla Canton experiences Tuzla Canton experiences

23. Arguments against additional payments It reduces demands for healthcare regardless of its necessity It reduces demands for healthcare regardless of its necessity It increases users’ expanses through additional insurance payments It increases users’ expanses through additional insurance payments It increases administrative expanses while the total amount of collected additional funds is not significant It increases administrative expanses while the total amount of collected additional funds is not significant Tuzla Canton experiences Tuzla Canton experiences

24. Newest trends Increase of revenues or insurance installments – Great Britain, Austria, Switzerland Increase of revenues or insurance installments – Great Britain, Austria, Switzerland Increased mutual risk funds – China, Korea Increased mutual risk funds – China, Korea Stimulation of private expanses Stimulation of private expanses Combination of taxes and revenues Combination of taxes and revenues