1. WPIX – Development of Scenarios for Health Expenditure in the Accession Economies, Stanisława Golinowska, Ewa Kocot, Agnieszka Sowa based on country reports of: Vladimir Kvetan, Viliam Páleník, Martin Mlýnek, Marek Radvanský Andras Gabos, Robert Gal, Rositsa Rangelova, Grigor Sariiski Stanisława Golinowska, Ewa Kocot, Agnieszka Sowa

2. Presentation plan Objective of the work package IX Model specific Health insurance system development in analysed countries Variables, type of data and sources Assumptions of variables development Modelling results Conclusion and policy recommendations

3. Objective of the workpackage IX To prepare expenditures and revenues projections of the public health budget in Bulgaria, Estonia, Hungary, Poland and Slovakia according to the methodology of ILO social budget model

4. Specific features of the applied model Taken into account external factors of the health system: demographic, labour market development, economic development Comprehensive health budget model; contains revenues and expenditures side Concentrate on insurance system balance and financial sustainability of the health care sector Based on national demographic, labour market and macroeconomic projections Based on national pattern of health service utilisation Results are policy oriented

5. Health insurance funding system Data of HI introducing ContributionShare of HI in total HC funding Bulgaria 1999 6,0%32% Estonia199113,0%66% Hungary1990 as SI 1996 -separate HI 14,0%71,6% Poland1999 8,5%63,0% Slovakia199414,0%86%

6. Structure of health care funding

7. Modules and variables of the model 1. Demography: population size and structure, TFR and LE 2. Labour market supply module: labour market participation rates, employment and unemployment, 3. Macroeconomic module: real GDP growth, labour productivity growth, wages development 4. Health sector: aggregate expenditures and its structure, health services utilization

8. Data sources National statistics: populations development and prognosis, employment statistics, macroeconomic results development Surveys of statistical offices: LFS, health utilisation, NHA Data from social and health insurance offices: health revenues and expenditures, health service utilisation Other sources: National Banks

9. Assumptions Demography - based on national prognosis: increase TFR and LE, nevertheless population shrinking, strong changes in population age composition Labour market development: increase of employment rate with the line of Lisbon Strategy Macroeconomic: growth and labour productivity follow national employment strategy and convergence programmes Health services utilization – J-form curve

10. General assumptions No policy changes in the health sector Epidemiological development with the line of LE assumptions Income elasticity – 1,0 (in the 90. lower than 1,0)

11. Population shrinking

12. Age structure - no more demographic pyramid 2005 – Christmas tree

13. Age structure - no more pyramid form – 2050 mushroom form

14. Result of demographic development – doubeling of the old age dependency ratio

15. Macreconomic assumption (1) – GDP

16. Labour market development assumption – employment strategy Low level of ER indicator at the start point 50% -55% Improvement in the first period of prognosis (2015 Bulgaria – 2020 Hungary – 2025 Slovakia) Lisbon target – 70% of ER will be achieved 2030 – Poland and Slovakia

17. Utilisation pattern by age – Hungary

18. Utilisation pattern – expenditures according age

19. Utilisation pattern - general In NMS – growing spending tendency in younger age than in the EU 15 (r.:40 and 50) Line of J-curve – more flat

20. Modeling results Revenues of the health budget Expenditures on health care services Deficit in the health sector budget

21. Revenues as % of GDP Different tendencies of relative revenue growth over the time: :  Increase revenues during the whole projected period: in Estonia and with moderate dynamic in Poland  Increase revenues in limited time: Bulgaria up to 2030 and Slovakia up to 2010  Drop of revenues in Hungary except the period of 2015-2025

22. Public health expenditures growth relate to the year 2005 (2005 = 100%)

23. Public health expenditures as % of GDP Higher start point – weaker dynamic In the end of the projected period 7% of GDP will be achieved, (France and Scandinavia countries achieve such indicator at present)

24. Death related costs moderate expenditure side

25. Results: public health care budget deficit as share of GDP

26. Results: public health care budget deficit as share of expenditures

27. Projected deficit in Hungary and Poland with death related costs modification as % of GDP

28. Comments Dynamic growth in Slovakia and Hungary (very high) already from the end of this decade Different tendency in Bulgaria – decrease up to 2020 and later the same tendency – increase Poland – moderate and stabile increases t death related costs decreasing to 0,5 % of GDP

29. Sensitivity analysis – moderate effect Revenues side: Growth of wages (+) Higher employment rate (+) Expenditures side: Death- related costs (-) Higher longevity (+) Deficit: death-related costs (-) longevity (+), wages (-)

30. General tendencies Systematic growth of HB deficit (Slovakia until 60% of expenditure and Hungary – about 50%) The growth of deficit is caused by trends influencing both: expenditure and revenue side. Very limited increase of the revenues, high dynamic of expenditures growth and as a consequence – systematic growth of deficit Sustainability of the health care system financing strong depends from the economy development: growth, labour market participation and wages Expenditure side as strong depended from the health care services utilization and their costs is conditional on effectiveness of the health care sector functioning.

31. Needed contribution to cover deficit CountryBase year20252050 Hungary17%21,0%28% Poland 8,6%10,7%11,7% Sovakia9,4%12,7%21,5%

32. Policy recommendations Bulgaria RS - dynamic GDP policy, higher health contribution ES – more efficiency in the health sector Hungary RS – wages, productivity and employment increase ES – effective health reform, more space for private sector Poland RS – complete health insurance covering, higher contribution rate, widening taxable income, employment strategy ES –improvements of governance and micro efficiency in the health sector Slovakia RS Dynamic GDP policy and wages increase

33. Common policy recommendations Base for revenue increase: dynamic economic growth with employment strategy and wages improvement (with line of productivity growth), priority setting for health in income distribution policy; contribution compliance Expenditure side: more effectiveness in the health care sector, clever health care reforms: capacity building, administrative efficiency Comprehensive health policy: all social insurance sectors, revenues and expenditure side, macro governance and micro efficiency, public health (healthy aging) and curative health care

34. Future - needed researches Health status of elderly; hypothesis: extensive longevity accompanies poorer health status > health care costs increase Migration impact on health expenditures; hypothesis: temporary labour emigration with come back in later age > health and LTC costs increase