Evgeny V.
Dyachenko
Taras Shevchenko National University of Kyiv
1 year
graduate, speciality "Finance"
Supervisor:
Ph.D., Docent R.V. Pikus
SCHEMES OF COMBINATION COMPULSORY AND VOLUNTARY MEDICAL INSURANCE
The article is exposed the essence
of voluntary and compulsory medical insurance scheme, possible combination of
compulsory and voluntary medical insurance in a complete system of medical
insurance. Particular attention is focused on the analysis of the market for
voluntary medical insurance.
Keywords: system of medical
insurance, basic medical program safeguards, voluntary medical insurance,
compulsory medical insurance premiums and insurance payments.
General issues
of organization, functioning and development of the medical insurance system in
Ukraine are widely covered in modern social and economic literature. Domestic
literature, mainly describes general patterns of medical insurance system in
Ukraine and abroad, concentrating on the opportunities that will get health
care system in Ukraine after the introduction of compulsory medical insurance
and the use of voluntary medical insurance. But the fact that it does not offer
specific methods of practical realization of these opportunities as part of comprehensive
medical insurance system in Ukraine is its great disadvantage. The actuality of problem is that at the
moment there is no basis on which combination of compulsory and voluntary
medical insurance will happen. Therefore, it is necessary to review the terms
and effective schemes of combination voluntary and compulsory medical
insurance.
Theoretical
and methodological foundations of social medical insurance essentially
developed by S. Brue, R. McConnell, P. Samuelson, O. Wasylyk, B. Bazilevich, S.
Osadets, I. Noga and others. However, certain practical issues are not covered
in foreign and domestic scientific literature.
The aim of the article is to study the schemes of combination voluntary and compulsory medical
insurance.
According to
the goals, objectives of our work
are:
- Define the essence of voluntary
and compulsory medical insurance and their forms;
- Analyze insurance premiums and
insurance payments for the first quarter of 2010 - 2011 for different types of
insurance;
- Describe possible schemes of
combination voluntary and compulsory medical insurance.
The medical
insurance system itself represents the set of forms and types of medical
insurance, which are carried out in the country by law or by contract.
Medical
insurance - a form of social protection of population’s health, expressed in
guaranteed payment for medical care by accumulated assets in case of the
insured event. Medical insurance helps to ensure a certain volume of free
medical services to the citizen in case of insured event (health disorders) by
the contract with medical insurance organization. The latter bears the cost of
medical care (risk) from a moment when citizen paid the first installment to
the appropriate fund.
Compulsory
Medical insurance is a kind of compulsory social insurance, which is a system
of legal, economic and organizational measures created by the state to ensure
guaranteed free medical care to an insured person by means of compulsory
medical insurance within the territorial program of compulsory medical insurance
and in cases established by law within the basic program of compulsory medical
insurance [12, c. 24].
The basic
program of compulsory medical insurance provides primary health care, including
preventive care, emergency medical assistance (except for specialized (sanitary
aviation) ambulance), and specialized medical care in certain cases.
In respect of
compulsory medical insurance practics and theorists of insurance industries and
health economics agree on the necessity of its introduction; the reasons why it
has not yet been introduced, are mostly subjective.
Voluntary
medical insurance is an additional program to the volume of health care
established for people, named by insurers as beneficiaries. Voluntary medical
insurance paid by expense of a budget, private contributions from the
individual or employer contributions [12, c. 26].
It should be
noted that voluntary medical insurance does not insure health, but the cost of
treatment, the latter reimbursed to the insured normally or by stage of treatments
(pharmacology, diagnostics, hospital) or by type of medical care (dentistry,
gynecology, cosmetology, death ), or by part costs for medical care provided
(full refund, percentage compensation, compensation within a certain amount).
Voluntary medical insurance usually
subdivides into individual (that takes into account the complexity of the
particular disease of specific person) and collective (that takes into account
the risk of certain diseases in groups of individuals).
Great hopes for improving the financial
security of health care and improve the quality and accessibility of health
services have relied on voluntary medical insurance, but, according to
statistics given below, they were not met. Insoluble part of the problem, which
hinders the creation of functioning medical insurance system in Ukraine is that
boundaries between compulsory and voluntary insurance are not clear, which
caused by various interpretations of existing regulations that govern
activities within medical insurance. Also, it is reflected by the lack of
classification of medical services provided to patients under compulsory and
voluntary medical insurance.
Speaking of the medical insurance system,
we believe that compulsory and voluntary medical insurance should be considered
in combination as complementary elements of one system. This is due primarily
to the fact that compulsory and voluntary medical insurance have a common goal
- protection against social risks, and associated with the need to obtain
medical services in the insurance case - disease.
In no country in the world compulsory and
voluntary medical insurance exist in pure form since coverage of separate forms
of medical insurance is not perfect; so there is usually a symbiosis of state
guarantees and additional medical services that are funded by private medical
insurance. Therefore, these forms of insurance must be carried out by
developing combined and complementary medical insurance program.
The effectiveness of country’s current
from the medical insurance system should be considered by the criterion of
satisfaction of its citizens with health care and quality characteristics of
health, but also in terms of the ratio "cost / effectiveness."
Scientists like O. Wasylyk, B.
Bazilevich, S. Osadets, T. Artyukh, O. Hamankova, O.Holyachenko and others
agree that the lack of compulsory medical insurance in our country inhibits
further development of voluntary medical insurance market - voluntary medical
insurance services remain inaccessible luxury for most of Ukrainians.
Given the fact that in Ukraine there is
no compulsory medical insurance, let’s look into main trends that emerged in
the market of voluntary medical insurance.
In the first quarter of 2011 the
insurance market was in a slight "recovery", while the figures have
not yet reached pre-crisis values.
The dynamics of premiums minus the share
of premiums paid to resident reinsurers, for the first quarter of 2010-2011, is
presented in Table 1.
Table 1
Insurance premiums by type of insurance for the
first quarter of 2010 - 2011
(volumes, growth rates)
|
Types of insurance |
Insurance premiums, mln hrn. |
||
|
Net |
Deviation |
||
|
² quarter 2010 |
² quarter 2011 |
² q. 2011/ ² q. 2010 |
|
|
1 |
4 |
5 |
6 |
|
Life insurance |
164,5 |
249,1 |
51,4% |
|
Types of
insurance other than life insurance, including: |
2 584,6 |
2 815,8 |
8,9% |
|
Voluntary private insurance |
380 |
455,8 |
19,9% |
|
Voluntary
property insurance |
1524,8 |
1 551,8 |
1,8% |
|
- Including financial risk
insurance |
151,9 |
212,3 |
39,8% |
|
Voluntary
insurance of liability |
101,1 |
90,7 |
-10,3% |
|
Non-state
compulsory insurance |
578,1 |
717,5 |
24,1% |
|
- Including
vehicle owners liability insurance |
451,3 |
578,9 |
28,3% |
|
State
compulsory insurance |
0,6 |
0,0 |
-100,0% |
|
TOTAL (all types of insurance) |
2 749,1 |
3 064,9 |
11,5% |
* According
to the State Commission for Regulation of Financial Services
According to the Stateinfoservice,
voluntary personal insurance, (part of which is medical insurance), is now
holding one of the leading positions among other types of insurance by the
volume of premiums collected and dynamics of market growth (the rates of growth
of net insurance premiums amounted to 19.9% for Q1 201/2010) [11].
Table 2
Insurance premiums by type of insurance for the
first quarter of 2010 - 2011
(volumes, growth rates)
|
Types of insurance |
Insurance premiums, mln hrn. |
||
|
Net |
Deviation |
||
|
² quarter 2010 |
² quarter 2011 |
² q. 2011/ ² q. 2010 |
|
|
1 |
4 |
5 |
6 |
|
Life insurance |
13,6 |
13,8 |
1,5% |
|
Types of
insurance other than life insurance, including: |
1223,9 |
1117,2 |
-8,7% |
|
Voluntary private insurance |
203,2 |
223,6 |
10,0% |
|
Voluntary
property insurance |
825,0 |
639,1 |
-22,5% |
|
- Including financial risk
insurance |
279,3 |
199,7 |
-28,5% |
|
Voluntary
insurance of liability |
6,3 |
11,0 |
74,6% |
|
Non-state
compulsory insurance |
188,9 |
243,5 |
28,9% |
|
- Including
vehicle owners liability insurance |
185,3 |
241,1 |
30,1% |
|
State
compulsory insurance |
0,5 |
0,0 |
-100,0% |
|
TOTAL (all types of insurance) |
1237,5 |
1131,0 |
-8,6% |
* According
to the State Commission for Regulation of Financial Services
In the
structure of premiums minus the share of premiums paid to resident reinsurers,
by type of insurance as of 3/31/2011 largest share belongs to medical insurance
- 288.3 million. (or 9%) (as of 31.03.2010 - 241.1 million. (or 9%)) (see Table
3).
Table
3
The dynamics of premiums
minus the share of premiums paid
to resident reinsurers,
for the first quarter of 2010-2011
|
Types of insurance |
² quarter 2010 |
² quarter 2011 |
Growth |
|
mln.hrn. |
Mln.hrn. |
% |
|
|
Car insurance (ÊÀSÊÎ, "Green Card") |
1 113,2 |
1 166,2 |
4,8 |
|
Property
insurance |
330,7 |
333,5 |
0,8 |
|
Insurance
against fire hazards |
212,9 |
235,4 |
10,5 |
|
Financial risks insurance |
151,9 |
212,3 |
39,8 |
|
Cargo and baggage insurance |
130,8 |
156,5 |
19,7 |
|
Third party
liability insurance |
77,3 |
74,1 |
-4,2 |
|
Life
insurance |
164,5 |
249,1 |
51,4 |
|
Medical insurance |
241,1 |
288,3 |
19,6 |
|
Credit
Insurance |
35,8 |
64,6 |
80,3 |
|
Insurance
against accident |
58,4 |
77,7 |
32,9 |
|
Aviation
Insurance |
62,2 |
56,3 |
-9,5 |
|
Insurance for medical expenses |
44,2 |
48,9 |
10,7 |
|
Insurance
against transport accidents |
25,9 |
28,1 |
8,6 |
|
Other
insurance |
100,1 |
74,0 |
-26,1 |
|
Total |
2 749,0 |
3 064,9 |
11,5 |
* According
to the State Commission for Regulation of Financial Services
In the
structure of insurance payouts minus the share of insurance premiums, that were
compensated to resident reinsurers as of 3/31/2011 largest share of insurance
payments belongs to medical insurance. The share of medical insurance
(permanent medical insurance) is 180.2 million. (or 16%) (as of 31.03.2010 -
167.9 million. (or 14%)) (Table 4).
Dynamics of
claims paid minus the share of insurance premiums, that were compensated to
resident reinsurers for the first quarter of 2010-2011, is presented in Table
4.
But the share
of insurance premiums involved is insufficient to significantly change the
financial support of public health.
Table 4
Dynamics of claims paid minus the share of
insurance payments compensated resident reinsurers, for the first quarter of
2010-2011
|
Types of insurance |
² êâ.
2010 ð. |
² êâ.
2011 ð. |
Òåìïè ïðèðîñòó |
|
ìëí. ãðí. |
ìëí. ãðí. |
% |
|
|
Car insurance (ÊÀSÊÎ, "Green Card") |
653,7 |
597,0 |
-8,7 |
|
Financial risks insurance |
279,3 |
199,7 |
-28,5 |
|
Medical insurance (permanent medical insurance) |
167,9 |
180,2 |
7,3 |
|
Credit
Insurance |
32,6 |
4,8 |
-85,4 |
|
Insurance
against fire hazards and risks of natural disasters |
5,9 |
43,1 |
630,0 |
|
Property
insurance |
35,4 |
23,0 |
-35,0 |
|
Insurance for medical expenses |
18,7 |
22,9 |
22,8 |
|
Life
insurance |
13,6 |
13,8 |
1,3 |
|
Other
insurance |
30,4 |
46,5 |
52,8 |
|
Total |
1 237,6 |
1 131,0 |
-8,6 |
* According
to the State Commission for Regulation of Financial Services
During the analyzed period, the share of
voluntary medical insurance in total premiums shows the interest of potential
policyholders in this form of insurance services, mainly due to motivation of
legal entities to purchase this type of insurance coverage, and the need of
citizens to get insurance coverage and as element of progressive trust in
insurers.
Solving the problem of additional funding
of health care only through the voluntary medical insurance is impossible.
Therefore, the solution is to construct a completed medical insurance system,
which should provide multi-funding of health care: at the expense of compulsory
medical insurance and the expense of voluntary medical insurance. Also there
should be the schemes of their combinations designed.
The basis for the combination of
compulsory and voluntary medical insurance, according to researchers, could be
the following:
1. Development of medical services
classifier.
2. Development of standard and unified
medical insurance programs with a clear and transparent structure.
3. Certainty, concreteness of government
liabilities and their financial security.
4. Abandon of Funding by generalized
categories [7, p. 37].
The reason we need to develop
classification of medical services is that the classifier will make it possible
to combine not only guaranteed list of medical services, but services provided
under programs of voluntary medical insurance. This combination will allow for
more efficient and focused use of financial resources in the health care
system. Given this basis for insurance of episodic events could turn into a guaranteed
source of cash inflows - "in addition" to free health care.
Certainty and concreteness of government
liabilities and their financial security should be achieved through the
formation of approaches to basic medical care program. The main purpose of this
revision is the transition from general to detailed definitions which medical
services, to what extent, in what time frame and in which specific health care
facilities can person get. Base of the list should be made of differentiated
list of manipulations that are performed within each medical specialty.
According to scientists we should abandon
funding by generalized categories, such as profile of visits, because with
these formulations it is impossible to verify appropriate use of financial
resources [6], [7].
Not all services available within the
guaranteed list. Therefore, when forming classifier of medical services, we
should consider that the list itself may vary depending on budget availability,
that’s why services which not included in the guaranteed list (basic program)
will be provided through the market of voluntary medical insurance and paid
medical services.
In result of introducing a single
classifier of medical services we will avoid double payment, since the specific
names of medical services allow an accurate understanding of what needs to be
paid with public funds, and what - by the state medical insurance. This
approach will form the medical insurance system in Ukraine.
Currently, the health system in Ukraine
is in deep financial, organizational and structural crisis. Introduction of a
mixed system of budget and insurance financing of medical institutions is
proposed as stabilization measure, the essence of which is to build subvention
insurance funds to compensate for the costs of medical institutions by
combining compulsory and voluntary medical insurance. So the difference between
the necessary volumes of financing defined based on standard treatment
regimens, the required number of medications, tests, test instrumentation,
calculated at market prices, and the existing volume of budget financing should
be compensated. To implement this system, fund owner functions proposed to be
transferred to insurance companies.
As part of a mixed system of budget
financing of medical insurance, there are two channels of financial flows:
1st channel is state (budget)
funding;
2nd channel is funding from
subventional insurance funds generated through compulsory and voluntary medical
insurance.
The proposed concept makes financing of health care not only
multichannel, but multilayered, with five levels of health care:
- First level - basic, so-called "lifeguard", carried out by the budget expense (assuming that a
minimum required level of medical care, sufficient to save lives of citizens,
including first aid, resuscitation services, emergency medical services and
other should be provided.
In addition, implementation of social
government programs, funding for science and education in health care should be
provided by budget funds as well);
- Second level - main, so-called "safeguard", carried out by the expense of compulsory medical insurance
(assuming that health services should be provided within the program of state
guarantees, level of medical care is sufficient for the average citizen,
including consultation in clinics, inpatient care, spa treatment for citizens
with low income and others.)
- Third level - so-called "service", obtained at state and
commercial medical institutions at expense
of voluntary medical insurance (medical services on top of the program of
state guarantees);
- Fourth level - "paid medical services" (medical
services not provided on any of the above levels, such as alternative medicine
services);
- Fifth level - "other sources" (health care
services provided through charitable programs, medical services within the
high-tech medical research, etc.). [4], [9], [12].
Let’s have detailed look at second
channel financial flows, which involves combining both compulsory and voluntary
medical insurance.
The second channel financial flows -
financing through subventional insurance funds generated through compulsory and
voluntary medical insurance.
It is assumed that required medical
services that were not paid through the budget (the first channel financial
flows), shall be paid by insurance companies that are licensed to provide
services for compulsory medical insurance. In connection with these insurance
companies, dealing with compulsory medical insurance should satisfy specific
requirements (experience, availability of insurance contracts, availability of
staff with appropriate education and experience, financial requirements, etc.).
The cost that was not covered by budgetary funds and compulsory medical
insurance must be offset by voluntary medical insurance.
Figure 1 shows the proposed organizational
and economic mechanism for the second channel financial flows - subventional
insurance funds formed by combining compulsory and voluntary medical insurance.
In this figure represented four-level
system of compulsory medical insurance and three-level system of voluntary
medical insurance: National medical insurance fund under the Ministry of Health
of Ukraine - Regional medical insurance fund and its subsidiaries - Company
(members UMSB) insurance and health care institutions.
Financial flows
General contracts
Fig. 1 Combination scheme of compulsory and voluntary
medical insurance as part of a mixed system of insurance and budget financing
of health care
Let’s review the expected function of each of the
funds.
The
main functions of the National Fund for
medical insurance (NFSM) is to develop a uniform policy implementation and
operation of compulsory medical insurance system in Ukraine, align funding
areas of Regions of Ukraine on the principle of a single standard, the creation
of insurance reserve in case of emergencies, as well as funding research
programs, providing health service and others.
The
main functions of the Regional medical
insurance fund (RHIF) are: to provide uniform policy of compulsory medical
insurance in the region, accounting for contributors for compulsory medical
insurance, collection of these contributions. RFSM plays the role of insurer of
population in the region, provides funding of insurance companies through
insurance premiums on the standard basis, and controls the efficiency of
insurance companies spending.
The
main functions of insurance companies
(IC) are: payments to health care institutions or assisting agencies for
provided medical services, registration of the insured individuals in a system
of compulsory medical insurance, quality control and examination of their
treatment.
The
main functions of the Ukrainian Medical
Insurance Bureau (UMIB) are: coordination of insurers, development and
implementation of medical insurance programs, the quality control of medical
services, reporting the formation of insurance rates, unification of rules,
requirements and standards for medical insurance, ensuring equal conditions for
all insurance companies in Ukraine, holding seminars, conferences and other
activities of scientific and practical nature, coordination of medical
insurance guarantee fund, which is the guarantor of the insurance companies of
their obligations to policyholders and others. UMSB is in a contractual
relationship with the NFSM, RFSM, and Department of Health.
The
main function of the Medical Fund of
Insurance guarantees (MFIG) is: accumulation of funds received as
contributions from each insurance policy for compulsory and voluntary medical
insurance for guaranteeing the solvency of insurance companies - UMSB members
to fulfill its obligations to policyholders in the event force majeure or other
situations.
Thus,
each level has its clearly limited functions.
Options
for reforming medical insurance based on a modification to the system of
compulsory medical insurance and medical insurance can function as well as
proposal to establish a multilevel (i.e. two-level) medical insurance system,
differentiated by the degree of state participation in paying for medical care
for different groups. In this multi-level system of compulsory medical
insurance program formed as a two-level [5], [10].
The
first level of compulsory medical insurance program includes medical services
provided to people free and fully funded by means of compulsory medical
insurance.
The
second level includes medical services that are free and fully funded by means
of compulsory medical insurance for one group and for other groups – financed
with common payments, and therefore only partially financed with funds of
compulsory medical insurance.
Common
payments, in turn, may be subject to voluntary or compulsory insurance.
Voluntary medical insurance programs act as programs of third and higher
levels. Their subject may be the services included in the compulsory medical
insurance of the second level, common payments for such services, and services
on top of the program of compulsory medical insurance. As a way to solve the
problem of differentiation of real benefits of insured in the existing system
of social insurance, it is essential to hold the institutional allocation and
separation of two components: general and collective (corporate) social
insurance.
Total
social insurance should provide a single premium rate for all insured, single list
of benefits (compensation) and straightforward providing terms. In cases where
benefits established for certain categories of population, the criteria for
these categories should be straightforward. Collective social insurance for
employees shall provide an opportunity to establish a higher level of their
social security by paying additional premiums (using a higher rate of social
insurance contributions, compared with the total contributions to social
insurance). The contributions size, their use, composition and conditions of
benefits claims should be determined by collective contracts of insurance
concluded between the company's union, the administration and the insured. A
new breakthrough in the discussion of the prospects of reforming the system of
compulsory health and social insurance is associated with a proposal to the
institutional division of insurance and tax financing guarantees to the
population within these types of social insurance. It can be achieved by giving
permission to working citizens to leave the system of compulsory health and
social insurance, enter into contracts with non-state insurers and use part of
social tax funds to pay contributions, provided in those contracts.
If
possibility to exit system of compulsory medical insurance and social insurance
will be introduced, the system (systems) that combines elements of compulsory
and voluntary insurance will be formed. Compulsory elements are the volume of
medical care, its composition and size of minimum care, which must be guaranteed
to insured in this system. Voluntary elements are: decision to participate in
this system, the choice of the insurer, the agreement on the insurance program
contents above the compulsory minimum and the corresponding premiums. The most
promising option seems to be the case when the subject of voluntary insurance
is at the same time the need for medical care and the risk of loss of income in
case of incapacity, disability, etc.
The
study of possible schemes of combination voluntary and compulsory medical
insurance allows the following conclusions.
Effective
functioning of the mixed medical insurance system, in our opinion, is possible
under the following circumstances:
- Adapting the structure of public health
institutions to work on behalf of primary health care;
- Change the orientation of the public
health system to independent monitoring and examination of the completeness and
quality of health care under voluntary and compulsory medical insurance;
- Introducing a system of accreditation
of medical institutions of all forms of ownership and certification of
physicians;
- Targeted and decentralized form of
financial resources by triple contributions - target contributions of
companies, organizations and institutions of various forms of ownership, private
entrepreneurs and state subsidies from general revenue, which are directed not
to the budget, but directly to the needs of health care;
- Ensuring balance of compulsory and
voluntary medical insurance services with their funding. For this purpose, tiered
medical insurance program with a list of services should be developed;
- Harmonization of standards of medical
care in accordance with the experience of European countries;
- Clear definition of legal,
organizational and financial foundations introduction of a combination of
voluntary and compulsory medical insurance.
Sources:
1. Constitution of Ukraine of 28.06.1996,
¹ 254 K / 96-BP.
2. Law of Ukraine "On
Insurance" from 07.03.1996, ¹ 85/96-BP.
3. The Bill "On health care
financing and compulsory social medical insurance in Ukraine» ¹ 4744 from
30.06.2009
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