National Institute for Strategic Health Research. April Content

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1 National Institute HUNGARIAN April 2008 Content - Editorial - Macroeconomic overview - Health financing overview - Referendum - The reform of the health insurance system in Hungary - Migration of health workers Editorial The goal of our publication is to provide reliable information twice a year on the Hungarian healthcare system and its current changes. We have waited two months for the publication of this year's first issue. The reason for this delay has been the daily uncertainties that characterised the reform process lately. We wished to describe a situation that is relatively straightforward and applicable at least on the short run, but this was not possible due to continuous political developments. The largest component of the Hungarian healthcare reform is the restructuring of the health insurance system. There was an agreement between the coalition partners that the single insurance system must be transformed in Hungary, but there was a debate concerning the direction of decentralisation and the limits of the role of private capital. The larger coalition partner, the Socialists, conceived of decentralisation on a territorial basis tied to administrative regions, and wished to assign the role of the private sector primarily to the side of service provision. The Free Democrats have been thinking in terms of insurance companies that compete nationwide, and conceived of competition among 100% public and 100% private insurers. As a result of political debates a model was created in which management funds compete with one another, where ownership is 51% public and 49% private. The legislation born this way designates a system that continues to be based on national risk pooling and solidarity, since the resources of health insurance flow into one fund, and the management funds receive their resources by capitation from this fund. The act passed in December 2007 was returned by the President to the Parliament for further consideration. After some minor legislative adjustments, the Act on Health Insurance Management Funds was passed again in February by the Parliament with the votes of the governing parties. The adoption of the act, however, did not end the debates, either between the governing parties and the opposition, or between the coalition parties themselves. The healthcare reform has preoccupied the whole Hungarian public. The opposition initiated a referendum, whereby the visit fee and the hospital daily fee introduced a year ago were rejected by the great majority of 1

2 HUNGARIAN the population. Though the surplus revenues had been left with the providers, the Hungarian Medical Association campaigned for the abolishment of the fees. The Administration made it evident that there is no possibility to make up for the people's payments from the state budget. Though the referendum would have obliged the Government to abolish these fees only on 1 January 2009, the Parliament ceased the fees as of 1 April After the referendum on visit fee Fidesz, the larger opposition party, protested against allowing private capital into the social insurance system and brought up the prospect of supporting a privatly initiated referendum on the health insurance act. The political debate arising from this led to the acquittal of the Free Democrat Minister of Health by The Prime Minister. This evoked the rejection of the coalition partner, which announced breaking of the coalition contract. The Hungarian Socialist Party is preparing for a minority governance. The party announced that they plan the reconstruction of health insurance by creating 7 regional health management funds in which no private capital can take part. This proposal for solution did not bring political peace. Just for the sake of information we provide a short introduction to the approved and currently effective act. still a bit pessimistic. Forecasts for inflation were around 7%. In realty GDP growth was 1.3% and CPI 8.0%. Both figures were, of course, influenced by international trends, namely the surge in energy and food prices, and the economic slowdown. On the side of domestic issues the low economic growth was in great part due to reduced public consumption compared to 2006, while CPI was increased by stricter subsidy policies. The government expected the deficit to be 6.8% of GDP, but it turned out to be 5.7%, according to preliminary calculations. This amelioration was a result of higher tax incomes and lower interest payments that offset the effect of slightly higher expenditures relative to planned figures. Table 1. *preliminary data Source: Updated Convergence Programme of Hungary, November, 2007; Central Statistical Office; Ministry of Finance Macroeconomic overview From a macroeconomic point of view 2007 was a year of negative surprises. Both the GDP growth and inflation came out worse than expected. The only achievement was the significant reduction in the deficit. In 2007 the government projected a 2.2% GDP growth rate, while analysts thought that is Before the referendum (see later) both the European Commission and analysts considered that the government projections for 2008 could be achieved, in case the financial discipline further prevails, but recently considerable doubt arised in this respect, as the whole reformcommitment of the government was questioned. The Ministry of Finance itself changed its 2008 GDP forecast from 2.8% to 2.4%, and the CPI forecast from 4.8% to 5.9%. 2

3 National Institute Health financing overview According to preliminary data the Health Insurance Fund's balance in 2007 turned positive: HUF billion, instead of HUF million previously planned in the budget. This was achieved by both topping total revenues by HUF 38.8 billion, and spending HUF 16.6 billion less. In real terms total revenues were 1% less than in 2006, resulting from minor changes in central budget contribution and pharmaceutical companies' payments. There has been a 9% fall in real expenditures in 2007 relative to The biggest contributors to this decline were pharmaceutical reimbursement and acute inpatient care. (Table 2a, 2b) and 6% for the employee). As a consequence the budget estimate for HIF revenues declined by HUF billion (85.8%) and expenditures by HUF billion (87.1%). If we suppose that disability pension expenditures would still appear in the budget, than we could observe a HUF 64.5 billion (4%) rise on the expenditure side. (Table 3a, 3b) Table 3a. Table 2a. Real revenue growth composition in 2007 Contribut ion revenues Pharma. companies' payments Other Central budget contributions Visit- fee and ho spital day -fee 1,50% 1,00% 0,50% 0,00% -0,50% -1,00% -1,50% -2,00% -2,50% 0,79% 0,50% -2,12% -0,05% -0,08% Table 3b. Source: NISHR Table 2b. Real expenditure growth composition in 2007 Acute in-patient care Pharmaceutical reimbursement Other 0,00% -1,00% -2,00% -3,00% -4,00% -5,00% -6,00% -7,00% -8,00% -9,00% -10,00% -3,12% -5,30% -0,64% From 2008 on disability pensions no longer appear in the Health Insurance Fund budget. In line with this health contributions declined by 4 percentage point to 11% (5% for the employer Source: NISHR 3

4 HUNGARIAN Referendum On 9 March 2008 a referendum was held in Hungary on abolishing the visit fee and the daily fee for hospital care introduced in 2007 as a result of healthcare reform legislation. The referendum was valid and resulted in an overwhelming victory for the opposition parties that initiated it. The turnout of the referendum was above 50% and the rate of votes against the fees was above 80%. Following the referendum, the ruling Socialists and Free Democrats submitted proposal to revoke legislation that introduced the fees. The proposal was accepted by Parliament a week later. Though the visit fee and the hospital daily fee will cease from 1 April, patients will continue to pay fees for healthcare in certain cases. The referendum did not abolish the rules of partial reimbursement, thus patients must pay a certain proportion of the charges if they use a treatment path on their own initiative. In outpatient and inpatient care patients may pay 30% (up to HUF ) of the treatment if they use services other than the institute assigned by the referral. The HUF 300 prescription fee for medicines is also retained. Fidesz, the leading opposition party demands that the government compensate the doctors and the hospitals for their lost income, otherwise they will experience financial crisis or bankruptcy. The coalition parties, however, claim that the government is not in a position to make up for the losses and insist that according to the Constitutional Court no referendum can touch upon issues of the state budget. The income of primary care physicians arising from visit fees amounted to an average of 20% of practice revenues. The government would remedy the financial troubles by formulating a new system of financing. The reform of the health insurance system in Hungary The Hungarian government started on the reform of healthcare in The factors that called for the above reform measures include low life expectancy at birth of the Hungarian population, poor health status, and also the critically high rate of healthcare utilisation in international comparison. The reforms in 2006 served the purpose of reducing acute hospital beds and constraining unnecessary physicianpatient contacts and medicines consumption. In the previous issues of Health System Scan we have provided information on the reform legislation and its first impacts. According to the healthcare administration, the restructuring of the healthcare system reaches its completion with the reform of the health insurance system. To this end in February 2008 the Parlament passed the Act No I of 2008 on Health Insurance Management Funds. Fidesz demands that the government withdraw the health insurance reform act, arguing that it would also be rejected on a national referendum. It is the possibility of minority share private ownership in the Health Insurance Management Funds that has been attacked most in the act by the opposition. Basic principles of the Act No I of 2008 on Health Insurance Management Funds According to the Act, financing of the health system will continue to rest on statutory social insurance based on national risk pooling and the solidarity principle. The statutory national health insurance system is universal. The whole population will continue to be insured either by paying contributions or by receiving state coverage (children, elderly people etc.). In principle the insured are entitled to the health services funded with the same professional contents and without any kind of discrimination. 4

5 National Institute The health insurance system is built on the nomenclature of single insurer/multiple health insurance management funds. The contributions paid by the people flow into one national fund, but healthcare is organised for the insured persons by the multiple, freely chosen management funds. The health insurance management funds receive their income from the national fund on the basis of capitation adjusted to demographic and other variables. An other part of the National Health Insurance Fund is the National Risk Pooling Fund, which finances expensive and special services. In the case of expensive services, the Health Insurance Management Funds are expected to take cost sharing. The financing of ambulance services, mother-, child- and youth health, school health and prison health will proceed separately from the capitation income of health insurance management funds, according to a separate legislation. The insured persons may switch management funds once a year and as a basic rule may obtain healthcare at those providers that have financial contract with the management fund. With the permission of the management fund, the insured persons may seek care at other providers as well. According to the Act the new system begins with 22 state-owned joint-stock companies, by dividing up the country on a territorial basis: 18 counties and the Budapest/County Pest region with 4 territories. Then 49% of the companies' stocks will be sold in an open international auction procedure. One investor may have share in several funds, limited only by regional monopoly and the maximum number of 2 million members. Following the auction, the Health Insurance Management Funds come into being and start to establish their organisations. After the start of their operation they have the opportunity to recruit members. The insured persons can be recruited from the entire country, and those who will not sign up to a health insurance management fund, will be automatically assigned to one according to the place of residence The funds may bring about mergers among minority owners. The membership base of 500 thousand to 2 million people should be reached by the end of The Act states, that provided the revenues of the Health Insurance Management Fund from health insurance services in the current year exceed expenditures and costs, the maximum amount of dividend payout shall not be more than maximum 2 per cent of the revenues from health insurance services if the earnings after taxation provide appropriate coverage for such a payout. No dividend or interim-dividend shall be payable before the annual report of the third full business year. Migration of health workers In Hungary, the number of emigrating health workers increased significantly after the EUaccession in May In the table below you can see the certificates made up for emigrating health workers between 1 May December Granted certificates for emigrating health workers between 1 May December 2007 *The data of 2004 refer to the period between 1 May and 31 December, while those of the other years refer to the period between 1 January and 31 December. Source: Office of Authorisation and Administrative Procedures of the Ministry of Health 5

6 HUNGARIAN Considering the past 4 years, it can be stated that the number of emigrating health workers was the highest in the 8 months after the EU-accession, and during this period emigrated the most doctors as well. In 2007, the most popular destination country was the United Kingdom among health workers, followed by Germany, Sweden, Ireland, Austria, France and Norway. The order of destination countries was almost the same in case of doctors: most of them emigrated to the United Kingdom (242), Germany took the second place (105), followed by Sweden (84), Ireland (46), Norway (33) and Austria (30). From regional view, the most doctors (more than 200) applied from Budapest for working abroad in It is followed by the counties Baranya, Csongrád, Pest and Hajdú-Bihar, where ca certificates were made up. It is important to note that the four faculties of medicine can be found in the chief town of these four counties. In 2007, the year-old doctors applied for the most certificates (229), followed by the year age group (172). It is notable that the year age group took only the 3. place with 92 certificates. From 2004 the Health Services Management Training Centre launched a research together with other professional organisations in order to appraise the opinion, situation and migration purposes of health workers. According to this research, the most popular destination countries are the English speaking countries, followed by the German speaking states and Scandinavia. The emigrants are mostly anaesthesiologists, family doctors, radiologists, surgeons or psychiatrists. They want to work abroad because of the better income possibilities, the saving options, the better work and life conditions, the higher living standards, the better carrier opportunities, the inadequate Hungarian circumstances of practising work and the better social appreciation of doctors abroad. Emigration of Hungarian doctors is not an unique phenomenon in Europe. In other Central Eastern European countries similar tendencies can be noticed. The Czech health workers go especially to Germany: in 2004 already 700 Czech doctors worked there. The vacant Czech posts are generally occupied by Slovakian health workers. In Slovakia, more than 3000 health workers applied for a certificate to work abroad since May Most of the emigrants want to work in Austria, the Czech Republic, Germany and the United Kingdom, but Sweden and Finland became also popular recently. Health workers from the south-slovakian settlements inhabited mainly by Hungarians come generally to Hungary. From Poland ca health workers went abroad since the EU-accession. The migrants are mostly specialists, and they contract to work abroad generally for 3 months, or for the weekends. In the Baltic states the situation is still worse, especially in Estonia, from where 182 doctors emigrated to Finland, Sweden, Germany or the United Kingdom in From the 106 medical students graduated in 2005, only 56 continued their carrier in their fatherland. In Lithuania, only 3% of doctors applied for a certificate to work abroad, but supposedly about half of them considers working abroad. In , 416 doctors emigrated to the Scandinavian countries, the United Kingdom and Germany. The migration of health workers from Central Eastern Europe is mainly motivated by the significantly more favourable income conditions in the Western European countries. The table below illustrates the annual income of doctors and the average annual income in some Eastern and Western European countries and in the USA. 6

7 National Institute Relation between doctors' income and average income in the economy Note: income expressed in national currency *data for 2004 ** data for 2002 *** data for 2001 Source: OECD Health Data Version : July 2007 Although the comparability of income data can be questioned, some differences can be obviously seen: the annual income of a self-employed GP was ( EUR PPP) in the United Kingdom, which is 2,64 times more than the average annual income. The annual income of a salaried specialist is ( EUR PPP) which is 3,36 times more than the average annual income. In Hungary, the salaried specialist is definitive in the comparison (there is no data of the self-employed doctor's income and the salaried GP is not a typical form in our country). Because of the main destination country for migrants is the United Kingdom, in comparison with this country we can see, that in Hungary the annual income of a salaried specialist is EUR PPP, it is 1,2 times more than the Hungarian average annual income, but it is only about onefifth of the British average annual income. Another example: many Czech doctors go to work in Germany, in both countries the selfemployed status is typical. In Germany, the yearly income of this group is EUR, in the Czech Republic EUR PPP, which takes 31% of the same group in Germany. (PPP: Eurostat). It is most likely that the growing tendency of migration from Central Eastern European countries will continue in the future, because most of the Western European countries strive with human resources shortage in health care. Some countries, for instance The United Kingdom try to mitigate the problem by recruiting health workers from abroad. The increasing number of emigrating doctors and nurses raises concerns also in Germany. 7

8 HUNGARIAN According to the data of the German Medical Chambers, 2249 doctors left the country in 2005 and 2575 in They most went to the United Kingdom. Germany tries to substitute them with health workers from Central Eastern Europe. Of course, migrant health workers come to Hungary as well, especially from the neighbouring countries. At present, ca. 9-10% of practising doctors are immigrants. Between there was a significant immigrant wave: 1462 doctors came to Hungary from the Carpathian Basin, primarily from Romania. In 2007, 187 work permits were granted for foreign health workers, most of these for Romanian citizens (128), then follow Ukrainian (11) and Slovakian (10) citizens. Concerning the occupational distribution, 106 permits were granted for doctors, 30 for nurses and 19 for dentists. 86 of the 106 immigrant doctors were Romanian citizens and 13 had a Slovakian citizenship. Nevertheless, the migration balance especially in case of doctors is negative: the volume of emigration is greater than that of the immigration. In 2006, 520 doctors went abroad and only 40 came to Hungary. In 2007, 695 doctor left the country and 123 applied for work permission. Sources: - Statistics of the Office of Authorisation and Administrative Procedures of the Ministry of Health, Hungary - International action needed to increase health workforce, World Medical Journal, 2007,53,1, Draft outline: World Health Report 2006, en/ - Dubois, Carl-Ardy et al: Human resources for health in Europe, pdf - Ärztestatistik: Berufsanfänger Mehr als die Hälfte sind Ärztinnen In: Deutsches Ärzteblatt, p?id= Dilemmák, döntések, diagnózisok In: Szabad Újság, hp?name=news&file=article&sid=765 - Estonia: health care reforms National Institute Editors: Gyula Kincses, MD Ilona Borbás Zsuzsa Ajtonyi Péter Mihalicza László Szirmai Arany János utca 6-8. Budapest H-1051 Phone: Fax: Homepage: Director General: György Surján, MD 8