|Yet to come: health policy response to the crisis|
|Implemented in this survey?|
A Health Fund endowed with tax money will come into operation in 2010 aiming at safeguarding a balanced budget of sick funds. While still in infancy, the Health Fund gives the government more say in sick fund matters. The government endorsed a road map for cutting costs which is linked to disbursements from the Health Fund. It is uncertain if cost targets can be achieved. A wider health reform in response to the economic crisis also adressing the fragmented hospital sector is still overdue.
During a retreat in February 2009 the center-left government in office since December 2008 pledged for safeguarding a balanced budget of nine regional sickness funds, i.e. "Gebietskrankenkassen" (sick funds) where 80 percent of the Austrian population is insured. The remainder population is covered largely by occupational funds who operate nationwide. Health insurance in Austria is granted on the basis of occupation and residence with no option for choosing among funds.
As opposed to most of the occupational plans many of the regional sick funds have been plagued by recurrent expenditure surpluses in the past (see survey 13(2009)). In addition, negative net assets have accumulated in the order of 1.2 billion Euro.
To achieve a balanced budget, sick funds
A first step in implementing the government resolution from February 2009 "(Sillian Papier") was to immediately grant 45 mio. Euro for short-term liquidity (see also Table 1 in survey 13(2009). Further, the government requested the Federation of Social Health Insurance Associations (Federation) to submit a road map for cost containment ("Sanierungskonzept") to the Minister of Health due end of June 2009. This had to be negotiated with providers, in particular with the chamber of doctors. The road map stipulates expected cost savings per year adding to about 1.7 billion Euro between 2010 and 2013.
On September 15, 2009 the government endorsed the road map for cost containment that became effective with two laws:
|Degree of Innovation||traditional||innovative|
|Degree of Controversy||consensual||highly controversial|
|Structural or Systemic Impact||marginal||fundamental|
|Public Visibility||very low||very high|
The creation of the Health Fund has two innovative aspects:
While still in infancy, the Austrian Health Fund will gain importance when more general tax monies will be fed into it in the years to come. Thus, controversy will remain and probably intensify
when guidelines of the new law and targets of the road map prove difficult to be adhered to.
So far visibility appears low because the public has been reassured that neither benefits will be cut nor co-payments will be raised (BMG, Presseunterlage, September 2009).
|Implemented in this survey?|
The road map for cost-containment 2010 - 2013
In June 2009 the Federation submitted a road map. This essentially resulted from negotiations between the Federation and the Chamber of physicians.
Discussions were held between February and June 09 in four working groups ranging from issues of "financial consolidation" to "needs planning", "quality assurance" and "IT-applications". Further, measures of improving management and administration of sick funds and the Federation have been presented.
The development of the road map was guided by the following propositions:
Table 1 indicates cost containment targets for specified areas and summarizes some measures as envisioned. About 24 percent of cost savings are expected to be achieved with measures applied in contractual relations with doctors. A similar share is to be achieved with other contractual partners including laboratory providers. The biggest chunk (about 50 percent) is expected to come from measures targeted at behavioural changes of prescribing doctors.
If these measures are ineffective negotiations will be resumed for implementing graded co-pays for drugs.
An implementation of such a scheme is possible earliest in July 2011 where an agreement about rebates granted by the pharmaceutical industry and the chamber of pharmacists will expire (see below).
|Expected savings 2010-2013 (in mio €)||in % of Total||Some measures as envisioned|
|Other contracutal partners||390||22.6|
|% of estimated expenditure 2010-2013||2.8|
Source: Federation of Social Health Insurance Association, July 2009, own calculations
Overall envisioned cost savings add up to 2.8 percent of cumulated expenditure of sickness funds 2010-2013 as estimated by the Federation.
The presentation of the road map led to a fierce discussion within the government. The Minister of Finance belonging to the conservative people party spread doubt about the credibility of cost containment measures and publicly condemned the Minister of Health, a member of the Social Democratic Party of not governing the process of negotiations appropriately. In particular, more details were claimed to be necessary to make money for the Health Fund available. In addition, discussions had occurred around the process how the money will be disbursed. Members of the Social Democratic Party envisioned immediate allotments to individual sick funds without prior approval by other involved actors, i.e. Ministry of Finance and Ministry of Health.
Details about the road map were only released piecewise. Moreover, the paper the Federation issued ("Gesundheit: Finanzierung sichern, langfristige Potenzial zur Steuerung der Augaben und zur nachhaltigen Kostendämpfung") was short of any details about the way cost containment measures were calculated and about concrete financial targets negotiated. This has been criticized in the public.
Other stakeholders, in particluar the pharmaceutical industry but also the chamber of pharmacists felt left out of the negotiations around the road map and seem frustrated that decisions have been made in "their areas" without involving them, where after all this part is expected to deliver about half of the cost savings through the road map. In this context the current road map makes reference to a "pharma package" which was contracted in 2008 and basically obliges the industry and pharmacists to claw-back parts of their profits to the Federation and sick funds. This adds to about 180 million Euros in instalments payable until 2011. In return agreements were made that no other measures will be brought forward by the Federation in this period, i.e. reducing cost growth of drugs, generic substitutions and the like. No detailed documentation about this agreement is publicly available. To show compliance with this agreement all "drug-related" measures in the current road map target mainly prescription behaviour of doctors and suggest graded co-pays for drugs. Other aspects discussed is a non-binding notice of intentions.
On September 15 2009 the road map was endorsed by Parliament after some adjustments were made in the guidelines for using the Health Fund money.
|Ministry of Health||very supportive||strongly opposed|
|Ministry of Finance||very supportive||strongly opposed|
|Chamber of Physicians||very supportive||strongly opposed|
|Pharmaceutical Industry||very supportive||strongly opposed|
|Pharmacists||very supportive||strongly opposed|
|Federation of Social Health Insurers||very supportive||strongly opposed|
|Individual Sickness Funds||very supportive||strongly opposed|
In essence no big deviations from the original proposal occurred. All safeguard measures discussed in Spring 2009 have finally been implemented (see also Table 1 in survey 13(2009)). The allotments for the Health Fund are made available for 2010 and require the Federation to define binding milestones with individual sick funds. This should be done on the basis of targets and has to follow specified criteria. In particular they should:
These criteria were put forward by the Ministry of Finance to ensure proper use of Health Fund monies. While safeguard measures have not been changed in the course of consultations guidelines were specified how the money is being disbursed. In concert with the Ministry of Finance the Ministry of Health has to approve all requests for subsidies coming from the Federation but actual disbursement of monies is made on the level of the Federation.
|Ministry of Health||very strong||none|
|Ministry of Finance||very strong||none|
|Chamber of Physicians||very strong||none|
|Pharmaceutical Industry||very strong||none|
|Federation of Social Health Insurers||very strong||none|
|Individual Sickness Funds||very strong||none|
How will the Health Fund operate?
The Health Fund will be operated on the level of the Federation but need to be administrated separately from other assets. The law foresees the establishment of a "dependent administrative fund" without legal entity on the level of the Ministry of Health (see also survey 13(2009)) who transfers the money to the Federation. Sick funds and the Federation are requested to adhere to the following process:
Starting in March 2010 the Federation has to submit evaluations about achievements in cost containment on a bi-annual basis. The Minister of Health reports these results to the government, also on a bi-annual basis. The Federation is requested to submit clarifications if cost containment targets deviate from what is specified in the road map. If deviations persist throughout the year, the Federation is required to propose cost cutting measures for achieving cost targets as stipulated.
In the medium term the creation of the Health Fund likely changes governance in the health sector. Even though the current endowment is low (about 0,7 percent of current expenditure of sickness funds), the Health Fund may become an important policy tool for the central government to interfere with to date rather autonomous sickness funds matters (see also survey 13(2009)). Subsidies coming from the Health Fund are a kind of bonus. For example, if sick funds are able to economize about 200 million Euro in 2010 as envisaged they reduce their expected deficit (- 264 million according to estimates from the Federation) and receive 100 million bonus. Thus, they will see a revenue surplus in 2010 in the order of about 50 million Euro. While guidelines for disbursing monies from the Fund are tied to cost containment goals which are subject to close monitoring by central government bodies it nevertheless remains uncertain if these targets can be achieved easily:
Also, and in this context saving targets appear overly ambitious when judged against what is probably needed to achieve a balanced budget of sickness funds (see also survey 13(2009), Table 1). For example, own estimates show that between 2010-2013 the expenditure surplus of sick funds will have reached about 1.1 billion Euro after safeguard measures have been phased in including 100 million Euro coming from the Health Fund in 2010 (2). This estimated deficit is clearly below of that the Federation has reported in July 09, i.e. 2.7 billion Euro. In particular, sick funds may "only" need to safe about 1.1 billions to achieve a balanced budget. In other words, unless envisaged cost containment measures as put forward also foresee a complete pay-off of accumulated negative net assets, the amount of cost containment necessary for a balanced budget of sick funds appears to be overestimated in the order of about 600 million Euro.
On the other hand, these ambitious cost targets may contribute to efforts to pay-off national debts after fiscal expansion comes to an end. Furthermore, in light of expected shortfalls in contribution revenues owing to rising unemployment even in times when weak signs of recovery appear (IHS Prognose September 2009) it is essential to be very ambitious with regard to cost containment. Better liquidity in combination with cost containment in the health sector may be just the right mix for improving performance while also helping to consolidate national fiscal balance in the future. However, in the Austrian context health reform must go beyond issues of safeguarding revenues and matters of sick funds. In particular, as long as cost efficiency in the hospital sector is not addressed a large chunk of economies remain non-harvested. Moreover, pushing most of the burden of cost containment onto sick funds and ambulatory care providers - which the current road map appears to suggest - may jeopardize the "climate" between them and ultimately that between patients and providers when they become discouraged. Thus, a wider health reform in response to the economic crisis where also the hospital sector and issues of better governing fragmented financing is part of is still overdue and necessary.
(1) However, very early experience in the federal state of Salzburg seems to suggest that on the basis of an agreement with the regional sick fund doctors have quickly adjusted their prescribing behaviour in favour of most cost-effective drugs.
(2) On the basis of official National Accounts forecasts from Statistics Austria and the Ministry of Finance in April 09, the following assumption were used for calculating revenues and expenditure of sickness funds between 2010-2013:
|Quality of Health Care Services||marginal||fundamental|
|Level of Equity||system less equitable||system more equitable|
|Cost Efficiency||very low||very high|
No formal rating of the current policy seems yet possible. Cost efficiency may well increase once sickness funds have succeeded to achieve cost containment targets. As of yet it is too early to say whether this will materialize. Also, the level of quality may increase in the medium term when ambulatory care providers and doctors are increasingly using guidelines in treating chronically ill people through disease managment programms or the like. Unless these programmes specifically target disadvantaged groups the level of equity likely remains unchanged.
|Yet to come: health policy response to the crisis|
Process Stages: Implementation, Policy Paper, Legislation
Maria M. Hofmarcher
The author is grateful for many helpful comments received by: