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EU structural funds as powerful health policy tool

Country: 
Estonia
Partner Institute: 
PRAXIS Center for Policy Studies, Tallinn
Survey no: 
(14) 2009
Author(s): 
Gerli Paat, Siret Lnelaid, Ain Aaviksoo
Health Policy Issues: 
Public Health, Funding / Pooling, Quality Improvement, Access, Remuneration / Payment, Responsiveness
Reform formerly reported in: 
Economic slowdown shaping healthcare system
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no yes no no

Abstract

EU Structural funds will have a strong impact on the acute and long-term care hospitals in Estonia. The capital investments into infrastructure will boost the grantees? capacity for development especially since funding for the provision of healthcare services paid by health insurance is diminishing. ESF money for public health activities will also help to fill the gaps of the contracted public budget, but also initiate a few new programs targeting alcohol abuse and workplace health.

Recent developments

Since 2004 structural assistance from the European Union has been one source of financing the healthcare system in Estonia. The aim of using EU structural funds is to foster sustainable development in Estonia.

In the health domain, the Estonian government has given priority to the development of the healthcare and welfare infrastructure using European Regional Development Fund (ERDF) money. In the second period of funding (2007-2013) public health activities have been added through the European Social Fund (ESF) to also promote a healthier labor force. 
Altogether the funds channeled to the health system from European structural funds are 185,1 million Euros from ERDF and 15,5 million from ESF. Meanwhile, the Estonian Health Insurance Fund (EHIF) has cut its public funding by 8% in 2009 as compared to 2008. There will be a further cut in 2010 by 6% compared to the 2009 budget. It is important to note that EHIF money is predominantly used for operating costs; capital investments usually have been paid from additional public sources.

The main challenges for Estonia that the structural fund investments are aimed at are:

  • Health life expectancy in Estonia is over ten years shorter than the EU average;
  • Availability of nursing and medical rehabilitation services is not sufficiently guaranteed;
  • Principles of provision of services close to one's home have not been widely accepted. The idea is that a person should be able to receive the service in his or her rural municipality, city or county.

Thus, the key goals that the structural fund investments should achieve as defined by respective documentation are the following:

  • Better quality and availability of nursing and welfare services;
  • The infrastructure of active treatment lays the foundations for functionally integral operation of hospitals;
  • Children and people with special psychiatric needs have better living, studying and working conditions.

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Characteristics of this policy

Degree of Innovation traditional traditional innovative
Degree of Controversy consensual controversial highly controversial
Structural or Systemic Impact marginal neutral fundamental
Public Visibility very low high very high
Transferability strongly system-dependent strongly system-dependent system-neutral
current current   previous previous

The funding will not change the healthcare financing system as this seems to be functioning well, as such.  

Infrastructure investments are usually just a part of EHIF financing of services according to the price list. Now, in a situation where EU funding will be available only for three hospitals out of 27, these three have a great comparative advantage. Some of the hospitals will receive funding from the nursing care investment measure financed through EU structural funds. The others will have to do with the amount paid by EHIF for services offered, containing an investment component - a sum that the three hospitals receiving EU funds will get on top. The other hospitals are not happy about  this, one has sued against the funding decision. 

The nursing and care services investment from EU Structural Funds cover just a small portion of the actual need, even though a very important one, taking into consideration the ageing population and plans to increase the retirement age to 65.

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? no no no no yes no no

Initiators of idea/main actors

  • Government: The planning of the EU?s structural funds 2007-2013 is coordinated by the Ministry of Finance in Estonia (thereby the Ministry is responsible for preparation of the NSRF) and all the relevant ministries and the State Chancellery participate therein based on their areas of activity. On 11 January 2007 the Government of the Republic approved the National Strategic Reference Framework and operational programmes to be submitted to the European Commission in order to commence official negotiations with the Commission over the said documents.
  • Providers
  • Payers

Stakeholder positions

  • Government: Government is under high pressure to stabilize the national budget and keep the deficit to a minimum (under 3% of GDP). Due to the global economic crisis, Estonian tax revenue has decreased, while public expenditure in the social sphere has increased. The Ministry of Social Affairs has managed to finalize evaluation and contracts with acute care hospitals receiving EU support in Tallinn and Tartu. They will receive about 100 million Euro EU support in the following years for infrastructure investments.
  • Providers: 20 nursing and care service providers will receive EU support. Contracts will be signed this year.
  • Payers: As a part of the EHIF budget cuts, EHIF also has reduced the price list according to which care providers are reimbursed. Therefore care providers are seeking any opportunities for cutting their costs from investment, salaries, etc.

The main stakeholders and participants involved and affected by the policy for using EU structural funds included the government (especially the Ministry of Social Affairs), hospitals, local governments and others.

Actors and positions

Description of actors and their positions
Government
Minister of Financevery supportivevery supportive strongly opposed
Governmentvery supportivevery supportive strongly opposed
Ministry of Social Affairsvery supportivestrongly opposed strongly opposed
Providers
Care providersvery supportivevery supportive strongly opposed
Hospitals receiving supportvery supportivevery supportive strongly opposed
Hospitals not receiving supportvery supportivestrongly opposed strongly opposed
Payers
EHIF Councilvery supportivevery supportive strongly opposed
current current   previous previous

Influences in policy making and legislation

In the implementation of all these measures, the Ministry of Social Affairs has been the main actor. At the beginning of the year (survey 13) hospitals and interest groups were very active and visible in their statements in public. With each subsequent reduction of costs these groups have become more silent - worn off. As the Estonian healthcare system is relatively transparent and its governance centralized (EHIF), the implementation of changes has been quite successful. There have been winners (the ones which will receive EU support for investment) and losers - all other care providers.

Legislative outcome

n/a

Actors and influence

Description of actors and their influence

Government
Minister of Financevery strongvery strong none
Governmentvery strongvery strong none
Ministry of Social Affairsvery strongstrong none
Providers
Care providersvery strongneutral none
Hospitals receiving supportvery strongstrong none
Hospitals not receiving supportvery strongweak none
Payers
EHIF Councilvery strongvery strong none
current current   previous previous
Care providersHospitals receiving supportMinister of Finance, Government, EHIF CouncilHospitals not receiving supportMinistry of Social Affairs

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Adoption and implementation

All three measures associated with the welfare and healthcare systems are implemented within programs under the administration of state agencies or MoSA. Furthermore, open calls directed to local governments and social partners for additional activities within the above mentioned fields have been launched. Several implementation schemes are used: framework programs including yearly operational programs with specific budgets and action plans; periodic programs and open calls.

By 15 May 2009, seven programs were being implemented (with 7-8 proposed additional programs) and two regulations for open calls have been approved (three more regulations for open calls are in progress)

An indicative list of the planned activities:

1. Development of the healthcare infrastructure

  • To develop units providing nursing services in active treatment hospitals located in county centers.
  • To optimize the infrastructure of central hospitals and regional hospitals.

2. Development of the welfare infrastructure

  • The overall goal of development of the welfare services is to ensure the best living, studying and working conditions for children and people with special psychiatric needs as well as to improve access to public services and to broaden the possibilities of participating in social and working life.

3. ESF Activities

  • In order to reduce the future percentage of persons inactive on the labor market and to prevent health problems, measures will be implemented to raise the level of health awareness and improve health behavior, including focusing on increasing the activeness of the population, improving eating habits, reducing consumption of addictive substances (including tobacco, alcohol, narcotics) and risky sexual behavior, and raising awareness of dangers related to the environment.
  • Publicity measures will be actively organized for the working-age population, in order to inform them about health risks and to suggest activities benefiting health. Service providers will be trained and the availability of services will be improved to make better use of the potential of personal services in promoting health, preventing diseases and relieving addiction.
  • As the municipal level plays an important role in ensuring the population's health and capacity for work, local and county governments will be supported in evaluating the condition and health needs of their population, as well as in planning, developing and implementing health promoting measures.

Monitoring and evaluation

In spring 2009, the Ministry of Finance ordered a rapid mid-term assessment of the use of structural funds against the changed macroeconomic environment. Apart from initial technical goals as set by the operating program, the evaluation assessed the planned use of money against five specific priorities that should be addressed in the economic crisis:

  • Preventing the deterioration of health status and health behaviour
  • Reduction of poverty risks in target risk groups and areas
  • Maintaining accessibility of first contact care and vital medical treatment to risk groups
  • Assuring the sustainability of health and social security systems
  • Sustained improvement of health and life expectancy of the Estonian population,
  • reduction of poverty and
  • creating independent abilities of coping among the risk groups

The estimated effects of the measures for given priorities in a short, mid- and long term horizon include the following aspects:

  • Priority: Preventing the deterioration of health status and health behaviour

Capital investments into infrastructure generally have long-term goals. Hence their short-term effect on health behaviour or  health status is limited. From the mid-term perspective, improving living and work conditions definitely has a positive impact on the health status and behaviour of persons admitted to orphanages or special care homes. Furthermore, improved infrastructure for nursing and care services has a positive effect on the health of target population groups by modernizing the standard of service provision. The improvements in the infrastructure of acute care hospitals have only modest effect on this priority.

  • Priority: Reduction of poverty risks in target risk groups and areas

The short-term effect of capital investments on poverty risk is small. In the long run, the investments should promote the efficiency and quality of acute care, nursing and long term care, welfare services and at least have an indirect effect on the coping of risk groups.

  • Priority: the accessibility of first contact care and vital medical treatment to risk groups

The centralization of acute treatment and the development of high-tech healthcare services can potentially increase the quality and efficiency of services. However, this does not have a direct effect on the accessibility of health services in Estonia.

  • Priority: Assuring the sustainability of health and social security systems

The effectiveness of investments depends substantially on the choices made on other healthcare and social policy issues and factors (balanced regional accessibility of health services, efficiency of investments on the level of particular institution, the financing guidelines of a particular service etc.). Additionally, besides wages, an important motivational factor of personnel is modern working conditions. This is critical also in health care and maintaining personnel as a critical resource (medical specialists and nurses) in needs appropriate investments in Estonia.

  • Priority: Sustained improvement of health and life expectancy of the Estonian population, reduction of poverty, independent abilities of coping among the risk groups

All measures for supporting capital investments in healthcare and welfare services are directed to improving population health status, reducing inequality and developing the ability of especially risk groups to cope independently.

Expected outcome

  •  Altogether 200 Mio Euros is about 4% of total health expenditure over 7 years (2007-2013)
  • The current timing at the time of economic crisis will help to select stronger service providers; at the same time regional disparities will probably increase by EU funds reaching only certain providers
  • No full certainty that politics has been kept out of the planning process, a comprehensive health strategy is missing,
  • There remains the risk that the investments were not made for the best possible solution.

 

Impact of this policy

Quality of Health Care Services marginal rather fundamental fundamental
Level of Equity system less equitable two system more equitable
Cost Efficiency very low high very high
current current   previous previous

The financing of EU structural funds will contribute to the implementation and development of different healthcare and welfare priorities. Public health money is largely spent on filling the gaps of reduced government funding (e.g. HIV/aids prevention); possibly some new initiatives will arise in the field of alcohol abuse prevention and workplace health promotion. The latter two are important and so far underfunded areas in Estonia - therefore the impact is noteworthy, although the full potential of the structural funds is probably not achieved.

References

Sources of Information

  • www.haigekassa.ee - Estonian Health Insurance Fund
  • www.struktuurifondid.ee - European Structural Funds in Estonia
  • www.sm.ee - Ministry of Social Affairs, Estonia
  • Past gains and future opportunities of patients in Estonia. PRAXIS Policy brief November 2009.
  • Evaluation of operational programmes for implementation of the National Strategic Reference Framework. PRAXIS 2009.

Reform formerly reported in

Economic slowdown shaping healthcare system
Process Stages: Implementation

Author/s and/or contributors to this survey

Gerli Paat, Siret Lnelaid, Ain Aaviksoo

Suggested citation for this online article

Paat, Gerli, Siret Läänelaid, and Ain Aaviksoo. "EU structural funds as powerful health policy tool". Health Policy Monitor, October 2009. Available at http://www.hpm.org/survey/ee/a14/1