Health Insurance in Poland and other Central and Eastern European Countries

Autor:Romuald Holly wspólnie z J. Wechowskim
Czas i miejsce publikacji: ON THE RISK, Journal of the Academy of Life Underwriting, vol. 16, Nr 2, June 2000, s. 40.

A new market is emerging in Poland - a health insurance market estimated to reach from 1 to 4 billion dollars in premium. The major limitation to its growth is the tax-financed public health care system called public health insurance. Sińce the government's spending on health care is relatively Iow, amounting to about 4% GDP, patients incur out-of-pocket ex-penses. The figurę reflects only official spending on the health care system. An additional 2-3% of GDP constitutes "fee-for-service" expenses of patients seek-ing better care and attempting to bypass šueues and referrals. Those patients do not have commercial health insurance coverage and most of them rely on public insurance for medical care. They are also most likely to purchase health insurance once the offer is on the market. In many aspects Poland can be considered a model country with respect to insurance development. Other Central and Eastern Euro-pean countries either have implemented similar solu-tions or are obserang Polish developments ready to follow with similar insurance market solutions.

While major insurance companies are researching the market, performing actuarial analyses and de-signing products, there are two instances when com-pensation is paid to the insureds in case of sickness. Those are diagnoses of major diseases and disabili-ties and sicknesses resulting from accidents. In nei-ther of the instances are costs of treatment of impor-tance. Patients receive treatment through public insurance or spend their compensation on private care (most often in public hospitals). When applying for "major disease" coverage in some cases, patients are rešuired to undergo laboratory tests and exami-nations. In most cases, however, a detailed šuestion-naire is sufficient. Life insurance underwriters, some of them undergoing extensive health underwriting training, propose the policy conditions. The public health insurance system covering almost the entire population is by no means true insurance as the premium (tax) is set as a fraction (7.5%) of income and independent from the actual health risk. In addition, family dependants are also covered. Also the benefits are independent from the tax and are intended to be equally available to all eligible. In reality, access and šuality of medical services are often unsatisfactory and patients incur out-of-pocket expenses.

Few private health care providers, almost exclusively individual physicians' and dentists' practices as well as laboratories, had been operating in Poland before the late eighties and most of them entered the market during the last decade. Hospitals, with few exceptions, still remain public, many of them now facing lay-offs and even closedowns as a result of limited financing on the one hand and overcapacity on the other. On January 1, 1999, the health care reform was launched to introduce market mecha-nisms into the public health care system. Centralized financing was replaced by financing through newly created regional "sickness funds." The 17 public funds are responsible for contracting health care providers yet have no influence on the nationally legislated health tax. There is, however, some slight dependence of the amount a fund receives on the population it covers. There is a degree of redistribu-tion of risk among the funds based on the average age of the region's inhabitants. Also, wealthier funds must contribute to the poorer ones. A legislated algorithm determines redistribution. Sińce the funds are in growing shortage, opinions are being voiced for raising the health tax. Naturally, any increase in taxpayers' spending on health care would limit the growth of the commercial insurance option.

Two distinct types of health insurance are expected to be offered by the companies in Poland. One is supplemental health insurance, covering all provi-sions in excess of the "basie basket" offered by the sickness funds. According to the recent polis, 42% of the adults are willing to obtain such coverage. This supplemental offer might resemble HMOs, PPOs or traditional indemnity plans. In major Polish cities, HMO-like plans have been offering coverage to primarily corporate employees, and their networks are likely to expand, possibly by contracting with major insurance companies. The primary obstacle to the explosion of the commercial supplemental health insurance offer is the lack of the "basie basket." The Ministry of Health is expected to determine the basie health provisions very soon. The other type of health insurance might be offered by private sickness funds

once they are founded - according to the law not earlier than in 2002, but the datę is likely to be postponed. The law rešuires such private sickness funds to cover all applicants together with their dependents and collect the parliament-imposed health iricome tax with no discrimination as to health risk.

The future of commercial health insurance in Poland depends to a large extent on political decisions following many parliamentary debates and legislative work. Another important factor is broad insurance consciousness among the public. Finally, precise determination of public and private responsibilities is crucial to any further discussion. The Insurance Institute in Poland took up the initiative of analyzing the newly emerging market niche as well promoting commercial health insurance to all players in the field. In November 1999, the First International Congress on the Role of Insurance in Health Care Systems was held in Cracow. The Congress was organized by the Insurance Institute in Poland as well as the Vermont Insurance Institute (now the Institute for Financial Services). Participants from 17 countries from the United States and Canada to Kazakhstan discussed the future of health insurance in Poland and other Central and Eastern European

countries. The conclusion was promising for the development of the new market niche, yet legał uncertainty, as well as lack of fuli political support, was evident. Now it seems obvious that insurance companies are not going to turn back. For life companies, health insurance is not only a new source of premium, but also a necessity if they don't want to lose clients. Covering both life and health should prove economically effective in Poland as it does elsewhere.

In March 2000 Insurance Institute in Poland held a national conference "Commercial Health Insurance -An Opportunity for Health Care Providers." Dur-ing the conference both the insurers and directors of medical institutions expressed the need for commercial health insurance, as the public sickness funds constitute no guarantee of šuality medical services accessible to the insureds. Many of the providers are determined to cooperate and begin negotiations with commercial payers. Health insurance that soon will be offered to the public will be that of supple-mental insurance, yet many companies have already started preparing strategies to enter the sickness fund business as well.

Romuald Holly, Ph.D.
Director Insurance Institute of Poland Warsaw, Poland Jarosław Wechowski, M.D.
Health Insurance Manager Insurance Institute of Poland Warsaw, Poland




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