Lessons from Mandatory Health Insurance Development and Governance in Estonia

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Lessons from mandatory
Lessons from mandatory
health insurance
health insurance
development and governance
development and governance
in Estonia
in Estonia
 
Triin Habicht
 
Subregional Dialogue on Health Financing in the Caribbean
 
Barbados, 28- 29 August 2018
 
Estonia in brief
Estonia in brief
 
Population
 
1
.
3 million
High-income country
European Union (since 2004)
GNI per capita 
17 750 
USD*
 (2016)
Health expenditures 
(201
6
)
6.
7
% of GDP
Per person  
1 340
 USD
Public expenditure 7
5.7
% of THE
Health insurance 65.0% of THE
OOP 22.7% of THE
Estonian Health Insurance Fund (EHIF) is a single payer
Social health insurance system since 1992
 
*1USD=0.8EUR
 
Governance of Health
Governance of Health
Insurance
Insurance
undefined
 
Ministry of Social Affairs
 
EHIF
Health
Board
 
Contracts
National Institute
for  Health
Development
Health care providers,
private law,  public or private
ownership
 
Public
Public
agencies in
agencies in
health sector
health sector
 
Evolution of the organization of
Evolution of the organization of
health insurance
health insurance
 
Key facts about EHIF
Key facts about EHIF
 
Estonian Health Insurance Fund (EHIF) is a single payer
EHIF pools most of public funds
The main source of revenues 13% payroll tax paid by employers
Coverage with health insurance  94-96% of population
 
EHIF operates as public independent legal entity
Founded in public interest by separate act
General public service regulation does not apply to EHIF
Governed by Supervisory Board chaired by Minister of Health
and Labor
 
EHIF revenues,
EHIF revenues,
expenditures and reserves
expenditures and reserves
 
 
Source: EHIF
 
Financial crisis
 
Deficit
 
EHIF’s reserves policy
EHIF’s reserves policy
 
Solvency reserve
: 5,4% of total budget since 2018 (8% in 2001-
2004, 6% 2005-2017)
To balance macroeconomic risks
Needs government approval
Risk reserve
: 2% of health insurance spending (introduced in
2002)
To balance the risks of health insurance obligations
Needs EHIF’s supervisory board approval
Accumulated surplus
: non-mandatory reserve as difference
between revenues and expenditures
Accumulated before last financial crises
Needs EHIF’s supervisory board approval (<30% of total surplus,
<7% of previous period’s health care services budget)
 
Moving away solely contribution
Moving away solely contribution
based health insurance
based health insurance
 
Gradual increase of state budget contributions on the
behalf of pensioners from 7% in 2018 up to 13% in 2022
On behalf on non-working pensioners
Contribution is calculated as a share of average state guaranteed
pension
By 2022 new revenue source forms about 11% of the EHIF’s budget
In parallel, other public expenditure streams will be
consolidated under the EHIF
Aims to reduce fragmentation
Was necessary to find a compromise in the Government
As a result, the net growth of public spending is expected to be 0.2%
of GDP by 2022
 
Tripartite supervisory
Tripartite supervisory
board
board
 
 
15 members (will be reduced to 6 in Sept’18)
 
5 state representatives
Minister of Health and Labor, Minister of Finance and Chairman of
the Parliamentary Committee of Social Affairs  (ex officio)
1 member or parliament (nominated by the Parliament)
1 public servant from Ministry of Social Affairs (nominated by the
Government)
 
5 employer and 5 beneficiaries representatives
Nominated by Government according to the proposal made by
representing organizations
 
Supervisory Board design is expected to prevent conflict of interest
Supervisory Board decisions are public
 
Scope of decision rights of
Scope of decision rights of
EHIF
EHIF
 
 
Establishment of system (objectives and principles) 
– Parliament
 
Contributions definition and coverage (eligibility) 
– Parliament
 
Co-payments
 –general regulation by Parliament; actual co-payments by
providers
 
Benefit package 
– general regulation by Parliament; actual benefit package by
Government
 
Provider payment methods and Prices 
–Government; price calculation
methodology by Ministry of Social Affairs
 
Contracting 
– basic principles by Parliament; specific principles by Supervisory
Board of EHIF
 
Waiting time limits 
–Supervisory Board
; for primary care by 
Ministry of Social
Affairs
 
Budget
 – forecast by MoF; 
budget position by Parliament as part of State Budget;
in detail by Supervisory Board
 
Accountability mechanisms
Accountability mechanisms
 
Management Board shall present quarterly
overview of the activities and economic situation to
the Supervisory Board
All reports made public
Annual reports available in English
https://www.haigekassa.ee/en/annual-reports
4-year corporate strategy with action plan and
score card
Reporting is part of the quarterly reporting
Revised annually
Available in English
https://www.haigekassa.ee/sites/default/files/
uuringud_aruanded/hk_arengukava_a4_eng_
veeb.pdf
Regular public and partners satisfaction surveys
 
Contracting and Payment
Contracting and Payment
Methods
Methods
 
 
Contracting cycle of EHIF
Contracting cycle of EHIF
 
Providers’ network
Providers’ network
 
Legal entities acting under private law
Licensed by Health Board
Hospitals mostly owned by central government,
municipalities, other entities under public law
(university) or private investors
20 strategic  hospitals (“Hospital Master Plan”
providers)
PHC providers mostly private
 
Market shares in specialist
Market shares in specialist
care (in 2016)
care (in 2016)
 
Financial planning of
Financial planning of
specialist care contracts
specialist care contracts
 
Factors that are taken into account:
Equal access by regions
Waiting times
Capacity of the provider
Historical utilization
Expected changes in service delivery (e.g. more day surgery)
Patient preferences
Changes in tariffs, benefit package
Care concentration for complex care
Cost and volume are determined  for each provider
Cost and volumes by specialties and by care types as outpatient, daycare, inpatient
Services provided over the contract volume are covered on certain conditions by
70% for outpatient and day care (up to 5% of total contract volume) and 30% for
inpatient care
 
Provider payment
Provider payment
methods in transition
methods in transition
 
Example of PHC
Example of PHC
 
Also, service delivery
Also, service delivery
model is changing
model is changing
 
Evolution of digital claims
Evolution of digital claims
 
Digital claims system was started to develop in
mid-90s
By end of 90s regional insurance funds had
digital database
In 2000, one country-wide database including
all claims and providers were incentivized to
submit digital data
Since 2003, focus on data quality and  how to
use claims data to support strategic purchasing
 
Digital claim
Digital claim
 
Claims standard format set in
the EHIF’s contract:
defines data fields, types, number of
characters by field, etc
 
Data fields:
person’s characteristics and ID
provider information
primary and secondary diagnoses
(ICD10)
clinical activities based based on
health service price list and Nordic
Classification of Surgical Procedures
price and volume information
 
Key messages
Key messages
 
Single-payer model 
has been proven to work well in
Estonia
Strong institutional framework with governance structure
Broader revenue base will increase financial sustainability
 
Financial incentives 
across different levels of care
are important to achieve UHC
Blending payment methods enables to mitigate negative side-effects
of single payment method
Strategic purchasing in much more than payment methods
Health financing reforms have to be aligned with broader health
service delivery reforms
Good quality data is a precondition for monitoring the performance
of providers
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Estonia has implemented a mandatory health insurance system through the Estonian Health Insurance Fund (EHIF) since 1992. The EHIF operates as a single-payer system, pooling public funds predominantly from a 13% payroll tax. Key aspects include high population coverage, independent governance, and financial stability despite challenges. The evolution of health insurance organization in Estonia reflects a strategic shift towards centralization and efficiency. Lessons from Estonia's experience can provide valuable insights for other countries exploring similar health financing models.


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  1. Lessons from mandatory health insurance development and governance in Estonia Triin Habicht Subregional Dialogue on Health Financing in the Caribbean Barbados, 28- 29 August 2018

  2. Estonia in brief Population 1.3 million High-income country European Union (since 2004) GNI per capita 17 750 USD* (2016) Health expenditures (2016) 6.7% of GDP Per person 1 340 USD Public expenditure 75.7% of THE Health insurance 65.0% of THE OOP 22.7% of THE Estonian Health Insurance Fund (EHIF) is a single payer Social health insurance system since 1992 *1USD=0.8EUR

  3. Governance of Health Insurance

  4. Public agencies in health sector Ministry of Social Affairs EHIF National Institute for Health Development Health Board State Agency of Medicines Contracts Health care providers, private law, public or private ownership

  5. Evolution of the organization of health insurance First sickness funds in 1913 Re-established regional non-competing sickness funds in 1991/92 (22 in total) Central sickness fund to coordinate regional funds in 1994 Estonian Health Insurance Fund in 2001, Currently with 4 regional departments

  6. Key facts about EHIF Estonian Health Insurance Fund (EHIF) is a single payer EHIF pools most of public funds The main source of revenues 13% payroll tax paid by employers Coverage with health insurance 94-96% of population EHIF operates as public independent legal entity Founded in public interest by separate act General public service regulation does not apply to EHIF Governed by Supervisory Board chaired by Minister of Health and Labor

  7. EHIF revenues, expenditures and reserves 1200 000 Financial crisis 1000 000 800 000 in thousand Euros 600 000 Deficit 400 000 200 000 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Revenues Expenditures Reserves Source: EHIF

  8. EHIFs reserves policy Solvency reserve: 5,4% of total budget since 2018 (8% in 2001- 2004, 6% 2005-2017) To balance macroeconomic risks Needs government approval Risk reserve: 2% of health insurance spending (introduced in 2002) To balance the risks of health insurance obligations Needs EHIF s supervisory board approval Accumulated surplus: non-mandatory reserve as difference between revenues and expenditures Accumulated before last financial crises Needs EHIF s supervisory board approval (<30% of total surplus, <7% of previous period s health care services budget)

  9. Moving away solely contribution based health insurance Gradual increase of state budget contributions on the behalf of pensioners from 7% in 2018 up to 13% in 2022 On behalf on non-working pensioners Contribution is calculated as a share of average state guaranteed pension By 2022 new revenue source forms about 11% of the EHIF s budget In parallel, other public expenditure streams will be consolidated under the EHIF Aims to reduce fragmentation Was necessary to find a compromise in the Government As a result, the net growth of public spending is expected to be 0.2% of GDP by 2022

  10. Tripartite supervisory board 15 members (will be reduced to 6 in Sept 18) 5 state representatives Minister of Health and Labor, Minister of Finance and Chairman of the Parliamentary Committee of Social Affairs (ex officio) 1 member or parliament (nominated by the Parliament) 1 public servant from Ministry of Social Affairs (nominated by the Government) 5 employer and 5 beneficiaries representatives Nominated by Government according to the proposal made by representing organizations Supervisory Board design is expected to prevent conflict of interest Supervisory Board decisions are public

  11. Scope of decision rights of EHIF Establishment of system (objectives and principles) Parliament Contributions definition and coverage (eligibility) Parliament Co-payments general regulation by Parliament; actual co-payments by providers Benefit package general regulation by Parliament; actual benefit package by Government Provider payment methods and Prices Government; price calculation methodology by Ministry of Social Affairs Contracting basic principles by Parliament; specific principles by Supervisory Board of EHIF Waiting time limits Supervisory Board; for primary care by Ministry of Social Affairs Budget forecast by MoF; budget position by Parliament as part of State Budget; in detail by Supervisory Board

  12. Accountability mechanisms Management Board shall present quarterly overview of the activities and economic situation to the Supervisory Board All reports made public Annual reports available in English https://www.haigekassa.ee/en/annual-reports 4-year corporate strategy with action plan and score card Reporting is part of the quarterly reporting Revised annually Available in English https://www.haigekassa.ee/sites/default/files/ uuringud_aruanded/hk_arengukava_a4_eng_ veeb.pdf Regular public and partners satisfaction surveys

  13. Contracting and Payment Methods

  14. Contracting cycle of EHIF Changes in health service prices and benefit package EHIF s 4-year budget planning principles and EHIF s 4-year development plan Annual (by 6 months) capped cost and volume contracts; 5- year framework contracts Quarterly contract, queue and budget monitoring and utilization review Negotiations about contract volumes EHIF s annual budget Selection of partners Pooling in EHIF Adjustments of contract if necessary Demand/need assessment by specialities (running and next year perspective) Framework contract conditions negotiated and agreed among EHIF and Estonian Hospital Union or Estonian Society of Family Physicians

  15. Providers network Legal entities acting under private law Licensed by Health Board Hospitals mostly owned by central government, municipalities, other entities under public law (university) or private investors 20 strategic hospitals ( Hospital Master Plan providers) PHC providers mostly private

  16. Market shares in specialist care (in 2016) Selected partners 7% General hospitals 12% Regional hospitals 52% Central hospitals 29%

  17. Financial planning of specialist care contracts Factors that are taken into account: Equal access by regions Waiting times Capacity of the provider Historical utilization Expected changes in service delivery (e.g. more day surgery) Patient preferences Changes in tariffs, benefit package Care concentration for complex care Cost and volume are determined for each provider Cost and volumes by specialties and by care types as outpatient, daycare, inpatient Services provided over the contract volume are covered on certain conditions by 70% for outpatient and day care (up to 5% of total contract volume) and 30% for inpatient care

  18. Provider payment methods in transition Revision of P4P to incentivize more adherence to the guidelines Piloting integrated care model (hospital+PHC center) Primary care: capitation, FFS, monthly allowance, P4P Outpatient specialist care: FFS New PHC Centers payment model Pay for high-rist patient management Inpatient specialist care: DRG, per diem, FFS, preparedness fee Global budget (pilot in rural hospital) Episode based payment

  19. Example of PHC

  20. Also, service delivery model is changing Primary care: family doctor+nurse, mostly solo practices Primary care: group practices, extended team (home nurse, midwife, physiotherapist) Hospitals: independent entities Hospital networks Primary and specialist care split

  21. Evolution of digital claims Digital claims system was started to develop in mid-90s By end of 90s regional insurance funds had digital database In 2000, one country-wide database including all claims and providers were incentivized to submit digital data Since 2003, focus on data quality and how to use claims data to support strategic purchasing

  22. Digital claim Claims standard format set in the EHIF s contract: defines data fields, types, number of characters by field, etc Data fields: person s characteristics and ID provider information primary and secondary diagnoses (ICD10) clinical activities based based on health service price list and Nordic Classification of Surgical Procedures price and volume information

  23. Key messages Single-payer model has been proven to work well in Estonia Strong institutional framework with governance structure Broader revenue base will increase financial sustainability Financial incentives across different levels of care are important to achieve UHC Blending payment methods enables to mitigate negative side-effects of single payment method Strategic purchasing in much more than payment methods Health financing reforms have to be aligned with broader health service delivery reforms Good quality data is a precondition for monitoring the performance of providers

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