From 2011 on private health insurance companies start managing public funds. Bulgarians pay 2% health tax to the private business in the sector
One of the most difficult and unreformed sectors in Bulgaria is healthcare. Coming to power, the new government explicitly declared its intention to quickly change the basic financial rules and to
implement a cardinal reform of the healthcare model in the country. Since this summer two round tables have been initiated to define the major weaknesses in the system. The last meeting of
legislators, ministers, professional organizations and trade unions took place in December 2009 and it made it clear that the Bulgarian health insurance model sets foot on a completely new
foundation and the private health insurance funds come in as a major player on the stage. The government intends to adopt the three-pillar health insurance model as of 2011.
Currently the shortage of funds in the healthcare system is BGN2.5-3 billion and the personal contributions of Bulgarians for health insurance remain low. For the infusion of fresh funds in the
sector government relies on the introduction of the three-pillar model, similar to the pension system (but only as lay-out) – a basic compulsory, additional compulsory and supplementary voluntary
pillar. From 2011 on, the rate of the health insurance contribution will be increased by 2 percentage points – from 8 per cent now to 10 per cent. The increase will be entirely for the account of
the insured persons, without burdening employers. The average rate in EU member counties is 12-14%. By 2009 the percentage has been 6%, and in 2009 it is increased to 8%.
From 2011 on the way of managing the system will be also changed, as the monopoly of the state Health Insurance Fund (NHIF) will be abolished and the private health insurance companies will start
to manage public funds. State NHIF will manage only the funds in the first pillar. The second and third pillars will be operated solely by private health funds. The design of the reforms was
announced by the deputy chairman of the National Assembly and chairman of the Healthcare Parliamentary Committee Dr Lachezar Ivanov.
The employed Bulgarians (about 2.5 million) will have to pay in extra cash for compulsory insurance under the second pillar (supplementary compulsory). They will pay each month 2 percent of their
real monthly income as additional contribution for health insurance and will be allowed to choose their health insurance fund. The state will finance the health insurance of about 4.1 million
people - pensioners, children, students, socially disadvantaged and others, referred to in Art. 40 of the Bulgarian Law on Health Insurance. To avoid criticism that the state gives public resource
to private businesses, the budget funds for the health insurance of these people will enter the NHIF accounts. NHIF will not be allowed to profit and the private funds will be able to, but only
after the second year of managing the money of the second pillar. Until then, however, each company will be required to reinvest its profit to modernize the information system, to develop its
branch network, for training and qualification of the staff.
The third pillar (supplementary voluntary) by definition is complementary, i.e. for people who wish to have access to broader spectrum of healthcare services and goods - they will be able to pay
extra healthcare packages on their request - luxury packages and other extras that the funds will design to attract customers. For example, anxious dad can indicate which named doctors he wants to
service his family, or wealthy retirees will be provided with special treatment and care on their own account.
It is not yet clear what volume of activities (services) the funds in the second mandatory pillar will cover. So far the state fund has been offering a set of broad activities, but there have never
been enough funds in its budget to pay for them. The private funds had to compete with NHIF for customers by pledging identical packages. And so the customers were not interested to pay in a
private fund for services, which NHIF was obliged to provide them by law, but which was not able to do that.
Dr. Lachezar Ivanov announced that an executive agency for financial analysis and forecasts will be created with the Ministry of Finance as part of the new healthcare strategy. The new structure
will evaluate the offered packages, the so called ‘clinical paths’, in order to be able to make a real valuation of the activities included in them. Only after the relevant estimates are declared,
it will become clear what exactly will be the commitment of the funds under the second pillar. The idea of creating the agency belongs to the deputy prime minister and finance minister Simeon
Djankov. The argument to set pricing and payment of medical services apart from the healthcare system in a separate unit is to avoid conflicts of interest. The state will be obliged to set eligible
maximum prices for medical services and activities and also to define the scope of the compulsory health insurance.
Private health funds will be required to provide equal access to medical services and will not be able to restrict or age limit the access to voluntary health insurance. Criteria for not allowing
corporate listing of people in a chosen fund (as is the current practice) will be written. The idea is that in the first 2 years after implementing the new strategy (2011 and 2012) the insured to
be able to change their fund once a year, after that they will be able to do that every second year.
Every health insurance company will have to set aside a certain percentage of the monthly transfers in a ‘risk fund’ (national equalization fund) that will cover the insured in case of failure of
their company. Health insurance companies will have to meet a number of licensing criteria – BGN 5 million registered capital, at least 50 thousand insured, offices in the 28 administrative regions
of the country, etc. The set out requirements in the new strategy speak for mitigating the tone towards the business. In mid-November healthcare minister Dr. Bozidar Nanev said that the strategy
provides for between BGN 5 to 15 million registered capital and between 100 thousand and 400 thousand insured in order to license a company. Also then was launched the idea that private funds in
the second pillar will have to offer upgrade packages for the activities, financed by NHIF. Apparently the idea has undergone revolutionary adjustments.
According to the latest strategy, the control of private health insurance companies will be implemented by a new department within the Financial Supervision Commission (FSC). Currently they
are supervised by the insurance supervision department of the FSC.
Days after the announcement of the latest healthcare reform ideas the professional medical organization in the country - the Bulgarian Medical Association, said that doctors would boycott the
healthcare reform because of the sharp bends in the opinion of the government and for turning NHIF in a solely state operated authority.
Critics of the new reform are skeptical about the quality of the proposals and think that the government pursues rather extreme dead-lines. Proponents on the other side are sure that the new ideas
will lead the healthcare system away from the crisis.
The ruling government says that current version of healthcare reform aims at higher quality medical services and cost optimization because of the enhanced control from the private sector. What the
employed in the healthcare and health insurance sector and also the general public think about the intentions of the reformers is to become clear at the end of January 2010, when Insurance.bg is
organizing an international roundtable on this topic in Sofia.
