Extensive preparatory work is required to introduce CHI

***

-Azer bey, President signed a decree on measures to ensure the application of CHI. As is evident from the decree, the Agency for compulsory health insurance is committed to creating a new legal entity titled "Association for medical territorial subdivisions management". Do you think, it is a correct step? Can we take it that in 2019 the country will switch over to CHI?

- As is known, since 2017 a pilot project on the compulsory health insurance was launched first in Mingechevir, Yevlakh, and in 2018 Agdash regions of the country. However, before introducing it across the Republic it is necessary to undertake a serious and extensive preparatory work. One must allow that the implementation of the project pursued an aim to approve new mechanisms in practice and then change over to the compulsory health insurance in the country. The preparatory work mentioned above also provides for development of a mechanism to manage public medical facilities and adapt them to new circumstances.

The question is that the structure of public health system of the country has been inherited from the Soviet epoch. In other words, the Ministry of Public Health remains to be an organization responsible for 1) development and implementation of policy in the public health; 2) medical services to the population through the subordinated public medical facilities 3) payment of medical costs on behalf of the state. It must be said that the CHI introduction calls for alteration of the system and transfer of the three functions stated above to separate structures. This would allow to create a balanced system of public health based on sharing of liability and mutual control over these structures.

As a matter of fact, a legal entity of "Association for medical territorial subdivisions management" to be set up under the presidential decree of December 20, 2018 is a component of the said reform. The essential point to remember is that public outpatient departments, hospitals, laboratories and other medical facilities mentioned in the decree, except for governmental medical structures, will be subordinated to "Association for medical territorial subdivisions management" (AMTSM) . In other words, these structures are removed from subordination of the Ministry of Public Health the latter being responsible for public health policy only. In this case, delivery and payment for medical services will remain with the State Agency for Compulsory Health Insurance (SACHI), i. e. the latter will be responsible both for medical services and related payment.

With this in mind, the SACHI will be responsible both medical services and their payment. However, this will generate not only a conflict of interests but corruption risks and confrontation between public and private health facilities within the framework of the compulsory health insurance. An issue remains undecided: will public health facilities under SACHI subordination become separate legal entities with independent accounts or not. The decree does not provide CHI introduction across the country since 2019. Decree-specified measures are a part of preparation and introduction of the compulsory health insurance while SACHI activity will start in 2020.

Minister of Finances" press-release says that 224 mln manats are specified in the national budget-2019 for implementation of compulsory health insurance reforms. The Presidential decree of December 22, 2018, guided by the enforcement of the Law "On National Budget of the Azerbaijani Republic for 2019", an amount for legal entity SACHI is 239,6 mln manats (Article 1.5.5.8). Note that 224 mln manats out this amount will be expended for preparatory work on CHI introduction, and the remaining part for pilot project charges. Unfortunately, a budget package provides no detailed information about routes of the funds and uninformedness thereof.

Below-cited is answer of the State Agency for Compulsory Health Insurance to our inquiry of November 26, 2018:

- How are you going to expend budgetary 224 mln manats allocated for compulsory health insurance in 2019?

- The State Agency for Compulsory Health Insurance goes along with CHI introduction in the country. Thus, at present the Road map on application of CHI is on the stage of approval. Under the Road map, It is allowed to prepare country"s hospitals for the system of the compulsory health insurance. This year budgetary funds allocated for CHI introduction are intended to integrate the compulsory health insurance in the system of public health. Information on the use of these funds will be reflected in the implementation plan at the preparatory stage which is still to be approved.

- Finance Minister Samir Sharifov stated that the introduction of the compulsory health insurance in the country is expected to start in 2020. Why is so late? What"s still to be done in 2019?

- CHI introduction is a reform which calls for radical changes in the system of health financing and the transition to this system involves complex measures. To integrate the compulsory health insurance into the existing system of public health, it is necessary to transform hospitals into a legal entity, adjust an initial public health service, develop an accounting system and infrastructure of information technologies. A Road map-2019 provides for infrastructure work at hospitals to adapt the public health system to the CHI. Preparatory work is planned to carry out across the country, and upon its completion the population will be served through the compulsory health insurance.

- Azer bey, are 224 mln budgetary funds enough to perform preparatory work?

- As noted before, there are no comments so far as of how these funds will be used. So it is difficult to say if these funds are enough. We hope that the SACHI has a well thought-out document to specify purposes. The point is that one of the goals of the pilot project is to define necessary steps toward the use of the compulsory health insurance across the country.

Thus, implementation of the pilot project was meant to demonstrate a spending level per capita in delivering medical services and drugs in line with basic feature package within the framework of CHI. It should be reminded that the Presidential decree of December 28, 2016 adopted a list of tariffs for medical services as per the above mentioned package enacted in administrative territories of Mingechevir and Yevlakh regions.

It is worth pointing out that the basic package of the pilot project consists of 1829 health services, including 480 ambulatory, 677 in-patients, 18 primary treatment, 6 urgent and emergency, 23 physiotherapeutic, 459 laboratory examination and 166 vitally important expensive curative services and related tariffs. Under an Agency report, health costs per capita over the basic package services in the pilot regions made up, with due regard for capital investments, 114 manats, and without large capital investments - 93 manats. To be sure, adequacy of this amount raises certain doubts.

It remains unclear what rate of wage of health workers was taken into account when calculating this payroll. Wages of health workers currently employed at public medical facilities are very low - down two times as compared to average wages across the country. To ensue good medical serrvice, it is essential to increase their wages, at least, by 4-5 times.

It is also necessary to take on the task of optimizing the staff number of health facilities, their services, residents attached to family or district physicians of health units or policlinics, bed capacities and periods of stay at hospitals, provision of health facilities with technical and communal services, etc. Besides, it is also necessary to clarify whether a single-channel system of health financing will be applied or a multi-channel system will stay that way.

In other words, will the CHI provide for health services only but also costs on provision of medical facilities with material-technical and communal services, including costs on insurance claims? As a matter of fact, the SACHI was meant to present a well thought-out and specific Road map for implementation of the reform - a strategy of actions across the country as a whole. With a document of this sort in possession only, it is safe to say that budgetary funds are sufficient to prepare for the reform?

-Is the system of public health in Azerbaijan ready for introduction of the compulsory health insurance?

-Reforms in the system of compulsory health insurance are ranked among most important and crucial social and economic reforms. It must be said that the effectuation of these reforms in many countries worldwide is faced with great difficultiesand challenging circumstances.

It should be added that the system of public health of Azerbaijan has been inherited from the Soviet period. Regretfully, in the independence period we failed to get rid of the Soviet remnants in the public health, so it"s hard to tell whether we are ready for the introduction of the compulsory health insurance or not. True, for more than two years the Agency for compulsory health insurance has gained a certain experience and applied a pilot project. The year 2019 is believed to be a year of preparation for introduction of compulsory health insurance across the country. A degree of readiness for introduction of compulsory health insurance may be qualified as follows:

• Institutional-legal base of reforms. Most documents signed by the President are related to the application of the pilot project. A draft changes and amendments in the Law of the Azerbaijani Republic "On Medical Insurance" have already been brought up to Milli Majlis for discussion. The draft clears up questions like forms of medical insurance (voluntary and compulsory), rights and duties of CHI participants, financial security of the compulsory health insurance, insurance amounts by separate groups and strata, calculation and payment rules of insurance amount, CHI organization, etc.;
• Organizational preparation. Some actions have already been made on this track: SACHI has been active for several years and gained a certain experience; underway is the establishment of the "Association for medical territorial subdivisions management" (AMTSM - TABIB). As a consequence, the scope of activity of the Ministry of Public Health gets narrower, etc. At the same time, many issues have to be settled yet, for example, the scope of activity of public health facilities: will their administrative and financial activity be regulated by a single center (through the AMTSM) or they be financially and administratively independent? How will the compulsory health insurance be applied in private clinics?
• Level of governmental financing of the public health. It has to be kept in mind that the CHI application does not downgrade state"s responsibility and role in the health organization; instead, it raises state"s importance. It"s common knowledge that insignificant money is allocated from the public budget for public health. Suffice it to say that public funds allocated from the budget for health needs in 2018 (ignoring investment expenditures) made up 739,3 mln manats that constitutes just 3,2% of total budgetary expenditures and about 1% of country"s GDP. In other words, public health costs per capita made up 75-80 manats (less than $50).

Under recommendations of the World Health Organization, annual health expenditures per capita should make up approx. $300 (2013). Figures of the branch in Azerbaijan are much lower from most countries worldwide. Thus, figures for public health in Turkey and Russia stand at 3,4% of GDP; in the European countries - 6-8% on the average; in Germany, Switzerland and France - more than 9%; in the USA - 8,5%. Note that health costs in the most mentioned countries (in the form of voluntary medical insurance) stand at 10-20% of total health costs. The situation is quite the opposite in Azerbaijan.

Thus, WB estimates for 2013 say that 25% of total costs for the public health in Azerbaijan are met at the expense of public funds, 75% at the expense of the population. The application of the CHI is meant to change this correlation: a greater portion of expenses for the public health - at least 85% - is to be defrayed by the public funds, i. e. through the compulsory health insurance. Based on the volume of average annual expenses for health services per manat 170 manats ($100), it is required to spend 1, 7 bln manats ($ 1 bln) to defray expenses for the public health in the country with population of 10 mln.

This is nearly two times more than budgetary funds for the public health (with no regard for CHI-stipulated reforms). What are government"s expectations of dues to be collected in 2020 when the compulsory health insurance will be enacted in 2020? Is the government going to increase funds from the national budget? Which part of funds intended for the public health will be transferred to the CHI Fund? What is a mechanism of expenditures specified for public health programs? Will extra-budgetary resources be allocated for maintenance of public medical institutions? All the questions cited above remain open;

• Development of rules and mechanisms. To carry out reforms, it is necessary to apply appropriate work product and instructions. Also, it is imperative draw up effective mechanisms for adjusting patients" reference to a physician, quality control of examination and treatment, etc. Of particular importance for quality control are clinical protocols;
• Staff training issues. Application of CHI necessitates properly educated specialists in health facilities, insurance agencies and legal system. Is any preparatory work done in this vein?
• Public support for reforms. It is important to approve reforms both by wide audience and health workers. It should be remembered that the reforms affect the interests of all layers of society, including partisans and opponents. Allowing for the fact that it is a complex social and economic reform, there is probable a growth of discontent of specific social groups, reform adversaries may take advantage of the situation in the service of their aim.

All things considered, a major issue of reform preparation is to enhance the transparency and accountability of the process and step efforts in society. In considering that measures aimed at regulating drug prices are appreciated ambiguously by the population, there is need in more calibrated efforts in the course of CHI reforms.

- Where"s a focus of efforts in this direction?

- The point is about issues cited above, including those remaining open and calling for special attention. It must be said that results of the reforms are dependent upon the level of appropriate preparations and main goals set by reformers. An eloquent testimony to this is examples of Estonia and Georgia, as well as a flawed example of Russia.

It should be added that these reforms are designed to destroy present-day corruption mechanisms that involved a good many people, so the latters are unlikely to be comfortable with the process.

For example, to provide patients with fully subsidized drugs and medical supplies approx. 25-30 mln manats have lately been allocated from the national budget (without consideration of funds within the framework of special disease programs). It is obvious that most funds are used other than as intended and embezzled. It"s common knowledge that patients cannot receive unpaid drugs at hospitals.

Cases of this kind are widely spread in other spheres as well, including corruption and bribery. The result is that there are persons disinterested in implementing reforms aimed at eradicating bribery and corruption cases. Hence, there is need in developing mechanisms of prevention and removal of obstacles upon the path of reforms.

One of the key issues in reform preparation is the credibility of society and public approval. To gain the credibility, it is imperative to ensure transparency and accountability. First of all, the government should labor high quality and timeliness of services within the framework of the compulsory health insurance. With that end in view, most countries that had earlier succeeded at carrying out identical reforms included a limited number of health services in the basic package. However, they expanded a list of services from year to year. But in our situation the contents of the basic package services is too broad.

If people fail to get these services freely and have to pay them personally, no trust to the reform is possible; second, it is important to give credence to reforms, for they are constitutive parts of these reforms. Therefore it is important that medical attendants receive wages concordant with their labor inputs. Third, possible failures should not be concealed from the public; instead, the public should get necessary information opportunely about these cases and on measures to remove them. Fourth, steps aimed at reforming the sector should be open for preliminary public debates, etc.

- For many years the experts recommend to introduce the compulsory health insurance. What do you think, will this introduction satisfy experts and population? Many diseases (for example, oncological) are not included in the system of compulsory health insurance.

- Let"s start with the second part of your question. As is known, for some time past special programs on some expensive curative services are implemented in the country (for instance, oncological diseases, renal insufficiency, tuberculosis, diabetes, etc.). In accordance with these programs, index cases should be examined, cured and provided with medical drugs at the expense of the state budget. As is expected, following the CHI introduction these programs will be implemented. That"s why the mentioned diseases are not taken into consideration in the basic package of services.

When it comes to reforms" effectiveness, it is safe to say that social-economic reforms of this sort cannot comply with every request. That being said, it is essential to evaluate all possible risks and take steps to remove them.

- In what form should the compulsory health insurance be introduced to rule out arbitrariness and bribery and enable citizens to enjoy benefits of this system?

- As a matter of fact, application of the compulsory health insurance is not a perfect mechanism to fully eradicate corruption and bribery. To put it bluntly, it is more effective system of public health organization that has become firmly established in the world practice. Account here has to be taken of two factors.

First, issues arising from the current management system and widely spread entrepreneurship of functionaries, abuse of power, organization of purchases at the expense of public funds, etc. in the system of public health. In other words, compulsory health insurance introduction cannot resolve the issues.

Second, issues stemming from the system of public health model, including untargeted disbursing of budgetary funds for public health; interrelations between a physician and a patient; quality and accessibility of medical services, etc. It should be remembered that accurate application of compulsory health insurance is an important instrument in addressing the said problems.

As has been noted above, there is a peculiar network of corruption and bribery in the current system of public health. Note that the introduction of the compulsory health insurance is forming new mechanisms of control and flow over public financing where funds follow a patient. Creation of the mechanism of quality control over quality of medical services increases responsibility of physicians. We cannot hope that the application of the compulsory health insurance will promptly eliminate corruption, for there are factors contributing to corruption risks.

Risks of this sort may arise depending upon facilities the Agency for compulsory health insurance will collaborate with; upon decisions on extent of insurance payments; formation of Agency"s interest in idle funds; conflict of interests arising from Agency"s interaction with the "Association for medical territorial subdivisions management" , etc. To prevent these risks, it is imperative to ensure the supremacy of law and independent judicial power in the country.

It is highly important that functionaries have professional competence, clean hands and abide by ethic norms. It is essential to form mechanisms, ensure a mutual control and eliminate the conflict of interests. Instrumental in this process is the role of independent civil society and public control. If no strong civil society and effective public control is available in the country, it is hard to explain whether the corruption escapes the compulsory health insurance.