THE PROCESS IS ALREADY UNDER WAY

Azerbaijan has launched the development of a mechanism of introducing compulsory health insurance (CHI). Based on the decision of the government, a special working group has been set up which is tasked to study and define alternative models of CHI financing.

Meanwhile, one of the main reasons for the delay in CHI implementation (the Law "On Health Insurance" was adopted 15 years ago) is that the system of health care financing needs to be changed completely.

According to experts, the introduction of CHI will allow the insurance market to grow many times over, while all the inhabitants of Azerbaijan will get access to free and, eventually, quality health care. In addition, the financial flow currently controlled by the Ministry of Health will be distributed directly by policyholders between medical institutions, which will create the conditions for true competition as both private and public institutions will vie for good doctors and advanced technologies.

Acute problems

One of the main arguments that inhibit the introduction of CHI in the near future is the outdated methodology of health care: there are 7.6 hospital beds per every thousand people in Azerbaijan, which exceeds the corresponding figures for Germany and Turkey by a factor of 2 and 3.5, respectively. At the same time, the occupancy of hospital beds in Azerbaijan (26.1 per cent) is much lower than the average indicator in the European Union (76.9 per cent), Turkey (61.9 per cent), Russia (86 per cent), etc.

Another acute problem standing in the way of introducing health insurance is that the financing of the industry from the budget is be reduced with the arrival of CHI funds to the health care system. Yet, the rate of insurance premiums paid from the payroll is to ensure financial coverage of medical care of only working part of the population. However, half of the citizens are classified as not economically active, though they need medical care most of all. Therefore, the problem of payments for the non-working population will become particularly acute in connection with cuts in budget financing of health care, and Emergency Call service and emergency medical assistance as well as socially important kinds of medical care will be the first to suffer. Based on the above, budget financing should be retained at the initial stage of implementation of health insurance until the formation of a certain fund.

Another point: as of 1 February 2008, all medical institutions financed from the state budget should only provide public health services on a complimentary basis. It should be noted that there are 1,734 outpatient clinics and 550 hospitals in Azerbaijan operating on the basis of the Ministry of Health, which are financed from the state budget, and more than 500 private medical institutions, most of which are dental offices. Given that the commercial accounts of public hospitals were abolished, there is no price list for medical services; hence the insurance companies cannot include them in the system of health insurance.

It turns out that private clinics currently have no competitors in the public sector and can dictate insurance companies their terms. Moreover, insurers are already complaining about the careless attitude of medical workers to their duties - there are cases where they purposefully and unnecessarily refer the patient to several doctors for consultation in order to receive a large insurance. In this regard, it was even proposed to boycott several, most notorious medical institutions by all insurance companies.

However, this problem can be solved fairly easily in the future. According to Musa Quliyev, a member of the Social Policy Committee of the Milli Maclis [parliament], following the launch of the electronic system of health care, a chip can be embedded in the ID of all citizens of Azerbaijan, showing the state of their health. Once a citizen has provided his/her ID or told its number, it will be possible to enter the database and access the patient's case history starting from his/her birthday.

And their solutions

Nevertheless, the overall situation with health insurance in Azerbaijan remains dismal, as recognised by market participants. This type of insurance is one of the most unprofitable, which is true in respect of almost all companies.

Yet, this kind of insurance has a potential and there is a market for it. The implementation of CHI is just one of the objectives set in the Concept of Development "Azerbaijan 2020: Vision for the Future." According to Azerbaijani Finance Minister Samir Sarifov, funds for CHI implementation are allocated in the state budget every year. However, these funds remain unused because of the lack of a mechanism.

M. Quliyev believes that the use of compulsory health insurance requires large funds - generally more than 1bn manats. However, not all of the funds will be allocated from the state budget. Funds allocated from the budget will only be directed towards socially vulnerable people - the disabled, the unemployed, pensioners and others. Funds for insurance of working people will be allocated by the employers and a part of this sum will be paid by the employee.

According M. Quliyev, after the introduction of compulsory health insurance, the burden on the state in the sphere of health care will slightly decline, and it will be divided between the state budget, the citizen and the company where he/she works.

In his turn, the chairman of the Association of the Azerbaijani Insurers (AAI), Orxan Bayramov, said that along with the government working group, the association also started a detailed research of various models of the CHI, amongst the others, the Turkish and Russian models are being examined. We plan to discuss them at the CHI sessions. Experts from Turkey, Russia, and Romania will be invited to the annual insurance forum, organized by the Association and held in summer. They will present detailed information on their ways of working. At the same time, the Association already has specific proposals. For instance, in order to develop the health insurance system in the country, it recommends that health services are exempted from value-added tax. This would also help reduce the price of health services and health insurance.

Experts believe that the CHI could serve to boost voluntary health insurance. Thus, some customers could choose to pay for additional services that are not included in the CHI package. This will have a positive impact on the voluntary insurance system.

There are all conditions for this. In the past, only foreign companies paid for health insurance for their employees. Now, however, this is becoming topical for Azerbaijani companies. The leader in the country's economy, SOCAR, has set a very good example for the other companies by deciding to refuse the services of the clinics and paying for health insurance for its employees.

Thus, the health reforms carried out in Azerbaijan and the introduction of the compulsory health insurance are ensuring a structural transformation of the industry aimed at boosting economic and clinical efficiency of its work and improving the quality of its health services.

HOW ARE THINGS OVER THERE?

The Turkish model envisages monthly payments, the amount of which depends on the income of the customers. Those choosing the services of private insurance companies, also have to get registered with the compulsory insurance system. Turkish citizens and foreigners who voluntarily pay social duties to the amount of 32 per cent of their minimal wages to the Fund of social security, don't have to get registered with the compulsory health system. As a result, only 3-4 per cent of Turkish population are not involved in the health insurance.

The Russian CHI system, regulated by the Federal law "On compulsory health insurance" and adopted in 2010, is constantly being developed. In 2013, they switched to the system of full tariff with the payments for health services.  Now in the Russian Federation they are planning to add prescription drug coverage to the CHI system, as this is the only way of making medication affordable to ordinary citizens.

In Europe, a proper medication insurance system has been in place for many years. In France, compensations are paid to the pharmacies from the treasuries (100 per cent of expensive medicines, 65 per cent of average medicines and 35 per cent of medicines that are optional). In Germany, the system of state health insurance covers 90 per cent of the population and covers about 90 per cent of medicines purchased by insured patients. Similar systems are in place in other Western European countries. Even in less developed countries of the Eastern Europe, the states pay for 38 per cent of the medicines (in Poland) and 57 per cent of them (in Hungary).