MONEY FOLLOWS THE PATIENT

Azerbaijan has actually experienced a surge of reform over the past 15 years. Changes in many spheres of activity have been successfully implemented, including to the system of social protection for the population. The government devotes great attention to improvements in the social situation of its citizens and to the reduction of poverty. The state programme for poverty reduction for 2007-15 was drawn up, encompassing a large number of projects. At the same time, large funds are allocated annually from the state budget to the social sector, and the state budget has been recognised as a "social" one for some years now. Of course, changes could not but have affected domestic health care. However, one of the most significant issues for the people -the implementation of a system of mandatory health insurance (MHI) - has not yet been tackled. According to research conducted by the State Social Protection Fund (SSPF) of Azerbaijan, health insurance is in place for employees of few joint ventures and companies. Citizens of the country spend about 200m dollars on medical services each year. 

The time has come, and there are the funds…

An MHI system was planned for implementation in Azerbaijan back in 1999 but, as we can see, unsuccessfully. According to state officials, the reason lies "with the mechanisms of implementation of the law". Anyway, as far as the people were concerned, MHI existed purely in theory. However, there is a deal of truth in what the state officials say. The point is that there are several models of MHI in the world and thus foreign experience, primarily that of the countries which were first to implement such a system, and which have a mechanism for financing health care similar to that in Azerbaijan, should be studied closely in order to avoid making the same mistakes. For example, the mistakes made by Russia, which implemented an MHI system quite a long time ago now, by which Russian Federation citizens regained access to departmental medical institutions that had been closed to them several years before. This happened largely due to the principle of MHI - money follows the patient. Simultaneously, a push was given to restructuring the system of medical aid provision, in which preference was given to day patient facilities - this is more convenient for people and is cheaper for the MHI system itself. One more advantage - it has been possible to accumulate a large volume of information on every section of the population and on every type of medical aid.

As a result, today MHI covers 100 per cent of the population of Russia. What is more, both employed and unemployed citizens have access to free medical services. The employer pays for the former and the state pays for the latter.

As can be seen, there are quite a few advantages, but it should be noted that in Russia MHI took more than a year to implement, as this type of insurance cannot be put into action immediately, without extensive preparatory work - starting with the development of a legislative framework and ending with a mechanism for application. This is why quite a lot of work has been done in this direction in Azerbaijan over the last nine years, and this work is continuing.

Thus, an interdepartmental commission (coordination council) to study issues related to the implementation of an MHI system in the republic was set up back in 2006. Azerbaijani Health Minister Oqtay Siraliyev was appointed head of the structure. At the first stage of the commission's work, the government's position was that a staged implementation of this system was appropriate. At the first stage it was expected that it would be applied to state servants. The coordination council prepared a package of proposals concerning various aspects of MHI implementation, and handed it over to the Cabinet of Ministers. It was decided at the same time to start using the system in pilot districts. The Siyazan District was named as one of the regions of Azerbaijan - the Health Ministry had noted the presence there of an appropriate medical infrastructure. It was then revealed, too, that MHI would be one of the elements of mandatory social insurance, which led to plans for a slight change to the insurance system. In particular, insurance companies were excluded from MHI - similar to the practice in other countries.

The leaders of a number of domestic insurance companies gave a mixed reaction. But citizens of Azerbaijan, who face domestic medicine willy-nilly, are not too concerned about the problems facing insurance companies. They need a quality product. No doubt experts and state officials considered this too. They agreed that the implementation of MHI in the country must involve reforms to the medical sphere itself. This is what happened in many countries, including our near neighbours, thus the Azerbaijani Finance Ministry focused attention on the implementation of structural reforms to the health care system, explaining that the time had arrived and that the funds were available. The government expressed its intention to provide financial aid to recover and improve the situation in this sector. To this end, a draft of a relevant programme was prepared back in 2006, under which it was planned to established a special fund, modelled on the SSPF, for the implementation of MHI, and the State Agency for Mandatory Health Insurance under the Cabinet of Ministers of Azerbaijan was set up on 27 December 2007. 

Using the MHI system, a new funding system will be established, while the planning and use of medical funds, and the efficiency and transparency of the healthcare system will improve. State funding will be directed towards ensuring state guarantees on a free basic package of services, will which be financed by the state and from mandatory insurance. Additional services will be financed by citizens and from voluntary insurance. In the future, the two sources of finance will be integrated. The state agency will involve all the employed in insurance, and funds received from employers will accumulate and be distributed within the system. Once the regulations are approved, the agency will begin active operations, first in Siyazan District and then across the country.

We should note that 1.4m manats were allocated from the 2008 state budget for the implementation of mandatory health insurance, and 51.1m manats from the 2009 budget.

Hadi Racabli, head of the Azerbaijani Milli Maclis standing commission for social issues, told R+ that the implementation of an MHI system in the country is considered the best option: the state machinery does not ensure the necessary quality of medical aid (largely due to inefficient distribution of funds), while not many can afford private medicine. The list of services of first medical aid, which is also be to endorsed soon by the Cabinet of Ministers, will include about 190 items. But the exact percentage of transfers from people's incomes to MHI has not been specified yet.

"Most probably, about 2.5 to 4 per cent of citizens' incomes will be transferred to MHI - from the experience of countries which have already implemented this type of insurance," Racabli said. He told R+ that the most difficult part of the process of MHI implementation was the management of spending by the Agency for Mandatory Health insurance. "This requires the formation of an appropriate health care grid. Further, people should be advised that individual records of health insurance are made for them to receive health insurance depending on the funds paid," said the head of the parliamentary commission.

Health at the expense of the… employer

Today, Azerbaijan also counts on aid from international donors in the process of structural reforms to health care. The creation of the MHI system in Azerbaijan is being carried out within a World Bank (WB) project for reforming the health care system and improving the quality of provision of medical services. The WB has already allocated 50m dollars to this end while the Health Ministry has started selecting contractors to develop a WB-funded master plan for the implementation of the project. Indeed, US, Canadian and German companies have shown interest in doing the work. According to various estimates, 100m to 200m manats are needed to implement MHI.

Of course, reforming health care will allow the state to increase volumes of funding for this sphere. Especially as the Finance Ministry believes that "it is necessary to ensure an increase in the effectiveness of state spending" and continues to advocate stage-by-stage implementation of the MHI system and completion of the process by 2010. At the same time, this insurance should cover 4.2m people. To put it simply, following MHI implementation, as in the whole developed world, so in Azerbaijan, spending on check-ups and treatment of employed people will be paid for by their employers and the state itself will pay for children, students, housewives and pensioners. However, the Finance Ministry advocates a decrease in the number of people receiving MHI at the expense of budget funds. It also advocates that mandatory health insurance should cover only some types of illnesses.

Time will show exactly which illnesses the long-awaited insurance will cover. Today it is important to tackle another problem which concerns the employed section of the population, which also lays claims to MHI. It is no secret that in many post-soviet countries the practice of illegal employment goes on, when an employer employs someone without a labour contract. In this case the gainer is the employer, who does not pay taxes, payments towards mandatory social insurance or, in the future, to the State Agency for MHI, either. As proof, let us cite an example. Within the framework of measures of control taken by the Azerbaijani Tax Ministry between 1 February and 1 March 2009, it was revealed that 47 taxpayers had 50 individuals working without concluding labour contracts with them. What is more, tax officials constantly reveal these kinds of violations. The-refore, when implementing MHI it is necessary to think of a mechanism for collecting insurance payments which would entitle one to receive free medical services and which would cover the entire able-bodied population.

That is to say, the state should not be worried about the question of exactly who makes the social payments - the employer or the employee, and then any sensible person seeking employment will insist upon appropriate terms from their employer.

The question arises: exactly what will the transition to the MHI system give Azerbaijan, considering the fact that, today, medical services in state medical institutions are provided for free? Especially as the Health Ministry notes that during MHI implementation, the basic package of medical services financed from the state budget will remain free. The answer to this question is simple. Under the state system of organization of medical aid, health care is financed wholly from the budget, under the insurance system - from mandatory transfers (by companies, institutions, organizations of all forms of ownership and organizational-legal bodies, and also fees from entrepreneurs - individuals). People will be given social health insurance cards from which the cost of services provided will be deducted. What is more, MHI changes the very "target" of the funding - not the service itself, but the result. It is also quite possible that only those paying insurance fees in a timely manner will receive free medical aid. But again, this depends on which model of MHI we choose.

One more thing: what level of demand will free medicine enjoy among the population? The point is many of us believe that "if it is free it means that it is low quality and bad", and we prefer to go to expensive private clinics.

As we can see, there are quite a few questions related to the implementation of MHI. It is for this reason that state officials advocate a staged implementation. Inciden-tally, apart from the construction of new, and reconstruction of existing, medical institutions, the Health Ministry is also doing major work to study practical ways of implementing MHI. This work is under way in all state structures involved, which note that a system of MHI has long been acknowledged as the best way of organizing the provision of medical aid. At the same time, we should stress that citizens always have an alternative - to wait for the MHI system or to turn to voluntary health insurance.