Reform of funding of the National Health Insurance

• Abstract
• Purpose of health policy or idea
• Characteristics of this policy
• Political and economic background
• Purpose and process analysis
• Expected outcome
• References

Abstract

The Ministry of Social Affairs and Health (MASH) has proposed to reform the funding of the National Health Insurance (NHI). The objective of the reform is to increase the sustainability and transparency of the funding of NHI. By this reform, the funding of NHI would be divided to two parts: sickness insurance and income insurance.

Purpose of health policy or idea

The objective of the reform is to increase the sustainability and transparency of the funding of the NHI. Especially the increase of pharmaceutical expenditure has been a threat to the sustainability of the NHI funding.

The NHI covers outpatient drug reimbursement, reimbursement of medical costs of private sector, compensation of costs for travels to health care units, sickness allowance and maternity leave allowance to all inhabitants of Finland. In addition, it covers part of the costs of rehabilitation and occupational health care. The NHI is mainly funded by employers and employees from whom income based insurance premiums are collected with taxes. In 2005, the NHI premiums for the insured are 1.5% of gross wage. The employers pay 1.6% of gross wages with an exception that the state as an employer pays 2.85%. The NHI is run by the Social Insurance Institution (SII) with about 400 local offices all over the country. The SII falls under the authority of the Parliament.  

By this reform, the funding would be divided into two parts: sickness insurance and income insurance. The sickness insurance would cover outpatient drug reimbursement, reimbursement of medical costs for use of private sector and rehabilitation services, and compensation of travel costs to health care units. The income insurance would cover sickness allowance, maternity leave allowance, rehabilitation allowance and reimbursement for employers for occupational health care services.

The sickness insurance would be funded by the employees (1.33% of the income) and the government (half of the expenses, in 2006 approximately 907 million euros). The income insurance would be funded by the employees (0.77% of the income) and the employers (2.06% of gross wages). The expenses of both schemes would be approximately equal.

The changes in taxation and premiums are planned to be so implemented that the reform would have no net effect on the state finances or the overall taxation of the employers and employees.

Main points

Main objectives

Increase the sustainability and transparency of the funding of the National Health Insurance

Type of incentives

None

Groups affected

Insured, Employers, Social Insurance Institution

Innovationsgrad	traditionell		innovativ
Kontroversität	unumstritten		kontrovers
Strukturelle Wirkung	marginal		fundamental
Medienpräsenz	sehr gering		sehr hoch
Übertragbarkeit	sehr systemabhängig		systemneutral

In general the approach is rather traditional for the financing system of the National Health Insurance, but the division of the funding to two parts is a new idea.

Political and economic background

The insurance premium revenues of the NHI in a given year should be approximately equal to expenditure in that year. However, while the collected premiums have not covered the expenses for several years, the government must have covered the NHI deficit (currently a third of its total budget) from the state budget in ad hoc bases. A major problem in financing has been the increasing outpatient drug expenses. In political debate, it has been increasingly requested that the budget of the NHI should be balanced and the financing reformed to be sustainable and explicitly based on legislation.

Purpose and process analysis

Current Process Stages

	Idee	Pilotprojekt	Strategiepapier	Gesetzgebung	Umsetzung	Evaluation	Veränderung/Richtungswechsel
Implemented in this survey?

Origins of health policy idea

The Ministry of Social Affairs and Health (MASH) has been concerned about the budget deficit of the National Health Insurance for several years. The main features of the reform were drafted in a working group appointed by the MASH in autumn 2003.

Initiators of idea/main actors

• Regierung

• Andere

Approach of idea

The approach of the idea is described as:
amended: Reform requires major changes in the law on the National Health Insurance and some minor changes for five other laws, such as the Law on Income Taxation.

Stakeholder positions

The Ministry of Social Affairs and Health has had a leadership role on the reform. The labour unions and employer associations have had traditionally a strong role on issues related to income taxation, the employers' social security contributions and occupational health care issues. For them it was important that there is no negative influence on total taxation or contributions of their members.

Actors and positions

Regierung
Ministry of Social Affairs and Health	sehr unterstützend		stark dagegen
Social Security Institution	sehr unterstützend		stark dagegen
Andere
Labour unions	sehr unterstützend		stark dagegen
Employer associations	sehr unterstützend		stark dagegen

Influences in policy making and legislation

Legislation is now under the review of the Parliament. If it is accepted as proposed it will come to force in January 2006.

Legislative outcome

pending

Actors and influence

Regierung
Ministry of Social Affairs and Health	sehr groß		kein
Social Security Institution	sehr groß		kein
Andere
Labour unions	sehr groß		kein
Employer associations	sehr groß		kein

Positions and Influences at a glance

Adoption and implementation

The most important practical changes of the reform are those for taxation and collecting contributions. Important actors in the implementation are the Social Insurance Institution, tax administration and employers.

Monitoring and evaluation

The Social Insurance Institution and Ministry of Social Affairs and Health will follow future developments in the financing of the NHI.

Review mechanisms

keine Angaben

Expected outcome

Most likely the reform will increase the sustainability and transparency of the funding of NHI.

Impact of this policy

Qualität	kaum Einfluss		starker Einfluss
Gerechtigkeit	System weniger gerecht		System gerechter
Kosteneffizienz	sehr gering		sehr hoch

The reform itself would have influence only on the financing, not on the provision of or access to services. However, it could lead to a new structure of the NHI in the future. The balance between financing health services and allowances can be rebalanced more easily after this reform. In Finland, the major part of health services is provided by the public health care system, thus they are not reimbursed by the NHI.

References

Sources of Information

• Hallituksen esitys Eduskunnalle sairausvakuutuksen rahoitusta koskevan lainsäädännön muuttamiseksi (HE 68/2005) [In Finnish]

Author/s and/or contributors to this survey

Lauri Vuorenkoski

Empfohlene Zitierweise für diesen Online-Artikel:

Lauri Vuorenkoski. "Reform of funding of the National Health Insurance". Health Policy Monitor, October 2005. Available at http://www.hpm.org/survey/fi/a6/2