Privatization via PHI & waiting time guarantee

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

Abstract

A rapid growth in supplementary private health insurance and a one month waiting time guarantee with access to private treatment at the public expense are improving the opportunities for private providers in the Danish health sector. The growth in private health insurance is supported by tax rules giving tax deductions to employers offering health insurance as fringe benefits. Employees do not pay taxes for health insurance benefits.

Purpose of health policy or idea

Recent years have seen a greater role for private insurance and private providers in the Danish health sector. Two policy initiatives particularly support this development:

1) A general waiting time guarantee was introduced in 2002. This policy entitles patients to treatment at private facilities in Denmark or abroad if the patient is facing an expected waiting time of more than 2 months (one month as of October 2007) from referral to treatment at hospital level. The previous government had introduced similar schemes, but for particular patient groups. The liberal/conservative government  extended these schemes to a general waiting time guarantee in order to pressure the regional authorities and hospitals. Regional authorities have to pay for patients that seek treatment at private facilities according to these rules.

2) A full tax deduction for private companies offering supplementary health insurance as a fringe benefit for their employees if they offer similar insurances to all employees. The benefits are also not taxed as income for employees. An official pupose of this policy is to give private employers better possibilities for developing human resource strategies to reduce sick days etc.

Main points

Main objectives

see above

Type of incentives

Waiting time guarantee:

For patients: The right to seek treatment at private facilities at the expense of their home region when facing waiting times of more than one month in the public system.

For regional authorities: The risk of having to pay for treatment at private facilities when unable to provide treatment at regional public hospitals. 

Tax deduction for supplementary health insurance:

Provides full tax deduction for employers if insurance is offered on similar conditions to all employees. Employees do not pay taxes on this benefit. The insurance typically provides a lump sum, which can be used to seek treatment at private facilities or to sort out other financial obligations in case of critical illness. It is interesting to note, that relatively few patients so far have used the policies, as they are generally given to healthy employees in the working age. The policies have recently been critized for excluding a number of less common critical illnesses.

Groups affected

Patients, private providers, private enterprises/employers; regional authorities and regionally owned public hospitals; insurance companies

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

Waiting time guarantees were introduced by the previous government and have existed for a number of years, but the reduction of the time limit to one month for gaining access to private facilities is new.

There has been some controversy over the reduction to 1 month. Regions, hospitals and some professionals argue that the limit is to rigid. The left wing opposition parties also hold this view.

The tax exemption is a traditional way to encourage specific developments.

Political and economic background

A liberal/conservative government came into power in 2001. Among other changes in the health sector it institutionalized a general waiting time guarantee of two months based on previous partial schemes, and a tax deduction for private companies offering supplementary health insurance to their employees. 

Waiting times were perceived as a major political problem and had been an important theme in the election campaign of 2001, as indeed in a number of national and regional elections in previous years. 

A growing market for supplementary health insurance was developing in the 1990s. Supplementary health insurance provides access to private health providers for services that are also offered in the public sector. The market for such services is relatively new in Denmark, whereas there is a long tradition for purchasing complementary private health insurance to cover co-payments for pharmaceuticals, dentistry, physiotherapy etc. This type of insurance is offered by the not-for-profit company "Danmark". "Danmark" had 1.953.198 members in 2006 (Danmark 2006) (36% of the population).   

720.000 persons were in 2007 covered by a supplementary for-profit PHI according to the insurance company "TrygVesta" (Andersen & Houe 2007; Pedersen 2007). Consequently 13.15 % of the population have a supplementary PHI.   

The increase in supplementary PHI probably reflects several underlying factors. First the relatively high income tax in Denmark, which makes it attractive to compete on benefit packages as a way to attract employees in a competitive labor market, particularly as PHI is tax decuctable for employers. Second the general trend towards individualization of demands for public sector services. Public health services are often accused of being inflexible and with too long waiting times. Regardless of the actual merit of these accusations they seem to fuel a demand for insurance policies that are believed to give more flexible access, partially in response to demands among high income employees and partially in response to the relatively high taxation of personal income. Private insurance is thus offered as a fringe benefit. 

There is social bias in the PHI coverage, as high income, private sector employees are more often covered than low income and public sector employees. Citizens outside the workforce are not included, unless they choose to pay on an individual basis. Some unions in public sector areas (e.g. police force, teachers etc) have negotiated private health insurance into their benefit package in response to developments in the private sector.

Change of government

Complies with

EU regulations

A supplementary objective of the waiting time guarantee was to comply with recent developments in European Court of Justice rulings on free movement of patients across national borders.

Purpose and process analysis

Current Process Stages

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

Origins of health policy idea

A three month waiting time guarantee providing access to private facilities was introduced as a pilot policy for knees and discus operations in 1995. A similar guarantee was introduced for "life threatening diseases" in 1999 (with shorter accepted waiting times).

The policy initiative was generated within the government but some patient representatives had spoken in favour of such policies. Inspiration also came from Swedish waiting time policies.

The tax deduction policy was also generated within government, but supported by industry representatives.

Initiators of idea/main actors

• Regierung: The waiting time guarantee was generated within the government but based on similar partial guarantees introduced by the previous government. The tax deduction policy was also generated within government and supported by Danish Folk Party. Regional authorities oppose both PHI tax exemption and waiting time guarantee.

• Parlament: The largest opposition party (the Social democrats) opposed the general waiting time limit of 1 month, arguing that the limit was too short and should be differentiated for different treatment areas. More generally the left wing opposition parties have critized the two policies for having the ideological purpose of increasing private sector involvement in Danish health care

• Leistungserbringer: Both PHI tax exemption and waiting time guarantee

• Patienten, Verbraucher: Patient organizations support the waiting time guarantee.

• Privatwirtschaft, privater Sektor: Industry organizations are supportive of both PHI tax exemption and waiting time guarantee.

Approach of idea

The approach of the idea is described as:
renewed: see above

Stakeholder positions

Waiting time guarantee:

This was a government generated policy, based on partial schemes introduced by the previous government. The policy was supported by some patient representatives, while others argued that this will create a bias in focus favoring elective care. Regions and public hospitals were opposed as the 1 month guarantee was seen as too rigid and costly. Private providers were not surprisingly in favor of the policy, but they do not have a strong voice in the public debate. 

The issue of "cream skimming" has been raised in the debate by public providers and regions. It is argued that private providers are likely to focus on the most well defined and unproblematic patients, while the public sector must cover in case anything goes wrong, and has the capacity to handle more complex cases. Private providers also have less obligations in terms of general research and training of personnel. 

Employer tax deduction for PHI:

This was a government generated policy. The policy was supported by private providers and insurance companies. The population appears ambivalent. On the one hand 6 out 10 Danes in a recent survey stated that it is problematic that PHI undermines equity in access. On the other hand there has been a tenfold member-increase since 2001 (Olsen 2007). Today approximately 2 million people are covered by a complementary PHI and 720.000 people are covered by a supplementary PHI (Andersen & Houe 2007; Danmark 2008; Pedersen 2007).

Actors and positions

Regierung
Government	sehr unterstützend		stark dagegen
Danish Folk Party	sehr unterstützend		stark dagegen
Regional authorities	sehr unterstützend		stark dagegen
Parlament
Social democrats	sehr unterstützend		stark dagegen
Other opposition parties	sehr unterstützend		stark dagegen
Leistungserbringer
Private providers	sehr unterstützend		stark dagegen
Public providers	sehr unterstützend		stark dagegen
Patienten, Verbraucher
Patient organizations	sehr unterstützend		stark dagegen
Privatwirtschaft, privater Sektor
Industry organizations	sehr unterstützend		stark dagegen

Influences in policy making and legislation

See above

Legislative outcome

success

Actors and influence

Regierung
Government	sehr groß		kein
Danish Folk Party	sehr groß		kein
Regional authorities	sehr groß		kein
Parlament
Social democrats	sehr groß		kein
Other opposition parties	sehr groß		kein
Leistungserbringer
Private providers	sehr groß		kein
Public providers	sehr groß		kein
Patienten, Verbraucher
Patient organizations	sehr groß		kein
Privatwirtschaft, privater Sektor
Industry organizations	sehr groß		kein

Positions and Influences at a glance

Adoption and implementation

Extended waiting time guarantee.

Regions and public hospitals must deliver within the limit of one month. It is their responsibility to communicate the option of choosing treatment elsewhere in case of expected waiting time exceeding the limit. Regions must sign agreements with appropriate private providers and monitor quality.

Monitoring and evaluation

No evaluation planned.

Expected outcome

The combination of rapid growth in PHI and reduction of the time limit for the general waiting time guarantee creates better opportunities for private providers.

Equity in access is affected by PHI as some patients can "jump ahead" particularly for access to private hospitals and privately practicing specialists.

The one month waiting time guarantee puts pressure on regional authorities and hospitals to reduce waiting times for elective procedures. This might lead to efficiency increases, but might also have negative impact on other treatment areas as resources are drawn to elective treatment and away from other areas such as acute care and long term care).

In the long run the willingness to support a universal, tax based system may be endangered as values of equity in access may become eroded.

The expansion of private treatment facilities in a situation of shortages of professionals (doctors and nurses) creates competetion for staff and upward pressure on wages, at least in the short to medium term.

So far there has apparently been limited actual utilization of the supplementary private health insurance, as they are mostly held by healthy persons in the working age. As this situation changes we can expect a) a growth in private sector demand, and thus new business opportunities in private sector. With the current shortage of health professionals this may lead to stronger competition for staff and further difficulties in staffing public health providers, and b) a realization of the limitations in the private insurance products, as they have limited relevance outside planned surgical procedures and only cover some critical illnesses. This may lead to a more mature market as opposed to the current market which is fuelled by tax deductions and perhaps by not fully realistic perceptions of shortcomings in the public sector and the capacity and service in the private sector.

Impact of this policy

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

Negative impact on equity in access of PHI. Overall health expenditures likely to increase due to shorter waiting times and utilization of insurance policies. Cost-efficiency at regional hospitals might increase, at least in elective surgery.

References

Sources of Information

Andersen IH, Houe JP. "Privat sundhedsbehandling boomer". Ugebrevet A4: 39, 2007. (A boom in private health treatment) 

Andersen IH, Madsen TN. "Medlemmer vil forsikres - fagbevægelsen siger nej." Ugebrevet A4: 11, 2008. (Members want health insurance - unions say no) 

Danmark. Årsrapport 2006. 2006. (Annual Report)www.sygeforsikring.dk/Default.aspx?ID=549, accessed 28/3-08.

Danmark (2008). www.sygeforsikring.dk/Default.aspx?ID=25, accessed 28/3-08. 

Danmarks Statistik (2008a). www.dst.dk/Statistik/seneste/Befolkning/Folketal_kvartal.aspx, accessed 25/3-08. 

Danmarks Statistik (2008b). www.statistikbanken.dk/statbank5a/default.asp?w=1024, accessed 4/3-08.

Forsikring & Pension (2008a). Sundhedsforsikringer - Hovedtal 2002-2006. www.forsikringogpension.dk/statistik/Sider/sundhedsforsikring.aspx, accessed 25/3-08. 

Forsikring & Pension (2008b). Markedsudvikling Livsforsikring - Forsikring & Pensions årsmøde januar 2008. www.forsikringogpension.dk/om_os/Documents/Aarsmoede_liv_2007_web[2].pdf, accessed 3/4-08. 

Forsikring & Pension (2008c). Sundhedsforsikringer. www.forsikringogpension.dk/Presse/Temaer/Sundhedsforsikringer/Sider/Intro.aspx, accessed 4/4-08. 

Forsikring & Pension (2008d). Kritisk sygdom. www.forsikringogpension.dk/Presse/Temaer/Kritisk_sygdom/Sider/Kritisk_
sygdom.aspx, accessed 4/4-08. 

Indenrigs- og Sundhedsministeriet. Sundhedssektoren i tal - juni 2007. 2007. www.sum.dk/sum/site.aspx?p=391&ArticleID=4325, accessed 28/3-08. (The health sector in numbers) 

Kommunernes Landsforening (KL), Videnskabsministeriet. Sygedagpenge. 2008. http://borger.dk/forside/arbejde-og-erhverv/dagpenge/sygedagpenge, accessed 4/4-08. 

Madsen TN, Andersen IH. "Ingen sundhedsfryns til offentligt ansatte." Ugebrevet A4: 12, 2008. (No health benefits to public employees) 

Mandagmorgen. "Privathospitalernes himmelflugt." Mandagmorgen: 38, 2007. (The rapid growth of the private hospital sector) 

Olsen L. "Sundhedsforsikringer er især for eliten." Ugebrevet A4:6, 2007. (Health insurance especially for the elites) 

Pedersen MS. "Flere betaler sig uden om sygehuskøen." Fyens Stiftstidende 267: 4, 2007. (Many pay to bypass the waiting lines) 

PFA. PFA Helbredssikring. 2008. www.pfa.dk/sw20782.asp, accessed 3/4-08. 

Strandberg-Larsen M, Nielsen MB, Vallgårda S, Krasnik A, Vrangbæk K and Mossialos E. Denmark: Health system review. Health Systems in Transition, 2007. 

Tryg 2008. www.tryg.dk/netinsurance01/notes.do?uniklink=PFaktaSundhed, accessed 28/3-08.

Author/s and/or contributors to this survey

Vrangbaek, Karsten

Empfohlene Zitierweise für diesen Online-Artikel:

Vrangbaek, Karsten. "Privatization via PHI & waiting time guarantee". Health Policy Monitor, April 2008. Available at http://www.hpm.org/survey/dk/a11/3