Health insurance... A topic quite seldom debated in Romania, left somehow in the shadow, which recently managed to attract the attention of all players on the market. Insurers, brokers, healthcare services providers - all of them noticed an impressive potential for this segment in Romania.
In such a context, on the 19th of April this year, Media XPRIMM organized the National Conference on Health Insurance - CNS, an event meant to offer the representatives of companies involved in this field, which is extremely active, the opportunity to put on the table the main existing/future problems, as well as the possible ways of solving them.
The specialists’ estimations regarding the private health insurance market proved to be very optimistic, forecasting a potential increase of underwritten premiums by 2010, up to EUR 150 million, given that in 2006, this reached the level of only EUR 10 million.
The forecasts were also supported by the statements made by Mircea IFRIM, the President of the Commission for Health and Family from the Chamber of Deputies: "In the field of health, we are on the right track, the budget earmarked for the health care system showing the highest increase. If the population is not going to feel an improvement in the next months with regard to the medical care provided, it is our fault that we did not manage the existing funds efficiently ".
"The current legislative package, although it requires some amendments, it also allows the introduction of the private health insurance system, the starting point being the favorable increases estimated for this segment", added the quoted official.
Public and private interest
in the coherence of the healthcare system
"First of all, the healthcare system needs both a mutation at the consciousness level and with regard to the purchasing power. In the past three years, the purchasing power had a positive dynamics, either in the case of employers, or the employees", stated at the National Conference for Health Insurance Sorin OPRESCU, President of the College of Physicians from Bucharest and Vice-President of the Health Commission in the Senate.
"We make sustained efforts in order to rebuild this system, so as the population benefits from quality medical services. It is to our best interest, namely for all of us, to cause the HIH budget decompression, which was done so far by withdrawing the state from the health programs, emergency care and psychiatric diseases and to also define, finally, the basic benefits package that we have been promising for a long time", added Sorin OPRESCU.
"The conditions that can make the healthcare system work properly represent the correlation of our actions with the budget for social security, decentralization, reform, the state’s focus on the national working plan, as well as the full earmarking of the funds in the system", concluded the President of the College of Physicians from Bucharest.
It can be done, but it won’t be easy...
Meanwhile, Sorina NICULESCU, Director General SIGNAL Iduna Services, believes that: "Underwriting in health insurance has reached, in 2006, EUR 10 million, which means a lot if we are to relate this to the extremely low values for the previous years... However, we must be aware that this production rate only represents 0.60% from the total insurance market and approximately 0.75% in non-life insurance".
"In order to reach the level of EUR 50 million, the annual underwritten premiums as estimated a few years ago or the EUR 150 million that we anticipate now, for 2010, the health insurance market should have an annual growth rate of approximately 80-90%, which is not impossible, but it will be quite difficult", added Sorina NICULESCU.
The fiscal conditions threaten the optimistic estimations
The fact that the current fiscal deductibility conditions, set within the limit of EUR 200, do not stimulate corporations enough to buy health insurance for employees, might seriously shatter the optimism from these forecasts.
"If a company buys a voluntary health insurance product of EUR 30 per month for an employee, the annual expense per employee amounts to EUR 360. Considering that health insurance falls within the income category, according to art. 343 paragraph (1) of Law no. 95/2006, this is taxed with approximately 80%, which adds another annual expense per employee, of EUR 290. The total expense reaches thus the level of EUR 650 per employee, of which the amount of EUR 200, the net advantage of the respective company being of only EUR 32, meaning 16% form the deducted EUR 200", explained Mircea OPRESCU, Health Department Manager, INTERAMERICAN Romania, at the CNS - The National Conference of Health Insurance.
The official presented two solutions during the event: "Either we give up the association of the health insurance with the salary, which is no longer taxed and, in this case, the EUR 200 deductibility limit is maintained, or we continue to associate the premium to the salary, by taxing it, but in this case the contributions must benefit from full deductibility".
According to a survey conducted by MEDNET, private health insurance represents 17.9% of the votes, namely the second position in the ranking of the employees’ preferences for extra-salary benefits, the first one being occupied by private pension, with 19.1%.
Primum non nocere
"I am glad we managed, in February 2007, to have a clear legislation for voluntary health insurance which is obviously not the best or satisfying for everyone, but at least it exists at the moment", stated Marius COVLESCU, Advisor, General Directorate for Medical Care, Ministry of Public Health, at the conference.
"The mechanism applied in drafting the legislation was a special one. Insurers, health care services providers, associations of insured, MPs and the National Health Insurance House participated in the drafting of the legislation, mentioned the representative of the Ministry of Health.
According to Marius COVLESCU, the ministry’s intention is to support a voluntary health insurance system in order to give a legal framework to the already existing offer, as well as to re-orient some of the public services towards the private segment.
"In drafting the legislation we have tried, by following a well-known medical principle „primum non nocere” (“first, don’t do any harm”, editor’s note), not to destroy what was already there; not to change what was good, not to waste the experience we gained", stated Marius COVLESCU. As for a potential amendment and addition to the law, he declared: "We don’t claim that this is a regulation that cannot be subject to amendments. Moreover, we consider that the legislation should be revised in certain areas. Also, those who shall work under the new regulations will come up with proposals that we will certainly take into account".
The French can be a model for us in healthcare
Given the possibility of amending the specific legislation, Vasile CEPOI, Director General of NHIH (The National Health Insurance House), proposes a voluntary health insurance system that is not based on the individual risk, but on the principle of mutuality, the system being similar to the one from France.
"The current system from France, which represents over 20% of the total healthcare expenses, would also be good for Romania, because of its social character... The French system provides social protection and is more accessible, the contribution depending on the income of every individual and not on the individual risk", stated Vasile CEPOI.
Talking about the Romanian legislation, the NHIH official added: "Nevertheless, in Romania the law allows at the moment this type of action only in the case of branches of companies from other EU member states; it does not provide for the possibility to set up such a company in our country".
Let’s draw the conclusions!
At the end of the National Conference for Health Insurance, Dan CONSTANTINESCU, Member of the ISC Board, presented a SWOT analysis for the private health insurance system in Romania.
"I will try to outline, in parallel, the conclusions to be drawn after this conference: It’s good that we have a law; it is less good that it has its flaws - especially those regarding the deductibility and the connection between complementary-supplementary insurance and the substitutive ones. It is good that we have the application norms for the law; it is less good that these norms still don’t clarify all aspects and introduce or at least suggest sometimes additional restrictions regarding the law", stated Dan CONSTANTINESCU, upon conclusion of the event from the Parliament Palace.
"Also, it is good that there is a provision for defining the basic benefits package; it is less good that this was not actually done in practice. It is good that fiscal deductibility was provided for - it represents a factor, but not the only one, to promote these products, but it is less good that it is too low compared to the actual needs and are taxed as individual benefits for the employee", added the quoted official.
Although Dan CONSTANTINESCU noticed the support provided for voluntary insurance by the authorities present at the event, still mentioned that he has some reservations concerning the actual corrections of dysfunctions over a relatively small amount of time.
To conclude, the interventions at legislative level, in the sense of increasing the interest of corporations for buying these products, would bring benefits for everyone: the customers - companies and employees -, for whom it would ensure a better retention rate, a higher quality for services and satisfaction, the insurers, by giving them the opportunity of higher profits and, last but not least, the state, by providing a healthy competition and a transfer of services for the insured to the private sector.
The intervention of the state, at legislative level, in the sense of improving the interest of the corporations for buying these products would bring benefits both for the state, through a healthy competition and a transfer of services for the insured to the private sector, and to the companies and employees for whom it would bring a higher quality services and increased satisfaction, together with a better retention rate and, last but not least, to the insurers, for the development of a market with potential and possibility to make profits.
