1. New Developments in Lithuanian
Health Care System
Romualdas Buivydas
Gediminas Černiauskas
Sveikatos ekonomikos centras
(SEC, Health economics centre)
Tallinn, 2011, March 16
Seminar „Private Health Insurance and Medical Savings Accounts –
defining the benefit package“

2. HC expenditure in EU, 2008
Health expenditure in EU countries, 2008, EUROSTAT
90%
Czech Republic (2007)
Denm ark (2007)
681,9 EUR Sw eden
3248,2 EUR
2610,8 EUR
85% Rom ania
Total Public Health expenditure as percentage of Total
France (2007)
278,9 EUR
2501,2 EUR
Finland (2007)
80%
1950,7 EUR
Austria
Spain 2612,6 EUR
Health expenditure
Estonia Poland 1492,7 EUR
75% 551,2 EUR 449,4 EUR
Germ any
2392,4 EUR
Belgium (2007)
70% Lithuania
2317,1 EUR
433,2 EUR
Hungary Slovenia
527,4 EUR 1050,3 EUR
Netherlands (2007)
65% Latvia (2006) 2541,0 EUR
265,9 EUR
60%
Bulgaria (2007) Buble size - public health
146,5 EUR expenditure in Euro per
capita
55%
5,0 5,5 6,0 6,5 7,0 7,5 8,0 8,5 9,0 9,5 10,0 10,5 11,0 11,5
Total Health expenditure as percentage of GDP
© Sveikatos ekonomikos centras (SEC)

3. Expenditure for pharmaceuticals in EU, 2008
Expenditure for pharmaceuticals and other medical non-durables in EU, 2008, EUROSTAT
Germ any Spain
Buble size - public health
78% 369,9 EUR 321,0 EUR
expenditure for
General Government expenditure for pharmaceuticals
and other medical non-durables, percentual share of
pharm aceuticals in Euro
Austria per inhabitant
316,9 EUR
68% Denmark
Czech Republic
Sw eden (2007) 118,0 EUR
(2007)
total current health expenditure
255,7 EUR
193,5 EUR
France (2007)
58% 370,3 EUR
Slovenia
169,5 EUR Begium (2007) Hungary
48% Finland (2007) 283,9 EUR 137,0 EUR
215,9 EUR
Rom ania Lithuania
Estonia
39,8 EUR
38% 65,2 EUR 59,6 EUR
Poland
Cyprus 57,7 EUR
28% Latvia (2006)
65,4 EUR 32,9 EUR Bulgaria (2007)
18,8 EUR
18%
0,7 0,9 1,1 1,3 1,5 1,7 1,9 2,1 2,3 2,5
Total expenditure for pharmaceuticals and other medical non-durables, percentage of GDP
© Sveikatos ekonomikos centras (SEC)

4. HC expenditure in Lithuania
SHI expenditure for HC services, 1998-2010
5.000
4.366,8 4.368,4
4.500
3.985,1
4.000 3.620,4
4.240,1
4.361,0
3.500
2.865,2
3.000
3.624,6
Mil. Litas
2.340,8
2.500
3.036,9
4.233,4
2.019,8 2.029,3
4.117,8
1.936,3 1.868,7
1.847,2 1.833,5 1.811,6
2.000
2.453,9
3.654,9
3.090,5
2.094,7
1.500
1.936,6
1.902,0
1.847,8
1.836,9
2.512,8
2.112,9
1.957,0
1.893,5
1.869,0
1.845,9
1.808,9
1.791,1
1.000
500
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Invoices received Payments provided Planned expenditures

5. Expenditure for pharmaceuticals in Lithuania
SHI expenditure for pharmaceuticals and other medical non-durables
1998 - 2010 m. (mil. Litas)
800,0
748
700,0 643
696
683
600,0
M il. Litas
618
680
500,0
701
534
618
400,0
484
547
386
495
420
440
409
300,0
390
322
381
364
318
307
302
297
200,0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Invoices received Paym ents provided Planned expenditures

6. 10,0
20,0
30,0
40,0
50,0
60,0
70,0
1998.03
1998.05
1998.07
1998.10
1998.12
1999.02
Trust
1999.04
1999.06
1999.09
1999.11
2000.01
2000.03
2000.05
2000.07
Not trust
2000.11
2001.01
2001.03
2001.05
2001.07
2001.10
2001.12
2002.02
2002.04
2002.06
2002.09
2002.11
Linear (Not trust)
2003.01
2003.03
2003.05
2003.07
2003.10
2003.12
2004.02
2004.04
2004.06
2004.09
Linear (Trust)
2004.11
2005.01
2005.03
2005.05
Trust in Health Care
2005.07
2005.10
2005.12
2006.02
2006.04
2006.06
2006.09
2006.11
2007.01
2007.03
2007.05
3 per. Mov. Avg. (Trust)
2007.07
2007.10
2007.12
2008.02
2008.04
Population Trust in Health Care
2008.06
2008.09
2008.12
2009.02
2009.04
2009.06
2009.09
2009.11
2010.01
2010.03
2010.05
2010.07
3 per. Mov. Avg. (Not trust)
2010.10
2010.12
2011.02

7. What exactly has been discussed in Lithuania
about private health insurance and MSAs?
• Since year 1996 in Government’s programs
are included proposal to develop SHI in
Lithuania
• Discussions about MSA started in 2007
• First draft proposals about MSA discussed in
the Government at the fall of 2008
• Revised version of the draft of SHI and MSA
has been developed in mid 2010

8. Supplementary Health Insurance in EU (1)
Private insurance expenditure as percentage of Current health care expenditure
EUROSTAT (2007 or last available)
16
13,52 13,45
14
12
9,59
10
Percentage
8
6,2 6,19 6,08
5,6
6 4,87
4,29
4
2,61
2,24
1,8 1,71
2 1,18
0,58 0,42 0,41 0,3 0,22 0,22 0,21
0
Germany
Hungary
Poland
Spain
Finland
Sweden
France
Portugal*
Latvia*
Luxembourg**
Bulgaria
Romania
Slovakia
Slovenia
Netherlands
Cyprus
Austria*
Denmark
Lithuania
Estonia
Czech Republic
Belgium

9. Supplementary Health Insurance in EU (2)
Private insurance expenditure as part of total private helth expenditure
EUROSTAT, (2007 or last available)
70%
63,94%
60%
50% 46,57%
42,32%
40%
34,52%
30% 22,53%
21,24%
21,23%
18,97%
20% 14,91%
10,71%
10,54%
10% 8,77% 6,78%
3,97%
1,98% 1,47% 1,45% 1,25% 1,18% 1,09% 0,96%
0%
Germany
Hungary
Poland
Sweden
Portugal
Spain
Luxembourg
Finland
France
Netherlands
Austria
Latvia
Lithuania
Czech Republic
Bulgaria
Slovakia
Belgium
Slovenia
Cyprus
Denmark
Estonia
Romania

10. Supplementary Health Insurance in EU
Conclusions (3)
• Supplementary health insurance (SHI) in EU member states mainely is
an addition to main schemes of social health insurance or NHS type
systems with an aim to reduce weaknesses inherited by these main
schemes
• International practice is indicating some preconditions for massive
introduction of SHI:
– Relatively big co-payments for health services (Ireland, France, Slovenia)
– Tax subsidies (Ireland, Austria, Germany, Slovenia, Spain)
– Insurance of certain groups of population by public funding (Germany)
– Certain obligatory measures (France, Slovenia)
Countries with SHI close to or above of 10 percent of total health
expenditures do have at least 3 of these preconditions

11. What have been the main obstacles for the
implementation?
For traditional SHI:
• Health care risks not covered by Statutory
HI are of limited attraction for private
insurance companies (risks mainly
predictable and small)
• Insurance plans provided by private
companies are of limited attraction to
corporate clients (premiums are high,
benefits not clear)

12. No match between supply and demand of
commercial SHI
Why Lithuanian people do not want to be insured by SHI?
I II III IV V VI VII VIII IX X
Citizens expenditure for
HC per year in Litas 69,6 135,6 164,4 223,2 231,6 325,2 399,6 436,8 595,2 1147,2
(2008 m.)
Average SHI premium
per person per year in 1108,2
Litas

13. Supplementary Health Insurance.
Situation in Lithuania
Supplementary HI market in Lithuania
120 100,00%
90,00%
Premiums, benefits sum per year, mil. Litas
Benefits/premiums ratio, percentage
100
80,00%
70,00%
80
60,00%
53,47%
60 50,00%
40,00%
40
35,83%
30,00%
32,29%
31,80%
29,60%
27,88%
27,24%
27,42%
20,00%
20
10,00%
0 0,00%
2002 m. 2003 m. 2004 m. 2005 m. 2006 m. 2007 m. 2008 m. 2009 m.
Benefits/premiums ratio, percentage Premiums sum per year, mil. Litas Benefits sum per year, mil. Litas

14. What have been the main obstacles for the
implementation? (2)
For MSA:
• Limited experience world-wide, almost no
practical experience in Europe
• Limited and uncertain gains for consumers
• Ministry of Finance is suspicious about new
financial products
• Insurance industry is opposing the product
partially regulated by the State

15. Are the people ready for such a system?
• Medical society is in favor
• General public would prefer MSA to SHI,
but support is limited
• Politicians are lost in between

16. What services should be excluded from the state’s
benefit package, should there be any changes and
what could be the methodology for doing that?
• Main stream thinking in Lithuania is to use
MSA as a certain relieve of currently
existing financial burden
• Medical personnel do have second thoughts
about significant co-payments, but they are
not able to convince politicians to support
this “greedy” approach

17. What problems would implementing MSAs or
Private Health Insurance solve in the system?

18. Supplementary Health Insurance in EU (4)
Different objectives had been indicated as a rational for the design of SHI. The
practise presented evidence in favour of just some of these objectives
Objectives Conclusions regarding precision of the objective
Expansion of SHI is leading to reduction of Only partially true Public expenditures may even grow because of tax and
public health care expenditures budget subsidies and demand inflated by SHI
Competition created by SHI will improve quality Partially true, depend on conditions, Competition is between private insurance
and effectiveness of health services companies mainly about engagement of rich and healthy. Companies usually
are too weak to have any influence on quality of care. They can’t manage
investments in to quality
Improve efficiency and transparency of using Not true. Cross subsidies between obligatory and supplementary schemes may
recourses in health sector. make transparency even lower
Increase of consumer choice what regards Partially t true. Monopoly of obligatory health insurance is effected but results
insurance company and provider of health care. what regards competition are quite marginal. Consumers are lacking
knowledge to make informed choices, individuals have limited rights to choose
under group insurance purchased by employers.
Revenues of health sector is going to increase Partially true. Certain countries do managed to improve moderately health care
financing by SHI
Better accessibility and less waiting lists. Partially true. Insured may gain but not insured may face even less accessibility
and more waiting lists
Less informal payments No clear evidence
Better assurances ageist financial risks Partially true. Insured may gain but not insured may face even more risks.
Increased responsibility of people regarding the Not true. Tax subsidies, group insurance practices make responsibly usually
personal health . marginal.

19. What are the main aspects of assessing the
implementation of such a system?
• Actual demand of a new product
• Financial and political sustainability of new
scheme

20. Potential for MSA/SHI
Private expenditure, mil. Litas
2500
2000
1500
1000 1999,8
1792,8
1640,2
1546,1
1341,1
1141,4
500
0
2004 2005 2006 2007 2008 2009
Private household expenditure for HC SHI expenditure

21. Proposals directed towards SHI market expansion
• To better compensate health expenditures of the
inhabitants, work must be concentrated in
following direction:
– Promotion of commercial supplementary (voluntary)
health insurance, to guarantee protection from large
financial loss due to illness.
– Utilization of international experience what regards the
medical saving accounts in Lithuania

22. Proposals directed towards SHI market expansion
Commercial health insurance
Main parameters
– Annual contributions are 200-400 Litas
– Number of insured in 3 years growing up to
1,5-2 millions. At least 100 000 per plan
– Administrative costs are up to 7 percent to
contributions
– Individual and group insurance
– Almost equal premiums

23. Proposals directed towards SHI market expansion
Model of medical saving accounts
Plan of the scheme
– All goods sold in pharmacies
– Health services not covered by the statutory
scheme
– Owner of the account may use his savings to
buy SHI from commercial insurance
– Accounts may be used for coverage of financial
expenditures of relatives and other persons

24. Proposals directed towards SHI market expansion
Model of medical saving accounts
Contributions
– May be paid by a person or his/her employer.
– The scheme may have additional revenues
Public financial support;
– For taxed income earners. Tax free regime for contributions
up to 400 per year
– Alternative: 15 percent budget subsidy for contributions up
to 400 Litas per year. Tax subsidies cancelled
Administrative costs
– Up to 4 percent of contributions

25. Comparison of Ratio of Average Consumption
Expenditures by Households between 10 and 1
Deciles with Life Expectancy
Comparison of Ratio of Average Consumption Expenditures by Households between 10
and 1 Deciles with Life Expectancy
72,4
72,2 72,14
72,05
Life expectancy in yeras (1997-2008)
71,99
72,0
71,94
71,79
71,76
71,8
71,66
71,6
71,39
71,4 71,32
71,12
71,2 71,08
70,92
71,0
y = -0,8204x + 78,367
70,8
70,6
7,5 7,7 7,9 8,1 8,3 8,5 8,7 8,9 9,1 9,3 9,5
Ratio of Average Consumption Expenditures by Households between 10 (richest) and 1 (poorest)
Deciles (1997-2008)
Correlation between these two data sets is (-)0,873

26. Questionnaires about SHI and co-
payments
Citizens – representative
Medical personnel, Managers of HC institutions,
Insurers – qualitative

27. What you like or dislike in Lithuanian HC
system? (points form 0 to 4)
1. What you like or dislike in Lithuanian HC system? (points form 0
to 4)
Accessability of services Citizens
3,00
2,50 Medical personnel (135)
2,00
Managem ent of HC system 1,50 Solidarity in HC system HC institutions
Managers of
1,00 (36)
0,50 Insurers (7)
0,00
List of services Quality of HC services
Quality of provision of services in
HC institutions

28. What level of solidarity you accept most?
(one answer), percentage
2.What level of solidarity you accept most? (one answer), percentage
80,0% 75,0%
70,0% 67,0% 66,7% Citizens
Medical personnel (135)
60,0%
50,0% Managers of HC institutions (36)
50,0% Insurers (7)
40,0%
28,4%
30,0% 23,0%
20,0% 16,7% 17,2%16,7%16,7%
8,3% 7,0%
10,0% 4,0% 4,5%
0,0% 0,0%
0,0%
All permanent citizens are equal and Government should guaranty same Citizens, who pay more taxes and Have no opinion
should receive the same HC services. level and quality HC services only to insurance premiums should receive
those who pay taxes or are socially more services than those for whom
supported persons. pay Government.

29. Are you insured by supplementary voluntary
health insurance?
4. Are you insured by supplementary voluntary health insurance?
80,0%
72,2%
70,0% Citizens
Medical personnel (135)
60,0% 57,0%
Managers of HC institutions (36)
52,2%
50,0%
43,3%
40,0%
30,0%
25,0% 25,0%
20,0% 17,0%
10,0%
4,5%
2,8%
0,0%
Yes, or would like to be insured No, and do not intend to be insured I do not know what it is

30. What benefits SHI provide/may provide
(up to 3 answers)
6. What benefits SHI provide/may provide (up to 3 answers)
120,0%
Citizens
100,0%
100,0% Medical personnel (135)
Managers of HC institutions (36)
80,0% Insurers (7)
72,2%
60,0% 53,0%
50,0% 50,0%
47,4%
43,0% 44,4% 41,7%
38,0% 38,0% 38,9%
40,0% 33,3% 33,3%
29,6% 29,6% 28,0%
24,4%
21,5% 20,0% 20,7%
19,4%
20,0% 13,0% 14,0%
11,1% 11,9%
11,1% 11,0%
0,0% 0,0% 0,0% 0,0%
0,0%
HC serv ices Improv ed quality of Higher quality of Less corruption in Vanish monopoly of Guarantee, that if you Higher salaries for More effectiv e use of
prov ided in time serv ice prov ision serv ices HC institution Statutory Health fell seriously ill, will medical personnel financial means in
insurance system be no lack of HC system
financing for
treatment

31. Should State financially support SHI?
7. Should State financially support SHI?
70,0% 66,7%
Citizens
58,0%
60,0% Medical personnel (135)
Managers of HC institutions (36)
50,0% 47,2%
Insurers (7)
39,4% 38,9% 37,9%
40,0%
33,3%
30,0% 27,0%
22,7%
20,0% 15,0% 13,9%
10,0%
0,0%
0,0%
Yes Yes, partly (by tax exem ptions) No

32. What should be reimbursed by SHI?
8. What should be reimbursed by SHI?
120,0% Citizens
100,0% 100,0% Medical personnel (135)
100,0%
Managers of HC institutions (36)
Insurers (7)
80,0%
66,7% 66,7% 63,9%
61,0% 60,0%
59,0%
60,0% 55,6%
50,0%
44,4% 45,0%
35,6% 36,1% 37,0% 36,1%
40,0% 30,4%
29,0% 27,8%
21,0%
20,0% 21,5%
16,7% 16,0%
20,0%
0,0%
Pharmaceuticals Odontology treatment and Invoices from public HC Invoices form private HC Expenses for SPA Additional expenses for
dental prostheses institutions for out of institutions. treatments. higher quality for services,
pocket payments for not guaranteed by State
services or co-payments. (single bed boom in
hospital, treatment without
waiting list, specialist
consultation without
referral)

33. Do you support SHI system development?
9. Do you support SHI system development?
80,0%
Citizens
69,4%
70,0% Medical personnel (135)
Managers of HC institutions (36)
60,0%
49,0% 47,7%
50,0%
40,0%
40,0%
30,0% 27,8%
25,0% 26,0%
20,0%
12,3%
10,0%
2,8%
0,0%
Yes, agree Agree with condition, that for those, No, not agree
who are not insured by SHI, HC
service provision will be not worse

34. What premium for SHI per year you agree to pay?
10. What premium for SHI per year you agree to pay?
70,0%
Citizens
59,0% Medical personnel (135)
60,0%
Managers of HC institutions (36)
50,0% 45,7% Insurers (7)
44,4%
41,7%
40,0% 35,0%
31,8% 33,3% 33,3%
30,0%
20,0% 17,1% 16,7% 16,7%
8,3%
10,0% 5,6%
4,0% 3,1%
1,0% 2,3%
1,0%
0,0%
0,0% 0,0% 0,2% 0,0%
0,0%
0,0%
Not agree to pay 1-200 litų 201-500 litų 501- 1000 litų 1001-2000 litų 2001- 3000 litų
any premiums

35. For which group of Lithuanian population
SHI is/will be most needed?
11. For which group of Lithuanian population SHI is/will be most needed?
120,0%
100,0% Citizens
100,0% Medical personnel (135)
86,1% Managers of HC institutions (36)
80,0% Insurers (7)
59,0%60,8%
60,0%
40,0%
20,0% 16,2% 15,0% 16,0%
10,0% 11,1% 10,8% 12,3%
2,8%
0,0% 0,0% 0,0% 0,0%
0,0%
For majority of Lithuanian For rich people For socially supported Nobody
population people

36. If you agree to pay additionally for SHI, what
methods are most convenient for you?
(possible few answers)
12. If you agree to pay additionally for SHI, what methods are most convenient for
you? (possible few ansvers)
70,0%
Citizens 61,1%
58,3%
60,0% Medical personnel (135) 57,0%
53,3%
Managers of HC institutions (36)
50,0%
40,0%
30,0%
30,0%
23,0% 23,0%
20,0%
11,1% 12,0%
10,0% 7,0% 5,9% 5,6%
0,0%
Agree to pay higher premium to Would like to be insured by SHI Collect money in special health saving Do not agree to pay additionally for
Statutory Health Insurance accounts. health insurance

37. If you agree to be insured by SHI, what type
premiums payment you prefer?
13. If you agree to be insured by SHI, what type premiums payment you prefer?
90,0% 83,3%
80,0% Citizens
Medical personnel (135)
70,0%
Managers of HC institutions (36)
60,0% Insurers (7)
50,0%
42,7%41,7%
40,0% 33,0%
32,0%
29,0% 27,8%
30,0%
22,2% 20,6%
19,8%
20,0% 16,8% 16,7%
8,3%
10,0% 6,0%
0,0% 0,0%
0,0%
Equal for everyone Healthier should pay less Volnurable persons Have no opinion
should pay less

38. If you agree to be insured by SHI, what type of
insurers you will trust mostly?
(possible few answers)
14. If you agree to be insured by SHI, what type of insurers you will trust mostly? (possible
few ansvers)
40,0% Citizens
Medical personnel (135) 35,0%
35,0% 33,0%
Managers of HC institutions (36) 31,9%
30,6%
30,0% 27,8% 27,8% 27,8%
25,0% 22,0%22,2%
20,0%
19,0%
20,0%
16,3%
15,0% 13,3%
11,1%
9,0%
10,0%
5,0%
0,0%
Private insurance Non profit HC providers State institutions Have no opinion
com panies institutions

39. If co-payments will be introduced for services
provided by State institutions, what option you
will prefer?
15. If copayments will be introduced for services provided by State institutions, what option you
will prefere?
80,0%
Citizens 71,4%
70,0% Medical personnel (135)
60,0%
60,0%
Managers of HC institutions (36)
Insurers (7)
48,9%
50,0%
40,0%
33,3% 33,3%
29,3%
30,0%
22,9%
21,0%
20,0% 16,5% 16,7% 16,7%
14,0%
10,0% 5,0% 5,3% 5,7%
0,0%
0,0%
All without exceptions should pay co- Volnurable people should not pay any Co-payments should be only for some Any additional co-payments should be
payments co-payments services introduced

40. Who should pay SHI premiums? (population,
percentage)
Who should pay SHI premiums? (population, percentage)
40,0%
37,0%
35,0%
30,0%
30,0%
27,0%
25,0% 23,0%
20,0%
15,0%
10,0%
5,0%
0,0%
State Everyone personally Em ployer Have no opinion

41. Will you agree to pay official co-payments for
better quality and better accessibility of HC
services? (population, percentage)
Will you agree to pay official co-payments for better quality and better accesability
of HC services? (population, percentage)
60,0%
51,0%
50,0%
40,0%
30,0%
22,0%
20,0% 15,0%
10,0%
8,0%
10,0%
0,0%
Not agree Yes, via SHI, if Yes, even if co- Yes, via SHI, if I do not know
premiums will be payments I should premiums should be
paid by employer pay myself paid from my
personal money

42. MSA business plan
How MSA may influence citizens expenditure for health care and for savings
2012. 2013 2014 2015
Number of insured 300.000 800.000 1.500.000 2.000.000
Average premium, litas 200 250 300 350
Amount of money for premiums per
year, mln. litas 60 200 450 700
Existing HC household expenditures
compensation, mln. litas 30 100 225 350
Annual increase of HC spending per
year, mln. litų 15 70 135 280
Amount of money saved in MSA, mln.
litas 15 45 135 205

43. Supplementary Health Insurance.
Situation in Lithuania
Insurance Supervision commision of the Republic of Lithuania
HC related insurance results, mil. Litas
2002 2003 2004 2005 2006 2007 2008 2009
Insurance premiums 39,19 41,34 44,64 55,45 69,75 87,13 103,55 84,05
Supplementary Health Insurance 25,92 18,17
Other Health Insurance 77,63 65,88
Health insurance ans insurance from
accidents 39,19 41,34 44,64 55,45 69,75 87,13
2002 2003 2004 2005 2006 2007 2008 2009
Insurance benefits 10,68 13,35 14,20 15,20 20,65 24,29 37,11 44,94
Supplementary Health Insurance 15,53 24,10
Other Health Insurance 21,57 20,84
Health insurance ans insurance from
accidents 10,68 13,35 14,20 15,20 20,65 24,29

44. Thank you