Przemyslaw Marcin Sowa

Mandatory aged care insurance: a case for Australia

ABSTRACT This paper assesses the feasibility and welfare-improving potential of an insurance market for aged care expenses in Australia. As in many other countries, demographic dynamics coupled with an upward trend in costs of personal care result in consumer co-contributions imposing a risk of expenses that could constitute a significant proportion of lifetime savings, in spite of the presence of a government-run aged care scheme. We explore issues around the development of an insurance market in this particular setting, considering adverse selection, moral hazard, timing of purchase, transaction costs and correlation of risks, as well as such contextual factors as longevity and aged care cost determinants. The analysis indicates aged care insurance is both feasible and welfare-enhancing, thus providing a gainful alternative to the aged care reform proposed by the Productivity Commission in 2011. However, while the insurance market would benefit the ageing Australian population, it is unlikely to emerge spontaneously because of the problem of myopic individual perceptions of long-term goals. Consequently, we recommend regulatory action to trigger the market development.

Transformation of Hospital Governance in Post-Semashko Health Systems

This chapter presents the experiences of transforming the hospital sector in 22 countries of Central and Eastern Europe and former Soviet Republics: Albania, Armenia, Azerbaijan, Bulgaria, Belarus, the Czech Republic, Estonia, Georgia, Hungary, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Moldova, Poland, Romania, Russian Federation, Slovakia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan. Using a qualitative approach, the country-level case studies produce detailed and internationally comparable descriptions of changes that took place in the area of hospital governance. Next, the individual reform paths are generalised in order to develop and substantiate a model of transforming hospital governance. Going beyond the public-private delineation, the model identifies five unique stages of prevailing forms of hospital governance: (1) the integrated Semashko model, (2) decentralised hospital management, (3) devolved hospital ownership and (4) corporatised and (5) privatised hospitals. Each stage corresponds to a distinct distribution of decision powers, financial risks and residual claims between the sector participants. These characterisations can be interpreted as efficiency factors associated with decentralisation. Recognising the importance of the above processes leads to an extended typology of post-communist health care systems. Accounting for both the dominant financing arrangements and the governance setup improves our knowledge of transition, compared to common classifications based exclusively on the introduction of social health insurance. The chapter concludes with a reflection on good practices and common mistakes found in this region-wide process.

Key Findings and Concluding Remarks

This chapter formulates answers to research questions and summarises the key points of discussion made throughout the book. From the background study, revisited are the magnitude of institutional, social and economic change, transition paths underlying similarities and contrasts within the region, the remaining burden of socialist inheritance, main issues in health-care reform and the challenges that lie ahead of the health systems of Central and Eastern Europe and Former Soviet Republics.

Selected Socio-economic Aspects of Post-communist Health-Care Transition

This chapter establishes the meaning of the post-communist transformation by presenting key socio-economic changes that took place since 1989 and characterising health care systems emerging from transition. The study recognises that the period has been a time of great social, demographic and economic change for the former Soviet bloc societies, which has not been without consequence for the health systems and their reforms.

Economic Implications of Transforming Hospital Governance

The objective of this chapter is to provide theoretical underpinnings for the stages of hospital governance transition. Considerations of economic efficiency in the context of governance stem from various branches of economic literature that include neoclassical theories, transaction costs, agency, political choice, decentralisation and fiscal federalism, institutional economics and models of organisational behaviour. The arguments are reviewed and synthesised in a discussion of their meaning and implications of the five-stage transition model proposed in the previous chapter. The overarching picture is that the hospital sector transformation in the post-communist countries strengthens incentives for efficiency and cost-awareness, however at the risk of growing access barriers, equality issues and a gradual phasing out of uncompensated care. The structure of governance emerges as an important factor in decisions surrounding the provision of health care and serves a function that is complementary to provider payment mechanisms in determining providers’ responsiveness to high-powered financial incentives. Moreover, in a network of autonomous hospitals, managerial capacity is a critical, if elusive, component of good performance.

Statistical Evidence on Effects of Hospital Governance Reforms

The objective of this chapter is to empirically verify the implications of changing hospital governance. For this purpose, the model of hospital governance transition presented in previous chapters, complemented with a set of control variables, provides a basis for an econometric analysis aimed at explaining the hospital sector performance expressed with a range of measures aggregated at the national level. A random trend model is populated with data from 22 countries over the period 1989–2010. The statistical evidence suggests that devolution of ownership leads to increases in acute care lengths of stay, numbers of admissions, and selected measures of mortality attributable to hospital care. Corporatisation of hospitals can be associated with increased acute lengths of stay and bed occupancy rates. The findings suggest that decentralisation and autonomisation reforms, as introduced in the region, did not contribute to the intended de-emphasising of inpatient care. Higher utilisation rates coinciding with increased mortality may imply that territorial governments may trade off quality for quantity of care when they are given authority over hospital care provision. Reform design features and resource constraints persistent in the transition systems offer possible explanations of this.