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Healthcare financing is unsustainable in the long-term.
Political uncertainty to prevent healthcare reform implementation in the short-term.
Healthcare forecast yet to incorporate potential long-term impact of healthcare reforms.
Forecasts:
We forecast total health expenditure in Slovenia to expand at a compound annual growth rate of 3.8% between 2017 and 2027, increasing from EUR3.52bn (USD3.98bn) to EUR5.13bn (USD6.25bn). We highlight the potential upsides to this forecast from healthcare reform implementation, which have not yet been factored in.
Healthcare system performing well. At first glance, Slovenias healthcare system performs well relative to its Central and Eastern Europe (CEE) peers. All permanent residents in Slovenia are entitled to access the compulsory health insurance system and coverage is essentially universal. As a result, access to healthcare services is high, with very low numbers (less than 0.2%) reporting unmet needs for medical care according to the European Commissions State of Health in the EU country profile (2017). Indeed according to the report, prepared in conjunction with the OECD and the European Observatory on Health Systems and Policies, there is almost no variation in unmet needs for medical care between income groups. The average reported unmet need across EU member states varies from approximately 1.4% for high income groups to 5.6% for low income groups.
Moreover, the Slovenian healthcare system also provides effective care for patients outside of hospitals (primary care), with below EU averages for avoidable hospital admissions for a range of diseases. Life expectancy (80.9) is also above the EU average (80.6).
Healthcare financing a major issue. Healthcare expenditure on a per capita basis is higher in Slovenia than most new EU members (accession since 2004). However, since the global financial crisis (2008/9) there has been a significant decline in the public share of total health spend. The government has implemented widespread cost containment measures, and co-payments have increased considerably. According to the current Health Care and Health Insurance Act, co-payments are uncapped and required for even basic healthcare services. As a result, 87% of the population purchase voluntary heath insurance (VHI). A significant burden of healthcare costs falls onto the Slovenian population: in 2015, approximately 13% of total healthcare spending was attributable to household out-of-pocket payments and almost 16% was through VHI payment schemes.
Healthcare funding is almost exclusively reliant on health insurance revenues to the Health Insurance Institute of Slovenia (ZZZS). As a result, funding is highly susceptible to fluctuations in the labour market, as was seen in the aftermath of the global financial crisis. This poses risks to the long-term stability of the system. As a result, the government has sought to implement wide-ranging reforms to the healthcare sector.
Structural reform agenda much needed. In March 2016, the Slovenian government adopted the National Health Plan 2016-2025 in addition to a number of other legislative initiatives to address this lack of fiscal sustainability. The National Health Plan aims to strengthen primary care and provide greater access to comprehensive and quality treatment through better care integration. Moreover, it is hoped that better coordination in public procurement will increase healthcare cost-efficiency. Through the implementation of this plan, the government hopes that the healthcare system will be better placed to deal with the growing demand on the system from its ageing population. Initial steps have have since been taken to implement this plan:
Family medicine outpatient clinics are being gradually introduced.
The Act Amending the Law on Healthcare Databases was adopted in April 2018. The aim of this is to establish new databases to improve healthcare for cancer. Moreover, new registers will also be established to improve healthcare monitoring nationwide.
A health technology assessment (HTA) system is planned to be established by 2020.
In addition to this Plan, the government has also approved a number of other acts to reform the healthcare sector. In 2017, proposals to amend the Medical Practitioners Act, the Health Services Act, the Patient Rights Act and the Act Determining Intervention Measures to Ensure the Financial Stability of Public Healthcare Institutions were adopted. However, approval and implementation are two very different concepts; these are yet to be adopted in their entirety.
Moreover, the government is also in the process of developing and finalising two further healthcare reform bills: On Long-Term Care and the Health Care and Health Insurance Act. The progress towards approval and implementation of the Health Care and Health Insurance Act is crucial for the long-term sustainability of the health system. In short, the Act aims to:
Diversify healthcare funding sources, specifically creating an extended contribution base for compulsory health insurance, taking direct and indirect income into account and unifying contribution rates across the population.
Implement additional funding from general taxation to finance specific programmes, such as medical specialisations.
Abolish the VHI scheme by 2019, replacing it with income-dependent contribution.
Election result raises doubts over healthcare prospects. Progress towards the adoption of the Act On Long-Term Care and the Health Care and Health Insurance Act has been slow due to considerable opposition, notably over the abolishment of VHI schemes. The Health Insurance Act is the central piece to Slovenias healthcare system reform and was put to the Economic-Social Council for consultation in December 2017. However, the draft law was not adopted before the June 2018 elections.
During the elections, the centre-right opposition Slovenian Democratic Party (SDS), led by former Prime Minister Janez Jansa, was the clear victor with 25% of the popular vote and 25 out of 90 seats in parliament. However, the SDS will need at least two coalition partners to form a majority government after the remaining vote was split between eight other parties. Given the highly fragmented political landscape, our Country Risk team note that it is highly unlikely a coalition will form due to the fact that any coalition would likely include multiple ideologically-diverse partners. This creates significant short-term political instability and is likely to prevent policy implementation.
Notably, since the election a number of parties have attempted to form coalitions, however these have all collapsed, with the outlook for healthcare reforms a major stumbling block between different parties. On July 17 the centre-right New Slovenia (NSi) party decided to withdraw form talks on a centre-left coalition led by election runner-up List of Marjan Sarec (LMS). Reportedly, the NSis wish to also give people a choice in public healthcare was the only thing the partners were not willing to compromise on.
We note that this ongoing political instability is unlikely to derail healthcare reforms over the long-term. At best, these vital reforms will be delayed, however there is a high probability that the Health Insurance Act could be significantly watered down, reducing its potential to maintain long-term financial sustainability of the healthcare sector. As a result, we remain relatively bearish on the long-term outlook for Slovenian healthcare . However once the political climate has become more stable and the direction of healthcare reform becomes more clear, we will assess our long-term forecast to incorporate the impact of any such reforms.
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