Martin Kukk, Chairman of the Supervisory Board of Südamekodud AS
A non-competitive and opaque patient insurance system unreasonably increases healthcare costs, burdens the Health Insurance Fund and, consequently, taxpayers, ultimately jeopardising both the availability and quality of services, writes Martin Kukk.
The idea behind patient liability insurance is to increase the confidence of healthcare workers and protect patients from potential medical errors by creating a mechanism that allows compensation without lengthy and exhausting court proceedings.
This is a long-awaited and commendable change in the healthcare system. Unfortunately, the implementation of the system in Estonia has faltered from the very start. The hope that many insurance providers would enter the market is fading — after nearly half a year of operation, the market is stuck, and all healthcare providers must sign contracts on the terms of the only existing insurer.
Before introducing liability insurance, the state should have ensured that the insurance market was ready and that real competition existed. Mere hope that the market would start functioning on its own was not enough. Insurance companies expected the state to have collected data on the sector that would enable proper calculations.
Without baseline data, new market entrants are in a difficult position. Fair pricing requires knowledge of loss ratios, which is currently virtually impossible. Unfortunately, it has now become clear that the only insurer to make offers does not share the data being collected.
Essentially, the market is locked, and competition cannot easily emerge, since insurers do not usually set prices “in the dark.” Moreover, when offering patient insurance, insurers are required to ensure the ability to enter data into the Health Board’s healthcare management information system via the data exchange layer — a condition that foreign companies are unwilling or find unreasonable to meet.
Healthcare providers are also in a bind. The contract must be signed under the terms of the only insurer, or the licence will be revoked. The terms are far from what could have been expected. The sums involved are not small — for example (according to public procurement data): the University of Tartu Clinic pays €476,601 annually for insurance, Viljandi Hospital €123,000, and Tallinn Ambulance €170,000, which is roughly the cost of a new ambulance.
Before the law came into force, based on Finland’s experience, the market volume for liability insurance was estimated at €2.5–4 million. The first bids, however, amounted to €7.2 million annually. It is difficult to find data on the total cost of policies for all healthcare providers, but it is certainly higher than the initial autumn estimates — around €10–12 million. Information about the state’s inaccurate forecasts and plans can be found, for example, from the October session of the Riigikogu’s special budget oversight committee here.
The system, while protecting patients, has in fact created significant additional costs for healthcare providers and further strained their already tight budgets. Since the Health Insurance Fund partially reimburses service providers for the cost of liability insurance (up to 50 %, with €2.5 million planned for 2024–2025), this also directly burdens the fund’s already deficit-stricken budget.
It is in the state’s interest to resolve this situation, because a non-competitive and opaque system unreasonably increases healthcare costs, burdens the Health Insurance Fund and, consequently, taxpayers, ultimately endangering both the accessibility and quality of medical services.
The fact that “something exists” is not enough in healthcare. We need a functioning market that creates a reliable, transparent, and fair system where patients, healthcare professionals, and insurers all feel that the system works.
As healthcare providers, we believe it would already be helpful if even one additional, perhaps more expensive, insurer entered the market — that alone would be a step forward, providing an alternative and fostering competition. At present, we must settle for a single option whose terms are neither transparent nor flexible.
Healthcare providers expect the Minister of Health, who has himself been moderately critical of the liability insurance scheme, to address the situation as soon as possible.
We have spoken with insurance companies — they see a future in this field and are willing to enter the market if the system becomes more reasonable. In hindsight, it’s easy to say the state should have gathered statistical data years ago, but not all is lost: the government could require the sole insurer to disclose information in order to open the market. The market cannot remain closed — it is the state’s duty to ensure competition among insurers.
Südamekodud AS
Register code 14168513
Karjavälja st 4, Tallinn 12918
info@sudamekodud.ee