the romanian healthcare system between bismark and semashko

The Romanian Healthcare System:

Between Bismark and Semashko

Cristian VldescuSilviu Radulescu

Sorin Cace

437

The Romanian Healthcare System: Between Bismark and Semashko

Cristian Vldescu, Silviu Radulescu, Sorin Cace

1. EXECUTIVE SUMMARY

The objective of this report is to review the formulation and implementation of health sector reform in Romania from the 1989 revolution to 2003. The study was conducted through three-person eldwork in Romania, using interviews and documentary analysis. The analysis covers main aspects of the health policy process in Romania. First, in the historical review section, the structural context of health sector reform is identied. The deteriorating health conditions in Romania are referred to, in addition to the problems of healthcare delivery. It is particularly important that these latter problems are under-stood within the context of nancing the public sector. Health sector reform should be seen as part of the broader transition to a market economy and political pluralism. Second, in Section 3, the principal and potential actors in health sector reform are identied and described. The analysis focuses on the distribution of power within the health system and on the important positions and roles of the medical profession, the World Bank, and public servants; in this context, the content of the proposals and agreed reforms to the health sector since 1989 are described; these include the decentraliza-tion of government, the primary healthcare project, and the development of the health insurance system Third, in a section devoted to country-specic experience, we focus on the implementation of the health insurance system in Romania and make specic comments/suggestions related to health policy in this area.

These reforms are consistent with similar changes in both Western Europe and FSE. Also, the decision-making process on health sector reform is examined. This incorporates the way in which health sector reform issues arrive on the political agenda, the process by which actual decisions are made, and the process of implementation. The following characteristics of the process are highlighted: the international character of the reform process and the prominent role of the World Bank, inter-ministerial relations, the lack of community and user participation, the form of consultation with group interests,

438

D E C E N T R A L I Z AT I O N I N H E A LT H C A R E

political coalitions for health sector reform, the lack of policy debate, the pace of reform, and conditions and contradictions in policy.

2. INTRODUCTION

2.1 General Information on Romania

Romania is situated in the southeastern part of Central Europe and covers an area of 237,500 km2. It is bordered by the Black Sea and the Republic of Moldova to the east, Ukraine to the north, Hungary and the Serbia to the west, and Bulgaria to the south. As of 2002, Romania was home to 21.68 million inhabitants, down from 22.81 million in 1992 (according to that years census); 54 percent live in urban areas. The capital Bucharest concentrates about 10 percent of the population. According to the last census the ethnic composition was 89.5 percent Romanian, 7.1 percent Hungarian, 1.8 percent Roma, and 1.65 percent other nationalities. The ocial language is Romanian, but minorities are entitled to use their native language. 86.8 percent of Romanian citizens professed to be Romanian Orthodox, 5.1 percent Roman-Catholic, 3.5 percent Prot-estant, 1 percent Greek-Orthodox, and 3.6 percent belonged to other religions.

The district (judet) is the basic administrative unit of the country. There are 42 districts, with an average population of about 0.5 million inhabitants each. The lowest administrative level is the local council, whose mayor holds executive power. Both the local council and the mayor are directly elected for a four-year period. Above the local council level is the district council, which coordinates the activity of the local councils. Relations between them are based on the principle that there should be local autonomy, and that public services should be decentralized. They work together to address common problems and neither level is subordinate to the other. Central government is represented at local level by the prefect, who is appointed by the government and whose role is to coordinate and supervise public services. Romania is a republic, led by a president and governed by a two-chamber Parliament: the Senate and the Chamber of Deputies. These are directly elected for a four-year term. Former communists dominated the government until 1996 when they were swept from power by a fractious coalition of center-right parties. Currently, the Social Democratic Party forms a nominally minority government, which governs with the support of the opposition Democratic Union of Hungarians in Romania.

439

T H E R O M A N I A N H E A LT H C A R E S Y S T E M : B E T W E E N B I S M A R K A N D S E M A S H KO

2.2 Trends in Socio-economic and Health Indicators

2.2.1. Socio-economic Indicators

Following World Bank classications of GDP, Romania is seen as a lower-middle-income country. Romanias GDP was 1,585 USD per capita in 1999, almost three times smaller than the CEE average, and about 15 times smaller than that of the EU.

Romania, one of the poorest countries in CEE, began the transition from commu-nism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the countrys needs. Over the past decade economic restructuring has lagged behind most other countries in the region. Consequently, living standards have continued to fallreal wages are down perhaps 40 percent. Many major businesses remain under state control and have yet to address the fundamental issues which enable business to survive and ourish in a competitive environment. After a spurt of growth up to and including 1996, the GDP contracted annually between 1997 and 1999 and started to grow from 2000; in 2001 the GDP growth was around 5.3 percent and for 2003 the estimations are around ve percent (see Table 1). With industrial output declining, services contracting, and investment plummeting, unemployment has been rising. The trade gap has widened appreciably for a number of years, and the current account decit stood at 5.4 percent of GDP in 1998 but improved to 3.0 percent in 2002. The work-ing population dropped by over 20 percent between 1989 and 2002 and the number of wage earners fell by over 27 percent. This decline in employment was largely due to layos or retirements from large, state-owned textile, metal, and machinery industries. Unemployment in 2002 was ocially reported to be 9.0 percent (in 1991, 3.0 percent), with female unemployment about one-sixth greater than male, and longer lasting, but with short-term male unemployment uctuating severely. Unemployment is expected to continue to climb in 20032005 as a result of the closures or restructuring of major enterprises. Thus, the structure of the economy is changing. The contribution of agri-culture to the GDP has constantly decreased since 1990, arriving by 2001 at a value of 15 percent (21 percent by 1993). The contribution of industry has also decreased to 30 percent by 2000, compared with 43.1 percent in 1992, having the same negative impact on industrial workers income. Another factor contributing to the deterioration of living standards was the high rate of ination, 45.7 percent by 2000 (the rate in 1997 was 154.8 percent), decreasing to 19 percent in 2002, with an estimation of 1314 percent for 2003 (see Table 1).

The long transition period in Romania has seen an enormous increase in poverty. In 1989 an estimated seven percent of the population was living below the poverty line. According to the National Institute of Statistics, this share had risen to 38.3 percent of the population by 2001. After 1989, a deep social stratication became visible in Romania.

440


Considering the poverty line to be a disposable income of less than 60 percent of average household expenditure, the categories of population most aected by poverty are: a) employees with low income and dependent children (39 percent of the total population below the poverty line in 1998); b) pensioners, whose average pension is below 50 USD (25.9 percent of the total population below the poverty line); c) farmers living in rural areas; and d) unemployed persons (11.1 percent of the population below the poverty line). Given these data and other reports, a majority of researchers agreed that much economic restructuring remains to be carried out before Romania can achieve its hope of joining the European Union.

2.2.2. Health and Healthcare Indicators

From the 1960s to the 1990s health status in Romania steadily declined. At the begin-ning of this period Romania was comparable in many important respects to Western European countries. Since then a tendency of relative and absolute decline prevailed. Table 2 synthesizes the main demographic indicators since 1980.

Mortality trends over the past three decades in Romania, like many other countries in Eastern Europe and the NIS, suggest a new pattern of the epidemiological transition, distinct from the experience of other developed and middle-income countries in Asia and Latin America (World Bank 1998). The principal distinguishing feature of this new pattern is a sustained increase in mortality among adult males, with a duration and order of magnitude that has never been observed previously. In an industrialized region noted for numerous improvements in child health, explanations for the rise in

Table 1.Selected Economic Indicators, 19972001

Indicator 1997 1998 1999 2000 2001 2002

Real GDP growth 6.1 4.8 1.2 1.8 5.3 4.5Unemployment rate (end of period, %)

8.9 10.4 11.8 10.5 8.6 9.0

Consolidated public sector deficit (% of GDP)

5.3 5.4 3.6 4.0 3.3 3,0

Consumer Price Index (1995=100) 820.3 1,194.9 1,606.8 1,968.9Labor force as % of population 51.4 50.2 50.6 51.0Annual average rate of inflation % 154.8 59.1 45.8 45.7 34.5 19.1Government revenue as % of GDP 26.7 28.2 31.4 27.2 na na

Source: World Bank (2002) and the National Institute of Statistics.

441


Tabl

e 2.

Dem

ogra

phic

Indi

cato

rs

Ind

icat

or

19

80

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

% a

ge 0

14

26.6

24.9

24.6

24.7

24.2

23.5

22.8

22.2

21.5

20.9

20.5

18.8

18.3

17.8

% a

ge 6

5+10

.410

.110

.310

.711

.111

.411

.712

.012

.212

.612

.813

.013

.313

.6Li

ve b

irths

% p

opul

atio

n18

.016

.013

.611

.911

.411

.010

.910

.410

.210

.510

.510

.410

.59.

8To

tal f

ertil

ity ra

te74

.866

.356

.248

.746

.644

.343

.341

.139

.940

.640

.640

.240

.337

.8Li

fe e

xpec

tanc

y at

birt

h69

.269

.469

.569

.869

.869

.569

.569

.469

.169

.069

.269

.770

.571

.1

Sour

ce:

MoH

, Sta

tistic

al Y

earb

ooks

, 199

020

02.

442


mortality of adult males include factors such as smoking, alcohol consumption, diet, and pollution. Some lifestyle indicators are presented below:

Table 3.Lifestyles Indicators

Year % of Regular Daily Smokers (Men Aged 1524, Women Aged 1544)

Liters of Pure Alcohol Consumed per Year per Capita, Age 15+

1991 8.01992 9.01993 Women: 15 Men: 40 8.61994 8.71995 9.01996 8.91997 9.31998 8.11999 Women: 26 Men: 45.4 7.32000 7.3

Source: 1. Reproductive health survey, 1993, 1999; 2. Health for All database, WHO.

The health data attest to a general decline over the past three decades in the lifespan of males, in contrast with a steady increase, since mid-1960, in the average life span of females.

The 1990 life expectancy at birth for males and females in Romania was estimated by World Bank studies to be 69.0 and 72.3 years, respectively. The World Banks 1995 estimate of life expectancy for the total population is 70 years, compared to 77 in the United States. Between 1980 and 1995, life expectancy at birth remained constant (World Bank 1998). Thus, the statistics on life expectancy at birth for males provides an illustrative example of trends in health in Romania, especially if compared with other countries. Male life expectancy in Romania, at 67.8 years in 2000, is the lowest in Central and Eastern Europe (not including the newly independent states of the former Soviet Union). There are positive developments, however. In 1998, life expectancy for males began rising in a pattern similar to other Central European countries such as the Czech Republic, Poland, Bulgaria, and Hungary.

The crude death rate for the total population hovered around ten per 1,000 be-tween 1980 and 1990 jumped to 12.0 in 1995. In part, this rise in the death rate may be explained by the decrease in birth rates and growing proportion of the population aged 50 years and older. Between 1980 and 1995 the general fertility rate plummeted roughly 40 percent. The annual rate of natural growth in Romania was estimated at

443


negative 0.2 percent in 1997 and negative 0.27 in 2000. Reecting improvements in infant and child health, MoH data document a marked decrease since 1980 in deaths among the 0-4 year age group, with almost a 50 percent reduction between 1990 and 1995. A drop in the infant mortality rate was reported, from almost 30 per 1,000 live births in 1980 to 21.2 in 1995, and less than 20 in 2001 and 2002; however this is still one of the highest in Europe. There are also considerable regional dierences: in 2000, infant mortality rates ranged from 12.2 to 28.3 per 1000 live births in dierent districts. The post-neonatal mortality (9.5 per 1000 live births in 2000) is also high, being 1.9 times the CEE average and 5.8 times the EU average. Post-neonatal mortality was two times higher in rural areas compared with urban areas (13.0 vs. 6.6 deaths per 1000 live births) indicating that access to eective medical care is poorer in rural areas.

In contrast, Romanias maternal death rate of 66 per 100,000 live births is more than three times the average for Eastern Europe and over six times the average for Western Europe, despite a huge decline since 1990 (from 83.6 deaths per 100,000 live births in 1990 to 33 per 100,000 live births in 2000), which were a result of new national abortion policies and their implementation. Abortion is still the most frequent method used for avoiding unwanted pregnancies. Though this indicator value has decreased very much, it is still at a high level of 1,107.8 abortions for 1,000 live births in year 1999, respectively 1.1 abortions to one born child in comparison with 3.1 abortions to one born child in 1991. There is an increase in the number of children born outside mar-riage and a decrease in the number of children born within marriage.

The increase in communicable diseases could also be associated with the fall in socio-economic conditions of the population. Trends in the incidence of tuberculosis conrm the pattern indicated by mortality statistics. The incidence rates increased stead-ily in the 1990s, from 61 cases per 100,000 in 1991 to 105.5 cases in 2000. Even more disturbing is the doubling of tuberculosis incidence rates in children (from 13 cases per 100,000 inhabitants in 1990 to 32 cases in 1999). The incidence rates for syphilis increased steadily from 19.8 cases per 100,000 inhabitants in 1989 to 45.17 cases in 2000. The total numbers of AIDS patients registered by the Ministry of Health and Family beginning in December 1998 were 5,040 AIDS children and 690 adults. There were another 3,257 registered HIV positive children and 642 adults. The proportion of children under nine years old was 86.9. However, there has been a reduction in new cases in recent years, due to the improvements in blood testing and ending a number of unsafe medical practices in childrens foster homes. Table 4 presents some trends in main morbidity indicators.

The World Bank has analyzed the health status of the Romanian population by estimating the burden of disease (BOD), or the loss of healthy life due to premature mortality and disability. The aggregate unit of measurement for the BOD is the dis-ability-adjusted life year (DALY). DALYs are calculated with Romanian mortality data, but disability calculations apply a ratio method of total DALYs to death DALYs from

444


Tabl

e 4.

Mor

talit

y-ba

sed

Indi

cato

rs

Year

19

80

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

Cru

de d

eath

rate

per

1,

000

indi

vidu

als

10.4

010

.70

10.6

010

.90

11.6

011

.60

11.7

012

.00

12.7

012

.40

12.0

011

.80

11.4

011

.60

Circ

ulat

ory

dise

ase*

588.

0061

7.60

627.

0065

8.20

707.

8071

2.30

709.

9073

6.10

785.

9076

1.50

738.

6073

7.00

701.

8071

0.60

Hea

rt d

iseas

e*15

2.30

199.

8020

2.20

209.

5022

1.80

251.

6024

7.10

248.

4026

1.50

256.

0124

8.45

249.

7323

0.57

228.

36C

ereb

ro-v

ascu

lar*

182.

2019

1.80

185.

4018

8.40

189.

8024

4.20

241.

3024

3.40

253.

2024

6.79

238.

8223

1.03

215.

5121

4.54

Mal

igna

nt n

eopl

asm

s*13

5.00

141.

614

2.10

144.

7015

3.00

158.

9016

2.20

165.

5017

0.30

173.

6017

4.60

176.

7018

4.00

190.

80D

iges

tive

dise

ase*

45.4

053

.550

.30

50.8

057

.90

62.5

065

.60

68.2

071

.70

75.5

071

.70

65.5

064

.00

70.6

0C

hron

ic li

ver d

iseas

e*32

.70

36.2

434

.60

36.1

040

.03

44.6

947

.67

50.6

453

.93

57.1

253

.72

46.0

044

.47

49.4

3Re

spira

tory

dise

ase*

136.

7010

5.70

97.3

091

.30

94.0

079

.70

80.6

075

.80

86.2

077

.60

70.8

074

.40

66.1

062

.90

Infe

ctio

us

and

para

sitic

dise

ases

*10

.84

12.1

212

.52

12.0

713

.54

15.0

815

.06

15.2

115

.91

16.0

414

.39

14.9

814

.55

15.8

0

Acci

dent

s*67

.10

74.7

076

.50

72.8

074

.30

73.8

076

.10

78.6

078

.70

76.8

072

.20

64.4

064

.20

63.7

0M

otor

-veh

icle

traf

fic

acci

dent

s*

9.84

19.5

316

.81

15.3

713

.94

12.5

712

.56

12.2

211

.52

12.8

113

.31

Infa

nt d

eath

s per

1,

000

live

birt

hs29

.30

26.9

026

.90

22.7

023

.30

23.3

023

.90

21.2

022

.30

22.0

020

.50

18.6

018

.60

18.4

0

Mat

erna

l mor

talit

y ra

te p

er 1

00,0

00

live

birt

hs

133.

0017

0.00

83.0

066

.50

60.3

053

.20

60.4

047

.80

41.1

041

.40

40.5

041

.80

32.8

034

.03

Not

e: *

SDR

per

100

,000

indi

vidu

als

all a

ges.

Sour

ce:

Euro

pean

Hea

lth fo

r All

Dat

abas

e, W

HO

.

445


the former socialist economy region as a whole. In contrast with standard mortality measures, the BOD methodology, constitutes a policy-making tool that establishes close links between the economy and health by measuring future loss of productive life that includes disability. The highest proportion of all DALYs, 30 percent, is lost to heart-related conditions. Cerebro-vascular diseases claim 14 percent of all DALYs. Third in order of importance are tumors or cancer of various kinds, especially of the lung, stomach, colon, breast, and prostate. Fourth, is the DALY loss (ten percent) associated with alcohol-related mental disorders. Trauma and respiratory diseases have the same share of DALY loss, at six percent each. The DALYs lost to trauma are less in Romania than in other Eastern European countries with higher rates of vehicle accidents. Diabetes falls in the nutritional/hematological classication which contributes three percent to total DALY loss. Infections and parasite diseases contribute two percent to all DALYs lost. Table 5 presents the trends of some morbidity-based indicators.

To conclude, in the last decade, the health status of the population continued to decline. There are signicant dierences in health indicators between Romania and Western European countries. Even comparisons with countries in the accession process to the EU are not favorablenot only in terms of health indicators, also in terms of both access to basic sanitation services and essential medical services. The distribution of diseases associated with high and low levels of income (like circulatory system diseases, typically associated with higher income countries or tuberculosis, usually associated with poor socio-economic conditions) shows a west-east divide, having a similar pattern as the resource distribution of primary healthcare providers, hospital beds, and medical profes-sionals, all of which having more resources per capita in the west of the country (the region of Transylvania) than the east (the region of Moldova). There is also a signicant urbanrural divide in terms of distribution of physicians, with a shortage of physicians in rural areas. A more detailed description of trends in major health indicators is given in the Annex (see Tables 5 and 6).

446


Tabl

e 5.

Mor

bidi

ty In

dica

tors

(All

Dat

a Ex

pres

sed

in In

cide

nce

per 1

00,0

00 in

divi

dual

s)

Year

19

80

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

Tube

rcul

osis

inci

denc

e54

.50

58.3

064

.60

61.6

073

.40

82.5

087

.30

95.0

098

.60

95.8

010

1.20

104.

1010

5.50

115.

30V

iral h

epat

itis

227.

2035

1.40

322.

1021

8.60

117.

9089

.50

118.

7013

9.40

104.

3088

.00

74.0

099

.70

117.

9011

5.30

Hep

atiti

s A

191.

6030

7.00

018

2.60

87.2

165

.48

84.8

410

6.80

81.3

068

.26

52.0

877

.99

97.8

194

.24

Hep

atiti

s B

34.8

443

.12

34.0

229

.38

24.0

921

.31

23.7

624

.43

20.9

217

.14

13.7

312

.27

12.0

111

.95

Dip

hthe

ria

69.9

048

.20

31.8

032

.50

35.6

038

.20

51.3

036

.60

24.1

024

.70

17.4

015

.30

12.1

011

.60

Acut

e po

liom

yelit

is 0.

560.

050.

030.

130.

080

00

00

00

00

Sour

ce:

Euro

pean

Hea

lth fo

r All

Dat

abas

e, W

HO

.

447


Tabl

e 6.

Hea

lth S

yste

m In

dica

tors

Ind

icat

or

19

80

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

Tota

l hea

lth e

xpen

ditu

repe

r cap

ita U

S $

(PPP

$)

17

629

925

721

520

319

0

Publ

ic h

ealth

exp

endi

ture

*

100

100

100

100

100

100

100

100

100

100

100

Tota

l inp

atie

nt e

xpen

ditu

re*

5758

5959

5863

53

Tota

l pha

rmac

eutic

al e

x-pe

nditu

re*

1114

1817

1917

20

Sala

ries*

5450

4838

Beds

per

100

,000

in

divi

dual

s

890

790

790

770

760

760

740

730

730

740

Phys

icia

ns p

er 1

00,0

00

indi

vidu

als

55

153

656

556

756

555

254

653

048

649

0

Aver

age

leng

th o

f sta

y (d

ays)

11.1

11.1

11.4

11.7

11.7

11.4

10.3

10.9

10.4

10.1

10.0

9.5

8.9

8.6

Bed

occu

panc

y ra

te77

.572

.867

.666

.378

.378

.379

.177

.577

.878

.678

.075

.675

.379

.4Pr

ivat

e ho

spita

l bed

s as

% o

f tot

al h

ospi

tal b

eds

00

0.01

0.01

0.01

0.01

0.01

0.01

0.02

0.02

0.03

Not

e: *

Perc

ent o

f tot

al h

ealth

exp

endi

ture

.

Sour

ce:

Euro

pean

Hea

lth fo

r All

Dat

abas

e, W

HO

.

448


2.3 Structural Background to Health Sector Reform

In this section of the report the principal contextual issues of health sector reform in Romania will be analyzed. This should provide an understanding of the key issues to which the reforms of the health sector, as outlined in section 2 and 3, respond to.

2.3.1 Health and Healthcare in Romania

The previous section indicated that, although health indicators in Romania are in many respects typical of its position as a middle-income country, the comparisons with es-tablished market economies of Western Europe highlight the health problems facing Romania. There is also a current concern that health indicators show a recognizable downturn in recent years. In many respects these follow from the legacy of social and economic problems from the Ceausescu regime and the social and economic dislocations experienced during the transition to a market economy. To Adeyi (1996) this transitional deterioration in health status comes as little surprise due to the i) reduction in real income and widening income disparities; ii) stress and stress-related behavior, iii) lax regulation of environmental and occupational risks; and iv) breakdown in basic health services. To these we may add the increase in crime and violent deaths.

Healthcare services are also confronting major problems. First, the economic reces-sion, according to a London School report (1994: 9) has led to a reduction of resources available for health services, leading to decreased immunization rates, lack of availability of drugs, and decreasing ability to provide treatment for certain conditions. Second, the legacy of the Semashko model and the identication of critical organization and management problems will be indicated in the next section. These problems are fre-quently cited in Romania as the critical targets of reform. Table 6 presents some of the major healthcare indicators in Romania.

2.3.2 Financing the Public Sector

All researchers are mentioning the low level of resources dedicated to healthcare in Romania as shown in Table 7, in comparison with both CEE, with an average of 5 percent of GDP and with UE with an average of 8.5 percent of GDP (see Table 7).

It is not surprising therefore that health sector reform has shown concern for increas-ing the resources dedicated to the healthcare system. However, any attempt to increase this sum has to be viewed within the context of policy constraints facing government. The economic recession of the 1990s, high ination, and the upheaval of the transition process hardly represent a solid basis for increased allocations to the health sector. There

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are clear dilemmas in determining where additional resources would be collected from. The government is under pressure to reduce the size of the public sector and the tax burden as part of the transition to a market economy. In order to increase the ow of resources to the health sectors, nearly all FSE countries have opted for schemes of social insurance, and this was also the political option of the Romanian Government, as will be described in the following sections. There are however, denite concerns over their appropriateness to the social and economic conditions in FSE. Resource constraints can clearly limit the options for health sector reform. Taking these constraints into account, dierent researchers suggested the need to focus health sector reform within existing resource constraints: the maximum possible value needs to be obtained from the limited sums available (and) the healthcare services provided need to relate to the existing and foreseeable patterns of disease in Romania(Jenkins et al. 1995).

In this context, one further point is important to mention regarding Romanialack of transparency. This refers to the process of resource allocation and raises important questions about issues like equity in the delivery of healthcare services.

2.3.3 Social and Political Transition and the Health Sector

The revolution of December 1989 is leading to important changes in the structure of Romanian society. Health sector reform should be seen as part of this broader change in society. Deacon (1992) suggests that these may be seen as part of a broader change from a bureaucratic state collectivist system of welfare to capitalism. Important structures of the previous regime have disappeared, and new social structures and processes are being formed. The partial introduction of capitalist relations, market systems, and liberal democracy are expressed through the emergence of a multiparty system, national and local political elections, a measure of land reform, the development of free enterprise, and the formation of trade unions. A particular feature of this new conguration of social and political power is the absence of an active and developed civil society. There are indications that the overall structure of social and political power in Romania has not been conducive to rapid and possibly major changes through health sector reform

Table 7.Total Expenditures for Health, 19902000

Year 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Total expenditure as percent of GDP

3.7 3.6 3.3 3.3 3.1 3.7 3.7 3.5 3.9 4.6 4.6

Source: Ministry of Health, Statistical Yearbooks, 19912001.

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Noting the importance of the transition is not to suggest that there is a clear idea within Romania as to the type of society that will emerge from this process. Platforms for change range from free market neoliberalism to social democracy and variations on state collectivism, even if now Romania is a candidate for accession to the EU. Certainly the overall direction of the change is towards the introduction of market systems and political pluralism and implementation of the acquis communitaire in order to become a full member of the EU. There are however many imponderables around the way in which the economy will face up to international pressures, the impact of a market economy, and the moment when Romania will join the European Union. It should be mentioned here that the healthcare system, along with other branches of social protec-tion, are generally not yet developed to a level consistent with that which is found in the EU. Romania continues to strive to secure economic viability and modern planning and managementnot least for the healthcare system, its eective management, and planning of resource allocation. There is a growing gap between professionally possible and aordable health services. The pre-accession strategy stresses the importance of in-stitution building, especially related to public accountability and budgetary control. The health sector is an important user of public funds and institution building is particularly important. It seems clear that the governing elite are facing a number of pressures in developing new policies on social welfare, to accommodate both internal demands and external constraints.

2.3.4 External Features of Health Sector Reform

Three points should be mentioned here. First, the issue of health sector reform is on the agenda, albeit in diering degrees, in all the CEEC. One can notice two major trends in this respect. There is a shift from a taxation-based system based on citizenship to a system of earmarked taxation of the payroll leading to individual entitlement to healthcare provision. This is seen as a way of increasing the ow of funds to the health sector. The other trend is designed to improve the systems eciency and involves the adoption of a pluralistic approach involving internal market mechanisms. While other countries are at the forefront of these changes, reform in Romania is more gradual and incremental. Second, the role and position of the World Bank (WB) has to be taken into account. This will be developed in the next sections this report. Third, we should be aware of the connections with the process of health sector reform in Western Europe. This will be seen to be of some importance when we refer to the primary healthcare project and the health insurance system in the next sections.

To conclude, this section has referred to the deteriorating health conditions in Romania and the problems of healthcare delivery. It is particularly important that

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these latter problems are understood within the context of nancing the public sector. Health sector reform should be seen as part of the broader transition to a market economy and political pluralism. The structural issues outlined in this section cannot be understood in isolation. There are links between them, as one issue is reinforced and/or reinterpreted by another. At the same time, the structural issues constitute contradictory pressures for policy makers. For example, we saw how policy makers face contradictory pressures to both restrict and expand the amount of resources dedicated to the health sector.

3. AN OVERVIEW OF REFORM: POLICIES, PROCESS AND OUTCOMES

The Romanian health system has been passing through radical structural changes since 1989. In some aspects, the present situation can be compared with what occurred after the Second World War. Then, the change of the health system was similar to that of the whole society, for the health system being imported was a model that had very few connections with the tradition or with the real situation in Romania at that time, the so-called Semashko model. After 1989, we are witnesses to a reverse process, of passing from a model that had been in place for ve decades to another model with foreign roots, which is closer to what existed in Romania prior to the Second World War. In spite of this general tendency to reform the healthcare sector, nding the optimal structure of the health system has proven to be a very dicult task for at least three reasons. First of all it should be underlined that the health system should have certain objectives. Theoretically, most countries dene three major objectives for their health system: a) universal and fair access to a reasonable package of health services; b) control of costs of health services, and c) ecient utilization of resources.

In spite of the relative concord about the objectives of a functioning health system, to establish their relative weight and prioritize them became very dicult for most countries that want to reform their health sector. This aspect can be discussed only after the socio-economic objectives and priorities of a country have been established. Another important factor for the development of health systems is ideologicalthe debates between supporters of free initiative versus the supporters of government plan-ning. Another major issue has been the relative lack of information concerning the functioning and performance of dierent health systems. The remaining two section of this report will try to show how these questions were answered.

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3.1 Health Policy Reform Since 1989

In the developments of the health policy after 1989 two main periods can be identied: one between 1990 and 1996, and the second from 1997 until today, the threshold be-ing the general election of November 1996, after which major new health legislation enacted. Even if the government changed again in 2000, it adopted most elements of the previous governments health strategy. This section will describe the principal reforms in the health sector from the revolution in 1989 up to 1996; the later period from 1997 until today will be described in the last section of this report, as it basically covers the period in which the HIL was implemented and the new HIS started to function. In this section, particular attention will be paid to: the initial policies and demands for change after December 1989 general government decentralization and the health sector the primary healthcare reform key actors in health policy and the decision-making process multilateral and bilateral external agencies, with a focus on World Bank involve-

ment in the reform process.

All the changes that occurred in health policy after 1989 were inuenced by the pre-1989 health system. The Semashko healthcare system was common in Central and Eastern European countries. Central to this system was the state provision of services for all members of society, leaving little or no choice to the user but seeking to achieve a high level of equity. The highly regulated, standardized, and centralized system was operated through the MoH. The legacy of this system can be felt in the current operation of healthcare: a) the relatively small proportion of the GDP dedicated to healthcare; b) the centralized and inequitable allocation of resources (with under-the-table payments and privileges for the nomenclature); c) physicians usually lacking adequate motivation, as they were poorly paid and underemployed; they had a narrow clinical orientation and lacked broader knowledge of public health issues and health management, includ-ing cost containment in modern health systems; d) the system was vertically integrated and required less regulation as it relied on a rigid hierarchical command and control structure, and the nancial ows were independent of outcome; e) lack of response to local needs; f ) poor quality of rst level services, inadequate referral and overemphasis on hospital-based curative services with a lack of good equipment and drugs; g) the supply of beds and personnel not matched by the provision of equipment and drugs; h) alienation from responsibility for ones own health; lack of associations of interested citizens, at both the national and local level, and lack of an autonomous civil society (still a challenge at present) was both a cause and a symptom of a situation characterized by a passive attitude towards issues which the state was supposed to take complete care

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of; i) growing inequity in healthcare provision between regions and between dierent social groups.

3.1.1 Initial Policies and Demands for Change after December 1989 to 1996

Following the political changes of December 1989, the overall approach of the new government was to make preparations for the process of change but not to dismantle the existing system until a new health policy had been adopted. Between 1990 and 1992 the healthcare crisis grew steadily worse, and the dialogue between the unions of health professionals and the national and sub-national administration became increasingly more dicult. Faced with severe and complex problems, the main diculty for health authorities did not consist in identifying needs, but in establishing their hierarchy. Under these circumstances, the major decisions made by the Ministry of Health immediately after the December 1989 events were the following: to avoid the de-structuring of the healthcare system prior to adoption of a new health policy; to inform both the govern-ment and the population on the dicult conditions of the system; to consider the HIV and Hepatitis B epidemics as a top priority; to lower maternal mortality by providing free access to safe abortion; to initiate competitions for admitting doctors to specialty training, and thereby reduce the strain in the ranks of health professionals (such com-petitions had been prohibited for 810 years); to provide free movement of doctors in a decentralized mannerat the level of district authorities; to create the specialty of general practitioner, and to re-introduce post-high school health education for training nurses, initiation of a managerial training process for the new directors of healthcare units, those who had been elected after the political events of December 1989, and who had to manage the crisis and lead the change. It can be noticed that in the competi-tion for priority, the emergency criteria were the uppermost, and those with a possible immediate impact, also favored by short-term conjuncture and political interests. The winner was, in fact, the preoccupation with reform of the healthcare services, and not for the reform of the health system.

Between 1992 and 1993 Romanian specialists, with the support of foreign experts and nancing from a loan from the World Bank, produced a project for the rehabilita-tion of the health system in Romania, called A Healthy Romania. In fact the project proposed the framework of a new strategy for the reform of health services. The more or less explicit major aims of the new strategy were the following: a) reduction of the state monopoly and its ownership role, which enabled it, at the same time, to nance and acquire, to provide and to manage health services; b) to introduce social health insur-ance and improve the nancing of the system; c) to decentralize the system, increasing the political and strategic roles of the Ministry of Health; d) to ensure management

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autonomy for the hospital, and the development of independent medical practice; e) to develop primary medical care and free choice of family doctor; f ) to develop mechanisms for accreditation and quality assurance; g) to adjust personnel policies in accordance with national needs and European exigencies.

Although based on recommendations from the World Bank, the elaboration of the strategy and decisionmaking lacked transparency and were methodologically unclear. Thus, of the major actors that should have been interested in this process, only the central health authorities were involved. In the necessary steps of preparing the policy (planning, organization, implementation, evaluation) representatives of the medical corps (professional unions, professional associations) participated only when the ways were discussed by which the decisions already made by the Ministry of Health should be implemented, and in such circumstances it was only natural for tension to develop that inuenced the nal outcome. The representatives of those directly involved in the experiment, namely the users, were not consulted at all, and thus the legitimacy of the process had serious weaknesses.

Until the change of government in 1996, the MoH demonstrated either indierence or resistance to reform activities, but persistent pressure from the World Bank, together with support from stakeholders outside the MoH, permitted some progress in reform components. Between 1992 and 1994 there was an initial simulation testing dierent mechanisms of payment in four districts carried out by four dierent teams involving Romanian and external consultants. The teams were from the UK (Nueld and Kings Fund), Denmark, and Swedeneach working with a dierent district and helping to choose the most appropriate way of PHC delivery. The initial idea was to implement dierent options and compare them to see which was most appropriate.

Between 1994 and 1996 pilot health reforms were implemented in Romania in 8 districts, building on some of the recommendations of technical assistance carried out in 19921994.

Legislation was passed in 1995 to establish the College of Physicians. Elections were held for this body, but they were conrmed by the government only after the 1996 election; the college started to function from 1997. The social health insurance bill was approved by the Senate in 1994 and by the Chamber of Deputies in mid-1997; its imple-mentation started in 1999, but the numerous amendments changed the initial philosophy of the law signicantly. A more detailed description of this essential component of the reform health policy in Romania is developed in the last section of this report.

3.1.2 General Government Decentralization and the Health Sector

The Law of Local Public Administration, passed in 1992, set out the new structure of decentralized public administration in the country. This dened the organizational

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context in which the public sector health services operate. It describes three forms of decentralization: Functional deconcentration within the MoH operates through 41 DHDs. These

are supposed to apply at the district level the guiding principles of health policy of the MoH. They are headed by a director, who is always a doctor and is ap-pointed by the MoH with the agreement of the prefect (see below).

Prefectoral deconcentration exists through the central appointment of a prefect in each district. They are representatives of the central government in their district and should ensure the legality of all decisions made by the local authorities and coordinate the activities of the functionally deconcentrated state services. The prefect also heads an administration council including the president of the district council, the mayor of the principal urban center in the district, and the directors of the deconcentrated central government bodies (including the director of the DHD). The prefect must approve appointments made to the administration council of the DHD, although the appointments are made by the MoH. The prefect can also issue instructions on technical aspects of health service, although these must be signed by the director of the DHD.

Devolution operates through a system of local government which takes the form of locally elected councils. These have a number of powers with implications for the health sector. These are: a) to approve the organization and activities of local civil servants, including their appointment; b) to ensure the proper functioning of local services; c) to monitor hygiene in public places and of food products; d) to prevent and limit outbreaks of infectious disease; and e) to authorize the opening and closing of local health facilities. This structure of public sector operation has nevertheless maintained a relatively centralized character through the lines of central-periphery authority, nancial control, and central administrative regulation

Delegation operates after the introduction of the health insurance system. The health insurance fund collects and utilizes funds for health as compulsory health premiums, income-based, outside the state budget, throughout 41 DHISFs which are autonomous bodies entitled to retain and use 75 percent of the collected funds at the local level; however, starting from 2003 this situation changed, as the DHISF are no longer entitled to retain the 75 percent of the collected funds in practice and all the funds are send to the NHIH which then allots them to districts based on its own formula (see the case-study on health insurance)

3.1.3 The Primary Healthcare Reform

During the communist era, Romanian health systems and health nancing were bi-ased toward expensive secondary and tertiary inpatient hospital care. Primary care was

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undernanced and relatively neglected. Most outpatient care was provided by special-ists in outpatient polyclinics, or in rural health centers. After hours, patients relied on national ambulance services to provide primary care (such that over 90 percent of ambulance visits were for primary care in Romania). General practice doctors were relatively few, received only basic medical training, and had little professional prestige. As a result, improvement in PHC was seen by the Romanian authorities as a key point of the reform of the health system and was included as the main component in the rst World Bank loan. The reforms were intended to strengthen access to and quality of primary healthcare, improve client responsiveness through competition among GPs, and reduce reliance on specialists and hospital care by giving GPs a gatekeeper func-tion. The design and implementation of general practice reforms were consistent with recommendations in the project-sponsored 1993 sector study.

Implementation began in 1994, and involved a new way of nancing primary health-care provision through a pilot program (see Box 1). Apart from this pilot approach, over 200 rural health clinics have been upgraded and equipped with basic items for PHC. However, several reports showed that almost half of them had no doctor at the end of the PHC pilot, even if the dispensaries were rehabilitated and endowed with necessary medical equipment (WB 2002).

Box 1.The Romania Pilot Decentralization Program

The reforms described below were a response designed in support of one of the key objectives set for health sector reform in Romania in the early 90s, i.e. shifting toward independent providers both in primary and secondary care and developing new payment mechanisms for these providers. This approach was intended to ad-dress some of the perceived problems of the Romanian health sector: ineciency resulting from the imbalance between hospital services and primary care in favor of the former, inequity due to limitations of access to basic services, resulting from inadequate stang (especially in rural areas) and funding for primary care, and lack of choice for patients in primary care. Income of sta was low (also compared to average income in the economy, the ratio is much lower than in OECD coun-tries) and was xed according to professional seniority and years of serviceno link existed between income and the volume or quality of services provided. Pri-mary care facilities were part of the same organization with the local hospital and polyclinic, thus sharing one budget allocation, with decisions made by hospital managersalways hospital-based clinicians. In an environment of overall scarcity (Romanias public spending on health services has uctuated narrowly around 3 percent of GDP from 1990 to 1997) and given the distribution of power in favor of hospitals, allocations for consumables, drugs, and equipment were even more limited for primary care centers than for other levels of care.

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In the last quarter of 1994, based on Government Decision 370 of that year, the eight pilot districts of Romanias 40 districts (covering 4 million people) introduced changes in the provision and payment of general practitioners services. The plan for piloting was received enthusiastically by district sta and generally welcomed by doctors, but had only lukewarm support initially from the MoH. It is notable that the pilots took place at all. The government had previously resisted piloting, particularly experimentation with private sector approaches to service delivery, and the pilots were only able to proceed in 1994 once the government and Parliament passed specic legislation authorizing them. The system switched from the xed allocation of patients to GPs according to residence to the free choice of the GP by the population. Payment moved from xed salary (set according to professional rank and seniority) to a combination of age-adjusted capitation (about 60 percent of the total) fee for service items (related mainly to prevention, mother and child care, early detection and follow up of major chronic diseases) and bonuses related to dicult conditions of practice and professional rank (about 40 percent of total). GPs contracts were held by district health authorities. District health authorities established contracts with doctors, ending their status as hospital employees. Terms of service introduced new requirements for 24 hours available for emergencies. The contracts specied primary care services to be covered (which continued to be free) and patients were allowed to choose their family doctor. Family doctors were expected to enroll between 1500 and 2500 patients each.

An evaluation of preliminary pilot experience was carried out in 1995 (Jenkins and others 1995). This was too early for an eective evaluation but provided some preliminary ndings. After two years, 86 percent of the population was covered by family doctors, with eight percent higher coverage in urban areas. Few patients changed doctors, but surveys indicated that family doctors had become more cli-ent oriented. The output of family doctors increased, providing 21 percent more consultations and 40 percent more home visits, and 87 percent provided emergency coverage at night or on weekends. Doctors incomes increased by 15 percent on average, and there was some evidence of declines in informal payments (although these were already relatively low for primary care). However, dierences in access between rural and urban areas persist as the limited nancial incentives included in the scheme were not sucient to attract more physicians to rural areas. There was no eect on hospital admissions, however, and no evidence regarding impact on key coverage indicators (such as vaccination rates) or health outcomes.

The reforms therefore strengthened the GP as the gateway to the referral system in addition to the introducing of a competitive element through patient choice and new forms of payment. However, purchasing authorities with insucient capacity and experience, operating in a weak regulatory environment, have been

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facing serious diculties in monitoring the payment scheme (especially the fee-for-service component) both in terms of number and quality of services reported (billed) by providers.

The pilots continued until 1997, when they were discontinued by the new gov-ernment. While the pilots would have beneted from further evaluation, national and district sta involved in the pilots played key roles in developing subsequent reform regulations, and a number of adjustments were made as a result of pilot experience. These included greater specicity in contracts regarding doctors respon-sibility for primary care, adding a practice allowance to the capitation payments for doctors to help cover capital and recurrent expenditure, doubling capitation payments for family doctors practicing in remote or low-income areas, and permit-ting doctors to charge for vaccinations to children not on their lists.

Source: Vladescu (2002).

Several additional lessons can be drawn from the PHC experiment: the proposed reforms create the potential for improved primary care, but the success of reforms de-pends not only on establishing appropriate incentives in the payment system, but also on developing adequate capacity within the purchasing authority (DHA) for regulation and monitoring of general practitioners; therefore changes in the payment and delivery system should be accompanied by adequate training for the sta of health authorities. Both national and especially local-level changes in employment and payment system of GPs should be accompanied or preceded by intensive training for family doctors, to allow them to adapt to their new roles and increase credibility for reforms among patients and the medical profession. The training needs generated by reforms outstrip available training capacity, especially if not properly planned from the beginning of the reform program. While the PHC approach to primary care had the potential to succeed in urban areas, nearly half of the Romanian populace lives in rural areas, where many of the stated aims of the project cannot be achieved for objective reasons: lack of adequate coverage with medical personnel and therefore lack of choice and competition between providers; diculties in accessing health facilities; inadequate basic medical facilities, etc. Some of these problems could be overcome by using new approaches which can maximize the existing scarce resources; for instance encouraging group practice (where possible) holds promise for addressing a number of issues, including pooled use of equipment and administrative assistance and improved coverage for after-hours care

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3.1.4 The Health Insurance Law

The Law on Social Health Insurance was approved by the Senate in 1994 and the Chamber of Deputies in July 1997. The introduction of health insurance was expected both to increase resources available for health (through compulsory health premiums) and serve as a catalyst for further system reforms, including improving system eciency. At the beginning, this reform commanded wide in-country support, but for dierent reasons: the Ministry of Finance, for example, hoped for increased eciency and cost control, while doctors expected higher salaries.

The nancing based prevalently on general taxation was replaced with one based on mandatory insurance premiums. The latter are calculated according to income and paid in equal proportion by the insured person (the employee) and the employer, as a xed percentage of the income (the salary and the wage fund respectively). In the rst year, i.e. 1998, employee and employer contributed ve percent each; afterwards, from January 1999, each contribution amount to seven percent, and starting with 2003 the employee contribution was 6.5 percent; the size of the contribution is matched by a corresponding reduction in income tax. Children and young people, disabled persons, and war veterans, as well as dependents without income, have free access to health insurance. For conscripted soldiers and people serving prison sentences, insurance contributions are paid from the budgets of the Ministry of Defense and Ministry of Justice. The key provisions of this law regulate the revenues of the health sector and the allocation of funds across health services and healthcare providers. These include hospitals and their outpatient units, diagnosis and treatment centers, health centers, dispensaries and medical oces). Through this social insurance-based system, healthcare providers are contracted by the district health insurance funds (DHIFs) to deliver health services to the insured.

All the funds are collected locally with the DHIFs. In order to improve equity across districts in resource allocation, up to 25 percent of funds collected by the district health insurance houses are redistributed through the National Health Insurance House between districts, according to their resources and needs. In the rst year (January 1, 1998 to January 1, 1999) the DHIFs operated as components of the district health authorities, and afterwards as independent bodies. In the same year, the Ministry of Health acted as the National Insurance Fund; the latter was set up as an independent body on January 1, 1999. Figure 1 illustrates the nance ow within the new structure.

There are another two special health insurance houses: one for military structures (Ministries of Defense, Interior, and Justice, as well as intelligence structures) and one for the Ministry of Transport. They actaccording to the special laws which complement the Health Insurance Lawas district health insurance houses, collecting money from their sta and redistributing up to 25 percent of their incomes to the national health insurance house. An analysis of the implications of these special funds will be made in the last section of this report.

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The new system grants insured peoples rights to health services, medicines, and health implements, as stipulated by the frame-contract, which includes: the list of health services to be provided by health units, the services quality and eciency pa-rameters, the method of payment, the hospital length of stay, criteria, and medication. The insurers are allowed to choose health services providers, and family physicians play a gatekeeper role

The framework contract is the basis of the contract to be concluded between the DHIFs and health organizations: hospital and their outpatient units, diagnosis and treatment centers, health centers, family doctors practices, etc.

Screening, prevention, and early detection of diseases in medical practice are re-imbursed by the DHIFs; health programs are nanced by the state budget, the health insurance budget, and other sources. The packages of services nanced by the DHIFs do not include health services provided for occupational hazards and diseases, labor ac-cidents, a number of highly specialized health services, a number of dentistry services, and high-rank hotel services. All this shall be paid for directly by the patients or through other methods of payment.

Quality is assured, according to the HIL provisions, by selective contracting (meaning the DHIFs shall only conclude contracts with the health units which meet the quality criteria approved by the National Insurance Fund and the College of Physicians); control is provided by physicians employed by the DHIF medical division together with the representatives of the College of Physicians specialty boards.

The Law on Social Health Insurance stipulates a variety of methods of payment, such as capitation (pay-per-insured person) and fee for servicefor primary healthcare and specialized outpatient care; global budget for hospitalscalculated to various rates (hospitalized patient, day of hospitalization, health service, and other formulae to be negotiated).

A more detailed discussion on the health insurance system in Romania and its re-cent developments will be made in the last section dealing with the country case-study (see Figure 1).

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3.2 Policy Actors and The Decision-making Process

In the last 14 years Romania witnessed a great number of individuals, groups, and in-stitutions with political interests in health sector reform. Among them we can mention: the government (MoH, MoF, local and regional governments, etc.), health insurance houses, Parliament, the presidency, the professional associations (CoPh, CoP), political parties, pharmaceutical companies and dealers, trade unions, NGOs, multilateral and bilateral external agencies (the World Bank, EU/Phare, UNICEF, WHO, UNAIDS, USAID, the German government, Swiss government, DFID, JEIKA-Japan, CIDA-Canada, OSI-Soros, etc.). Given the great number of these players in health policy arena and the inevitable space restrictions, we will focus only on the most prominent of these actors, i.e. the MoH, NHIH, CoPh, and the World Bank

The Ministry of Health (and Family, from 2001 to June 2003the MoHF)

To a large extent the governmental system in Romania continues to operate as a central-ized bureaucratic command and control system. This focuses important political power at the top levels in the ministerial hierarchy. In the case of the MoH, the minister and the high level technocracy have originated a number of reforms or taken on board reforms suggested by the World Bank and groups of parliamentarians. The MoHF maintains the responsibility for developing national health policy and dealing with public health issues; at the local level the MoHF acts through district public health directorates and plays a major role in the decision-making process in health policy. Almost all the major health policy documents were initiated by the MoH. Starting November 2002, the MoHF also coordinates the functioning of the National Health Insurance House. It should be mentioned that since health reform tends to involve changes in public nances, almost all the decisions required the approval of the Ministry of Finance. Thus, in the last sev-eral years the MoF has been in a position to heavily inuence the budget approved by Parliament for the NHIH; in this way the MoF can be seen as an important (indirect) player in the eld of health policy.

The National Health Insurance House

The NHIH sets the rules for the functioning of the social health insurance system and coordinates the 41 District Health Insurance Houses (DHIHs). The NHIH negotiates the framework contract which sets up, together with accompanying norms, the benet package to which the insured are entitled to. The NHIH also controls the redistribution mechanisms between districts and the resources allotted between specialties (primary care, hospital care, ambulatory care, emergency care, dental care). The NHIH has the right/power to issue implementing regulations (rules, norms, and standards) man datory

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to all DHIHs, in order to insure the coherence of the health insurance system. The annual budget for the NHIH is based on a framework contract, agreed upon annually by the NHIF and the College of Physicians. This framework contract is approved by the government and denes the benets package, conditions for service delivery, and payment mechanisms. There are co-payments required for drugs and allowed for other services. Family physicians play a gatekeeper role. The framework contract sets the general terms for provision of healthcare services and is the basis of the contracts between the District Health Insurance Funds (DHIFs) and healthcare providers (hospital and their outpatient units, diagnosis and treatment centers, health centers, and medical oces). The budget for the NHIF and its forty-one DHIFs is designed to cover ambulatory (primary and specialist), inpatient, and dental care, including clinical preventive services and drugs. The insured are entitled to prescription drugs and healthcare materials needed to correct eyesight and hearing; prosthesis of the limbs is also either partially reimbursed by the insurance funds or free. The Ministry of Health and Family and the NHIF, us-ing recommendations from the College of Physicians and the College of Pharmacists, compile a list of prescription drugs on a yearly basis with reference prices. Pharmacists must sell the cheapest available drug, if only the generic name is on the prescription, and must mention potential substitutes

Starting from November 2002 NHIF is coordinated by the MoHF, and the presi-dent of NHIF became deputy minister in the MoHF (see also the specic section on HIS).

The College of Physicians and Medical Personnel

The CoPh registers doctors as provided by the 1995 law. The CoPh has important and extended responsibilities in all areas of concern for physicians. This involves most elds of the healthcare sector, including the health insu rance system in which the CoPh is involved in negotiating the framework-contract that forms the basis of all individual contracts between DHIHs and providers. By virtue of this, the CoPh has an inuence on the contents of the benet package for the insured population, the type of reimburse-ment mechanisms in place for health service providers, what drugs are compensated, and in what proportion. After the change of government following the 2000 elections, new legislation initiated by the MoH considerably reduced the responsibilities of the CoPh in areas related to health policy (the CoPh has now only a consultative role in the majority of the health policy decisions in which it was before involved).

Physicians have been particularly concerned about their relative lack of ocial status in the old system, their low ocial income, and the limited technological environment in which they work. With a view to improving their income the profession supported a health insurance system and increased private medicine in the early 1990s. Dierent opinion surveys indicate, however, that this initial reformist zeal has now weakened

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(CPSS 1999, 2000) It is possible that physicians (especially in hospitals) have come to realize the benets of under-the-table and untaxed payments from patients. Also, in the present system they are largely unaccountable for their work, a situation which could change with the introduction of a more coherent health insurance system. At the same time, the rst years of health insurance did not bring spectacular improve-ments in their social and nancial status, and for some physicians more administrative work was required at incomes similar to what they earned before the introduction of health insurance system. It also should be mentioned that medical professionals are not well-organized politically, but are individually important due to their links with Parliament (approximately 50 members of Parliament were/are medical professionals, including the president and vice president of the health commission), political parties, and particularly in their occupancy of important positions in the MoH hierarchy. This raises another issue related to the analysis of health sector reform: healthcare reform was planned and implemented by the medical elite who have a vested interest in scientic research and high technology medical activities; numerous studies signaled that in Ro-mania the medical profession maintains almost exclusive inuence on policy making and strategic decisions (World Bank 2001). Referring to the CEE in general, the WDR (1996) is clear: The medical lobby is well placed to steer policy in CEE countries and the NIS because, in contrast with most market economies, the health minister is often a physician, as are many parliamentarians. As a result, the Ministry of Health can easily become the ministry of the health profession (World Bank 1996).

The Role of the World Bank

First, it should be mentioned that the two major reform projectsprimary healthcare and health insuranceshow a clear inuence from health systems of other countries. The introduction of capitation payments and contracting draws on UK experiences in this eld, while the health insurance system draws on the German experience in this eld. Both projects relied heavily on consultants from these respective countries. Second, there is a growing presence of international agencies involved in the health eldUSAID, EU (through PHARE and other specic programs, especially after Romania was invited to join the EU and started the pre-accession procedures), the governments of Germany and Switzerland, British Council, UNFPA, and UNICEF, etc. Third, the World Bank has been an important player in the process of health sector reform in Romania.

The World Bank project started in 1992 and involved a loan of US $150 million. Originally designed to terminate in June 1996, it was extended to 1999 to allow the government to spend the remaining monies. The project has the following major aims: 1) upgrade rural dispensaries; 2) improve reproductive health; 3) train health practi-tioners; 4) procure and distribute drugs and consumables; 5) improve management of

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emergencies; 6) strengthen health promotion; 7) develop a national health strategy; 8) develop a health information system; 9) establish a school of health services and management. On a six -point scale (highly unsatisfactory, unsatisfactory, moderately unsatisfactory, moderately satisfactory, satisfactory, and highly satisfactory) the project outcome was rated as moderately satisfactory. As a comparison the US $34 million Estonia Health Project was rated highly satisfactory and the US $56 million Hungarian project was rated moderately unsatisfactory.

A second loan project of US $40 million was approved and started up in 2000. The six-year, two-phase Adaptable Program Loan seeks to further strengthen health reforms while supporting additional investments, especially for district hospitals and emergency medical services. The project retains a strong focus on infrastructure and is not provid-ing direct project support for strengthening health insurancethe European Union has emerged as the primary donor for insurance. But the project seeks to combine invest-ments with support for systemic reforms (for example, piloting an integrated approach to emergency services).

The impact of the World Bank on health sector reform in Romania has been impor-tant. The primary care project outlined above follows from the World Bank-sponsored Kings Fund/NIH report and comes within its program of health sector reform (see also Box 1, for more details). Although the World Bank was not involved in the initial devel-opment of the health insurance system, they have played an important role in reshaping the structure of the health system (see also the case-study section on HIS).

In Romania, the World Bank has looked to restrain and guide the process of health insurance reform. A clue to its reservations here is oered in the WDR (1996) which expresses three concerns over health insurance reforms: the tendency towards structural decits given the need to subsidize the unemployed population; the increase in the cost of labor and the incentives to work informally; the lack of control over spending. An additional concern in Romania was that the health insurance scheme should be in accordance with other reform projects, such as pensions, and that these should be seen and considered together.

World Bank involvement in Romania should be seen in the context of its overall approach to the transition process in FSE. This is put forward in the WDR in which a prescription of freeing up economies, scal discipline, and control over ination is put forward. In the social policy eld, attempts should be made to ease the pain of transi-tion, but also push the transition process forward. Health policy options proposed include the need to: a) focus on health improvements through changes in lifestyle and aecting pollution and occupational risks; b) improve healthcare delivery through more eective resource allocation, provider competition, and involvement of the private sec-tor; c) achieve the correct funding balance between taxation and social insurance in addition to the correct balance between provider payments through fee-for-service and capitation payments (WDR 1996). A more detailed description of the role played by

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the World Bank in the development of the HIS in Romania is given in the case study section of this report.

3.3 Policy Debates and the Pace of Reform

In comparison with some other CEE countries, the pace of reform in Romania has been relatively slow. In attempting to explain this, one can nd both political and technical arguments.

Major changes in an area that concerns every member of a society cannot be achieved unless major politicians are involved, appropriate information is disseminated, and citizen support is secured (both from providers and recipients of healthcare). Major health policy changes have historically beneted from the direct involvement of im-portant public gures: in the 19th century Germany, the new social security system was introduced under the leadership of chancellor Bismark, and the second modern health system was introduced in England after WWII by Lord Beveridge, both system types now named after the two politicians. While in other countries, changes in health poli-cies led to extensive analyses and debates by institutes and professional analysts, with wide media coverage, in Romania the debates involved only peripheral issues and the discussions were usually triggered more by spectacular episodes related to the day-to-day aspects of the systems (non-)operation and less by the causes and possibilities to solve such deciencies. What we witness in Romania is the concern of both popula-tion and specialists with the continuous deterioration of health indicators and medical care quality, reected by many opinion polls and statements, coupled with an almost complete lack of debates on this issue in the media; even the discussion and passing in Parliament of the Social Health Insurance Law went almost unnoticed by the public. Political involvement was minimal, and all discussions on health reforms were at the level of the Ministry of Health, with isolated involvement of actors like the College of Physicians or certain unions, whose approach is rather reactive and strictly limited to the interests of their own members.

In this context, the lack of a body of professionals in political analysis and the lack of interest from the government for such assessments caused important decisions to be taken without proper justication. Also, the provision of health services in the command and control system, where the Ministry of Health and the local bureaucracy played a part in almost every decision of the health units, severely limited the ability of manag-ers and political decision-makers to gain experience in using information, incentives and competition to achieve the desired results. In this context, the call for an increase in the managerial eciency of the health system has very little support from the facts, both at the macro level and at the local and health-unit level.

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4. COUNTRY-SPECIFIC EXPERIENCE

4.1 Case-study on the Development of the Health Insurance System in Romania

In this section the new health insurance system introduced in Romania will be presented and analyzed. The topics that will be discussed will deal with: the regulatory and insti-tutional history of the HIS, the new process of resource allocation in the health sector and its impact on performance indicators, and the way in which the new health policies linked with the introduction of the HIS in Romania fulll the declared objectives and expectations of health reform. It will conclude with authors recommendations on the development of the HIS in Romania

Regulatory and Institutional History

Discussed for the rst time in the Romanian Parliament in 1994, voted and promulgated in the summer of 1997, the Law on Social Health Insurance initiated the transformation of the health system from a state-nanced model to a social insurance-based model. The Health Insurance Law was intended to begin partial operation on January 1, 1998, and complete operation from January 1, 1999. Due to the lack of political stability (four ministers in less than two years) and lack of decision-making capacity, 1998 was not a preparation and training year, as was intended. Thus, instead of the insurance system entering into force on January 1, 1999, it was necessary to make several modications to the Law on Social and Health Insurance (LSHA) by government ordinances. The system starting functioning legally only in April 1999. The same reasons (lack of politi-cal stabilityfour presidents in less than two yearsand lack of managerial capacity) produced a situation where the NHIH did not produce any new forms of reimbursement for the main providers of medical services (ambulatory clinics and, especially, hospitals) which function in practice, according to previous administrative patterns. In spite of the contracts being signed with insurance houses, almost all the mechanisms for resource allocations at the outpatient and hospital level remained unchanged.

The introduction of the Law on Social Health Insurance was strongly supported at the beginning by the population, physicians, and also by decision makers, especially the health committee of the Romanian Parliament. This massive endorsement of the law, and implicitly a public health insurance system, had two motivating sources. First, a political source: after the changes of 1989, with everything associated with the old regime being challenged, the Soviet-imported Semashko system of healthcare could not keep itself o of the chopping block. In the given conditions a replacement had to be chosen, and the options were not very numerous. Taking into account the fact that European tradi-

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tion and reality, both Western and Romanian, made the adoption of a private system practically impossible; the only options remaining were a Bismarck-style public health insurance system, like in Germany, France, or Austria, or, a Beveridge system, based on general taxes, like in England, Italy, or Sweden. The option for a Bismarck system was determined in this case by arguments connected with politics and tradition; this kind of system being close to that existing in Romania prior to the Second World War. Another factor was ideological factormost of the debates on this topic were between supporters of a free market and supporters of government planning. In this context the health insurance system was positioned somewhere in the middle of these two options, and therefore acceptable to both sides.

The second motivation was technical, meaning how to implement the chosen system and with what conditions. Many documents and statements by decision makers and providers promoted the idea that social health insurance model is technically capable of providing many of the desired and requested healthcare features: more resources allotted to health, increased earnings for health professionals, greater nancial independence, an increase in transparency a better match between patients needs and the services provided, improved quality of care, and an increase in service-provider accountability. The result is that the reformed Romanian healthcare system has not yet fullled the expectations created in 1997, although health insurance did succeed in increasing the revenues available to the sector, as is shown in Table 8.

Table 8.Trends in Healthcare Expenditure, 19972000

1997 1998 1999 2000

Public expenditure as share of GDP (percent) 2.8 3.1 3.8 3.8Total expenditure as share of GDP (percent) 3.5 3.9 4.6 4.6

Source: Ministry of Finance.

Still the amount of spending on health, both as a percentage of GDP and also as net gures, places Romania at the lower end of the spending distribution among countries with a similar per capita GDP, as well as among most other countries in the CEE region.

However,