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Privatization of Health Sector in TurkeyPrivatization of Health Sector in Turkey

Filiz TepecikFiliz Tepecik

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Since 1980s developing countries have Since 1980s developing countries have been forced to make changes in many been forced to make changes in many areas by Washington Consensus. areas by Washington Consensus. Developing countries, sometimes Developing countries, sometimes willingly sometimes reluctantly, have willingly sometimes reluctantly, have to give up on their Keynesian to give up on their Keynesian economic policies.economic policies.

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Washington Consensus, Washington Consensus, iin some sectors, n some sectors, such as such as the the healthhealth sector sector, , the the educationeducation sectorsector, is suggested that public , is suggested that public investments should be increased. But, investments should be increased. But, these investments have some limitations these investments have some limitations because of Consensus’ other articles. So, because of Consensus’ other articles. So, increasing investments in health sector increasing investments in health sector has to be thought together with the has to be thought together with the limitation of government role on market. limitation of government role on market.

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1980’s witnesed to increase the cost of the 1980’s witnesed to increase the cost of the health sector all countries. But reasons of health sector all countries. But reasons of the cost is different the cost is different developing developing countries countries

than developed ones. than developed ones.

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PROVISION OF SERVICESPROVISION OF SERVICES SOURSES OF FUNDSSOURSES OF FUNDS

PublicPublic State Budget throughState Budget through

Hospitals of Ministry of HealthHospitals of Ministry of Health Ministry of HealthMinistry of Health

Hospitals of SSK (Social Insurance Hospitals of SSK (Social Insurance Organization)Organization)

Higher Educational CouncilHigher Educational Council

University HospitalsUniversity Hospitals Ministry of DefenceMinistry of Defence

Hospitals of MunicipalitiesHospitals of Municipalities Other Public Sector SourcesOther Public Sector Sources

State Economic EnterpriseState Economic Enterprise Compulsory InsuranceCompulsory Insurance

Hospitals of Ministry of DefenceHospitals of Ministry of Defence SSKSSK

Other MinistriesOther Ministries Bağkur (Insurance Scheme for self -employmentBağkur (Insurance Scheme for self -employment

PrivatePrivate Emekli Sandığı (Goverment Employees Retirement Emekli Sandığı (Goverment Employees Retirement Fund)Fund)

Turkish and International HospitalTurkish and International Hospital Private Insurance FundsPrivate Insurance Funds

Private PhysiciansPrivate Physicians Out-of Pockets Payments (User Charges)Out-of Pockets Payments (User Charges)

Private LaboratoriesPrivate Laboratories

Private PharmacistsPrivate Pharmacists

PhilanthropicPhilanthropic

Source: Health Sector Master Plan Study, Price Waterhouse/AnSource: Health Sector Master Plan Study, Price Waterhouse/Ankara,kara, State Planning Organi State Planning Organizzation, 1990ation, 1990

Table1: Provision and Financing of Health Services

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CRACTERISTICS OF HEALTH SECTOR (1)CRACTERISTICS OF HEALTH SECTOR (1)

MULTI-HEADED STRUCTURE MULTI-HEADED STRUCTURE SSKSSK ((Social Insurance OrganisationSocial Insurance Organisation):):SSK SSK is a social security organisation for private sector and blue-collar public sector workers, is a social security organisation for private sector and blue-collar public sector workers,

and functions both as an insurer and as a health care provider. Members mainly use SSK and functions both as an insurer and as a health care provider. Members mainly use SSK services but are referred when needed to MoH, University and private health institutions.services but are referred when needed to MoH, University and private health institutions.

Bag-Kur Bag-Kur ((The Social Insurance Agency of Merchants, Artisans and the Self-The Social Insurance Agency of Merchants, Artisans and the Self-EmployedEmployed))

Bag-Kur is the insurance scheme for the self-employed. All contributors have the same Bag-Kur is the insurance scheme for the self-employed. All contributors have the same entitlement to benefits covering all outpatient and inpatient diagnosis and treatment. Bag-entitlement to benefits covering all outpatient and inpatient diagnosis and treatment. Bag-Kur operates no health facilities of its own, but contracts with other public service Kur operates no health facilities of its own, but contracts with other public service providers.providers.

Emekli Sandığı Emekli Sandığı ((Government Employees Retirement Fund (GERF)Government Employees Retirement Fund (GERF)GERF, primarily a pension fund for retired civil servants, also provides other benefits GERF, primarily a pension fund for retired civil servants, also provides other benefits

includingincluding health insurance. There is no specific health insurance premium collected from health insurance. There is no specific health insurance premium collected from either active civileither active civil servants or pensioners. The scheme is financed by general budget servants or pensioners. The scheme is financed by general budget allocations.allocations.

Green cardGreen cardThe Green Card system was established in 1992 and is directly funded by the Government. The Green Card system was established in 1992 and is directly funded by the Government.

Poor people earning less than a minimum level of income which is defined by the law, Poor people earning less than a minimum level of income which is defined by the law, are provided a special card giving free access to outpatient and inpatient care at the state are provided a special card giving free access to outpatient and inpatient care at the state and some university hospitals, and covering their inpatient medical drug expenses but and some university hospitals, and covering their inpatient medical drug expenses but excluding the cost of outpatient drugs.excluding the cost of outpatient drugs.

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CRACTERISTICS OF HEALTH SECTOR (2)CRACTERISTICS OF HEALTH SECTOR (2)

Low Income levelLow Income levelLow premimumLow premimum

Lack of dataLack of data Low goverment power - coalitions-Low goverment power - coalitions-

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‘‘Transformation program in health’ Transformation program in health’ general health insurance,general health insurance,family medicine, family medicine, data network systemdata network system,,the provision and finance of service the provision and finance of service

separatesseparates,,Decresing the cost of healt servicesDecresing the cost of healt services

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EXPENDITURE OF FUNDS SOURCE OF FUNDSEXPENDITURE OF FUNDS SOURCE OF FUNDS

Public Public (%)(%) PrivatePrivate (%)(%) TotalTotal (%)(%)

State Budget State Budget 69.069.0 6666 0.50.5 0.860.86 69.569.5 42.6342.63

Insurance Funds 31.031.0 3030 4.54.5 7.767.76 35.535.5 21.7721.77

User Charges 5.05.0 44 53.053.0 91.3891.38 58.058.0 35.6035.60

Total 105105 100100 58.058.0 100100 163.0163.0 100100Source: Health Financing Policy Options Study For Türkiye, Health Insurance Commission of Australia, PCU, MoH, 1995

Table 2. Aggregate sources of funding for health services and expenditure, 1993

(In 1994 Prices, Trillion TL)

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Grafik 13 - Yıllar İtibariyle Aktif - Pasif Oranı

24,3

16,88

9,036,29 2,45 2,39 2,44 2,02 1,97 1,72 1,75 1,72 1,69 1,7760851092,002797573,47

0,00

5,00

10,0015,00

20,00

25,00

30,00

1960 1975 1990 2000 2003 2006(ARALIK)

Oran

Source: http://www.ssk.gov.tr/sskdownloads/anasayfa/istatistik/subat_2007.xls

Active – passive Balance for SSKActive – passive Balance for SSK

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Budget Transfers to the Social Security Institutions (1994-2005)

0,00%0,20%0,40%0,60%0,80%1,00%1,20%1,40%1,60%1,80%2,00%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

years

GN

P %

SSKBağ-KurEmekli Sandığı

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Tuba Agartan says that In some low-income countries,Tuba Agartan says that In some low-income countries,…,health sector reform has been driven by wider …,health sector reform has been driven by wider macro economic policy and the implementation of macro economic policy and the implementation of structural adjustment programs which require control structural adjustment programs which require control of public expenditure and changes in public and of public expenditure and changes in public and private sector institutional structuresprivate sector institutional structures..

The economic strategy, adopted in 1980’s, which The economic strategy, adopted in 1980’s, which ‘aimed at decreasing both the scale of public sector ‘aimed at decreasing both the scale of public sector activity as well as the degree of state intervention in activity as well as the degree of state intervention in the operation of the market’ represent the direct and the operation of the market’ represent the direct and indirect influence of the international fiscal indirect influence of the international fiscal community, World Bank and IMFcommunity, World Bank and IMF..

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3. IMPLEMENTATION AND MAJOR CRITIQUES3. IMPLEMENTATION AND MAJOR CRITIQUESIn transformation program, government has aimed to take little steps one at a time. By In transformation program, government has aimed to take little steps one at a time. By

doing this, it has prevented big reactions. However, this led repeated discussions on doing this, it has prevented big reactions. However, this led repeated discussions on every little steps. Sometimes,every little steps. Sometimes, harsh discussion may lead to a situation where major harsh discussion may lead to a situation where major components of the reform are never implemented or related laws are overturned by components of the reform are never implemented or related laws are overturned by the Constitutional Court. Sometimes, the goverment does not leave much room for the Constitutional Court. Sometimes, the goverment does not leave much room for the critics to formulate and publicize their opinions about the reform and their the critics to formulate and publicize their opinions about the reform and their alternative proposals. For instance, one of these steps was a Protocol which dated alternative proposals. For instance, one of these steps was a Protocol which dated 07.01.03. It was signed among the MoH, Ministry of Labor and Social Security, 07.01.03. It was signed among the MoH, Ministry of Labor and Social Security, and the Ministry of Finance that made it possible for the beneficiaries of Bag-Kur, and the Ministry of Finance that made it possible for the beneficiaries of Bag-Kur, Emekli Sandigi, and active public employees and green card holders to be able to Emekli Sandigi, and active public employees and green card holders to be able to receive treatment at any SSK institution; and for the SSK beneficiaries to be able to receive treatment at any SSK institution; and for the SSK beneficiaries to be able to benefit from MoH hospitals. The following step will have been all beneficiaries benefit from MoH hospitals. The following step will have been all beneficiaries will be able to any hospital (private or public). Final aim constituted the will be able to any hospital (private or public). Final aim constituted the establishment of the ‘service partnership in health care institutions’, and hence the establishment of the ‘service partnership in health care institutions’, and hence the general health insurance. The most opponent of the reform program, the Turkish general health insurance. The most opponent of the reform program, the Turkish Medical Association (TTB) responded immediately, denouncing the protocol for Medical Association (TTB) responded immediately, denouncing the protocol for transforming SSK into an institution which would be solely responsible for transforming SSK into an institution which would be solely responsible for financing of health systems. With the protocol, SSK simply buy services instead of financing of health systems. With the protocol, SSK simply buy services instead of providing them itself. The association also claimed that this method of buying providing them itself. The association also claimed that this method of buying services from MoH hospitals or private institutions would increase the costs for services from MoH hospitals or private institutions would increase the costs for SSK three-foldsSSK three-folds..

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But at the same time, the change was also fostered by the idea that welfare But at the same time, the change was also fostered by the idea that welfare services were to reach European levels and all of the people should benefit services were to reach European levels and all of the people should benefit from it. Turkey wants to become a member of the European Union. This from it. Turkey wants to become a member of the European Union. This object functions as a crucial incentive for the government to implement its object functions as a crucial incentive for the government to implement its reform package. reform package.

They may be right about escalation of the cost. As it is mentioned on one of They may be right about escalation of the cost. As it is mentioned on one of OECD’s studies ‘“public provision of care” appears associated with lower OECD’s studies ‘“public provision of care” appears associated with lower overall spending on health care’overall spending on health care’. . The cost is very important since The cost is very important since transformation started because health was a burden to public budget. transformation started because health was a burden to public budget. Although the association and other opponents declared that they would not Although the association and other opponents declared that they would not like to have new regulations which cause an increase in the cost, their like to have new regulations which cause an increase in the cost, their suggested system is totally based on government budget and all services suggested system is totally based on government budget and all services are free. are free.

In other words, very costly new regulation. Another critique is that the system In other words, very costly new regulation. Another critique is that the system protects those who have income but leaves those who don’t to the market protects those who have income but leaves those who don’t to the market forces. At this point, government stated that outpatient treatment was going forces. At this point, government stated that outpatient treatment was going to be free. This means another cost item.to be free. This means another cost item.

““Health is totally left to market forces or health become goods” is an other Health is totally left to market forces or health become goods” is an other critique. critique. Most of the time, these critics were discredited by the government Most of the time, these critics were discredited by the government for being too much ‘ideologically-oriented’. for being too much ‘ideologically-oriented’.

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CONCLUSIONCONCLUSIONHHealth sector in Turkey hasn’t improved a lot since ealth sector in Turkey hasn’t improved a lot since

1960s. To solve this problem has become the object 1960s. To solve this problem has become the object of all political parties in power since 1980s. But, two of all political parties in power since 1980s. But, two things were obstacles for them. things were obstacles for them. Political limitation:Political limitation: Till 2000, coalition governments could not produce Till 2000, coalition governments could not produce an effective solution and even they produced a an effective solution and even they produced a solution, they could not carry out effectively. solution, they could not carry out effectively. Financial limitation:Financial limitation: Problems of health were not Problems of health were not possible to produce solution with tax revenue. possible to produce solution with tax revenue. Because of this, political authorities have become Because of this, political authorities have become depended on the external forces.depended on the external forces.

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The problems of health sector are obvious. But the The problems of health sector are obvious. But the chosen path for the solution is by sign coming from chosen path for the solution is by sign coming from outside. One of the guides is from Washington based outside. One of the guides is from Washington based institution (IMF, World Bank etc.) because there are institution (IMF, World Bank etc.) because there are payment balance problems in Turkey. The other payment balance problems in Turkey. The other guide is EU and their demands just because of the guide is EU and their demands just because of the attempts to enter EU. The third guide of course is attempts to enter EU. The third guide of course is Turkish people. As long as political authority is able Turkish people. As long as political authority is able to get an agreement between these three guides, it to get an agreement between these three guides, it will be successful. will be successful.

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Personally, I hope some parts of this transformation are Personally, I hope some parts of this transformation are not stuck between these jigsaw puzzle policies. The not stuck between these jigsaw puzzle policies. The attempts of establishing database and free first step attempts of establishing database and free first step examination are some of them. Database is very examination are some of them. Database is very important: Who treats whom for which illness with important: Who treats whom for which illness with what method and how much? This database can be what method and how much? This database can be the answer to many further critiques. However, to the answer to many further critiques. However, to form database is very costly. form database is very costly.

If this transformation program is aborted, is not it If this transformation program is aborted, is not it another cost item?another cost item?