Contributions to Publicly Financed Health Care and their Coordination in the

European Union

Filip Křepelka (krepelka@law.muni.cz)

Masarykova univerzita, Brno, CZ

Private and public financing of health care

• Money for health care: direct payments – private insurance – public insurance – health care tax – general taxation.

• Who pays? individuals, family members, charity, employers, taxpayers in general.

• Organization: Insurers, charitable institutions, public funds, government.

• Public financing prevails in Europe.

Explanation and justification of public health care insurance

• Traditional institutions developed in the past when there was no general public health care insurance.

• Autonomous schemes – managed by insured persons, employers, trade unions…

• Social differentiation – different schemes are available for social groups

• Private investment into organization of public health care insurance and providers of care.

• Competition among insurers and providers of health care.

Government Interventions

Fixing model of public insurance: individual, family co-insurance, insurance for future based on contemporary income etc.

Setting construction and rates of contributions to public insurance.

Redistribution among funds and contributions of government for inactive paying no contributions.

Requrements on private insurance (anti-discrimination).Increased control if private insurers allowed to manage

public insurance (coverage, profits etc.). Control of prices of health care.

Etatist tendencies

• Integration of contributions to public health care insurance with general taxation of income – substantive, procedural and institutional measures.

• Takeover and control of funds – making tham effectively part of government.

• Nationalization of health care providers or increased control of their decision making.

• Direct financing of health care providers or government reimbursement.

Tendencies towards privatisation and its limits

• Health care providers largely privatized in many countries, they compete, however, for limited amount of public money.

• Commercialization of public health care insurance funds.

• Increasing co-payment of patients. • Privatization of health care and its financing

increases inequality of health care. • „Obamacare“ (USA) – effort to reduce inequality

with incentives for private insurers, redistribution (taxation cadillac policies)

Nature of contributions to public health care insurance

• Competing tendencies, rapid reforms and importance of other private and government financing blurr nature of contributions to public health even on national level.

• It is difficult to compare correctly various models of financing including contributions on international level.

• Public insurance or specific health care taxes are the most important for financing of health care in Europe. However, it is difficult to categorize all models.

Financing of health care for migrants

• Short-term migrants remain uncovered in general, private insurance is often required for entry and stay,

• Middle-term migrants can be treated uneaqually if there is no requirement of equal treatment – resort to private insurance.

• Long-term migrants integrated in economy and society are usually treated equally (same taxes and same benefits).

• Law of the European Union requires equal treatment of nationals of other member states.

International Taxation and its Coordination

• Residents are taxed for worldwide income and enjoy personal deduction.

• Non-residents are taxed for income in the territory. • Double taxation curtails cross-border economic activities. • Tax treaties exclude or reduce double taxation. • Tax treaties treat differently health care taxes and

contributions to public health care insurance. • The European Union has not supranationalized

coordination of international taxation. Bilateral treaties among the member states are applied together with case law implementing basic economic freedoms.

Coordination of social security

• Social treaties or supranational law of the European Union (regulation 883/2004)

• Principle of single state – every individual shall be protected by only one member state.

• Member state of employment or individual business is priority, state of residence is secondary criterion.

• The principle of single state is applied also on contributions.

• Solely one member state shall thus collect contributions. Other are excluded to do it.

Problem 1: Parallel employment or individual business

• People having employment or individual business in two or more member states.

• States are free to decide whether income in other member state shall be considered for contributions to health care.

• If yes, contributions shall be paid in the member state of residence according to its law also from incomes in the second (and other) member states.

• Administrations of social security shall cooperate in enforcement. Contributions from employers?

• Place of employment and residence can be easily manipulated to avoid burden if contributions or income taxation are excessive.

Problem 2: minor and temporary employment

• Numerous Slovak students study at Czech universities (better quality, no fees, intelligible language, tradition, equal treatment based with both bilateral treaty and

• Czech Republic extended contributions to minor employments due to misuse of them to avoid contributions to social security and for publich health care insurance.

• Slovak students having mini-jobs switch automatically to Czech public health care insurance. They do not want it and often do not know about it. They are penalized if they do not notify change if they visit their own physicians in Slovakia.

• Minor and temporary employments shall not be regarded as criterion for competence of member states.