International Journal of Caring Sciences 2014 May-August Vol 7 Issue 2 390

S P E C I A L P A P E R .

The Place of Private Health Insurance in Cyprus and its Prospects

Andreas Kontopoulos BSc, MSc in Pharmacy, MSc, PhD Candidate in Health Management

Eva Kontopoulou, Product Manager & Medical Insurance Underwriter at Trust Insurance Cyprus ltd

Abstract

The aim of this study is to investigate the future and the place of private health insurance in Cyprus. Even though this phenomenon has only recently appeared in Cyprus, it seems that up to now, and based on the current health system, it has not achieved to convince the public for its necessity. It is believed that by now, the right conditions have been created in Cyprus in order for this product to enjoy the market share it deserves. It is estimated that the PHI will receive the part of the market share that amounts to them by having the place of a mainly supplementary health care insurance, especially after the application of the National Health System.

Key words : Health Insurance, Private Health Insurance

Introduction constitute this need for Cypriots even more urgent. It is commonly acknowledged that health and social security systems in general, in most The aim of this study is to investigate the developed countries, face significant future and the place of private health financial problems. insurance in Cyprus. Even though this phenomenon has only recently appeared in The main causes are demographic ageing, Cyprus, it seems that up to now, and based the increased demand for health services and on the current health system, it has not the technological revolution in the field of achieved to convince the public for its health. (Liaropoulos 1993) necessity. It is believed that by now, the right The impoverishment citizens have to face in conditions have been created in Cyprus in the recent years as well as the cuts in the order for this product to enjoy the market spending on the health system will force in share it deserves. the near future an all-the more increasing A disease is almost always inextricably number of people to ask for health care linked to financial problems, even in the coverage in private health insurance cases when high levels of care are provided schemes. The waiting queues, the deficiency for completely free. Financial problems can in basic pharmaceutical products will arise by the loss of income or the reversal of

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International Journal of Caring Sciences 2014 May-August Vol 7 Issue 2 391 personal plans and prospects (Liaropoulos for one to insure against a danger then this 1993). danger needs to be simple and not to include any aspect of interest for the insured person Definition of Private Health Insurance (Christophides 1998). Private insurance is a form of a social The notion of insurance danger insurance system with a view to protecting the person from the repercussions of the It is a plain fact that the danger of losing disease (as this is defined by the World one’s health is unpredictable. This is what Health Organisation), accidents and in some drives in the person the urgent need to feel cases of motherhood. Additionally it safe against the danger that might threaten constitutes a system of personal initiative him/her. This safety consists of the certainty that aims to extend the cost recovery of that the required health services will be health services. In most cases it acts as a available both in quantity as well as in complimentary institution to public health quality at the right time (Liaropoulos 1993). insurance by covering for its shortages Private Health Insurance predicts the (Souliotis 2006). possibility of a damage to be incurred based on laws of probability and statistics. The Health Insurance provides the person with possibility that a person develops a disease the capacity to use health services and at the against which he is protected, is considered same time it pays up for his income loss due an uncertainty while as the time passes, the to his/her absence from work. The person possibility to contract this disease increases that wishes to be insured seeks for a carrier in such a rate that makes it a certainty. In i.e. for a private insurance company that other words, it is dangerous. In the following takes up the role of “rectifying the damages” lines an attempt to clarify the notion of (financial loss) from random incidents that insurance risk will be made. The concept of have already been agreed. It is worth noting danger comprises the possibility of damage, here that the conditions and provisions of the the idea of uncertainty with regards to the agreement are different for every insured occurrence of the damage and the issue of person. Insurance is based on the creation of the significance of the damage. It is a personal and particular contract that sets: distinguished by its possibility and frequency the object to be insured, the amount of of occurrence. It also depends on age, sex, compensation and the premium i.e. the health conditions, way of life, conditions of amount that the insured person is called to life etc. In theory, any danger could be pay top the company in order to ensure insured. Nevertheless, in order to insure a his/her coverage. This amount ranges particular danger, it needs to be defined by depending on the extent of the assumed the following characteristics: (Roupas danger. 2006). What is insurable • The danger to be common for a wide In order for something to be insurable, some number of people preconditions need to be met. Most • The danger to de clearly defined importantly, it is salient to make sure that the from the beginning damage or loss to be incurred can be measured in money and under normal • The danger should be unexpected conditions there should be a rationally great and unpredictable number of similar dangers to be insured • The danger should not be against. Additionally, one has to consider the conspicuous insurable interest of the insured person with regards to the insured object. One can only • The danger should not be insure an object if a loss of or damage of the unimportant object will cause him a financial loss. It is • The danger presupposes that the also significant that the damage or loss must damage to be incurred can be measured have occurred by chance as far as the insured person is concerned whilst insurance cannot • The cost of the insured risk should go against public interest. Finally, in order be allowable

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• The danger should create insurance derived when the coverage of the interest. consumption of goods and health services from the public domain does not satisfy the • The insured danger should not go insured people and so they are forced to seek against social models and the for services from the private field. This principles that dominate a society. deficiency regards both the extent of the Private Health Insurance Principles offered benefits as well as their quality. The The health insurance system is an efficient person is then addressed to organised one. The current contributions are enterprises and insurance institutions that can redistributed, most of the times immediately, deliver to him complimentary or full in order to ensure health provisions and in coverage. It also seems that private funding contrast to social insurance, it has a distinct agencies contribute more to the investment character (Giannitsis, 2007). pharmaceutical expenditure. According to the bibliography, the reasons that drive one It is also defined by the following to seek for coverage from a private insurance characteristics: company are the following: (Liaropoulos • It constitutes a personal choice and it 1993) is a personal obligation of the • The quality of the services offered contracting-insured person. by the public health insurance • It is most often a complimentary • The free choice of a doctor insurance. • The free choice of a hospital or a • It is optional diagnostic centre • There is a free contract between the • The choice of food insured person and the company that constructs the insurance policy. • The choice of a hotel level care • The contracts are governed by • The choice of visiting hours commercial laws • The choice of the time of the • The contributions correspond to each acquisition of health services contracting party. Forms of private insurance • They are profit-making. Personal insurance • The benefits are personal and their Personal forms of private insurance are scale depends on the height of the provided to a limited number of people who bestowed contributions. are subscribed to the various trade unions or • It is provided by private enterprises. the various private insurance companies. The services that personal private insurance • There is no public funding in case of delivers are the coverage of expenses in the deficit when financial loss is faced case of hospitalisation while they also (Giannitsis, 2007). provide other benefits outside the hospitals The need for private insurance and other targeted allowances for their insured clients (Roupas 2006). Despite the attempts undergone in the recent years for the development of a health system Group Insurance based on the principles of a welfare state, Group private insurances are implemented health expenditure in Cyprus still falls below on a level of companies, institutions, the average of the other members of the families, clubs and other organised sets. European Union as the bibliography shows. They cover all the members of a team based It is calculated that 5.8% of GDP is spent on a collective treaty and irrespectively of with the biggest share to regard private the private case of each member (Roupas insurance (INSURANCE IN CYPRUS, 2006). Group health insurances are mostly 2009). The need for the development of delivered by private health insurance private insurance in the field of health is agencies and they provide health services for

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International Journal of Caring Sciences 2014 May-August Vol 7 Issue 2 393 the members of the “team.” These services bound to conform to the current rules and essentially cover for hospitalisation expenses decisions of the Managing committee. in private clinics, for various diagnostic tests The agencies of private insurance in Cyprus and operations. are: Bancassurance 1. SEK (Cypriot Workers Banking institutions and private insurance Confederation) companies have many things in common as 2. PEO (Pancyprian Labour they both constitutes enterprises that attempt Association) to promote the products they offer. These similarities essentially allow for joint 3. DEOK (Democratic Labour production. The term Bancassurance derives Association Cyprus) from the collaboration of the two enterprises 4. PACYDY (Pancyprian Association with a view to distribute in the market life of Public Officers) insurance products from the bank branch stores or investment products from a 5. ETYK (Association of Bank company’s sales network. (Roupas 2006). Employees) Private Insurance in Cyprus 6. OELMEK (Association of Secondary Teachers Cyprus) The development of insurance companies in Cyprus begins in the 1980s. Nevertheless, 7. POAS (Pancyprian Association of according to the Organisation for Economic Independent Trade Unions) Co-operation and Development the 8. Private insurance agencies (i.e. engagement of private insurance in the field TRUST, ΚΟΣΜΟΣ , Eurolife, Universal Life of health is limited due to the lack of tax etc). incentives. Most companies that provide health insurance do it mostly in order to Exceptions – Diversifications complete other insurance contracts. As a Private health insurances, in contrast to result, the products offered for health in their social insurance they do not cover the danger packages are most of the time simple and from certain diseases that are eligible, long- plain. As the medical cost increases, the lasting or particularly costly i.e. pre-existent demand for a complete coverage increases illnesses, optometric care, AIDS, dental care, respectively. Based on the annual report of chronic diseases, alcohol abuse, drugs, the Insurance Association of Cyprus for 2009 geriatric care, beauty surgery, there are a total of 34 registered insurance psychotherapy, psychiatric care (Liaropoulos companies. Eight of this work solely on life 1993). insurance and three with life and non-life insurance. As Elpida Constantinou notes, In order for private insurance companies to there are other insurance companies of maintain their premiums at an attractive foreign interests that are solely active in the level, they have come up with certain field of health, but as they are not registered diversifications in their contracts as it for in the association and so is no official data example happens in the contracts with on them (INSURANCE IN CYPRUS, 2009). limited use reductions. In this case, the company offers a reduction to those insured In the category of private insurance one finds who rarely use their right to compensation. the various Health Care Funds that were These diversifications also exist in the form created by trade unions in order to cover for of contracts with limited cover where a case the health care needs of their insured is covered only when for several months, members. These have a semi-government waiting lists exist in the public sector, or status and all the members of the trade union, contracts with the participation of the insured including those dependent on them, are person where a small amount burdens the entitled to them. The members are obliged to insured person either as a percentage or an pay their subscription to the association and initial amount. These diversifications also their donation to the Funds. They are also take place in the case of contracts based on

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International Journal of Caring Sciences 2014 May-August Vol 7 Issue 2 394 the use of conventional beds or medical total amount of registered mixed premiums services when the insurance companies make (excluding policy fees), has rapidly increased sure they buy beds of medical services at a and has reached 101,8 million Euros in 2011. lower cost (Liaropoulos 1993). This is contrasted to 95,8 million Euros in 2010 and 89,5 million Euros in 2009. The The future of private insurance growth in this field has been caused by the It is admittedly a fact that Cyprus is lacking continuous consumer preference for a service in a comprehensive health system and this from the private field due to the aggravation creates a s sense of dissatisfaction for the of the problems faced by the public sector present situation. The need for reform is (INSURANCE IN CYPRUS, 2011). blatantly obvious and what is most crucial is the funding capital that has a key role in the development of a health system Key financial indicators on casualty and (Adamakidou, & Kalokairinou- health insurances in Cyprus 2011. Anagnostopoulou, 2009). According to the One can find below the financial indications bibliography, the most efficient way to of the insurance industry in Cyprus in the manage and distribute funds is by creating a casualty and health domain in the years carrier through which universal coverage 2010-2011. The indicators signify the will be given. This is the case of a health demands, supplies and expenses as a system type Bismark. (Charalampous & premium index. The combined ratio is Socratous, 2009). simply a combination of three previous indicators (demand, expenses and supplies). In 2001 the Cypriot Parliament voted on a These indicators can be used by various law that calls for the introduction of a companies at a given time or by an enterprise National Health System and is now on the in the course of a number of years with a verge of being implemented. In the case of view to comparing performance and to track introducing such a system, the whole Cypriot any trends towards better or worse as well as population will be placed under its umbrella to trace any problematic areas that require irrespective of any financial criteria. Under more attention from the management. The these conditions one would expect the need lower these indicators are, the better. If there for private insurance to be severely are lower demands or expenses in relation to undermined. (The 2001 law on the National premiums, then there is a greater profit Health System (Ν.89( Ι)/2001)). (Korner, 1994).

For the time being, the developments in the Claims ratio is the difference between the financial front are constantly changing while ratios of premiums paid to an insurance globalisation has spread significantly and it company and the claims settled by the touches upon the various parameters related company. Loss ratio is the total losses that with the way health services are funded and are paid by an insurance company in the offered to the public. At the same time, one form of claims. notes a gradual preference in neo-liberal principles and policies and such a context The losses are added to adjustment expenses sets the ground for the strengthening of and then divided by total earned premiums. private insurance’s place in Cyprus As Investopedia explains “loss ratio” varies (Charalampous & Tsitsi, 2010). depending on the type of insurance. For instance, for health insurance, the loss ratio According to the Insurance Association of tends to be higher than for property and Cyprus, Casualty and Health Insurance casualty such as car insurance. This indicates policies represent in 2011 an estimated how well an insurance company is doing. 21.7% of the total amount of non-life This ratio reflects if companies are collecting insurances. premiums higher than the amount paid in Data on the premiums offered by insurance claims or if it is not collecting enough policies on Casualty and Health indicates premiums to cover claims. Companies that that even though the rate of development has have high loss claims may be experiencing dropped to 6.3% in 2011 (7% in 2010), the financial trouble.

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Graph 1: Facts on premiums of Casualty and Health insurance policies.

Source: INSURANCE IN CYPRUS, 2011, (used with permissions from the authors)

Graph 2: INSURANCE IN CYPRUS, 2011* (used with permissions from the authors)

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Source: INSURANCE IN CYPRUS, 2011 (used with permissions from the authors) *The above graphs do not include health insurance policies that are associated with life insurance.

Investopedia also explains that expense ratio The combined ratio is comprised of the represents the ratio between underwriting claims ratio and the expense ratio. The expenses (fee paid agents, state and claims ratio is claims owed as a percentage municipal taxes, provisions to employees and of revenue earned from premiums. The other operating expenses) and premiums expense ratio is operating costs as a earned expressed as a percentage. The percentage of revenue earned from indicator is calculated by dividing premiums. The combined ratio is calculated underwriting expenses with the premiums by taking the sum of incurred losses and earned. The expenses indicators are usually expenses and then dividing them by earned low when concerning health insurance. premium. Additionally, Investopedia notes that the Investopedia explains that in the case of definition of acquisition cost ratio that is combined ratio, even if it is above 100%, a most often used in the insurance domain, company can potentially still make a profit, occurs when a company calculates the sales as the ratio does not include the income costs that are associated with the acquisition received from investments. In actual fact, of a new client in the course of an insurance many insurance companies believe that this policy. Most of these sales expenses result is the best way to measure the success of a from the commission paid to external company because it does not include contributors and agents investment income and therefore only includes profit that is earned through Combined Ratio is a measure of efficient management. profitability used by an insurance company to indicate how well it is performing in its Investopedia defines retention ratio as daily operations. A ratio below 100% shows the percent of earnings credited to that the company is making underwriting retained earnings. In other words, the profit while a ratio above 100% means that it proportion of net income that is not paid is paying out more money in claims that it is out as dividends. receiving from premiums.

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According to a study conducted by Sarah other European countries and one can Thomson και Elias Mossialos,(2009), the conclude that there is a wide spectrum for figures presented below (Graphs 1.10.2,- 4) improvement. Another key factor that can describe the situation for private hospital influence the sector’s development is the tax- insurances. It is plain that health coverage is exempt status that health insurances enjoy . still in an embryonic state when compared to

Graph 3: Spending through PHI as proportion of total health spending 1996- 2006

Source: Sarah Thomson και Elias Mossialos,(2009) (used with permissions from the authors)

Graph 4: Spending through PHI as a proportion of private health spending 1996-2006 (%)

Source:Sarah Thomson και Elias Mossialos,(2009) (used with permissions from the authors)

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Graph 5: Proportion of the population covered by PHI 2008(%)

Source:Sarah Thomson και Elias Mossialos,(2009) (used with permissions from the authors)

PHI (Private Health Insurance) (Graph National Health System. When this 1.10.5.) has the role of a substitute in System is implemented though, PHI will Cyprus today, at the absence of a acquire a more complimentary role.

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Graph 6: PHI premium income by country as a percentage of total EU PHI premium income 2006(%)

Source:Sarah Thomson êáé Elias Mossialos,(2009) (used with permissions from the authors) Graph 7: PHI average claims ratios 2006 (%)

Source:Sarah Thomson êáé Elias Mossialos,(2009) (used with permissions from the authors)

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Taking into consideration the above graph purely complimentary character and can be one can conclude that there is a wide considered a “ luxury good” (Liaropoulos L. spectrum of profit for health insurances as 1993). well as an extended field of improvement. There are also indications that public health PHI often undermine the targets of public spending is associated with expenditure on health policy in the market (which can be private insurance. It is furthermore possible different from the objectives of the public that the efficiency of public health services policy for the market). This is mostly the in the way they deal with the needs of the case regarding financial protection, equality public is linked to the spending on private in funding and the fair access to health care. insurance. However, this is most often a matter of Additionally, the extent of social protection public policy. On the contrary, PHI that is expressed through the GDP contribute to the financial protection of the percentage distributed for pension schemes, wider health system. This explains the great is another influential factor that drives people extent of government intervention in the to seek private health insurance (Liaropoulos markets. 1993). With regards to the impact on health policy Retirement age and unemployment is also targets on the extended health system, PHI directly related with the security feeling that results are key players in the provision of dominates. All these directly influence the financial protections to subscribers. At the income as well as the expenditure of social same time though, the existence of PHI insurance (Liaropoulos 1993). undermines other health policy targets even when the market regulates itself cautiously. How the current financial condition of For instance, in Germany they have allowed Cyprus took shape following the 15 th people earning a higher income to choose March, what the Memorandum provides between public and private coverage. This for the health sector and the possible was a detrimental move as the state’s funds repercussions. are severely hit. This is because the state not In general, one can conclude that the only loses the contributions of high earners Memorandum of Understanding on Specific but it is also called to cover for the high-risk Economic Policy Conditionality includes a group of people programme of economic adjustment that will The use of tax allowances for subsidising address the short- and medium-term PHI also reduces the market shares as people financial, fiscal and structural challenges that raise resources from public health care Cyprus faces. However, is it as simple as it funding in order to be privately insured. appears to be? All in all, the argument that PHI will The main goals of the programme are: contribute to a state’s financial sustainability To restore the soundness of the Cypriot by releasing pressure off the public budget banking sector and to regain the trust of the cannot be concretely based on the evidence. depositors and of the market by thoroughly It is absolutely salient for those responsible restructuring, and downsizing financial to appreciate the necessity for a new policy institutions, strengthening of supervision and route regarding the advantages and by addressing the expected capital shortfall, disadvantages of promoting the development according to the political deal that was of PHI ( Thomson & Mossialos, 2009). reached by the Eurogroup on the 25 th May The factors that influence buying of 2013 (Memorandum of Understanding on private health insurance Specific Economic Policy Conditionality) (http://www.scribd.com/doc/138159788). It is well proven that the pet capita health To continue the on-going process of fiscal expenditure on a national level are consolidation in order to correct the inextricably linked with the per capital gross excessive general government deficit, as domestic product. This link is omnipresent in quickly as possible, in particular through the case of private health insurance that has a measures to reduce current primary

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International Journal of Caring Sciences 2014 May-August Vol 7 Issue 2 401 expenditure. Also, to maintain fiscal create a co-payment formula with zero or consolidation in the medium-term, in low admission fees for visiting general particular through measures to increase the practitioners, and increasing fees for using efficiency of public spending within a higher levels of care for all patients medium-term budgetary framework and to irrespective of age. enhance revenue collection and improve the iv) Introduce effective financial disincentives functioning of the public sector. for using emergency care services in non- (Memorandum of Understanding on Specific urgent situations. Economic Policy Conditionality) (http://www.scribd.com/doc/138159788). v) Introduce financial disincentives (co- payment) to minimise the provision of To implement structural reforms in order to medically unnecessary laboratory test and support competitiveness and sustainable and pharmaceuticals. balanced growth, allowing for the unwinding of macroeconomic imbalances, in particular vi) The council of ministers should adopt a by reforming the wage indexation system new decision regarding the restructuring plan and removing obstacles to the smooth for public hospitals. This plan will improve functioning of services markets. quality, and optimise costs while redesigning the organisational structure of the hospital More precisely, with regards to the domain management, by putting into practice of health and health care expenditure, the recommendations from the 2009 “Public Cypriot Government has pledged the Hospital Roadmap.” following: (Memorandum of Understanding on Specific Economic Policy Conditionality) vii) Assess and publish before parliamentary (http://www.scribd.com/doc/138159788). discussion the potential risks and benefits of the planned introduction of the National In order to strengthen the sustainability of Health System (NHS) in an updated actuarial the funding structure and the efficiency of study that takes into account possible public healthcare provision, the following proposals for implementing NHS in stages. steps should be followed before the first financial aid disbursement (Memorandum of Additionally, the other partners in the Understanding on Specific Economic Policy programme will first examine and then Conditionality) negotiate with Cyprus on the application of (http://www.scribd.com/doc/138159788). the following measures: (Memorandum of Understanding on Specific Economic Policy i.) Abolish the category of beneficiaries class Conditionality) "B" and all exemptions for access to free (http://www.scribd.com/doc/138159788). public health care based on all non-income related categories except for persons viii) Make the award of the tender for the IT- suffering from certain chronic diseases infrastructure conditional upon the results of depending on illness severity. the study and the decision for implementing NHS. ii) As a first step for a system of universal coverage, introduce a mandatory ix) Reconsider the income limits for contribution in health care for public officers entitlement to free public health care, in and retired public employees. The comparison with the eligibility criteria for contribution should reach 1.5% on gross social assistance. At the same time, it will be wages and pensions. The measure will be ensured that co-payment will be examined by the second quarter of 2014 with implemented for public health care in order the other members of the programme. For to effectively protect people and homes from families with three or more dependent disastrous health expenditure. (Q4-2013). children, participation in this health care x) Create protocols for laboratory tests and measure will be voluntary. the prescription of pharmaceuticals based on iii) Increase fees for medical services for thorough scientific evidence. non-beneficiaries by 30% in order to reflect xi) Introduce a coherent regulatory the associated costs of medical services and framework for pricing and reimbursement of

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International Journal of Caring Sciences 2014 May-August Vol 7 Issue 2 402 goods and services based on the actual level Economic Policy Conditionality) of costs incurred in accordance with Article (http://www.scribd.com/doc/138159788). 7 of Directive 2011/24/EU of the European On the one hand, one might argue that at Parliament and of the Council of 9 March least with regards to health care, the 2011. An interim report will be ready by memorandum sets clear time schedules for [Q3-2013]. applying related measures in order to finally xii) Conduct an assessment of the basket of move on to the application of the National the top 4 publicly reimbursable healthcare Health System based on a rational and not products in terms of annual spending to wasteful management. On the other hand, the increase cost-effectiveness of the basket of memorandum calls for the pricing of several publicly reimbursed products and prepare the services offered to citizens at a time when implementation of 10 new clinical guidelines their financial state has been severely focusing on high annual volume and high deteriorated. cost diseases [Q2-2013]. Let us move on to take a more precise look xiii) To start coding inpatient cases by the into what changes, what is abolished and system of diagnosis-related groups (DRGs) which groups lose privileges and those that with the aim of replacing the current hospital can still benefit from free medical care at payment system by payments based on public hospitals. Minister of Health Mr. Petrides, issued a statement on the 4 th April, DRGs (Q3-2013). regarding the conclusion of negotiations with xiv) In a first step, establish non-stop the Troika and everything that was achieved working time in the Health Service, in throughout. After these statements, the conjunction with moving the starting time by Ministry’s spokesman, Pampos Charilaou, half an hour (from 7.30 to 8.00) and was called to further enlighten the public on extending the flexibility period from a half to this issue in a radio programme hosted by one hour. With this modification, the weekly Katerina Eliades at Super Sport Fm Radio working hours of public officers remain Station. According to Mr. Charilaou, the unchanged, but are distributed throughout the following changes have been noted: year as follows: 37 ½ hours per week, 7 ½ Criteria for fee reduction. Certain criteria hours per day, daily (Monday to Friday): need to be met in order for anyone to be able 8.00/9.00 to 15.30/16.30. The same applies to claim a reduction in the fees needed for for the transitional period of 1.1.2013- accommodation in public hospitals. Firstly, 31.8.2013 but the starting time remains the one needs to be a Cypriot or European same (7:30) and thus the ending time is citizen who lives permanently in Cyprus. moved back by half an hour (15:00/16:00). Furthermore, he must have paid his/her Following a review, in a second step, revise contribution for at least three consecutive the regular working hours and stand-by shifts years. Finally, he must have completed his of healthcare staff, including rules to obligations as they fall under the law increase the mobility of staff; revise current regarding tax collection 1978-2013. regulations on overtime pay and fully implement existing laws on Criteria for free care. According to the recording/monitoring overtime payments Ministry’s spokesman, free medical care falls [Q1-2014] under certain financial criteria. One can benefit from free health care if his annual xv) To define a basket of publicly income is not greater than 15400 Euros. The reimbursable medical services based on same goes for a couple whose annual income objective, verifiable criteria including on does not exceed 30750 Euros while for every cost-effectiveness criteria [Q2-2013]. dependent child a further 1700 Euros are Additionally, the Cypriot government will added. inspect the possibility for the establishment Beneficiaries. As it has been mentioned by of a system of family doctors that will Mr. Charilaou, the process of applying for determine access to further levels of care. free medical care will be gradual, as the (Memorandum of Understanding on Specific application of the measures will only start on

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International Journal of Caring Sciences 2014 May-August Vol 7 Issue 2 403 the 1 st June. However, the process is still the of voluntary contribution,” Mr. Charilaou same and the citizens entitled to free medical further stated. care should take along all the attestations for Patients suffering from chronic diseases. which the law has provided until today ( These patients fall in three categories. On a social insurance, tax returns, incomes, etc.) first basis, one finds the people who, Abolishment of Beneficiaries Class “B”. regardless of their income, are entitled to free The abolishment of the category of health care in public hospitals. In the second Beneficiaries class “B” is a significant category fall the patients with specific amendment in the field of public health care diseases who are entitled to free health care as this category was until recently only if their annual income is less than 50.000 paying half of health care cost. “Today, this Euros. Finally, the third category comprises category of people is abolished. The number patients who are entitled to a number of free of people belonging to this category is services (medical care, pharmaceuticals and estimated around 17000”, Mr. Charilaou laboratory tests for the particular disease),if stated. their annual income does not exceed 15000 euros. The loss of privileges by public officers. Following the spirit of reform, the right to Fee Introduction. The changes in the field free care in public hospitals is repealed for of public health presuppose the introduction those government officials and public of fees in medical care for those entitled to it. officers whose previous entitlement was More specifically, for the general practitioner based on their status rather than on financial the fee is three euros, for the specialised criteria. From the 1 st June they are called to doctor the fee is six euros and half a euro for pay 1.5% on their monthly income. This every prescription drug and for every amount will be deduced by the Treasury of laboratory test. For Emergency Services the the Republic will the equivalent amount will fee is 10 euros while the only ones excluded be deducted from the professional pension of from this fee are those entitled to public retired government employees. It is assistance. important to mention that in the case of a Maximum payment policy. The flexible couple of two public officers, then they are policy is not influenced by amendments in both called to pay the 1.5% fee. the public health domain. The term The Turkish Cypriots, lose the excessive “maximum payment” is introduced in order privileges they previously enjoyed and are to help the citizens –non-beneficiaries, who from there on treated in a similar manner to based on their income they cannot pay the the rest of the public. required cost for their hospitalisation. “There is a category of patients, the non- Exceptions. However, the modifications do beneficiaries, who are entitled to come to the not touch upon semi-public institutions and public hospitals, enjoy the services there but institutions who have agreed a particular deal are obliged to pay for them. In order for this with the Ministry of Health. Regarding the measure not to be detrimental for a family’s hourly government staff, they will be budget, we have achieved, following a strong deducted a 1.2% from their monthly income, battle against the Troika to introduce the as has been the case for a number of years. notion of “maximum payment.” In this way, Voluntary contribution for a family with a non-beneficiary who will receive health three children or more. Even though care within the hospital will not be asked to insurance is mandatory for public officers, pay for the whole price, but based on his families with three children or more can income, he will be asked for a maximum voluntarily participate in the 1.5% fee system amount that will be valid for a whole year. on their income. “Families with three This goes regardless of the fact that he might children or more are vulnerable and sensitive need a second round of hospitalisation in that groups of people and following intense same year. negotiations with the Troika, the Ministry of However, government intentions regarding Health has achieved to include them in a plan the instant implementation of the NHS are

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International Journal of Caring Sciences 2014 May-August Vol 7 Issue 2 404 clear. More precisely, in a press Conference Conditions for the Implementation of the on the National Health Day , Mr. Petrides National Health System said that with regards to the National Health In order for the plan to be introduced the System, what Troika asked for “is the following conditions need to be met. updated actuarial study for the implementation of the NHS and we are • The elimination of the existing health therefore on hold,” as the new financial funds after the full application of the circumstances need to be taken into health system plan, the granting of rights consideration. The Health Minister noted to all those employed in the public health though that « I will not try to court the public nursing service. as the full implementation of the National • There is a need for the creation of Health System does not seem to be feasible intensive integrated educational courses at the moment and based on the financial for private doctors. state of the country today.” • Advantages of the National Health System Public hospitals will be independent and autonomous and based on the modern The urgent need for the completion of the management and cost accounting National Health System is dictated by the principles, without government subsidies plethora of advantages to the entitled patients and they will be in a position to compete in the public and private domain and their against all health care providers. carriers. The entitled patients gain easy • access to all the service providers in the Finally, regarding the psychiatric, dental private and public field even after their care and public health care services not collaboration. After the abolishment of the covered by the General Health Care waiting list instant patient service is System, they will continue to be under achieved, while the patients are enjoying an state auspices. (Matsis 2008). upgraded service quality thanks to their Conclusions correct allocation to the various carriers. It is clear that the Cypriot private health In the public field one achieves to decongest insurance industry is still in an embryonic doctors’ offices and hospitals since the state with regards to health coverage. In patients are directed to competing providers. particular, when one compares it to other In this way, the pressure eases on European countries, he/she can conclude that government doctors and medical institutions there is a wide area for improvement. A with a view to the better and more efficient significant factor that might influence the service and to the satisfaction of prospective development of this field is the tax-exempt clients. status that exists for health care insurance. Additionally, in the private sector one notes a On the other hand, it is predicted that with more correct exploitation of the existing the application of the last memorandum resources while the per capita cost is reduced measures on healthcare, the gates have been with the inflow of patients. Its sustainability wide opened for the development of PHI. is hence ensured. These measures call for the reduction of healthcare spending and are set to prepare In general, with the application of the the ground for the introduction of the National Health System at the same cost, i.e. National Health System. In this way, many by having the same total spending on health previously privileged groups like civil care, all the above mentioned advantages are servants and the semi-government sector attained. Another advantage could be the fact employees are eager to cover the possibly that the cost’s rate of increase will remain new health care needs through the PHI. constant at lower levels, similar to that of Finally, it is estimated that the PHI will other European countries. receive the part of the market share that

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International Journal of Caring Sciences 2014 May-August Vol 7 Issue 2 405 amounts to them by having the place of a Insurance Association of Cyprus, Annual report, mainly supplementary health care insurance, (2011) INSURANCE IN CYPRUS directory especially after the application of the and statistical information. National Health System. When this occurs, Investopedia, http://www.investopedia.com (last things will be clearer and the public will get retrieved 15.09.2013) to understand the extent of health coverage Korner S., translation P. Pantelis (1994), provided by the National Health System. Financial Context and Insurance, Insurance Institution of Cyprus edition, pp.143-147

Liaropoulous L. (1993), Private Health Insurance, References its role, problems and its problems in Greece, Adamakidou, Th. Kalokairinou- Edition Financial Forum, Athens, pp. 15-18, Anagnostopoulou, A. (2009) The financing 47-52 methods of hospital and primary health care in Matsis S. (2008), Study on Medical and Greece. Nosileftiki 48(1):37-49 Pharmaceutical Care in Cyprus and the Charalampous, A., Socratous, S. (2009). National Health System, Nicosia Descriptive Analysis of the Cypriot National Memorandum of Understanding on Specific Health System based on the main principles of Economic Policy Conditionality) the Welfare State. Nosileftiki, (48(2), pp.136- (http://www.scribd.com/doc/138159788) (last 142. retrieved 30.07.2013) Charalampous, A., Tsitsi, Th. (2010) The impact Press Conference of Minister of Health Mr. P. of globalisation on the field of health and the Petrides for World Health Day, 04/04/2013 development of supernational buffer frame. Roupas Th. (2006), Private Insurance and Health Archives of Greek Medicine. 27(1):106-112 Services, Papazisi editions, Athens Charilaou Pampos, spokesperson of the Ministry Sarah Thomson, Elias Mossialos, 24th June 2009, of Health in radio show hosted by Katerina Private health insurance in the European Eliades at radio station Super Sport FM., Union Final report prepared for the European 15/04/2013 Commission, Directorate General for Christophides Yiannakis (1998), basic data on Employment, Social Affairs and Equal insurance, Edition iv, Insurance Institution of Opportunities, LSE Health and Social Care, Cyprus, pp. 6-10. London School of Economics and Political Giannitsis, T. (2007) The issue of insurance (that Science pp.25-63 lacks policy)and a solution. Edition Polis, Souliotis K. (2006), Health policy and health Athens. economy: strategic planning-organisation and Government Newspaper (2001) Law No. 3497 “ management, financial functions and policies , Law that calls for the introduction of a Papazisis editions, Athens national health system and related matters” 89 (I)/2001

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