The health care system in Albania, as in all other ex-communist countries of Central
and Eastern Europe (CEE), is rooted in the Soviet “Semashko” model. The legacies of
the Semashko system still remain visible especially in the state ownership of public
healthcare institutions, public provision of the services, as well as the funding
from the general tax base (especially for secondary and tertiary care) (1). WHO data
show that in 2013, the total health care expenditure for the country amounted to 5.9%
of its GDP (2). This is relatively high compared to other former communist CEE or
Former Soviet Union (FSU) countries, but still much lower than the average 8.5% for
the EU15 countries (2). However, only about 48.4% of the total health care spending
in Albania comes from the general state budget (2), and the share of private expenditures
and out-of-pocket expenditures is relatively high (3). The utilization of health insurance
in Albania remains low (4). In addition to this, almost 19% of all patients visiting
outpatient services and almost 44% of patients visiting inpatient services in 2008
pay informally as well (5). But, are out-of-pocket and informal payments in Albania
catastrophic to households’ budgets? If yes, what are their effects on poverty? And
more importantly, what are the main policy implications for a fast-developing country
like Albania?
The Health System in Albania
The Albanian health sector during the communist period was underfinanced, and the
investments in health technology were very low. The extensive web of primary health
care (PHC) posts and centers and the large number of local and regional hospitals
had out-dated equipment and were overstaffed (6). After the change of regime, the
main reforms were focused in PHC and have sought to transfer the financing of the
sector to the Health Insurance Institute (HII), which was established in 1994. The
HII covers the costs of PHC visits, reimburses (part) of the drugs’ prices for drugs
in the reimbursement list, as well as covers some costs of secondary and tertiary
care. Ministry of Health (MoH) remains the owner and administrator of all public hospitals
(4). During the past years, interventions in the hospital sector were mainly targeted
to infrastructure and technology improvements and little has been done in terms of
reforming the financing of providers.
Although the funding of PHC is through the HII, the sector is still dependent on subsidies
from the general state budget. In 2013, about 74.1% of total public expenditure on
health came from social health insurance funds while the rest came from general taxes
[WHO (2)]. The health insurance contribution consists of a flat rate of 3.4% of gross
salaries. However, numbers of contributors are still low due to the (still large)
informal sector of the economy.
Since 2008, patients are required to pay a small fixed co-payment per visit for PHC
visits or specialized treatment in hospital care (7). Despite the fact that by law
all citizens should be covered by health insurance, surveys show that about 40–45%
of the population declares to have a health insurance booklet (5). Previous studies
have indicated that catastrophic health care payments remain high in the country (4).
In fact, three main conditions are supposed to increase the incidence of catastrophic
payments in health care: (i) the existence/availability of health care services requiring
out-of-pocket payments, (ii) low capability from the public to pay for health care,
and (iii) lack or inefficiency of the health care insurance (8). All these conditions
seem to hold in Albania given that: (i) patients visiting public health centers are
still required to pay out-of-pocket for many services and drugs that otherwise would
be free-of-charge (5), (ii) poverty seem to be a constant concern during the last
decades (9), and (iii) public health insurance is still not able to cover for all
health care expenditures incurred in the public facilities (2).
Formal and Informal Payments in Albania
Albania’s limited public spending on the health care sector (as compared to other
Balkan or Eastern European countries) (10) has resulted in an increased reliance on
out-of-pocket payments for both inpatient and outpatient care. Survey data report
that for the lowest income quintile, the share of total out-of-pocket spending in
inpatient services has gone up to 60% of the total monthly household expenditure (4).
These vulnerable or poor groups of the society lack protection against out-of-pocket
spending and this may contribute to increased inequalities but also to barriers to
access (11). Although inpatient care is almost free for all those in possession of
a health insurance booklet (except for some co-payments for high-cost diagnostic tests),
in reality, most of the people visiting this service report to have paid substantial
amounts of out-of-pocket payments (4). Out-of-pocket payments consist mainly of fees
for services received, money to buy medicines, payments for laboratory work, transport
expenditures, as well as money paid informally to medical staff. Expenses on medicines
are the highest in outpatient care (12).
In general, there is a lack of clarity between formal and informal payments in Albania
(4). The changes in legislation in early transition years imposed co-payments for
users of PHC. Albanian health care seekers are therefore confronted with other formal
out-of-pocket payments for laboratory tests, medicines, and transportation costs.
However, it is not always clear whether such payments are paid formally or informally
(13). As the Albanian legislation prohibits direct payments to medical staff, most
of the informal payments studies focus exclusively on payments paid to medical staff.
The amount paid informally to medical staff also differs (14). The main factors of
this relate to attributes of patients (i.e., economic status, residence in the same
locality, personal relations, and societal/political position) attributes of providers
(specialists vs. general practitioners, highly specialized medical staff, and availability),
the type of services (inpatient/outpatient, locality, specialty, complexity of treatment,
and technology involved), and other contextual factors (like urbanization of the locality,
social norms, etc) (5, 14). Payment mechanisms also tend to differ and are complex.
Despite the illegal nature of such payments, they are reported to take place in the
open and are often not something that is hidden. Patients may gather information from
social networks but in many cases the nurses or physicians directly induce the payments.
Some of these strategies involve talking about the low salaries, leaving money on
the table (to show that others have also paid), requesting them from patients or relatives
accompanying the patient, acting unfriendly, or delaying care (14). The impact of
these payments on patient’s welfare has proven to be quite substantial and the situation
is particularly dramatic for people in the lowest quintile of the expenditure distribution
(15).
Are Out-of-Pocket Payments in Albania Catastrophic for Households’ Budgets?
Out-of-pocket expenditures for health care can be a heavy burden on household’s expenditures.
If they are too high, they can also hinder household’s long-term income generating
capabilities. Out-of-pocket expenditures for health care are considered catastrophic
when they force individuals or households to significantly decrease their standard
of living now or in the future (16). This pushes them not only into a closed circle
of inter-generational transmission of poverty (17) but may also prevent them from
getting necessary health care treatment.
A recent study (4) shows that payments per health care episode constitute a substantive
share of total monthly per capita expenditures. When looking at the share of out-of-pocket
expenditures over total non-health expenditures and using a 10% threshold to define
a catastrophic health care payment for that household, almost 22.6% of the population
had catastrophic out-of-pocket payments in 2002, while this incidence declined in
2005 and 2008 to, 17.6 and 13.3%, respectively. Despite this decrease, the incidence
of catastrophic out-of-pocket payments remains high, and moreover, this is higher
for vulnerable groups of the population. Evidence from the same study (4) shows that
for the lowest quintile, this incidence declined by a lower extent for the poorest
quintile, i.e., from 29.9% in 2002 to 28.7% in 2005 and 20% in 2008.
In fact, the effect of catastrophic out-of-pocket payments is most worrying if it
pushes households in poverty. The pre-payment and post-payment poverty headcount rates
can tell about this effect. Jan Pen’s parade of “dwarfs and a few giants” (18) depicts
total household expenditures with and without (gross and net) of total out-of-pocket
payments and helps to visualize this (see Figure 1).
Figure 1
Poverty impact of health expenditure on the distribution of non-health expenditure.
(A) Year 2002, (B) year 2005, and (C) year 2008. Source: Tomini et al. (4).
The graphs show clearly that the effect of out-of-pocket payments may be catastrophic
(i.e., push households below the food poverty line of 2 US$ a day) and that this is
not only observed for the poorest quintiles. The graphs show also clearly that an
increase in formal or informal payments can be problematic even for the highest quintiles
in the absence of insurance to compensate for the financial losses.
Limitations to Studying Catastrophic Impact of Out-of-Pocket Payments
One of the main limitations in studying the impoverishing effect of out-of-pocket
and informal payments is the lack of information on those patients that needed health
care but could not afford it. Survey data give information only on patients that have
sought health care and do not allow estimating the gap that needs to be filled in
order to ensure equal access for everyone. Other limitations relate to the most likely
underestimated effect of informal payments. Survey data for Albania allow distinguishing
only the part of informal payments paid as “gifts” to medical staff. Other definitions
of informal payments may include more types of informal payments. Additional data
(allowing for a more comprehensive definition of informal payments) may provide more
insights on the overall causes of informal payments and the burden imposed on households.
Also household surveys are not necessarily randomized based on health and health care-related
information. This may lead to an underrepresentation of certain groups (especially
high utilization groups like the elderly or chronically ill) and therefore underestimate
the effect of out-of-pocket payments for such groups.
Policy Implications
The existence of catastrophic health care expenditures raises concern. Catastrophic
health care expenditures do not only impose a higher poverty risk for people seeking
health care but may also impose barriers to access for them (19). The Albanian authorities
should seriously consider the reduction of total out-of-pocket payments, which amount
to almost 60% of total expenditures for health care in the country. This is best achieved
through ensuring the effectiveness and attractiveness of formal mechanisms of health
care financing (i.e., general tax revenues and health care insurance). While improving
the effectiveness of such mechanisms requires a better coordination and allocation
of resources, the attractiveness could be raised by adopting the structure of contributions
and co-payments so that they better reflect the income distribution. Measures like
fee exemptions or price subsidies for vulnerable groups have already proven effective
in reducing catastrophic payments in other countries (20).
Other measures like subsidized transportation for the poor or a better distribution
of health care centers would also help in this regard. But, on the other side, any
policy reform aiming to increase health care utilization of the poor should evaluate
the effect on catastrophic payments, especially for the poor and the vulnerable. Previous
research has warned that focusing only on the availability of health services can
indeed contribute to improving health of the poor but it may also increase the proportion
of poor households facing catastrophic expenditures (8).
Further research should be focused on identifying the effect of out-of-pocket and
informal payments on people who cannot afford such payments and are therefore denied
access to health care. In fact, previous research has shown that more that from the
effect of catastrophic health care expenditures, the poor suffers the catastrophic
effect of illness given the barriers to access and the consequences on the uninsured
shocks on prospective incomes from employment (19). Another interesting aspect for
future research is also the investigation of the effectiveness of policy measures,
like fee exemptions and price subsidies, in reducing the risk of falling in poverty
among particular health care seekers addressed by these policies.
Conflict of Interest Statement
The authors declare that the research was conducted in the absence of any commercial
or financial relationships that could be construed as a potential conflict of interest.