BDAR

History of health insurance funds

Everyone knows that today the National Health Insurance Fund under the Ministry of Health is one  of the most important institutions in the health sector that carries out compulsory health insurance. However, it is likely that little is known about such rather interesting historical facts, such as: in our country, as early as in 1912, it was planned to introduce compulsory insurance of industrial workers in case of illness, but the plans were thwarted by the First World War, and the first health insurance fund in Lithuania was established on 28 October 1928 In Kaunas.

In this section, we invite you to get acquainted with the interesting and „winding“ history of health insurance funds, which dates back as early as to the end of 19th century and the beginning of 20th century.

At the times of the ending of the 19th and the beginning of the 20th century, the health insurance funds established by some of the larger Lithuanian industrial enterprises during that period were called “Krankenkasse” following the example of Germany. Historical data shows that health insurance funds helped business owners to aid sick workers since they took contributions from them, equal to up to 2,5 percent of their wage.  However, the sickness funds of industrial enterprises were managed by the administration of the enterprises, so the help was scarce in case of illness.

In 1912 it was planned to introduce compulsory health insurance for industrial workers, but the plans were thwarted by the First World War. On 23 March 1926 The Seimas (Lithuanian Parliament) has passed the Law on the Chief Social Insurance Board, which regulates the establishment of the Board for the management of social insurance matters, and on 18 May, the President of the Republic of Lithuania Aleksandras Stulginskis announced this in the Government Gazette. The date of adoption or promulgation of this law can reasonably be considered the beginning of social insurance in Lithuania.

Health insurance funds in our country were established at the end of 1928. Lithuania, compared to its neighbors, was late: in Poland and Estonia, health insurance laws were passed in 1920, and in Latvia in 1922.

The first health insurance fund in Lithuania was established on 28 October 1928 In Kaunas. Soon six more health insurance funds appeared: Kaunas, Šiauliai, Marijampolė, Panevėžys, Ukmergė and Vilkaviškis counties. In 1931 these funds became county funds. Although in 1926, the Law on Health Insurance Funds, provided for the establishment of 21 health insurance funds, i.e. in order to have them in each county, only seven were established, uniting various counties.

In the year 1932 new county health insurance funds began to operate. There were nine of them, in addition, the Kaunas city fund was also working in this area. Soon six more funds of various companies and institutions were established: the Ministry of Transport and Communications, Eiguliai, „Elektra“ joint-stock company, the Bank of Lithuania, St. Zita Society, Vytautas Magnus University.

According to the law, all employed persons, regardless of gender or age, should receive compulsory health insurance by the health insurance funds (except for people employed for temporary works no longer than one month), people employed in the public service, people receiving more than 400 Lithuanian Litas per month and agricultural workers, were also to be covered by compulsory insurance. Later, the exception was extended to municipal employees. In addition to compulsory insurance, optional insurance for agricultural workers was introduced during that period, but it was not popular.

The fact that agricultural workers, including farmers, were not insured was a problem, as this category of people made up the majority of the Lithuanian population. That is why it was decided to ask the Government to pass a law to insure agricultural workers in case of illness and old age.

The health insurance fund ensured that the person, who had been a member for at least a month, received first aid, outpatient care, prescribed a doctor to visit the patient, received medicines, hospital treatment, bandages and medical supplies, maternity care, dental treatment, and paid benefits. The longer a person belonged to a health insurance fund, the higher the benefit and assistance they received. The Insured had the right to choose any doctor, pharmacy or medical institution from the list compiled by the Health Insurance Fund. Medical assistance was also provided to the family of a member of the health insurance fund. Patients were served by doctors who had contracts with the health insurance fund.

Sickness insurance was financed by contributions - they could not exceed 3% of the wage. 40 percent of contributions were paid by the employer and 60 percent. - the insured. In 1934, the amount of the contribution increased to 6%, and the amount paid was divided equally between the employer and the insured. The state treasury paid 5 percent of the amounts of contributions of policyholders and members. Employers were required to pay taxes for members of the health insurance fund who did not receive a cash salary. The board of the fund, with the approval of the State Social Insurance Board, was able to increase taxes for those employers whose companies were at higher risk of becoming ill.

During the decade of operation of the health insurance funds, the health insurance was developed as a system, the health insurance funds themselves were strengthened, they established their own treatment and disease prevention institutions, and they promoted a healthy lifestyle. Financially and in other respects, they strengthened greatly between 1935 and 1940: they built 7 grand houses, 2 sanatoriums, 3 children's summer colony houses, 1 X-ray room, a laboratory and a pharmacy, 12 outpatient clinics, 7 outlets and smaller medical institutions. The health insurance funds did not have inpatient treatment facilities.

In 1938, the expenses of health insurance funds were distributed as follows: 42.4 percent were allocated for medical assistance, 11.5 percent for medicines, 21.6 percent for benefits, 9 percent for administration, and 15.5 percent for other needs. In that year, the funds had insured 141.4 thousand persons (of whom 77.5 thousand were members of the funds, 63.9 thousand were members of their families). And 42 percent of the insured were ill and received support. However, the insured accounted for only 3-4% of the population of Lithuania, while in Latvia they were 9.3%, and in Germany a quarter of the country's population was insured.

After the Health insurance funds were liquidated on 15 December 1940, a health care system financed from the state budget was introduced in Lithuania. This system existed for many years of Soviet occupation. In 1988 a debate on health financing reform was also launched.

In 1992, the National Health Insurance Fund (NHIF) was established, and although state budget funds were still used to finance medical institutions, the principle of financing according to the services provided was introduced, and the Soviet model of financing medical institutions by number of beds or visits was abandoned.

1992 became the beginning of the restoration and improvement of health insurance in Lithuania. The Law on Health Insurance was adopted in 1996. Further on the path of transformation, the Ministry of Health (MOH) undertook to optimize the hospital network, reorganizing some of the poorly resourced and more complex medical facilities into nursing hospitals, of which there was a dire need in the country. Health care institutions were reorganized into public institutions, medical institutions were divided into three levels. As the system was reformed, the number of private doctor's offices and clinics increased, and the procedure for reimbursing medicines and paying for services from the Compulsory Health Insurance Fund (CHIF) budget improved.

Today, CHI is carried out by the following institutions: the Compulsory Health Insurance Council and the Health Insurance Funds. Health insurance funds administer CHIF budget funds (prepare draft CHIF budgets, reports on its implementation, executes the budget itself, creates a reserve of this budget and uses it, distributes CHIF budget funds); maintains the Register of Persons insured with compulsory health insurance, the CHI information system „Sveidra“, etc .; reimburses the health care costs of the insured and for this purpose enters into annual contracts with personal health care institutions (PHI), pharmacies and other economic entities; organizes and implements the process of pricing management of PHI services reimbursed by CHIF, reimbursable medicines and medical aids and measures, orthopaedic technical devices, calculates their base prices; coordinates the activities of the THIF, etc. This means that the health insurance funds are responsible for ensuring that the taxpayers' money accumulated in the fund us used legally and efficiently, but also within the limits of the budget - always in accordance with the established regulations.

  • After the restoration of Lithuania's independence in 1990, ensuring the provision of health care services to the population became the most important task of health care. By the decision of the Government of the Republic of Lithuania, in the years 1990–1991, the priority was to develop a framework for general social security legislation.
  • On 23 October 1990 The Supreme Council of the Republic of Lithuania adopted the Law on the Framework of the State Social Security System and on 21 May 1991 - the Law on State Social Insurance, which legalized the beginning of the restoration of the health insurance system. This law regulated the reimbursement of benefits related to the costs of medicines and sanatorium treatment.
  • In the year 1991, the Parliament of the Republic of Lithuania approved the Lithuanian National Health Care Concept, which regulated health care policy and set priorities - to develop primary health care, to establish a family doctor institution, to divide medical institutions according to primary, secondary and tertiary service levels. This concept became the basis for the formation of Lithuanian health policy.
  • During the years of 1992-1996, the country was preparing for the global implementation of the CHI. An appropriate model of the PSD system and key principles for health care financing had to be chosen; relevant legislation had to be drafted and adopted.
  • On 1992 January 10 NHIF was established under the MOH by the order of the Minister of Health. The functions of the NHIF at that time were: to finance medical institutions of republican jurisdiction with the funds of the state budget, taking into account the scope of services provided; to pay for inpatient services grouped according to the international classification of diseases at the prices set by the HOF, which included the costs of providing the services; to combine advance payments with payment for services provided. The total annual funding for all agencies had to coincide with the budget appropriations.
  • Since 1 July 1992 , republican institutions were started to be financed from the state budget through NHIF. This continued until the establishment of the NHIF, which took over many of the funding functions of treatment facilities.
  • In 1996, the Law on Health Insurance and the Law on Health Care Institutions were adopted.
  • On 16 September 1996, NHIF became subordinate to the Government of the Republic of Lithuania, the regulations of the Compulsory Health Insurance Council under the Government of the Republic of Lithuania were approved, and the composition of this council was determined. 10 THIF were established.
  • On 1 July 1997, the agreements on the reimbursement of medical expenses were signed with all medical institutions, and the basic prices of medical services were approved. As soon as at October 1 of the same year, medical facilities were started to be funded according to the principles of health insurance.
  • In the year 1997, the first CHIF budget was approved, amounting to 1.3 billion Lithuanian litas (EUR 379 million).
  • In 1997 the development of the health insurance database was started, which later became the register of compulsory health insurance policyholders. This register is used by all medical institutions with which contracts are concluded for the provision of services and reimbursement from the PSDF budget, as well as pharmacies that dispense reimbursable medicines and medical aids.
  • Since 2000, CHIF budget funds are distributed to the THIF: with the funds received, the THIF pays for the services provided to the residents of its area of operation.
  • In 2003, CHIF governance reform was launched: the Compulsory Health Insurance Council became an advisory body to the Minister of Health in decision-making; THIF became subordinate to MOH; the number of THIFs was reduced from 10 to 5 (Vilnius, Kaunas, Klaipėda, Panevėžys and Šiauliai).
  • In 2004, after Lithuania became a member of the European Union (EU), the country's insured persons acquired the right to travel, study, work in the EU, EEA countries and the Swiss Confederation. European health insurance cards were issued to insured persons, which guarantee that Lithuanian insured persons who have travelled to any of the listed European countries will, if necessary, receive emergency medical care services under the same conditions as the residents of the country they are visiting.
  • In the year 2006, the first electronic services were launched: information on diagnoses, compensated medicines and about the health care services provided to them in medical institutions, which were paid for with the CHIF budget, was made available to the population on the Internet
  • In 2009, the CHI contribution reform was implemented: these contributions were separated from personal income tax; the contributions of self-employed persons and other groups of the population were regulated more clearly, their rate was harmonized (9% of taxable income); controls were tightened on the payment of these contributions.
  • At the end of 2013, Lithuania began to implement the Directives of the European Parliament and Council regarding the patient's rights to inter-state health care services: people insured in Lithuania, when travelling to other EU countries, can receive health care services, paid for by themselves, then upon their return to Lithuania, they are able to address the THIF for the reimbursement of such costs from the CHIF budget.
  • 2013-2017 - Large-scale public awareness projects on cancer, cardiovascular disease prevention programs funded by the CHIF budget were implemented – „It is healthy to know”, „Bypass Disease”, „We Are Rising Against Cancer”. Lithuanian residents were invited to free health check-ups. There was also a social advertisement „Be smart, do not overpay for medicines“, which encourages the rational use of medicines and choosing the medicine with the lowest premium in the pharmacy.
  • On 6 May 2020, the Government of the Republic of Lithuania has approved the project of consolidating health insurance funds in order to optimize the activities of the PSDF and simplify its management structure. Following consolidation, the CHI would be implemented out by a single legal entity, NHIF with regional divisions (which would replace the current THIFs).
Last updated: 07-06-2021