underestimation of total pharmaceutical expenditures. Also, measuring out-of-pocket expenditure on any aspect of healthcare is almost impossible without regular, and detailed, household budget surveys.

# _<u>D2.2 Generous benefit packages and increasingly expensive medical technology</u>_

In the Socialist Federal Republic of Yugoslavia (SFRY), access to healthcare was a constitutional entitlement of all citizens, and benefits were exceptionally comprehensive. Today, healthcare benefits at both primary and secondary level remain very generous in Serbia, Montenegro, Kosovo, Bosnia and Herzegovina and Macedonia, and typically include a range of non-essential services and even non-health benefits. This tends to drive up expenditures by encouraging excessive consumption of these services, which are often very expensive.

In Serbia, recent reforms have eliminated coverage for plastic surgery and funeral expenses and restricted dental coverage to children, but the package still includes expensive treatment abroad and generous sick leave benefits. There is anecdotal evidence that the sick leave provision is frequently abused and used to temporarily disguise redundant unemployment. In Macedonia, the non-medical benefits of maternity leave and sick leave consume as much as 5-6% of annual HIF expenditures. By contrast, in Albania, which does not have the same legacy of generous health insurance-related entitlements, the benefit package is more limited.

In all countries, there is a risk that the benefit package will expand in size over time: as medical technology advances, there will be a demand for the inclusion of the latest technological procedures into the benefit package. This demand will come not only from consumers, but also from healthcare providers, especially those who have benefited from more sophisticated training and continuing medical education.

Consequently, countries in the region need to move towards defining affordable benefit packages that are focused on services provided at the primary and secondary level. This process will require a careful analysis of the costs, and cost-effectiveness, of different treatments, and a careful analysis of anticipated health insurance revenues.

One reform that countries could consider would be to remove non-medical benefits from the health insurance package. These benefits are not included in most EU countries and, in comparisons of health care expenditure, artificially inflate the share of GDP devoted to health in the Western Balkans. The difference, in the case of Serbia for example, is estimated to be equivalent to around 1% of GDP.

With respect to new technologies, it may be prudent for countries in the sub-region to follow the example of many EU countries and adopt formalized medical technology assessment (MTA) and pharma-economics techniques in evaluating the cost-effectiveness of new technologies before giving approval for their inclusion in benefits packages. Currently, decisions tend to be made by committees of experts which are typically dominated by clinicians rather than financing experts. This could occur in conjunction with reforms that reserve investment in the most sophisticated medical technology for tertiary and specialized hospitals, and implement appropriate referral systems to ensure that those patients who need the particular technology receive it. This could help to prevent unnecessary duplication of equipment and technological investment that is not justified by patient loads.

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