Cyprus: Disputes continue on health scheme proposals

Debate is continuing over a draft law to replace the existing public health scheme, which provides free healthcare only to patients with chronic or incurable diseases and/or who are on low incomes. Trade unions and employer organisations oppose proposals for insurance contributions, with the unions threatening to strike over plans for new employment contracts.

Background

The discussion over the introduction of the new National Health System for Cyprus, as well as the debate on its structure and provisions, dates back to the early 1970s. However, the first serious attempt to bring in such a system was not made until 2001 with the adoption of the Law on the General Health Scheme (Law 89(I) of 2001). This law was never implemented, even though it enjoyed the support of political parties as well as employer and employee organisations. However, the Health Insurance Organisation, provided for by the 2001 law to structure and supervise the scheme, was established.

Proposed general health scheme

The existing public health scheme provides free access to State-run and government-financed healthcare facilities only to patients with chronic or incurable diseases and/or those who are on low incomes.

The government wants a new general health scheme to give full healthcare coverage to all citizens through compulsory health insurance with tripartite funding.

The scheme is expected to provide all insured people with the freedom to choose either a private or State-owned service provider. However, this raises doubts about the viability of the current State-owned healthcare facilities, which will be expected to compete in the new system when the general health scheme is introduced. (The failure to fully implement the 2001 law is mainly attributed to the prolonged debate over this issue.)

The government says the introduction of its general health scheme is vital due to:

  • the deteriorating situation in public healthcare facilities during the economic crisis with soaring numbers of patients overcrowding poorly staffed public hospitals
  • increasing and escalating labour disputes
  • the cuts imposed on the government health budget by the Memorandum of Understanding between Cyprus and its creditors.

Dialogue over draft law

In July 2016, the President of Cyprus initiated a dialogue with the main political parties to try to reach consensus on reforming the legislation surrounding the introduction of the general health scheme. This led to an understanding, allowing the government to complete a draft law (amending the 2001 law) which it submitted to the House of Representatives in October 2016.

The debate on the introduction of the scheme then moved to the Health Committee of the House of Representatives with the involvement of social partners and other stakeholders.

However, the many efforts of the Minister of Health, George Pamboridis, to reach agreement on the scheme have not yet been successful. The 105-page draft law aimed at a general overhaul of the 2001 law, but the main characteristics of the scheme have remained untouched. These are:

  • universal coverage
  • the retention of the Health Insurance Organisation as the single insurance provider
  • comprehensive health service coverage
  • tripartite funding.

The current debate at the hearings of the Health Committee is on the rate of insurance contributions to the new system by the employer, the employee and the government. This is calculated on the gross salary of the insured person. The 2001 law provides for contributions of 2.00%, 2.55% and 4.55% for the employee, employer and government, respectively. The 2001 law also provides for a 10% contribution by patients for medicine.

At the committee hearings, George Pamboridis has pushed for an increase in contributions by employers and employees to 2.85%, while leaving the government’s contribution at the same level. Trade unions say this violates the proportional balance of the 2001 law; employer organisations are also opposed to the proposed new rate. George Pamboridis says he is ready to discuss any other tripartite mode of funding, provided that the anticipated annual cost of the scheme is secured and that the proportion paid by the government remains unchanged.

Social partners differ over scope of scheme

Another contentious issue is whether the Health Insurance Organisation should continue to be the sole service purchaser. The option of opening the market to other private service purchasers (insurance companies) is supported by some stakeholders – including employer organisations – but strongly opposed by trade unions and most political parties.

Even if George Pamboridis manages, with the help of the Health Committee, to resolve all the previously mentioned disputes, he still has to overcome the obstacle of what will happen to State-owned hospitals.

The government has submitted an additional draft law to the House of Representatives, ‘on the Establishment of the State Health Services Organisation’ providing for the autonomy of State-owned hospitals. This would mean the State Health Services Organisation becoming an autonomous economic unit, which would administer and manage the State-owned hospitals and health centres. This proposed new legal status of State-owned healthcare facilities is opposed by some opposition parties, as well as by the trade unions, who say it risks leading the facilities to financial collapse because of their exposure to competition. They favour instead a re-organisation within the structures of the government, where the State retains liability over the State-owned hospitals. They also want the State-owned facilities to be allowed a reasonable period of time to adjust to their new mode of operation before being exposed to competition.

Opposition by trade unions to new terms of employment

The labour-related issues, however, are the most controversial. The draft law provides that the new organisation will be staffed with:

employees with indefinite or fixed-term contracts and wage earners;

  • posted public employees
  • new personnel.

The first two categories refer to existing personnel in the State-owned hospitals and health centres, who will be posted or transferred to the new organisation with their terms of employment unchanged. However, any new staff recruited after the establishment of the organisation would have new terms of employment. All the employees’ unions, particularly the Cyprus Governmental Doctors Trade Union (PASYKI) and the Cyprus Nurses Trade Union (PASYNO), sharply oppose the government’s plan to introduce different terms of employment and remuneration for new personnel. The terms of employment of new personnel are subjected to the Law for the Establishment of the State Health Services Organisations General Regulations, which were drafted by the Ministry of Health and distributed to trade unions for consultation. In particular, trade unions criticise a central provision of the draft regulations, which provides for renewable three-year employment contracts for new personnel, claiming it aims to undermine the process of collective bargaining. They also want the Ministry of Health to recruit staff as provided for by the organisational chart of every facility before the reorganisation is completed.

PASYNO is also demanding that the government upgrades nurses from the Α5–A7, A8 scale to the A8–A10, A11 scale which is reserved for employees with university degrees and has a higher career pay path.

Commentary

As many essential issues of the scheme remain controversial, it is impossible to predict whether it will be successfully concluded. It will be seen in April whether the Minister of Health and the Health Committee can suggest a compromise acceptable to the House of Representatives and the social partners. If not, the country’s long-suffering health sector could face industrial action. PASYNO, for example, is preparing for this possibility and has announced its intention to increase its strike funds.

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