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Funding the Program of Medical Guarantees
WHAT IS THE PROGRAM OF MEDICAL GUARANTEES? The Program of Medical Guarantees (PMG) specifies the national health care benefit package and is funded through a single program in the central budget. Before the 2017 health financing reform, most of the medical services in Ukraine were funded through subnational governments (SNGs), which received earmarked health grants from the central budget and supplemented those amounts with local revenue. In this way, the centrally collected general taxes, such as the value-added tax (VAT), were allocated to around 800 regional and local budgets for oblasts, rayons, cities, and hromadas,1 creating a high degree of fragmentation. The core innovation of the reform was to pool most government health spending under a single central program executed by the national purchaser, the National Health Service of Ukraine (NHSU). This program covers purchases of medical services included in the PMG. The 2017 law defines the PMG as the description of medical goods and services fully funded by the state, so it is commonly understood as the specification of the national health care benefit package. At the same time, the PMG is also a program within the state budget that pays for most of the procurement of these services and goods. A portion of the PMG continues to be supplemented by SNGs through smaller local programs. Although the reform has shifted most of the responsibility for PMG financing to the central government, SNGs are still expected to fund the cost of utilities out of local revenue. The NHSU purchases PMG services based on tariffs, which do not assume an explicit breakdown by cost components such as capitation, case rates, and global budgets. This represents a departure from the previous funding system, where facility budgets were approved and funded strictly by economic classification lines based on respective spending norms. At the same time, the law requires SNGs, as facility owners, to pay for the utility costs of the services in the PMG. This rule was introduced as a temporary measure against the backdrop of significant fiscal pressures on the central government following the 2014â15 economic crisis on the assumption that the NHSU rates were, in that context, insufficient to cover utility costs. Whether the rates were indeed insufficient remained a matter of judgment because the PMG costing methodology was not explicit in these first years. At the primary health care (PHC) level, capitation 23
