Presentation of Dr. Árpád Skrabski at the Conference
on health care systems in Central and Eastern Europe
September 6-7, Warsaw, Poland

I would like to speak about the role of the complementary financial system in the health care reform and the social marked in Western Europe.

The main points of my presentation are:
I. The mutualities in Europe are the most powerful representatives of civil values
II. The legal status of the voluntary mutual benefit funds in Hungary
III. Key issues and the role of the health funds in the health care reform

I. The mutualities in Europe are the most powerful representatives of civil values
     The basic characteristics of the Western ideal (the successful entrepreneur) are the co-operative skills as well as creative skills. The "civic co-operative entrepreneur" would include the owners participating in the work of the organisation as well as the creative-minded employees and consumers rallied around the organisation. Mutuality is the trait of the co-operative entrepreneur - the thought and the practice of joining forces and solving problems together. The mutuality in France is a type of organisation (mutualité), an independent legal institution. This type of organisation in the Hungarian legislation is called "voluntary mutual benefit funds".

In the table the organisations representing the social market are shaded (e.g. cooperatives), while the organisations representing the free market are left unmarked.

	Organisations established by unification of individuals	Organisations established by fusion of funds/capital
"For profit" organisations	Cooperatives	Share-holding companies Limited companies
"Not-for-profit" and "nonprofit" organisations	Associations, friendly society type organisations, Voluntary mutual benefit funds (mutualities)	Foundations, foundation type organisations (Providence", Fund)

The co-operative entrepreneur appeared in the European Union regulations when they together controlled and co-ordinated the mutualities, associations and cooperatives. The European mutualities, cooperatives, associations and foundations (CMAF = Cooperatives, Mutuals, Associations, Foundations) have set up a permanent advisory board (CEP-CMAF). According to the CEP-CMAF (this board) the following organisations incorporate the co-operative entrepreneurs:

CEP-CMAF Permanent European Conference of Co-operatives, Mutuals, Associations and Foundations

Types of organisations	Organisations established by unification of individuals	Organisations established by fusion of funds/capital
"For profit"	ACME CCACE
"Not-for-profit"	AIM CEDAG	EFC

Friendly society type organisations – mutuals ad associations are represented by:

Cooperatives are represented by:

Foundations are represented by:

The Hungarian Federation of Mutual Funds is member of AIM.      The characteristic of the co-operative entrepreneurs representing the social economy is that they participate in the enterprise in an organised way as entrepreneurs, employees or consumers, and that the achievement of the enterprise is measured by the increase of human capital and social capital besides that of financial one. For example the ahievement of mutualities is measured by monitoring the members' health status and its improvement.      In the case of mutualities the members are the owners and the provided services are used exclusively by the members and their families.      The right of ownership cannot be sold as it results from membership. The members of the mutualities are exclusively natural persons.      If we compare mutualities with other social economy organisations, we find that each of those organisations are closer to the for-profit, competitive sphere than the mutualities. The associations may have legal entity among their members, the members may differ from those benefiting of services. The curators representing and directing the foundations and those making use of services may have conflicting interests. In a co-operative the members have a share that they can convert into money. Therefore the owners of the cooperatives could become passive shareholders.      The following tables provide information about the planned meetings of the social economy organisations. THE NEXT MEETINGS OF THE EUROPEAN SOCIAL MARKET

Belgian presidency of the EU will hold a European Conference on the prospects of social economy	Ghent 13/14 November 2001.
Spanish presidency of the EU also will hold a European Conference on social economy	Salamanca 27/28 May 2002.

THE NEXT MEETINGS OF THE ASSOCIATION INTERNATIONALE DE LA MUTUALITÉ

AIM meeting	in Tel Aviv on 17/19 October 2001
AIM meeting	in Amsterdam on 12/14 March 2002.
AIM meeting	in Morocco on 13/15 November 2002

II. The legal status of the voluntary mutual benefit funds in Hungary      The Antall government established a new form of legal institution based on the French mutualities by passing the Act on the Voluntary Mutual Benefit Funds in 1993. According to the Act the so-called "funds" are not-for-profit organisations that only natural persons can set up; the members are the owners of the "fund", and are 100% represented in the General Assembly, the decision-making body of the fund. The fund must be independent from employers, political parties, services. The trustees of the funds have legal relations with the members, and if they cause damage to the members by offending their independence, the trustees are obliged to give compensation.      So the English translation is misleading. A better translation would be the friendly society.      The aim of the funds established according to the act is not the increase of capital but the improvement of members' health status and quality of life. Of the sums received only as much is saved as it is needed to overcome periods of deficit. The health funds were established within legal framework and have developed in a slower manner and more natural pace than pension funds. The number of members in health funds and self-help funds in Hungary reached 130.000. Considering the families of members also benefiting from services the number of those effected increase to 300.000, this being 3% of the population. The mutualities in Europe have altogether 200 million members. According to experience those mutualities that represent 10% of the population are considered a significant factor in the health care financing of the respective country.      The table compares the development of the private pension funds, voluntary pension funds and voluntary health and self-help funds.

	Private pension funds		Voluntary pension funds		Voluntary health and self-help funds
	1999	2000	1999	2000	1999	2000
Number of funds	30	25	145	116	43	46
Number of members (thousand)	2064	2191	1007	1081	94	131
Capital (billion HUF)	89,8	159,4	159,6	217,4	3,0	4,8

As we see from the table above the growth of the number of pension funds reached the upper section of the exponential line. The increase in number of members in health funds is exponential - 50% each year. III. Key issues and the role of the health funds in the health care reform      The standpoint of the health care government that the social security has to be the health care financing institution as one organisation. This provides favourable conditions for an integral and powerful health policy. Insurance organisations complementing the social security are most appropriate for solving financing problems. The providers are considered as the fields to be privatised. The Hungarian health care system is partly privatised.      - growing part of the general practices are privatised      - some services inside or outside the hospitals are privatised      After the privatisation process the primary and partly the out-patient health care system will be privatised and owned by medical professionals.      New regulations will be introduced in the field of functional privatisation of the hospitals. The main problems are:      - the high level of mortality rate among the middle aged men in the lower strata      - the high prices of the drugs and equipment      - the low level of salaries of the health professionals.      Lack of ability to improve the mortality rates in Hungary may be an obstacle in the way of joining the European Union. The effective prevention becomes more pressing every day. Therefore the health care government launched a public health programme. The health funds as service providers as well as financing institutions may have a significant role in decreasing the mortality rate and the success of the health care reform.      The task of health funds is complementing the support provided by the social security. The health treatment is financed by the social security according to the current legislation (apart from occupational health care, health resort treatment, dentistry), therefore the health funds carry out their activity in the field of prevention.      The consequence of the participation of members or patients, the health funds could be very effective in the field of prevention.      All age groups have access to the necessary services. The services recommended by the health fund depend on the decision brought by the members at the General Assembly, thereafter the member decides whether he/she would like to benefit from the service and chooses the provider to make use of the service.      The attitude of co-operative entrepreneur, that is the health promoting and healing oriented "self-management" and the safety net provided by the community ("community as provider" phenomena) have proved to be risk reducing and health enhancing factors, therefore the health funds are suitable to complete the task devolved on them in the field of prevention.      The health funds functioning at present (Dimenzió, Honvéd, Dunaferr) can reach out to those high risk individuals who have not turned to the physician with their symptoms. The health funds developed the practice of screening their new members and recommend them health promoting and preventive services according to their age and health status.      If we compare the health funds to the American HMO-s we realise that the irregularity of the guided medical attendance experienced at HMO-s do not appear as a result of the members' interference and taking responsibility. As the members are the owners of the fund, they have increased sense of responsibility and participate in the operation of the fund through democratic management. The fund is suitable for the members to use the sources in a controllable way provided with optimal price-value rate and remuneration proportional to services. The fund is present on the market as a pretentious customer; once paying for the service fee it assumes and legalises the informal payment. Those providers who record the health status and conduct prevention training's manage the health care attendance of the member in case of illness, thus reducing the helplessness of the member. The health fund becomes the catalyst of the necessary reform of the health care provider system by demanding the conditions of quality insurance.      The health funds according to the government and the governing party's program- as so-called recognised funds - can perform the local administrative task of the compulsory system within the framework of contract with the social security. On one hand the funds can better meet the needs on local level, and harmonise the unutilised capacities, on the other hand the effective market price bargain can be performed on this level. Thus the health funds become efficient tools in controlling prices. At the same time the health care government can realise its national health policy in the frame of a compact social security.      The health funds can be appropriate tools of an effective health care financing reform as they do not draw away sources from the social security, and at the same time bring new sources into medical attendance, thus taking over responsibility from the government instead of increasing it. They also provide a framework for a civil organisation, that supports solving the needs left unmet by the social security by applying own sources, and thus reducing the political tension emerged in the health care.