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Adam Leive
This paper exploits the staggered adoption of major concurrent health reforms in countries in Europe and Central Asia after 1990 to estimate their impact on public health expenditure, utilization, and avoidable deaths. While the health systems all derived from the same paradigm under central planning, they have since introduced changes to policies regarding cost-sharing, provider payment, financing, and the rationalization of hospital infrastructure. Social health insurance is predicted to increase this share, although the leads of both social health insurance and primary care fee-for-service suggest endogeneity may be an issue with the outpatient share regressions. Provider payment reforms produce the largest impact on spending, with fee-for-service increasing spending and patient-based payment reducing it. The impact on avoidable deaths is generally negligible, but there is some evidence of improvements due to fee-for-service. Considering the corresponding relative reduction in inpatient admissions and the incentives fee-for-service provides to deliver additional services, perhaps there is an overprovision of services in the primary care setting and an underutilization of more specialized hospital services.
International Monetary Fund
The first analysis focuses on external stability, an important issue in view of Croatia’s external imbalances and the requirements of the IMF’s 2007 Decision on Bilateral Surveillance. The paper shows that the real exchange rate is broadly in line with economic fundamentals and that external debt dynamics are sustainable as long as macroeconomic policies remain strong. The second analysis finds significant inefficiencies in Croatia’s social spending. It also discusses several reform measures to reduce inefficiencies in public spending and generate budgetary savings to reduce the general government deficit.
Ms. Victoria Gunnarsson and Mr. Etibar Jafarov
This paper assesses the relative efficiency of government spending on health care and education in Croatia by using the so-called Data Envelopment Analysis. The analysis finds evidence of significant inefficiencies in Croatia's spending on health care and education, related to inadequate cost recovery, weaknesses in the financing mechanisms and institutional arrangements, weak competition in the provision of these services, and weaknesses in targeting public subsidies on health care and education. These inefficiencies suggest that government spending on health and education could be reduced without undue sacrifices in the quality of these services. The paper identifies ways to do that.
Ms. Victoria Gunnarsson, Sergio Lugaresi, and Marijn Verhoeven
The paper assesses the financial situation of the health sector in the Slovak Republic. It also evaluates the efficiency of health expenditures and service delivery in comparison to the OECD and other new EU member states and suggests avenues for cost recovery and reform. The health sector of the Slovak Republic is plagued by financial problems. To turn around health system finances and achieve larger gains in health outcomes, the efficiency of health spending needs to increase and the mix and quality of real health resources need to be improved. Although Slovak's overall health spending efficiency is on par with that of the OECD, substantial inefficiencies occur in the process of transforming intermediate health inputs into health outcomes. Efficiency may be enhanced by containing the cost of drugs and reducing reliance on hospital care. Also, although cost-effectiveness may be relatively high at present, its sustainability in the future is an issue.
Mr. Todd D. Mattina and Ms. Victoria Gunnarsson
This paper assesses the relative efficiency and flexibility of public spending in Slovenia compared to the advanced and new EU member states. Spending on health care, education, and social protection is relatively high in Slovenia without achieving correspondingly better outcomes. Inefficiencies appear to stem from the financing mechanisms for social services, institutional arrangements, and the weak targeting of social benefits. In addition, the composition of spending appears to be strongly tilted towards nondiscretionary items that reduce the fiscal room for maneuver. Greater flexibility is needed to facilitate the reallocation of relatively inefficient expenditure into higher priorities. In this manner, medium-term expenditure rationalization can focus on reducing inefficient outlays rather than restraining traditionally flexible components of the budget, such as public investment.
International Monetary Fund
This paper provides a background on the key policy challenges for Slovenia in the euro zone. Then, it assesses the discretionary scope to adjust spending and proposes initial steps to enhance budget flexibility so that fiscal adjustment can be targeted on relatively inefficient spending. This study also discusses the long-term fiscal sustainability position of Slovenia using a generational accounting framework. A simulation of retirement incentives suggests that the pension system will encourage individuals to retire earlier than the statutory full pensionable age. These incentives are stronger for low-income earners.