Tuesday, November 26 2019 18:33
Naira Badalian

Armenia`s Universal Health Coverage takes from the rich and gives to  the poor: initiator of "health tax" clarifies

Armenia`s Universal Health Coverage takes from the rich and gives to  the poor: initiator of "health tax" clarifies

ArmInfo. The healthcare sector of Armenia needs additional resources in the amount of 150 billion drams and there is no alternative to the introduction of a new type  of payroll tax. This was stated by the initiator of the "health tax",  the Minister of Healthcare of Armenia Arsen Torosyan during a live  broadcast on his Facebook page.

"Today we are trying to solve the issue of medical health care for 3  million residents of Armenia. I am saying this to clarify the scale  of the issue," the Minister of Healthcare noted.  According to the  head of the Armenian Ministry of Healthcare, today the Armenian  healthcare system is distorted, the state pays for the treatment of  one part of the population, and the population pays for the second  half. In this regard, the Minister referred to the experience of the  advanced countries of the world.  For example, in Denmark, where the  Minister of Health is present today to participate in the second  session of the 27th Standing Committee of the World Health  Organization (WHO) in the European Region, unlike the Armenian health  system, 85% of healthcare costs are covered by state health funds,  and only 15% are paid by citizens and mainly for dental services.

The Minister recalled that according to the draft state budget for  2020, the budgetary allocation for the health sector will amount to  approximately 109 billion drams. They cover a range of services for a  specific group of citizens. Meanwhile, many continue to pay for their  treatment from their own pockets. But, as the calculations of the  Ministry of Health show, to solve the health issues of all citizens  of the country, an amount of approximately 250 billion drams is  required. "The question is where to find an additional 150 billion  drams," the minister asks, "there are 2 mechanisms and the first of  them is to request these funds from the budget. Another option is to  find an additional source of financing. In any case, these funds  should be centralized in one place and spent accordingly, "he  stressed.

Calculations of the Ministry of Healthcare showed that a new tax  could become a source of additional financial resources in the amount  of 150 billion drams - a 6% tax on the salary of the working  population of Armenia. Moreover, as the minister explained, it is  possible if, as part of the medium-term spending program for  2020-2022 the sector's budget annually increases by 10-20 billion  drams, then in 2022 a tax of not 6%, but 4% of the salary may be  established. "But, the fact that Armenia will have to attract  additional funds is inevitable," he said.  The head of the Ministry  of Healthcare also commented on why the ministry wants to establish a  new tax in the form of deductions of certain percentages of salaries,  rather than a fixed amount, as is the case with voluntary health  insurance. "I emphasize once again that this is not a system of  voluntary medical insurance, but a system of universal social  security for the total solution of health issues for the entire  population of the country and there is no alternative to establishing  a new type of tax. Being an inclusive, social state, we must take  care of citizens who currently do not have a permanent source of  income. It can be everyone, our friend, our relative, " Torosyan  said.

Arsen Torosyan insists that introducing universal health coverage in  Armenia is an objective necessity.  According to him, given the  incomes of the population of Armenia, health care costs are mostly  disastrous and lead to impoverishment of citizens. Often people get  into a debt burden - they take loans, sell real estate to pay for  treatment, and the proposed universal health coverage will make these  expenses more inclusive, he said. "The proposed system is a system of  social security, not development of financial markets," the head of  the Ministry of Health said. As a result, according to Torosyan, it  should cover everyone - working and not working citizens, otherwise  the system will continue to be distorted. "I am ready for a polemic  on the topic with any expert in any format," he assured.  According  to the minister, the project "On Approving the Concept of  Implementing Universal Health Coverage in the Republic of Armenia",  posted on a single portal of legal documents e-draft.am, should be  considered as a proposal, but not a final decision. "Nevertheless, we  believe that this is the best solution, or at least, on the basis of  which we will find this solution, since the basis of this proposal is  an analysis of all the experience of Armenia over the period of its  independence, the best international experience and the reality, we  live in, "he stressed.

To recall, according to the draft concept, the Universal Health  Coverage (UHC) will cover the entire population within the framework  of the established basic package of services, which will be  differentiated depending on age and gender. A special UHC Fund will  be appointed by the "regulator" to review all the principles of the  process of providing state-guaranteed medical assistance to the  population, as well as the implementation of procurement functions  (including payment of compensations, revision of the tariff for  services, selection of a service provider). The Minister of Health  will head the Council.

According to the rationale for the document, the introduction of the  UHC promises an increase in income not only to medical organizations,  but also to the state treasury. So, according to the calculations of  the Ministry of Health, the turnover of medical facilities will  increase 2.5-fold. As for the state budget revenues, if in 2018  revenues from hospital and non-hospital services amounted to 82  billion drams (payments on taxes and state duties amounted to 14.4%  or 11.7 billion drams), then according to preliminary estimates by  experts of the Ministry of Healthcare, in addition to revenues in the  amount of about 122.8 billion through the "health tax", the state  budget in the form of taxes and duties as a result of the provision  of medical services will make 32.7 billion drams. The process of  introducing the UHC itself will require 229.1 billion drams.   According to preliminary estimates by the Ministry of Health, the  <health tax> will not become an additional burden for more than 41%  of the working population (those who have a monthly income of 150  thousand drams or more). For the remaining 59% of employees, the  effect of the new type of tax, according to the authors of the  document, will be mitigated by the introduction of a flat taxation  scale. It is noteworthy that the authors of the concept of the UHC  either intentionally mislead the reader, or by mistake, say that  Armenia will pass to income tax at a rate of 20% as early as 2021.  And on the basis of this, they considered that for those who receive  a "minimum wage" the tax base will decrease by 4%, and then  "establishing a health tax of 4-6% will not have a significant  negative impact on the employee's income." In fact, if a new tax is  nevertheless introduced in 2022, the accountant will deduct funds  from the employees' salaries at the aggregate rate according to the  following scheme: 21% income tax, + 5% of payments under mandatory  pension system,+ 6% health tax, + payments to the Fund of 1000 AMD.

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