Health insurance in Armenia: Why does social justice contradict  social solidarity in Health Ministry`s compulsory health insurance  concept and what are risks of State Fund control ?

ArmInfo.The model of compulsory health insurance  system (CHI) conceptually proposed by the Armenian Ministry of Health, is not justified and is fraught with serious  risks. Haykaz Fanyan, head of the ACSES Analytical Center (Armenian  Center for Socio- Economic Studies), told ArmInfo.

The idea of introducing CHI in Armenia is not new, but quite relevant  for the current government. They started talking about it back in  2017, under the government of Karen Karapetyan. The then head of the  Ministry of Health Levon Altunyan proposed two options for  implementing the program: either the insurance is fully paid by the  citizen every month in the amount of 6,000 drams or a 50/50 split,  that is, 50% is paid by the citizen, and the other 50% by the  employer. And, since, as noted, there are 750 thousand employees in  Armenia, in this way, as expected, 1.25 million citizens will be  provided with compulsory health insurance. And the state planned to  take over the insurance of all other citizens. The draft law on CHI  in Armenia was planned to be developed during 2018-2019 and finally  submitted in 2020.

The second attempt was already made by the government of Nikol  Pashinyan. In 2019, the Ministry of Health proposed cutting off 4-6%  of employees' wages for health insurance from 2022. As the draft of  that Concept stated, compulsory medical insurance will cover the  entire population within the framework of the established basic  package of services, which will be differentiated depending on age  and gender. According to the project, the cost of annual insurance  coverage per beneficiary is 77,274 drams.

It was noted that the Special Fund for compulsory health Insurance  will exercise control to review all the principles of the process for  providing state-guaranteed medical care to the population, as well as  the implementation of procurement functions (including payment of  compensation, revision of the tariff for services, selection of a  service provider), and will be headed by the Minister Health of RA.  This project of the Ministry of Health caused a mixed reaction,  primarily due to the fact that many working citizens found it  inappropriate to pay for those who do not work.

At the beginning of this year, the Ministry of Health put into  circulation a new draft Concept. According to the document, the  implementation of the system will start this year and 2023 will be  the "preparatory phase". The next three years, 2024-2026, are the  "testing phase", and from the fourth year, 2027, it is planned to  fully implement the CHI. It is noted that the necessary financial  resources for CHI will come from two main sources: the state budget  and insurance premiums. Funds from the state budget will be allocated  on a co-financing basis to cover insurance costs, taking into account  the social and medical risks of beneficiaries. At the same time, the  Ministry of Health in the new document did give up  the principle of  "social solidarity" and the idea of establishing the Fund.

The previous draft was clearer, at least in terms of specifying the  intentions of the authors of the document, Haykaz Fanyan says. So,  the new document does not specify both the amount of the insurance  premium and the mechanism for deducting funds in the form of a  percentage of the salary or a fixed amount. The formula for  determining state participation is also not specified. It is known  only from the words of a member of the working group on the  development of the document, voiced by him during the discussion,  that according to a preliminary assessment, based, according to him,  on actuarial calculations, each working citizen will have to pay  150-200 thousand drams annually. However, the figure is not final and  is subject to annual revision. < It's like asking a random person on  the street if he wants a Lamobrghini, he'll probably say , but  if he's told he'll have to give up a kidney, he'll probably say no >,  the expert explains. Based on this, Fanyan considers the discussions  on the topic of justification or not of the figures voiced by the  representative of the working group to be ineffective.

The economist also mentioned that the principle of social solidarity  is unreasonable in the implementation of CHI. , he asks.

The head of the Analytical Center also questions the effectiveness of  the State Fund, which, according to the idea of the authors of the  project, will have to exercise, among other things, control over  prices.  According to Fanyan, during the discussion with the working  group, one of the present doctors noticed that the state funding for  the same surgery, which costs 650 thousand drams in the private  sector,  is 350 thousand drams.  "That is, with a state monopoly on  financing, in order to carry out a surgery, the patient will have to  pay the difference of 300 thousand drams from his pocket," the  economist notes. According to him, when considering the functions and  powers of the proposed Fund, one gets the feeling that an attempt is  being made to establish a state within a state, where the head of the  Ministry of Health will be at the helm.

In the meantime, according to the expert, it would be right if the  body established  by the state works on the principle of the  Servicemen Insurance Foundation -that is, it manages financial flows.  Fanyan suggests delegating the insurance function to private  insurance companies, because "they create a system of balances with  medical organizations.", the expert notes.

In the meantime, according to the economist, working with insurance  companies will help to avoid such risks, since the latter will curb  the appetite of physicians, and in case of excess funding, they will  bear the losses themselves. As the expert notes, perhaps the best  solution would be to carry out a reform on the model of liability  insurance for CMPTL drivers - to make a joint decision on the price  policy of all companies at the initial stage and only after a few  years to pass to the price liberalization of the market.

, the economist concludes.