Economy Health

2023: state funding of healthcare and a transition to health insurance

The 2023 state budget of Armenia envisions an increase in the funding of the healthcare by 4%, as compared against this year’s funding; and yet, the index will only comprise 1.6% of the country’s GDP.

The state budget of Armenia is expected to collect AMD 2 trillion 364 billion in revenues, with AMD 2 trillion 652 billion  anticipated expenses for the next year. This means the deficit is expected to reach some AMD 288 billion.

The overall amount envisioned for the healthcare is expected to reach AMD 146 bln 373 mln. Despite being declared to be a priority the healthcare still gets lesser portion in the state budget.

As an example, the amount envisioned for the maintenance of the state debt is nearly the double of that allotted for the healthcare, equaling to AMD 272 bln 122 mln . And it is likely that the portion of healthcare in the overall structure of the country’s GDP remains unchanged due to the urge to steer the budget to covering the debt.

Tigran Khachatryan, the Minister of Finances of Armenia, reminded during the debates over the draft budget of the republic in the National Assembly, that ongoing expenses will set restrained growth in case the government’s debt is above the 50% benchmark. At the same time, the minister assured of an agreement reached during the discussions held at the government on that a major growth in the financing of the sphere shall be ensured for a mid-term perspective.

The minister also explained that the overall amount allotted to the healthcare has not decreased; the growth in the financing in the past years has been due to the programs aimed at the neutralization of the consequences of the pandemic, which have dropped this year, because of more forecasted predictability of the situation. Anahit Avanesyan, the Minister of Healthcare, underlines that the ministry tries to ensure the portion of the sphere reaches at least 4% of the country’s annual budget.

Professor at the Yerevan State Medical University Davit Melik-Nubaryan, PhD, says the financing of the healthcare has nearly doubled since 2018, which is definitely a positive move, yet, the professor says, it is not enough to ensure provision of comprehensive healthcare services.

Melik-Nubaryan says that might require at least twice the amount provided now; the index has to be at least doubled in the structure of the GDP. The expert reminds of the European countries, where the healthcare makes some 7 to 10% of the GDPs, and that is believed to be an optimum index to ensure a proper level of healthcare services.

“A system evolving around hospitals makes it a system concentrating on treatment, and, so is inefficient in terms of ensuring public health,” Melik-Nubaryan says, adding: “A system that is structured to treat patients is extremely inefficient in terms of budget expenses, because the WHO data indicate hospitals are the top source of healthcare inefficiency. From that perspective, strengthening the primary care institutions shall have an immensely positive impact.”
The next year’s budget envisions AMD 1.7 billion for the planned increase in salaries of primary care medical workers.

Aharon Barseghyan , the head of the State Health Agency (SHA), details on the mechanism of salary revisions in a conversation with Ampop Media.

“There are problems in the sphere of healthcare and their solution is mostly connected to the increase of efficiency of primary care institutions, which is why we are planning to set indexing of primary care workers’ performance, so that doctors get bonuses for meeting the set benchmarks or exceeding the anticipated results.”

This means that starting from 2023 the salaries paid to doctors of the primary care institutions (district physicians, pediatricians, and family doctors) will be calculated based on the load and the quality of performance. The official says the envisioned bonuses may be quite substantial and motivating. The ministry envisions growth in AMD 55 to 60,000 per specialist.

Read also: The demographics of a country highly depends on the quality of healthcare

Barseghyan assures the changes are not about the salary increases conditioned by the professional qualification of doctors, but the actual load and the quality of services. For instance, a patient suffering hypertonia (high blood pressure) requires a regular medical supervision; in case the supervision is organized on proper level in the primary care institution and the blood pressure of the patient gets controlled and the medication is used in time, most likely a patient will not need hospitalization. The expert says the doctors at the primary care institutions will not need to develop new skills to perform the job, because that’s what they do on a daily basis.

“We want to gradually switch to strengthening the out-of-hospital services to limit medical care and services provided at hospitals, because that’s the most efficient method in terms of prevention,” Barseghyan says.

The problems in polyclinics, the expert says, are due to years of poor financing of the institutions. Hospitals have been prioritized over the polyclinics in terms of budgetary allotments. He believes that is the reason the polyclinics today are far from providing satisfactory level of services, yet the experts prioritize the vision.

“We want to have well set up efficient primary care institutions, to make sure only the complicated cases are referred to hospitals for medical help,” Barseghyan says.

Davit Melik-Nubaryan says people have inaccurate perceptions of the possibility to treat complicated cases such as the liver transplant at polyclinics. “It’s been our own fault to let those perceptions spread. But the polyclinics are not supposed to deliver those services. The material and the technical furbishing of the clinics lets them perform their functions. People have to revisit their attitudes. Why would someone with hypertension appear in a hospital?! A primary care institution is definitely much better at handling it,” Davit Melik-Nubaryan.

The program for the mother and child healthcare remains priority for the sphere and envisions about 7.2% increase in costs. The budget is planned to reach AMD 21,017,000,000 .

The treatment of cardiovascular diseases, diabetes, and malicious tumors is expected to get AMD 20,103,500,000 .

Armenia on the brink of state insurance of health

The head of the State Health Agency says despite a concept of the medical insurance has been circulating starting from the 1990s, the state has not been prepared for its introduction in terms of infrastructures to the extent it is today.

“The government is in the stage of finalizing the technicalities of the concept. We have near final drafts of legislative initiatives and supplementary acts, and, what’s more important, there is a political consensus on that medical insurance has to be introduced. I have to underline that this will be specifically a state medical insurance,” Aharon Barseghyan says.

The expert says the state guarantees services of medical insurance to citizens of Armenia. The system will be introduced on a stage by stage basis; it will be introduced for certain target groups at inception, and most likely, those will be public servants, and the groups covered by the insurance will be expanded gradually. Before making the insurance mandatory to all, the state plans to give an opportunity for voluntary engagement by subsidizing payments to a certain degree.

Barseghyan believes the concept is likely to be passed by end of year, with another year envisioned for preparations. The prices are expected to be defined in the preparatory stage; and that will be followed by the actual introduction of the system. Barseghyan assures following the introduction of the system, the state will continue including some of the target groups and providing health insurance to those occupying key state positions.

It is still unclear exactly how the system is going to be introduced; whether it is expected to set a fixed amount of income to be paid for insurance, or there will be a certain amount proportionate to the income for the insurance. The head of the SHA says the discussions are still underway.

The Minister of Health Anahit Avanesyan shared some details on the stage by stage introduction of the system during the discussion of the draft budget at the full parliamentary session on November 13.

Some AMD 134 billion are envisioned for the introduction of the health insurance system. The number of beneficiaries is expected to be levelled in 2024. AMD 175 billion are planned for the program in the same year to ensure comprehensive coverage; a pilot program is also expected to be introduced in 2024. The introduction of the system for citizens is planned for 2025.

The insurance will cover cardio-vascular conditions, oncological diseases, diabetes and other health related issues. The package will not include dentistry, plastic surgery, as well as a number of other services.

By Seda Ghukasyan
Charts: by Karine Darbinyan

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First Published: 10/01/2023