Compulsory health insurance system to be introduced in Armenia

ArmInfo. A system of compulsory health insurance will be introduced in Armenia, RA Prime Minister Nikol Pashinyan said on August 18 during a government meeting,  presenting the government's program for the next 5 years.

According to him, significant changes have been made in the  healthcare sector in recent years.  "Nevertheless, now the government  has reached the point where radical reforms are needed. We must show  political will and introduce an insurance program in the healthcare  system in Armenia. I have to say that, in fact, we have already  decided on the content of the program. A lot of work has been done in  this direction, and in the near future we should be able to implement  the planned programs, "he said.

To recall, back in 2019, the Ministry of Health of Armenia proposed  to introduce a tax of 4-6% on wages for health insurance from 2022.  According to the rationale for the document, the development of the  concept is due to the need to ensure the availability of high-quality  and timely medical services for all citizens of the republic,  regardless of gender, age, place of residence and social status.  Today, as the authors of the document noted, the low level of  financial affordability has led to an incomplete workload of medical  institutions. "Due to financial problems, about 20.1% of the  population does not visit primary care doctors.  The lack of  financial resources hinders the development of the system and the  improvement of the quality of medical services, contributes to the  impoverishment of families due to catastrophic health care costs,"  the document said. Thus, in 9% of the population more than 25% of  consumer spending is directed to health care, as a result of which  about 6% of them "slide" into impoverishment, which is the highest  indicator in the region. According to the authors of the project, the  introduction of health insurance system promises an increase in  income not only for medical organizations, but also for the state  treasury.  Meanwhile, this project of the Ministry of Health became  the topic of heated discussions, and was criticized not only by  experts, but also by ordinary citizens, who pointed to too high a  percentage of the "health tax".  In particular, the state structure,  which is entrusted with the implementation of the country's tax  policy, the Ministry of Finance of Armenia, opposed the initiative in  the form in which it was proposed by the Ministry of Health. As then  head of the Ministry of Finance Atom Janjughazyan stated in December  2019, explaining the negative position of the financial authorities  of the country, in particular the Ministry of Finance, regarding the  "health tax" proposed by the Ministry of Health, it turns out that,  on the one hand, the financial authorities of the country declared  their readiness to increase the competitiveness of the republic, in  particular, by reducing income tax and income tax, on the other, in  fact, we create an additional tax burden for business. "The logic of  reducing direct taxes pursues the goal of forming working capital for  business for new investments, forming new potential and generating  additional results," the minister said.  As Janjughazyzn pointed out,  despite the fact that many people say that the proposed "health tax"  is an additional burden for the employee, in fact it will be placed  on the shoulders of the country's economy. The same employee,  according to the minister, can invest the free funds following the  reduction of income tax in the development of the capital market in  Armenia and the formation of additional potential in this direction.

As Janjughazyan emphasized then, the majority of the country's  citizens are dissatisfied with the project.  When asked whether the  Ministry of Finance has a preferred threshold for the health tax, the  head of the department replied: "The preferred threshold of the  Ministry of Finance is zero. The question is not in size, but in  direction." Thus, according to Janjughazyan, the ministry is not sure  that the path proposed by the Ministry of Health will be painless and  lead to the desired result. According to the head of the Ministry of  Finance, the issue requires additional study.

We add that there is a law on insurance and insurance activities in  Armenia, within the framework of which voluntary medical insurance is  carried out in the republic, to which 1.5% of total health care costs  are allocated. To stimulate the voluntary health insurance system,  the tax code provides for benefits to organizations that insure the  health of their employees - within the 120 thousand AMD package, they  can present this amount as justified expenses, thereby reducing the  taxable base for income tax.