Foresight Center predicts drastic increase in Health Insurance Fund deficit

Health Insurance Fund (Haigekassa) office.
Health Insurance Fund (Haigekassa) office. Source: Siim Lõvi /ERR

The annual deficit of the budget of the Estonian Health Insurance Fund is set to grow to 900 million euros in the next 15 years if Estonia sticks to the present model of healthcare financing, Magnus Piirits, expert at the Estonian Foresight Center, said in the center's blog over the weekend.

The share of own funding by patients in Estonian healthcare has reached the maximum limit of 25 percent set out in the national health development plan. Estonia's healthcare expenditures equal 6.4 percent of gross domestic product (GDP), which is almost half the level of Sweden (11 percent) and much lower than the level of 9.2 percent registered in Finland, while being largely on a par with the Lithuanian and Latvian levels of  6.5 percent and 6.0 percent, respectively. In the mid 1990s, Estonia's healthcare expenditures were on a similar level as they are now, but dropped to 5 percent by the beginning of this century. 

The ratio of healthcare expenditures has been growing since.

Average life expectancy of Estonian residents is estimated to grow to 81.7 years by 2035, up from 78.5 years in 2018, but since the number of years lived healthily has not increased in recent years, this will pose a major challenge for the financing of the healthcare system. With the present financing model, the deficit of the budget of the Health Insurance Fund would expand to 900 million euros a year by 2035, an estimation model put forward by the Praxis foundation suggests. 

The main problem with the financing of healthcare in Estonia is its link to labor taxes, the Foresight Center finds. In 2018, 99 percent of the expenditures of the Health Insurance Fund were financed using labor taxes. In 2019, the respective ratio was 90 percent. The connection with labor taxes poses a problem foremost because the forms of working are changing, work is becoming more global, the population is aging and the share of working-age population is decreasing.

According to the Foresight Center, the available options include changing the financing model so that it is not so tightly connected with labor taxes, or increasing the share of appropriations from the budget, or further increasing patients' own contribution. A further option would be to reduce the scope of services offered or treatment volumes. 

Patients' own contribution already stands at 25 percent, the ceiling set out in the national development plan, with most of that money spent on medicines and dental services. In 2018, an average household spent 700 euros on healthcare. If the present model were to be left unchanged, the share of own contribution would triple in Estonian healthcare over the next 15 years.

Nor can the volumes of medical services be reduced, as Estonia already has the highest unmet demand for medical services in the EU due to long doctor wait times. Unmet demand in Estonia amounted to 16.4 percent in 2018, compared with 2 percent in the EU on the average.

Estonia also has one of the highest percentages of people without medical insurance in the EU - 6 percent. While many countries have insured ratios of close to 100 percent, the ratio of uninsured people is 2 percent in Lithuania and 7 percent in Poland.

Besides, the Estonian healthcare system is suffering from a staff shortage, having lower ratios of doctors and nurses per 1,000 population than Europe on average. Where European countries have on the average 8.5 nurses per 1,000 inhabitants, the ratio for Estonia is 6.2.

The Foresight Center is about to publish a report in October titled "Estonian Healthcare in Foresight - Key Trends," which will offer an insight into the challenges and opportunities of Estonian healthcare for the period until 2035. As part of the same line of research, potential scenarios for health insurance will be offered.

The Foresight Center is a think tank with the Estonian parliament; its tasks include analyzing long-term developments in society, identifying new trends and development avenues and drafting development scenarios. Operating under the chancellery of the Riigikogu, the Foresight Center bases its studies on a variety of possible developments and outlines alternative scenarios.


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Editor: Marcus Turovski

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