Before the elections to the Riigikogu, it is the right time to ask whether we want to maintain at least the same or even higher levels of solidarity-based health insurance and service provision, write Andres Võrk, Kaija Kasekamp and Magnus Piirits.
The renewed debate in Estonia about the sustainability—or, should we say, unsustainability—of healthcare funding is welcome, especially in light of the upcoming elections.
Several trends are influencing Estonia's healthcare financing and growing unhappiness with it. The long-feared population aging is gradually becoming a reality, which results in a growing demand for health services and a diminishing tax base.
Simultaneously, innovative forms of work that circumvent the traditional labor tax become increasingly popular. Rapid yet expensive innovations in medicine, such as new cancer treatments, are widening the gap between the expectations of the population and the potential for solidarity funding. In recent years, Europe has also experienced a growing lack of nurses, physicians, medicines and medical supplies, which is pushing up healthcare costs everywhere in the region.
Where and how can money be found for health?
The World Health Organization (WHO) states that a successful healthcare system achieves the following goals:
- No one is impoverished due to the cost of health care
- The funding burden is fair, i.e., the contribution must be proportional to the available resources
- Access to treatment is equal, depending on need
- Funding facilitates the provision of high-quality, cost-effective healthcare
- Funding is transparent and efficiently administered
Countless evaluations conducted by Praxis (non-profit, civil initiative think tank - ed.), the WHO, the Estonian Health Insurance Fund (Haigekassa), the Ministry of Social Affairs and the Foresight Center (a think tank at the Estonian parliament - ed.), as early as 2005 identified Estonia's health funding issues. These have shown that health care financing and access to services are not fair and that unmet health care needs will increase if nothing changes. This is marked by lengthy waiting lists for specialized care, unequal access to services across regions and increasing co-payments.
Additional public spending for health has been a key recommendation in evaluations. It is suggested that high co-payments be reduced, that the entire population be covered by health insurance and that the role of family medicine and prevention be expanded. Likewise, we should search for areas where the healthcare system could be made more efficient without worsening access disparities.
The (in)appropriateness of private insurance and medical accounts for Estonia has also been studied.
What efforts have governments made?
In seeking additional funding for healthcare, the two previous governments have attempted to adhere to the recommendations of the World Health Organization. In 2017, the administration of the Center Party, the Social Democrats and Isamaa resolved to begin allocating additional funds from other state budget revenues to the Estonian Health Insurance Fund (Haigekassa), proportionally to the number of non-working retirees. It gradually increased to ten percent of the health insurance fund's income. As a result of the simultaneous transfer of a substantial portion of the Ministry of Social Affairs' responsibilities to the Health Insurance Fund, the additional benefit was modest in monetary terms. However, it laid the groundwork for a more efficient organization of healthcare.
At the onset of the Covid crisis, the administration of the Center Party, EKRE and Isamaa made a large financial transfer to the Health Insurance Fund until 2024, compensating for both the extra expenditures and lower tax income. This was a novel occurrence in the financing of healthcare in Estonia; during the previous financial crisis, which lasted from 2008 to 2012, access to benefits and services was restricted as tax revenues fell.
Regarding money, it is impossible to ignore the current government's dishonesty with the European Recovery and Resilience Facility, when it initially promised major expenditures for the construction of the Tallinn hospital and the purchase of medical helicopters, but then cancelled them. Moreover, until recently, the government's website displayed a figure for the distribution of money, where most of it was proudly listed under the banner of health and social protection. However, in reality, only a small fraction of this money reaches the social sector.
The decisions made so far regarding the additional funds will have a short-term impact, and by 2025, the Health Insurance Fund will require hundreds of millions of euros to continue delivering health services at the existing level. The deficit will be significantly bigger if the goal is to provide health insurance to everyone, lower co-payments or shorten specialist waiting lists.
Three detrimental and three beneficial healthcare policy development factors
Estonia's options for financing healthcare are constrained by three major factors: small size, ageing population and (relative to Europe) poverty.
Due to Estonia's small population, it seems unlikely that private health insurance will be more cost-effective than a solidarity-based health fund. Through health-contingent payments, private insurance could motivate some people to adopt healthier behaviors, such as immunization, screening and quitting smoking; however, there is insufficient evidence to suggest that this is the case.
Even if there were gains from better prevention, they would be wiped out by rising administrative expenses for private insurance and increasing inequality. We remember the high management fees of actively managed pension funds. Now think what the costs of profit-seeking health insurance funds could be.
Personal healthcare accounts, in which individuals accumulate tax-free funds to cover the costs of illness, will have little impact on health care as a whole as a result of an aging population. Unfortunately, the elderly and those with limited means are the primary consumers of health care.
Highly paid workers accumulating funds in their medical accounts through tax credits (which may lose real value in the face of rapidly rising health-care costs) do not contribute to covering the costs of the elderly and children. Health savings accounts would make sense in a country with a large generation of young people who can save for their own health as well as pay for elderly care.
In comparison to Finland, Sweden and Norway, where our nurses and doctors are working, we are still a poor country. This means that increasing the efficiency of the health system cannot come at the expense of overtime for healthcare workers or expectation that they will go to rural areas where wages are lower. They are more likely to cross the Gulf of Finland, to find jobs where the cost of healthcare per capita is double. The medical sector needs additional personnel, which again requires more money for healthcare.
So, ahead of the elections, the question for politicians and voters is: Do we want to maintain at least the same or even higher levels of solidarity-based health insurance and service provision?
There are two ways to accomplish this: either raise taxes to fund health care or increase health-care spending at the expense of other national-budget-funded services, as had been done by previous governments. Abandoning the expansion of healthcare solidarity funding would almost certainly result in an increase in co-payments, worsening health disparities and lengthening waiting lists, including those at the door of emergency care.
We would like to conclude on a positive note: Regardless of how healthcare is funded, the three negative factors affecting healthcare policy development can and must be balanced by the three positive orientations: person-centeredness, integration, innovation.
Person-centered healthcare focuses on the individual as a whole, as opposed to a list of diagnoses and services supplied by the health insurance provider. It involves empowering individuals to contribute to their own health and treatment. Person-centeredness, however, demands a robust system of primary care.
Integration entails greater collaboration among the various actors in health, the social sector and the individual. Innovation lays the groundwork for this collaboration and aids in the introduction of new cost-effective prevention and treatment methods.
A greater emphasis on these three orientations in healthcare will result in more people being healthy for a limited amount of treatment money. These key words could be included in the election manifestos of the parties, preferably along with the sources of revenue required to implement them.
Editor: Kristina Kersa