Plan to boost private healthcare funding sparks different reactions

Kuressaare Hospital.
Kuressaare Hospital. Source: Margus Muld/ERR

Estonia's Minister of Health Riina Sikkut (SDE) is to look for ways to ensure the financial sustainability of the healthcare system, with private medicine seen as one possible avenue. Opinions are divided as private healthcare money is seen as necessary, while there are fears it could make some problems worse.

The government still sees a system centrally managed by the Health Insurance Fund as the best option both in theory and practice. Minister of Health Riina Sikkut finds that fragmentation manufactures inefficiency. But Estonia still lacks a political agreement on how to bring more money to the healthcare system.

Previously analyzed options are still on the table.

"To fundamentally change the financing base – untie it from social tax receipt and use revenue from other taxes to ensure necessary annual funding. To continue relying on social tax, while adding minimum contributions for children, as is currently being done for unemployed pensioners. We could also move some expenses out of the Health Insurance Fund, pay for them from a different budget or expand the social tax base. Theoretically, we have options," the minister said.

Reliance on labor taxes is seen as one of the problems of healthcare funding in Estonia as the ways in which people work are changing and the tax base is not keeping pace. The question of whether it is effective to turn healthcare access into a matter of tax discipline is raised.

"Based on this logic, we could also say that if we want to maximize tax receipt, we could limit basic education access to those children whose parents pay taxes. Naturally, most people would find that to be a very poor plan because it is in everyone's common interest for all people to have a good education that goes beyond the basics, which is why we ensure access to the education system irrespective of criteria. It is not a public service, but a public benefit instead," said Tarmo Jüristo, head of the Liberal Citizen Foundation.

The Estonian Private Medicine Association has been saying for the past decade that healthcare money should follow the taxpayer around, in other words, promoting the free movement of patients.

"The healthcare service is not aimed at consumption, and people only seek it out when they need it. Improving availability through offering private medicine more opportunities, adding alternatives would achieve shorter waiting times and improve availability. Everyone will be better off in the end," said Ivo Saarma, head of the Fertilitas private hospital.

The relative importance of private medicine has grown in recent years and played a crucial role in solving the coronavirus crisis. Because almost all general healthcare services have private alternatives today, the government's goal of finding more private medicine funding needs to be seen as an opportunity also for solidarity-based healthcare.

"State hospitals are largely funded using tax money and through the national healthcare system, while they also offer private services – appointments, diagnosis, tests. Boosting private funding does not mean all of it should move to privately owned clinics or service providers," said Marja-Liisa Alop, head of private healthcare services provider Meliva.

On the other hand, it is a problem for the Health Insurance Fund that private service providers are given equal access to funding as private medicine is organized differently.

"They are not obligated to offer the full range of services, which is the case for major regional hospitals or other state service providers. They [private clinics] are cherry picking the most lucrative services that makes it possible for them to maximize their returns," Jüristo said.

Estonia's leading private hospital Fertilitas disagrees. Its director said that the better availability and coverage, the better the result, adding that [more] private healthcare funding would improve competition.

"Employee satisfaction would grow and work culture improve as relevant competition forces employers to think about how to keep their people. I do not think those aspects are fine today. Work atmosphere in hospitals is not what's best for the employee everywhere," Saarma suggested.

Employers willing to pay for their workers' medical services is another way to bring additional money to healthcare.

"Taxing healthcare expenses by employers with fringe benefit tax could be a hindrance in the system. Removing that obstacle would probably see a lot more money reach the healthcare system in a matter of a few years. And I say again that we are not talking about private funding for clinics, it would constitute more money for the system," Alop said.


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Editor: Marcus Turovski

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