Analysis recommends new tax to maintain healthcare availability

North Estonia Medical Center.
North Estonia Medical Center. Source: PERH

An analysis of healthcare funding to be unveiled Monday recommends new taxes to maintain recent level of healthcare availability. Healthcare is set to be short €200 million by 2025 if nothing is done.

Estonia's healthcare system was meant to be independent from political decisions, with healthcare funding coming primarily from social tax receipt and a state budget contribution for unemployed pensioners.

"We can see that this will not be enough in the future, meaning that additional state budget funding of the Health Insurance Board is needed," its board member Pille Banhard said.

University of Tartu researcher Andres Võrk said that there are two choices, broadly speaking. Either to have healthcare funding depend on political decisions or lay down a purposeful healthcare tax. The analysis also proposes the state should pay social tax for everyone with health insurance in the future.

"If there were payments for children, all pensioners and a few other groups with equal coverage, such as students, this would yield enough money for covering the deficit over the next 15 years," Võrk suggested.

He added that a tax cannot be avoided if Estonia wants to retain solidarity in medical insurance. One solution proposed by the analyst is hiking VAT from 20 percent (soon to be hiked to 22 percent by the coalition – ed.) to 23.5 percent. That kind of a tax hike could cover the fund's need for financing until 2040.

"This way of paying for expenses would be the most stable, easiest to forecast and administratively simplest. Because state budget revenue also requires money to be found somewhere, we are hard-pressed today," Banhard remarked.

Andres Võrk said that doubling the excise duties on alcohol and cigarettes could also help pay for the healthcare deficit, while a tax on sugary drinks would not go amiss either.

Minister of Health Riina Sikkut (SDE) said that the Ministry of Social Affairs is not in charge of tax policy and can simply describe what the sector needs and what additional funding could achieve. "But which taxes to introduce or hike is a political decision," the minister said.

Sikkut is tasked with presenting the government with her proposals before 2025. If decisions are not made in time, healthcare will be short €200 million by then. That is roughly how much it currently costs to maintain the Estonian family medicine system.

"But bringing more money to the system is not the only thing we should be doing. We need to go over the fund's spending, analyze how to make effective use [of funds]," Banhard said.


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Editor: Marcus Turovski

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