Minister of Health Riina Sikkut (SDE) is set to propose to the cabinet ways of reducing the Estonian Health Insurance Fund's mounting deficit for the coming years. As the board will be short €150 million by 2025, the ministry proposes moving children's medical expenses out of its budget.
It is hardly a surprise that healthcare funding is falling short. This will come to a head in 2025 when the Health Insurance Fund is forecast to be €150-170 million in the red. The coalition agreement tasks the health minister with proposing ways to remedy the system by year's end. Do you have that solution?
Allow me to start by talking about how we ended up here. We have clearly been prioritizing three fields over the past 32 years. They are national defense, culture and education. We have invested relatively more in those fields, with considerable public support. No one else is going to fund Estonian culture or education after all.
But when it comes to social welfare, we are among the back markers in the EU. For example, our healthcare funding is 20 percent below the EU average. This explains our lengthy treatment queues and the slow pace at which new medicines and services are introduced. The gap between people's expectations and the reality is widening, while the relative importance of elderly people in society is growing and working patterns have changed. There are more businesses, and while the general level of income is growing, this growth is not reaching healthcare through social tax receipt.
What is more, the Health Insurance Fund has been given new tasks in recent years, whereas they haven't always come with the necessary bump in funding. For example, the fund is now in charge of appointing family doctors, nicotine addiction prevention and several other new things. The recent decision concerned moving prison healthcare into the fund's administrative area.
All of it will require more money in the coming years, which no one will be compensating the fund for. /.../ This means the fund's deficit will come close to €170 million in 2025.
Healthcare needs more money in objective terms, whereas it is crucial to secure permanent funding. Whether to adopt a new drug should not be a political decision. We should not have to wait for [state budget strategy] negotiation results to learn whether the healthcare budget will rise of fall. The Latvian government decides how much money it will have for healthcare every autumn. I do not believe that is the way to go.
Analysts proposed paying for children's medical expenses straight from the state budget to free up a lot of Health Insurance Fund resources back in spring. This is the model currently used for unemployed pensioners. That would be the preferred solution.
And this would free up €200 million and solve the fund's money troubles for a decade?
The funds freed up would cover the deficit and ensure development. For example, shorter treatment queues and investing in digital solutions. The fund has completed an analysis to seek efficiency, which should not be impossible at a budget of €2.2 billion. For instance, it is possible to switch to a results-based funding model and change the way risk patients first enter the system. However, that requires a lot of health specialists to change the way they work, which needs financial motivation. We estimate that the fund could save 1 percent by operating more effectively.
Based on your analysis then, moving children's health expenses out of the fund and finding the money in the central government's budget instead is the way to go?
Indeed, a permanent change regarding minors' medical expenses is one option. The other is moving inability of work benefits and care allowance out of the fund's budget. These things aren't really associated with healthcare services and could rather be the Unemployment Insurance Fund's concern. /.../ But moving children's medical expenses from one balance to another is simpler, administratively speaking.
Let us presume the Health Insurance Fund will be exempt from having to pay for sick days. Who would be picking up the tab in its place? It amounts to moving money from one pocket to another. What is the difference?
Absolutely. Moving sickness benefits out of the Health Insurance Fund would have half the effect moving children's medical expenses would. But sickness benefits are tied to people's income, and the level of income keeps growing. Inability for work benefits spending has grown by €150 million in the last nine years.
That is why the government needs to decide whether to start working on the necessary amendments for the next state budget strategy (RES) to consider the reform. We clearly have a massive deficit, while we cannot just add hundreds of millions to the system without asking what it will buy. Long waiting times are the biggest problem today, and the additional funds need to help shorten them.
Knowing your majority coalition partner (referring to the Reform Party – ed.), they will tell you to find the money in the system. The view from Tallinn begs the question of whether maintaining the Võru and Põlva hospitals, which are just 20 kilometers apart, constitutes sensible use of money? While brutal and unpopular, reorganization could help free up resources.
It has been our good fortune to have European taxpayers help us pay for hospital reconstruction and new health centers, not to mention [major hospitals] the North Estonia Medical Center (PERH) and the Tartu University Hospital. All have been funded with the help of the EU. We will have to find the money ourselves in the coming decades.
Construction and buildings are one thing, while hospitals employ people who must be paid a salary and need extremely expensive equipment. We know that Tallinn and Tartu doctors often commute to work in those smaller hospitals. Wouldn't it be cheaper to bring hospitals together in a few major centers?
Dialing back county hospitals would not yield the money that's missing. A part of our efficiency plan deals with patient movement, how they move between hospitals and service providers. More serious reorganization of county hospitals might have been possible before the pandemic, while the crisis showed that having just two or three major hospitals would not have been enough.
I didn't quite receive an answer in terms of who will be paying children's medical bills or sickness benefits? Will the Ministry of Social Affairs simply apply for an additional few hundred million in funding?
Yes, tax revenue is growing from one year to the next, and it is up to the government and parliament to decide how to use it. /.../
And looking at recent priorities, the focus should be shifted onto healthcare and social welfare. We are also discussing tax changes and cost-cutting for the next four years. This should be done by the first quarter of next year in order to tie all of these things together for the 2025 budget talks.
It is very difficult for any minister to give definitive answers for their administrative area. The deliberations will be very difficult. But at least we will have timed these deliberations in a way to make changes possible should the political will be found. We also need to make some values-based choices, such as medical insurance. We can't just tell people with health problems to pay for it out of pocket. It is more beneficial for society to pay to keep people healthy than to pay them [inability for work] benefits later.
You will be taking your reasoning to the government where you will very probably, just like we've seen regarding teachers' salaries, be told that there is no more money unless you find it inside the system. The prime minister and her party have been quite adamant in those terms. What will you do?
We will not be making the financing decision right away. We will discuss scenarios or alternatives the Ministry of Social Affairs and the Ministry of Finance have put together. That is what we will be doing for the remainder of the year.
I suppose your preference would be to get more money for the system and for the central government to pay children's medical expenses?
I would indeed mirror the solution currently in place for unemployed pensioners. I believe society would find it acceptable. All children have medical insurance in Estonia and their health concerns must not be ignored. Let us make children's medical needs a priority in more than just words.
Editor: Barbara Oja. Marcus Turovski