4 August 2020

Tuesday, 06:52



Azerbaijan to introduce large-scale mandatory health insurance system



Health is better than wealth… Given the current situation in health care, the actual meaning of this saying seems dubious. In truth, not everyone can afford buying modern health care services, while the credibility of free health care in the world is extremely low.

In developed countries, the problem of covering the financial costs of health care has long been solved outside the state budget. In the last two years, the system of mandatory health insurance (MHI) successfully tested in those countries has become more relevant in Azerbaijan. Although the first main “sponsor” of the new mechanism for financing health care services is the state, the introduction of a robust mechanism for collecting insurance payments will increasingly push the state to secondary positions.


Revolution for ₼47 million

According to the Analysis of Health Care Services Market in Azerbaijan made by BusinesStat, in 2013-2017 the volume of health care services in Azerbaijan decreased by 7.3%: from 76.3 million receptions in 2013 to 70.7 million in 2017. Last year, private sector had the largest physical share in the health care services market, which accounted for 70.3% of all health care procedures in Azerbaijan.

There is a significant increase in public confidence in private clinics. Therefore, the entire system of financing the public health care costs is becoming more relevant every year.

The major reason for delay in the introduction of such an important project as the MHI was financial problems. The State Agency for Mandatory Health Insurance (SAMHI) was created back in 2007, but the project has been forgotten for many years, since primary research showed that the creation and running of the system during the first years required considerable funds. Almost ten years later, the growth and strength of the national economy gave the idea a second boost. The state budget provided ₼10 million and additional ₼24.5 million in 2016 and 2017, respectively for the pilot implementation of MHI in the cities of Mingachevir and Yevlakh. In 2018, the President Ilham Aliyev decreed to join the Agdash district to the pilot project as well. In general, three districts of Azerbaijan received about ₼37 million from the state budget in 2018.

So far, SAMHI received a total of ₼71.5 million of budget funds. Were they spent efficiently?  In a very short period, almost revolutionary changes were made in the health system of the pilot districts. These changes include the complete reworking of the management structure of medical institutions, such as the creation of a post for managing director responsible for all administrative and business issues, while the head physician supervises the issues related to medical treatment, almost full automation of clinical procedures and the use of equipment, tools, and medicines, which can also be traced in detail through the online control system. In addition, primary health care services have been improved and a separate family doctor institute has been created. The latter required that local and foreign re-profiling courses for district doctors be held. In order to make health care services as accessible as possible to all residents of the district, rural first-aid posts are reorganised into family health centres equipped with new tools and trained personnel.

One of the main problems of free health care, low salaries of medical staff and the ensuing facts of extorting money from patients, was also solved. Salaries were raised, and a bonus system was introduced for doctors when a certain patient admission limit is exceeded. Therefore, doctors themselves are interested in accepting more patients, for which it is necessary to be a good and conscientious specialist. According to SAMHI, any negative signals are dealt with severely in time.


It's all about money

According to Vugar Gurbanov, the head of the Department at SAMHI, the people liked the introduced innovations so much so that the number of requests for health care has increased significantly. For example, in 2017, 28% more patients received inpatient treatment, and the number of surgeries increased by 50% and reached 8,274, as opposed to indicators of 2016. "Our main insurance package includes high-cost but vital services, such as heart surgery, brain aneurysm removal, angioplasty, etc. Only last year, our surgeons performed 300 such operations. Another remarkable data: last year, over 10 children with congenital heart disease were born in Mingachevir, and all of them were operated with the support of our agency,” Hasanov said.

In other words, in all three districts the new system was introduced very successfully. Judging by the results of a recent survey, over 80% of local residents in Mingachevir, Yevlakh and Agdash expressed positive feedback on mandatory health insurance.

But why is the nationwide introduction of mandatory health insurance, in particular, in Baku delayed? Originally, it was planned that the introduction of the pilot project would take a year and a half. It was also planned to launch a similar project in Baku starting from 2018.

Apparently, this also depends on funding. As noted above, so far both the creation of new mechanisms and their management are fully funded from the state budget, which in parallel is financing traditional free health care services. The devaluation of manat three years ago followed by the measures taken to optimise budget expenditures were the limiting factors.

It seems that the success of pilot projects inspired the government to invest in the expansion of the MHI throughout the country. In 2019, it is planned to allocate a record ₼223.5 million for these purposes. Presidential Reserve Fund allocated another ₼1.3 million provided for in the state budget for 2018 to SAMHI. These funds will be used to pay for the services of an international consultant, McKinsey & Company, involved in developing a roadmap and a plan for transition to the nationwide MHI.

According to Finance Minister Samir Sharifov, although the full implementation of the MHI system in Azerbaijan is expected to begin in 2020, 2019 will be the key year for the project.


Financial stability

The main task before the large-scale launch of the project is to determine the sources of financing. After all, if the state budget continues to bear all the material burden, significantly increasing the salaries of health workers and financing complex surgical operations, as well as taking into account other costly procedures included in the main MHI package, it turns out that the new system will be inefficient from an economic point of view, i.e. will not live long. And what's the point of getting something for nothing, when insurance implies regular contributions from the insured.

Zaur Aliyev, the Director of SAMHI, noted that in Azerbaijan insurance premiums would also be collected on medical insurance accumulated in a separate fund. The approximate mechanism of the process looks like the current pension system and fees for social contributions. According to the head of the department at SAMHI, Araz Nasirov, in European countries both the employer and employee pay 5% to 15% from their income for mandatory health insurance. For Azerbaijan, of course, this size is still unbearable. Initially, it is proposed that insurance premiums amount to about 3%, of which the employer and employee will pay 2% and 1% from income, respectively. For the rest of the citizens, the fee will be ₼120 per individual per year, that is, ₼10 per month. Moreover, working citizens and freelancers will be able to pay the insurance premium in instalments.

What about unemployed citizens like children, pensioners, disabled people and low-income families? “The state will cover their expenses in MHI,” Z. Aliyev said.

However, the practice of state participation in the payment for health care services for certain groups of the population is also used in countries with extensive experience in MHI. Also, according to Nasirov, alternative methods were identified for replenishing the budget of the MHI Fund. For example, it lists additional taxes on the sale of tobacco, alcoholic beverages and other products that are harmful to health. Yes, this leads to a rise in price of products. But, on the other hand, there is a double impact on health care - people begin to use less expensive and unhealthy goods, and their sale helps to get health care services for the non-working part of citizens.

According to experts, to improve the financial sustainability of the MHI system, it is also considered relevant to index insurance premiums depending on the inflation rate. A similar mechanism is used in Lithuania, where the premium index depends on the minimum wage - with its increase, the amount of premiums grows.

MHI is mostly a social project. It is based on the principle of social solidarity, when the young one pays for the elderly, and the healthy for the sick. MHI is based on the universal nature of coverage, that is, all citizens, regardless of gender, age, health status, place of residence, level of personal income, are entitled to receive free health care services included in the basic package of MHI. On the other hand, by improving the system of high-quality health care services, it is possible to increase the number of working-age population, which will increase the economic opportunities of the country. In other words, by investing large amounts from the state budget today, the country will return these “investments” in full in the future.