Financing of the health care system in the Republic of Armenia in the period of 1999-2001: perspectives for improvement

Abstract

In recent years there has been a sharp increase in interest in how the health sector should be financed in high as well as middle and low income countries. The main sources of mobilizing resources for health services are taxation revenues, social health insurance contributions, private actuarial insurance premiums, and out-of-pocket payments. The first two sources (state budget and social insurance contributions) are considered to be public systems regulated and justified by appropriate legislation, while the third and the fourth (private insurance premiums, direct payments) are private and voluntary. Under continuing pressure to contain costs, increase efficiency, and raise service standards, health policy makers have introduced a range of changes to health care in the quest for improved performance. A further concern has been the desire to ensure access to health care of various groups on an equitable basis. The issues and development trends present in heath sector financing of the Republic of Armenia in the last decade have brought about a situation where access to health care, has declined dramatically, primarily due to economic factors. At present, less than 10US$ per capita of public financing is available for health services annually and official public sources for health account for less than 25% of estimated health care expenditures; the rest coming largely from under-the-table payments directly from patients to health care professionals. Increased incidence of informal out-of-pocket payments has created a serious financial barrier to essential health care services, in particular for the poor and the sick. The situation is aggravated by excess capacity of deteriorating hospital and polyclinic infrastructure and unbalanced supply of human resources. The above mentioned deficiencies have led to an increasing ineffectiveness of the national health services in producing good health and possible negative impact on health status indicators of population. The Government of Armenia is committed to reforming the health care sector. The reform strategy was first outlined in 1995 Minister of Health’s “Programon Development and Reforms of the Health Care System in the Republic of Armenia, 1996-2000.” During the past ten years of transition, the key government health policy initiatives to deal with the main sector issues have been to: • strengthen primary health care (PHC); • implement health financing reform to create incentives for efficiency and ensure population’s access to essential health care services; and more recently, • optimize (rationalize) the health services network. The aim of the financing component of the health care reform is the introduction of a new system and mechanisms of health finance to improve the efficiency of limited public spending on health. The paper shows the dynamics of the health care financing situation during the period of 1999-2001, the results of the Armenian health care financing reform, analyzes the major issues still present in the Armenian health care financing system, and current and potential intervention strategies. Finally, based on the discussion of relative advantages and disadvantages of the outlined strategies, their potential benefits, technical and political feasibility and ease of implementation a course of action is recommended aimed at the establishment of an optimal model of health care financing in Armenia.