Joint OECD and WHO meeting on financial sustainability of health systems in central, eastern, and south-eastern Europe Tallinn, Estonia, 28-29 June 2012 Securing stable revenue for health: Earmarking policy in Republic of Moldova Andrei Matei Head of department of health insurance, budgeting and financing Ministry of Health, Republic of Moldova
Facts about the Republic of Moldova Population: 3,55 mln. (not including Transdniestria), almost 1 million abroad. Area 33,851 square km During transition lost 70% of its GDP. During 2008-09 lost 7% of its GDP. GDP (2011): MDL 82,9 billion GDP per capita in PPP terms (2011): $3,440 Poorest country in Europe: GNI pc PPP 3,340 USD USD 1,810 (current); Remittances account for more than ¼ of GDP Around ¼ of Moldovans are poor
Share of GDP, % Total Health Spending, Public and Private 14 12 10 8 6 4 2 0 5.5 6.33 5.3 5 5.1 3.7 3.6 4.2 4 4.2 4.2 4.7 4.9 5.4 6.4 5.6 2003 2004 2005 2006 2007 2008 2009 2010 Public Spending Private spending
Total health expenditure, PPP$ per capita, 2010 Source: WHO NHA database, 2
Financing of health expenditures A single national pool of funds collected by National Health Insurance Company (CNAM) Single benefit package guaranteed under mandatory health insurance. Minimum benefit package for the uninsured (EMS, PHC, comp. drugs, some hospitalisations) CNAM REVENUES Contributions of population Payroll tax Flat rate State budget contribution Earmarked value, 12,1% of total govt. expenditures
Sources of revenue of the NHIC 1. Payroll tax paid by employers and employees = 7% (3.5%+3.5%) 2. Transfers from state budget on behalf of several categories of population. Earmarked value of 12.1 % from the state budget expenditures. 3. Insurance premium as a flat rate tax, paid by selfemployed people (~250 USD for 2012) 4. Other revenues (penalties, interest on deposits, grants, etc.)
Share of revenues of CNAM, 2011 Flat rate 1.6% Other revenues 0.4 % Payrol tax 44 % State budget 54 % Source: CNAM annual repor
Percentage, % Share of CNAM revenues Payroll tax 50 45 40 35 30 25 31.6 31.7 32.4 37.3 41.6 46.4 42.2 43.3 In 2011, 933 400 employees out of 2 837 100 of insured population, contributed through payroll tax and formed 44% of total CNAM revenues. 20 15 10 5 0 2004 2005 2006 2007 2008 2009 2010 2011 Payroll tax revenues Current payroll tax 7% In 2004-06, payroll tax was fixed at 4% In 2007-09 it started rising by 1% every year Current flat rate tax is 6 times greater than it was at the beginning of MHI. 8 7 6 5 4 3 2 1 0 7 7 7 7 6 5 4 4 4 2004 2005 2006 2007 2008 2009 2010 2011 2012 Payroll tax value
Share of CNAM revenues, % Transfers from state budget Current transfers from state budget equal to 12.1% of the overall state budget expenditures. In 2011 there were 1.851.200 non-working population insured by the government. Decreasing budget contributions as share of CNAM revenues. 80 70 60 50 40 30 20 10 0 66.7 65.5 64.2 58.6 53.8 56 54.5 50 2004 2005 2006 2007 2008 2009 2010 2011 State contributions
Financing of other health expenditures Budget allocations to MoH National disease programs Out of pocket payments Medical services (ambulatory, hospital) Prevention services For medicines
Budget allocations to MoH Funding of national disease programs: Procurement of medicines, vaccines and consumables for treatment and prevention of various diseases. Funding of National Prevention Service: 36 Public Health Centres National Public Health Centre Funding of Rehabilitation centres for children with disabilities and TB Genetics Centre, Administrative expenditures
Earmarked policy for health financing Initially, in 2004 per capita budget contributions were linked to per capita payroll contributions and to per capita cost of the MHI programme. But, it increased levels of government spending. In 2007 budget contributions decoupled from payroll contributions and an earmarked value of 12.1% of the overall state budget expenditure was fixed. Dedicated for population that is insured by government according to the law on MHI (See next slide)
Categories of population insured by the Government Pre-school children; Primary school children Professional education children College students Bachelor students Mandatory resident post-graduate students, doctoral students Children up to 18 years that do not attend school Pregnant women; Disabled Pensioniers; Officialy unemployed; Home carers of persons with severe disabilities Mothers with more than 4 children; People from socialy vulnerable families that benefit from social support.
Share in the CNAM revenues, % 80 70 66.7 65.5 64.2 60 50 40 30 31.6 31.7 32.4 58.6 37.3 53.8 41.6 50 46.4 56 54.5 42.2 43.3 20 10 0 2004 2005 2006 2007 2008 2009 2010 2011 State contributions Payroll tax revenues Source: Based on CNAM da
Percentage Priority of government given to health 16 14 12 11.9 11.3 11.7 11.7 13.0 14.1 13.6 13.3 10 8 6 4 2 0 6.4 4.2 4.2 4.7 4.9 5.4 5.6 5.2 2004 2005 2006 2007 2008 2009 2010 2011 Public health expenditures, % of GDP Govt. exp. on health as share of general govt. expenditures Source: National Bureau of Statistic
Share of GDP, % Stable revenue for health in the Republic of Moldova 14 12 10 8 6.8 7.8 8.4 9.4 10.3 10.7 11.9 11.7 6 4 2 0 2003 2004 2005 2006 2007 2008 2009 2010 Public expenditures for health
Securing stable revenue in times of crisis Existence of two main sources of revenue to CNAM, allows to use the payroll tax revenues in times when the state budget is low. CNAM has a separate account for keeping savings. In 2009 CNAM used the savings account to substitute a part of government transfers, that were low during economic downturn. Several National Programs (dialysis) that were financed from state budget, later have been transferred to CNAM s responsibility.
Key messages A combination of earmarked state budget contributions and payroll tax contributions guarantee a predictable and stable revenue. Payroll tax contributions makes a good way to overcome state budget shortages in times of crisis, sustaining a stable revenue for health spending. Allocated in a single national pool to guarantee equity in distribution of resources, but form two different sources of revenue.
Key messages Government gives a quite high priority to health care sector spending 13 % out of it total expenditures. A historical legacy, due to fully state budget funded system before the introduction of MHI. Although, decreasing participation of government in health financing, it s share is still high and plays a significant role in sustaining a stable revenue. Due to the development of economy the government will put more responsibility on the population to finance health expenditures through payroll tax contributions.
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