Head of insurance company on new concept of universal health insurance: It's a social security project

Head of insurance company spoke about a new concept of universal health insurance.

"Many points of the universal health insurance concept are disputable from my point of view, but I am even glad that the state will take over the basic insurance because we will be able to sell additional insurance packages and make good profit," Arevshat Meliksetyan, Executive Director of Ingo Armenia Insurance Company, said this when speaking about whether the introduction of the universal compulsory health insurance will create problems for private insurance companies.

Any challenge is an opportunity

Under the new concept of universal insurance developed by the Ministry of Health, a state insurance fund will be established where all revenues for healthcare - both budgetary and citizens' insurance premiums - will be accumulated.

Today in Armenia the state order is fulfilled by the State Health Care Agency, and the health insurance of state employees, which is also paid by the state (social package), is fulfilled by private insurance companies. With the introduction of universal health insurance, private companies will be deprived of the social package, which means about 120,000 people. About the same number have voluntary health insurance, and they would also have to become beneficiaries of the state insurance system, so private companies risk losing about 240,000 customers.

"Any challenge is an opportunity," Arevshat Meliksetyan noted, adding that their experience and expertise will allow them to develop new packages of additional services that are not included in the basic package, or the same services but with additional features. "In the case of the social package, we are the state's operators, and we don't make much profit. So let the state take over the basic package, and we will sell our additional services, and make a profit," he said.

The health care system is not ready for universal health insurance

Arevshat Meliksetyan thinks that the Health Ministry didn't estimate what kind of surge in demand will happen and what kind of behavioral changes will take place when the financing of the treatment will become available to all the residents of Armenia. And he thinks that our healthcare system is not ready to provide services of proper quality in such an amount.

"In Armenia, per capita health care costs are $200 a year, including government and out-of-pocket expenses. In Iran it is $470, in Russia it is $586, in European countries it is several thousand dollars. These are the data of the World Bank. That means that in Armenia the share of expenditures for healthcare in the GDP must grow at least tenfold in order to create an infrastructure - hospitals and clinics. The whole system must be changed, starting with doctors' education, work planning, and salaries. Today, doctors, first of all, think about money, and they should not think about it at all," he said. 

Additional packages

According to the head of the company, the jump in demand, while maintaining the quota funding of health facilities, will lead to long waiting lists in some health facilities and some doctors.

"There will be queues, two months will pass, and people will come for additional insurance to avoid lines and go to the doctor they want," he said, adding that it would be right if "the money went to the patient," that is, the payment was made on the fact of patients, without quotas.

The head of the insurance company explained that even today there are private medical centers that do not agree to work at prices of social package, and wishing to be treated there should buy an additional insurance package. "We are not inventing a new bicycle. All developed countries have passed this stage: In Great Britain, Austria, Denmark, etc., the share of public funding in the total cost of health care is 30-40%. Almost all working people buy supplementary packages. In the UK, for example, all employees in banking, finance, IT, buy supplementary packages, because people want comfortable service, at a convenient time, with the doctor of their choice. And under the state program of the NHS people have to wait in line for 6 months," he said.

Insurance or social security?

According to Arevshat Meliksetyan, the concept of universal insurance offered by the Health Ministry is, in fact, not an insurance, but a concept of social security. Insurance has certain principles: chance and probability. And what is proposed is, according to the specialist, a social security program. "In many countries it is called that: social healthcare system, without the word insurance. If the word insurance is used, then there has to be a third, independent party who has to balance the one who pays - in terms of financial savings, and the one who provides services - in terms of better value for money. And at the center of the system is the citizen, who has to get the best treatment at the most affordable price."

The state cannot be a good manager by definition

Arevshat Meliksetyan believes that the state cannot be a good manager by definition, and this is a classic, and it is written about in books.

"Even under socialism and communism, the state can only be a good governor if it is a dictatorship. But the world is moving toward openness, democracy and competition, and there must also be competition in services. We must look at who has what interest. What is the interest of the state, the health of the citizen? Very good. And what about financing? Will we raise as much as we need? Very well. And how will we measure its effectiveness? There must be an interested party. This is the logic of the market, and if you're pursuing profit, you have to provide it for yourself, balancing social justice, price, quality, accessibility. The government must conduct policy, monitoring, and control. And insurance should be provided by private companies, it's logical," he said, adding that 120,000 people in our country have been using the social package via private insurance companies for over five years and there is no dissatisfaction.