It is an unwritten rule in Armenia to toast for good health in any occasion. From celebrations to commemorations, people raise their glasses and wish for long, healthy lives. This is a pragmatic superstition, because falling into bad health could very well be a nightmare – financial and otherwise – for Armenians to this day. Fortunately, universal healthcare, which Armenia is slowly inching towards, could prove to be the solution.
The Armenian healthcare system has undoubtedly improved in the past few years. Hospitals have been built across various regions in Armenia, many facilities have been upgraded, and the number of services available to citizens free of charge has increased. The maternal mortality rate has decreased and life expectancy has increased. But universal healthcare, until very recently, seemed like a distant dream.
Universal healthcare is defined as everyone being able to access the necessary health services without financial distress. The World Health Organization envisioned “the highest attainable standard of health” to be a fundamental human right, as far back as 1946. But it is only in the recent decade that access to affordable, and quality healthcare has emerged as one of the central tenets of development and a basic human right. Universal healthcare has even been adopted in the Sustainable Development Goals under Goal 3: Good Health and Wellbeing, where the eighth target is to “achieve universal health coverage, including financial risk protection, [and] access to quality essential health-care services.” This comprehensive definition illustrates the growing recognition that the right to healthcare is necessary to the wellbeing of any society. That is why developing affordable, quality healthcare is essential for Armenia, where the system is fissured and many are falling through the cracks.
The Armenian Healthcare System
The Armenian healthcare system is centered on the Basic Benefits Package (BBP) program [պետ պատվեր]. The BBP encompasses two groups: the first is the entire population, and the second is “socially insecure and special groups” that are categorized in rule N 318-Ն which was adopted in 2004. The categories include, among others, disabled groups I, II, and III, socially insecure families, military personnel and their family members, and family members of those who died in the defense of Armenia. According to whether or not a patient falls within the categories of the vulnerable group, medical services are either fully or partially subsidized under the BBP. These services include inpatient treatments where the individual is hospitalized or outpatient treatments such as visiting polyclinics. As such, healthcare entitlements are defined by the BBP which formulates the notion of ‘who gets what’.
Polyclinics offer primary healthcare services, as well as maternity services and sanitary-epidemiological services. These services are completely free of charge for poor, vulnerable, and special individuals. However, it varies for the rest of the population. For example, consulting doctors, gynecologists, neuro-specialists and undergoing general laboratory tests such as blood or urine tests, ultrasounds, or x-rays are free for the entire population. But high tech diagnostic services such as MRIs and Cat Scans are only free for the vulnerable groups, and the rest of the population has to make a full out-of-pocket payment.
More importantly, pharmaceuticals require full out-of-pocket payment by the general population, whereas it varies for the vulnerable group. For some vulnerable categories, such as disabled groups I and II, pharmaceuticals are free. But for other categories, such as disabled group III, 50-70 percent co-payment is required. Only pharmaceuticals for a few specific diseases are provided freely, such as tuberculosis, malaria, and HIV/AIDS. This often makes essential medicine unaffordable for a large sector of the population, stalling treatment and causing the exacerbation of otherwise manageable health problems.
As for inpatient hospitalization services, treatment is provided free to the vulnerable groups for around 200 conditions, identified as priorities by the Ministry of Health (MOH). For the rest of the population, treatment is offered free for ten priority diseases, including tuberculosis, chemotherapy, hemodialysis, and antenatal care. In the case of other diseases, treatments require either partial or full co-payments. These co-payments are based on an approved MOH price list, which differs between Yerevan and the regions. As a result, only 38 percent of the general population is covered for inpatient treatments. The fact that nearly two-thirds of the population does not have coverage for hospitalization means households that are not considered vulnerable often have exorbitant fees to pay when they receive inpatient treatment.
Lack of Financing
Lack of financing is perhaps one of the biggest structural challenges faced by the Armenian healthcare system. As of 2014, the total expenditure on health in Armenia was only 4.5 percent of the GDP which is quite a low figure. In comparison, total expenditure on health for the same year was 6 percent of the GDP in Azerbaijan, 6.9 percent in Tajikistan, and 7.5 percent of the GDP in Georgia. Low spending created a healthcare system that is full of shortfalls, where many families and individuals often fall through the cracks. In order to implement universal health coverage that leaves no one behind, increased public spending on health is essential, but in Armenia, public spending on health is one of the lowest in the world. Upon his visit to Armenia in the summer 2018, the UN Special Rapporteur on the right of everyone to the enjoyment of the highest attainable standard of physical and mental health found that public expenditure on health is below 2 percent of GDP.
As a result of low financing and the absence of universal health coverage, many families are forced to make significant out-of-pocket payments to receive adequate medical treatment. These payments include the formal co-payments for services under the BBP, direct payments for services not covered by the BBP, and informal payments. Notably, three fourths of all out-of-pocket spending is to acquire pharmaceuticals.
According to data by the World Health Organization, 16.1 percent of the Armenian population has household out-of-pocket health expenditures that are greater than 10 percent of the total household expenditure. Only a handful of countries, such as Nigeria, Nicaragua, and Nepal, have a higher percentage of the population making such expenditures. In fact, a study by the World Bank found that out-of-pocket payments account for 51 percent of health financing in Armenia, which is an alarmingly high number.
The high level of out-of-pocket payments increases the risk of households falling into financial hardship when faced with a health crisis. Health problems could even push households into poverty, and this is a fear with which many people live. As long as out-of-pocket payments remain at a high level, healthcare will continue to be unaffordable for certain sectors of the population, causing inequalities and further deepening social injustice. Unless there is a significant increase in public funding, out-of-pocket payments are unlikely to decrease, and the financial burden on thousands of households will not be relieved. Fortunately, recent developments related to healthcare give cause for some optimism.
Recent Developments
This year has seen several rapid developments in the field of healthcare, many of which are expected to have a positive impact on universal health coverage. One such development is the increase in the budget of the Ministry of Health.
Only a few days ago, approximately 12 billion AMD from the state budget was allocated to the healthcare ministry. This allocation will fund the widening of the coverage of the BBP, increasing the proportion of the population covered, and expanding the range of services provided. Additionally, 1.75 billion AMD will be dedicated to ensuring free inpatient treatment for all children under the age of 18. Previously, the coverage of those under 18 was sporadic. Children aged 0-7 received free inpatient treatment, along with specific groups aged 8-18, such as orphaned children and children with disabled parents. The move to provide free inpatient services to all children under 18 will bring health coverage to an additional 200,000 individuals, which is not a minor feat.
An additional 5.1 billion AMD will also be dedicated to fund the services available to the “socially insecure and special groups.” The additional funding will improve the accessibility of medical services and increase the salaries of hospital staff. The aim is to improve the efficiency and the quality of services provided. The increased funding will provide 500,000 individuals with health coverage.
Davit Melik Nubaryan, the former head of the Department of Medical Assistance Policy at the Ministry of Health, noted that the ministry budget had already increased from approximately 84 billion AMD in 2018 to almost 94 billion AMD in 2019. “There was no tangible increase in the budget for many years because the government did not consider healthcare a priority,” Melik Nubaryan said. “The increase allowed us to solve some essential problems.”
Increasing national budget spending on health would increase the financial protection of citizens in regard to healthcare because out-of-pocket payments will be reduced. Reducing these payments will have a tangible impact on household expenditure, relieving households from a heavy burden. However, the UN Special Rapporteur pointed out that for this impact to be truly perceptible, the system should be “efficient, transparent, friendly, and responsible to those who use it.” Investments in Armenian healthcare should seek to ensure the system attains those ideals without which positive developments will not make sense.
A recent decision also announced that pharmaceuticals will be free for socially insecure families. Previously, these families were required to pay in full for the necessary medicine, which contradicted the idea of social justice. This development affects 200,000 families who can now access the pharmaceuticals they need without risking their financial stability. Another significant development is that 335,000 pensioners are set to receive free inpatient and outpatient medical treatments, according to 2020 budgetary financing report of the Ministry of Healthcare. Currently, pensioners who do not belong to the vulnerable groups identified by the BPP are forced to shoulder the costs of their healthcare all alone. The aim is to provide the same set of healthcare services to all pensioners, whether or not they belong to the vulnerable group. This initiative is especially important because the percentage of those older than 65 is expected to rise from 10 percent to 20 percent by 2030, according to the World Bank. If the healthcare of this age group is not provided, the total health coverage will be negatively impacted, as will the financial wellbeing and poverty levels of a significant part of the population.
These developments have come to fix many of the inherent flaws in the healthcare system. In addition to these, there are several other important strides being made to set Armenia on the path to accomplishing universal health coverage, which is the ultimate aim of the Ministry of Healthcare, according to Melik Nubaryan. “We expect to come closer to that coverage within the next 3-5 years,” he said. “We might not have universal coverage, but we will have the concrete steps that will lead us there.”
While these developments are commendable, much remains to be done. The focus on providing services to vulnerable groups is often at the expense of the remainder of the population. Many households fall through the cracks of the healthcare system and are unable to receive the necessary treatments because they are neither poor enough to qualify for health coverage nor rich enough to pay the cost of treatment. In many cases, paying for medical treatments pushes these households over the edge and into deep poverty. But if Armenian healthcare continues to develop at the same pace and direction that it follows now, then universal healthcare will become an attainable goal, rather than a distant dream, and fissures of the system will begin to fade.
