EKIP– Expert Club for Economics and Politics A Different Opinion
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In view of the ongoing economic crisis, resources in each of the publicly funded activities of the state are becoming scarce. Specifically for the NHIF, on the one hand, income from insurance contributions is decreasing due to the increase in unemployment, and on the other hand, income from the state budget is decreasing. Despite the moderate increase in the healthcare budget in Bulgaria, a number of financing problems have been observed in the last few years, especially when it comes to co-payments by patients. On average, 47% of Bulgarians pay co-payments for healthcare in various areas, including medicines, outpatient and inpatient care. An economic crisis will create deficits, as a result of which a new approach to co-financing the healthcare system may be necessary.
One of the budget-neutral instruments that can be used to finance health activities and services is the earmarking of excise taxes. On the one hand, excise taxes are taxes on goods with relatively inelastic demand, which makes them less subject to the economic cycle, and therefore less volatile in terms of revenue.
The activities for promotion, prevention, treatment and control of diseases for which targeted financing from excise duties can be used concern groups of diseases related to the use of these goods. Redirecting targeted financing to the treatment of these groups of diseases would further help limit the growth of morbidity and also maintain low mortality rates.
If the state had chosen to earmark excise taxes only from tobacco and alcohol, in the best-case scenario (10%), revenues of BGN 304.6 million would have been expected for the healthcare system in 2019, and in the worst-case scenario – BGN 30 million (1%). If all excise taxes were earmarked, revenues would have been BGN 544 million (10%) or BGN 54.4 million (1%), respectively.
Based on calculations of the percentage ratio between three of the main items in the NHIF budget, it was estimated by how much the revenue earmarked from excise duties could potentially be increased. In the period from 2018 to 2020, the percentage ratio between the items for outpatient care, inpatient care and medicines did not undergo major changes. On average, the cumulative budget between the three is divided into 19% for outpatient care, 52% for inpatient care and 29% for medicines, medical devices and dietary foods. With the lowest earmarked percentage rate of excise duty, the NHIF budget for 2020 could have been additionally subsidized with 54.4 million BGN, of which 10 million BGN for outpatient care, 28.6 million BGN for inpatient care and 15 million BGN for medicinal products. With the maximum increased allocation (10%), respectively, a total of 544 million BGN BGN, of which BGN 99.6 million for outpatient care, BGN 286 million for inpatient care and BGN 158.3 million for medicines.
The TEAM's proposal:
The targeted allocation for healthcare of 1%, 5% or 10% of the proceeds from excise goods (tobacco products and alcohol) will lead to an increase in public funds in the field, which can ensure stability of the healthcare budget and access for Bulgarian patients in times of economic recession, which is why we propose the following exemplary amendment to Art. 53, para. (3) of the Health Act, namely:
Now:
"One percent of the funds received in the state budget from excise taxes on tobacco products and alcoholic beverages are used to finance national programs to limit the use of tobacco and related products, alcohol abuse and prevent the use of narcotic substances."
Approximate change:
"One (five or ten) percent of the funds received in the state budget from excise duties on tobacco products and alcoholic beverages are used to finance budget items in the NHIF related to the limitation, promotion, prevention and treatment of diseases related to the use of tobacco and related products, alcohol abuse and preventing the use of narcotic substances."
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