Armenia. Healthcare reforms and statistics in 2011
Previously it was believed that the free market could serve as a rational resource allocation mechanism for the healthcare system in Armenia. Since the mid-1990s the government has started to work on a radical program of reforms but many of these efforts, in particularly those from the South Caucasus region (Azerbaijan, Georgia), have had no effect. Between 1993 and 2011 several measures were undertaken towards structural and financial reforms of the health system, which led only to partial improvement, but produced some unexpected results.
Public financing of the Armenian health system has increased in relative terms in recent years and from 2000 to 2011 it increased from a total of approximately $17.8 million to about $173.6 million (or 62.5 billion AMD) i.e. approximately tenfold, nevertheless it is still low. Moreover, as a percentage of total Government expenditure, Armenia’s public health funding fell dramatically between 2006 and 2008 - by 47%, from 9.7% of total Government expenditure to 6.6% of total public expenditure. The government expenditures on health care as a percentage of Gross Domestic Product (GDP) also remain low in Armenia (about 1.66% of GDP in 2011), among the lowest in the world, lower than in many poor nations in Africa and Asia. In 2000 it even fell to a low of 0.8% of GDP. This is in spite of the WHO that health care expenditures should not be less than 6-9%.
The physical conditions in health posts and polyclinics are often poor and staff has had little incentive to treat patients with respect. On the one hand the reform provides the patients with the right of choosing their primary physicians, as well as reduces inappropriate and overly expensive secondary medical care; however, on the other hand, the health care reform limits the patient’s rights of access to direct specialist care. If the primary physician does not agree to refer the patient to a specialist, there is no way for the patient to refer himself to the secondary setting without directly paying into it and without a letter of referral from a primary physician in all except for emergency cases. Thus, even though the public costs are greatly reduced by the reform, actual out-of-pocket costs increase since the patients who chose to bypass the primary care physician referral process, and see a specialist, will have to pay for the treatment.
The role of private health facilities is becoming more and more apparent in the whole healthcare framework of Armenia. According to a World Bank report (2010), the private health care spending was more than 1.2 times higher than public expenditures in 2009. Private facilities are recognized as much better organized, ensuring a higher quality of services, and familiar with the client-oriented approach and modern costing mechanisms. However, it is not clear whether private expenditures include only official payments for health care services or informal payments as well. It is also not clear if total spending on health incorporates humanitarian aid provided by international donors and the Armenian Diaspora, i.e. medicines, equipment, supplies, and professional development opportunities for practicing healthcare providers.
Along with the decrease of government’s ability to socially protect the population, the active development of a shadow market of paid medical services has been observed. The growing informal sector of the economy caused a near collapse of the old social insurance and safety nets mechanisms. Estimates of the black market health care economy in Armenia cannot be accurately estimated. According to World Bank in 2000, the share of patients making ‘informal’ reimbursements was the highest among CIS countries, reaching 91%, as compared, for example, to 74% in Russia. Access to health care services has become increasingly dependent on whether a household can afford the ‘informal’ payments to providers.
The government has been trying to implement Health Insurance System for 10 years. However, in Armenia, the market literally fails to provide health insurance. At the same time a significant part of the population couldn’t afford to buy private health insurance, and current tax laws do not give incentives to the employer to provide health insurance to its employees. Besides, the social security taxes that employers currently pay for their employees’ wages and income taxes that employees pay, an additional 9% or even 3% tax on wages is not politically feasible. At this stage, given the government’s relatively low revenues, public health insurance seems to be cost prohibitive. If people are struggling for survival every day, they are less willing to pay insurance premiums in advance in order to use services at a later point in time. The low income of the population and the existence of a shadow economy make the development of public and even private health insurance very difficult.
In order to reduce the shadow turnover in health sphere in Armenia a co-payment mechanism was introduced into health care services in March 2011. It has been implemented with differentiated approach in the regions compared to Yerevan, which means that the cost for healthcare services is significantly lower in the regions. While one part of the amount was directed to increasing salaries of medical workers from about $150-$200 (60.000-80.000 AMD) to about $500-$650 (200.000-250.000 AMD) depending on the hospital and number of patients, the other part of the money accumulated in the form of co-payments was intended for the improvement of the quality of healthcare services, provision of hospitals with medicine, equipment and tax payments. However, the amount of the co-payments is substantial and most part of the population cannot afford to pay it.
The State Health Agency (SHA) in Armenia that was established in 1998 is responsible for purchasing services from providers through contractual mechanisms. Since then the public budget for health care is disbursed to health care providers through contracts between the SHA and the providers. Those funds are directly transferred from the Ministry of Finance (MoF). The main tasks of the SHA are: contracting health care providers for services in accordance with Basic Benefits Package (BBP), ensuring the target use of state financial resources and reimbursement of the health care providers and quality assurance. The contractual arrangements between the SHA and the providers, however, are defined relative to the health services that are provided using state property such as infrastructure and equipment. This represents an unclear arrangement since according to the existing regulation the SHA has limited ability to supervise the functioning of the contracted enterprises, and can only solve the “problems of the filed within the limits of its jurisdiction without violation of the independence of subordinate enterprises”.
Although the range of benefits nominally available to the poorest under the program of State Guarantees is greater, the SHA payments do not act as a full “catastrophic insurance” program. In general, the amounts paid to hospitals through the SHA are less than their costs, and these institutions continue to collect sizeable out-of-pocket payments from patients. In primary care, chronic disease drugs are nominally a guaranteed benefit, but primary care budgets are inadequate to cover these costs and patients continue to pay large sums out of pocket. Except for the poorest, there is no government payment for hospital care for many chronic and degenerative diseases. For this category the levels of SHA payment are below cost (50% of overall real spending), so those who must be admitted to hospital pay substantial amounts. Hence, state funding is not even sufficient to assure guaranteed free services for socially vulnerable groups. In these conditions, even many representatives of these groups, whose treatment costs are covered by the state, under the pressure of unavoidable additional payments often refuse to use the free of charge medical care services guaranteed by the state.
Chronic disease continues to be “catastrophic” for many households in Armenia. The expenditures by the poorest in fact exceed the amounts spent by the richest part of the population for medication. In fact, Armenians are still making significant sacrifices to obtain prescribed drugs, particularly for chronic conditions.
Despite the stability of some health indicators in Armenia in recent years many of these are still worse today than they were in 1990. The accessibility of healthcare in Armenia has clearly worsened during the researched period of time. Armenians continue to experience poor access to health care despite the sufficient number of health facilities and medical workforce.
The number of patients admitted to the hospitals of the Ministry of Health in 2010 was just over a third of the number admitted in 1990, while all hospital admissions decreased by almost 50%, meaning the cost effectiveness of the hospital system has also declined. Similarly, the trends in the utilization of both medical services (hospitalizations and ambulatory visits) in 1990–2010 also followed this pattern: the annual bed occupancy rate per patient has declined from 68% to 62.1% and the number of annual per capita ambulatory polyclinic visits has also sharply dropped from 7.8 in 1990 to 3.6 in 2010, i.e. was 2.2 times less than in 90s.
Between 1998 and 2010 the morbidity rate has increased. At the same time, the morbidity of population and children 0–14 years diagnosed the first time has increased. The overall birth rate from 1970 to 1990 was around 22 per 1000 population, but has since dropped to 13.8 in 2010. Between 1990 and 2000, the birth rate sharply decreased while the overall death rate comparatively increased. This can be explained by the fact that since the beginning of the transition towards a market-oriented economy, Armenia has faced a number of difficult challenges; including a major tragic earthquake of 1988, the Nagorno-Karabakh War, referred to as the armed conflict that took place from February 1988 to May 1994, a blockade enforced by Turkey and Azerbaijan since 1993 (in place now for over 19 years), an energy crisis, recession and economic collapse. This combination of events has had severe consequences.
Economic decline has placed Armenian health institutions in jeopardy, hindering reforms. Gains in freedom have been accompanied by a loss of many basic economic and social services that the population had come to enjoy and expect. Thus, the population growth rate decreased along with natality rate (Table 1).
The overall mortality rate has slightly increased. In 1989–1990 infant mortality has been in the range of 20 to 25 deaths per 1,000 live births, lower than the rates in many of the new independent states, but higher than the values reported for developed countries. For instance, infant mortality in the United States is 9.8 per 1,000 live births. According to the State of the World’s Children 2009, in Armenia, roughly 22 infants per 1,000 live births die before their first birthday. Approximately 80% of these deaths are during the first 28 days of life – the neonatal period. According to the official national statistical report from 1990 to 2010, infant mortality rate (IMR - deaths per 1,000 live births) in Armenia has declined from 18.5 to 11.4.
Mortality rate per 1.000 live births among children under 5 years of age comprised 13.4 per thousand in 2010, as compared to 23.8 per thousand in 1990. While other sources prove it, that the figures are different for the same period of time: IMR has declined from 46.1 to 17.5, the value for child mortality rate under-5 (per 1,000) declined from 54.5 to 19.6, that was a minimum value over the past 35 years (a maximum value of 98.3 in 1975) [15,16] and the value for neonatal mortality rate (per 1,000) declined from 26 to 11.
The ratio of maternal mortality (MMR) per 100.000 live births, in 1990 was 40.1. Meanwhile, the maternal mortality rate has increased by 12.4% from 1990 to 2000 due to the large number of unassisted home deliveries and abortions caused by the infrequently use of contraceptives. Since 2000 to 2010 it has declined from 52.5 to 8.9. Maternal mortality in Russia and other former USSR countries has been also high, probably reflecting the use of abortion as the most common method of family planning - an average of five abortions per woman.
With considerably low public funding Armenia managed to ensure relatively good life expectancy compared to many countries in the Europe and Central Asia (ECA). Life expectancy at birth has remained high - estimated at 71 years for men and 78 years for women during 2010. Both indicators were higher than those of 1990. It is difficult to adequately explain the data, because from 1990 to 2011 the value of this indicator increased. During the Soviet era, Armenia had one of the best developed health care systems in the Soviet Union (SU). Life expectancy, which in the early 1980s was the highest in the Soviet republics (73 years), fell in the early years after independence (71 years in 1991). Since the mid-1990s, this factor has been climbing steadily and reached 73.2 in 2011. Certainly, the economic collapse impacted health system outputs, and in particular, life expectancy, but the outcomes from this may be distributed over longer periods of time, and may be felt to some extent in the future.
Source: International Journal for Equity and Health
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