The Armenian Ministry of Health has called for a new 6 percent income tax that would finance the planned introduction of public health insurance covering the country’s entire population.
Health Minister Arsen Torosian made a case for the extra tax late on Tuesday as he presented an official “concept” for the insurance system drawn up by the ministry. He said it is the only realistic way of making medical services accessible to all Armenians.
Public access to healthcare in Armenia declined significantly following the collapse of the Soviet Union as cash-strapped governments allowed hospitals to legally charge their patients. Most Armenian hospitals were privatized in the 1990s.
Currently only state-run policlinics are required to provide basic medical aid to the population free of charge. Healthcare, including surgeries, is also supposedly free for children aged 7 and younger. Their parents often have to make hefty informal payments to doctors, however.
Also, for the past several years the state has partly covered healthcare expenses of civil servants, schoolteachers and other public sector employees.
Torosian argued that those expenses put an extremely heavy financial burden on the majority of people suffering from serious illnesses and their family members. “The bad thing is that given the incomes of our population those expenses are mostly disastrous and make our people poorer,” he said in a live Facebook broadcast.
According to Ministry of Health estimates cited by Torosian, a national health insurance system covering a wide range of surgeries and other medical treatment would require 250 billion drams ($525 million) in annual government funding. The Armenian government plans to spend only 109 billion drams on healthcare next year.
“Calculations show that the additional tax can be the source of [the required] 140 billion drams,” the minister said.
Torosian said the 6 percent tax rate is affordable for 41 percent of officially employed Armenians earning 150,000 drams per month or more. The financial impact on other citizens would be mitigated by tax cuts enacted earlier this year, he claimed.
The proposed insurance scheme sparked heated debates on social media, with many users voicing strong opposition to it.
Levon Harutiunian, a relatively well-paid information technology engineer, said on Wednesday that the extra tax is unfair because it would not apply to some categories of the population, notably self-employed taxi drivers and small business owners, who are exempt from all taxes. He said the government should end these privileges and tax evasion before telling law-abiding taxpayers to foot the insurance bill.
Harutiunian also argued that he is already covered by private health insurance paid for by his employer. “It’s cheaper than what the minister is proposing and covers more services,” he told RFE/RL’s Armenian service.
Torosian reacted to such arguments in another video address aired from Denmark’s capital Copenhagen where he was attending an international conference. “By that logic, I could ask why people who are not paying taxes are allowed to use roads built with my taxes,” he said.
Torosian said he is ready to engage in a public debate with the critics on his return to Armenia.
The proposed healthcare tax has not yet been discussed by Prime Minister Nikol Pashinian’s cabinet.
Pashinian’s My Step bloc promised “accessible and high-quality healthcare” in Armenia in the run-up to the December 2018 parliamentary elections won by it. Its election manifesto said that a compulsory insurance system will be put in place for that purpose. Torosian, who is a senior member of the bloc, said in January that the government plans to start introducing the system in 2021.