Healthcare financing reform in Latvia: Switching from social health insurance to NHS and back?

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ContentslistsavailableatScienceDirect

Health

Policy

j o u r n al ho me p ag e :w w w . e l s e v i e r . c o m / l o c a t e / h e a l t h p o l

Health

Reform

Monitor

Healthcare

ﬁnancing

reform

in

Latvia:

Switching

from

social

health

insurance

to

NHS

and

back?

夽

Uldis

Mitenbergs

a,∗

_,

_Girts

_Brigis

a

_,

_Wilm

_Quentin

b,c a_Riga_Stradins_University,_Department_of_Public_Health_and_{Epidemiology,}_Latvia

b_Department_of_Health_Care_Management,_Technische_Universität_Berlin,₁₀₆₂₃_Berlin,_Germany c_European_Observatory_on_Health_Systems_and_Policies,_Brussels,_Belgium

a

r

t

i

c

l

e

i

n

f

o

Articlehistory:

Received28August2014 Receivedinrevisedform 21September2014 Accepted25September2014

Keywords:

Healthcareﬁnancing Insurance Healthcarereform Healthpolicy Balticstates

a

b

s

t

r

a

c

t

Inthe1990s,LatviaaimedatintroducingSocialHealthInsurance(SHI)butlaterchanged

toaNationalHealthService(NHS)typesystem.TheNHSisﬁnancedfromgeneraltaxation,

providescoveragetotheentirepopulation,andpaysforabasicservicepackagepurchased

fromindependentpublicandprivateproviders.InNovember2013,theCabinetof

Min-isterspassedadraftHealthcareFinancingLaw,aimingatincreasingpublicexpenditures

onhealthbyintroducingCompulsoryHealthInsurance(CHI)andlinkingentitlementto

healthservicestothepaymentofincometax.Opponentsofthereformarguethatlinking

entitlementtohealthservicestothepaymentofincometaxdoesnothavethepotentialto

increasepublicexpendituresonhealthbutthatitcancontributetocompromising

univer-salcoverageandaccesstohealthservicesofcertainpopulationgroups.Inviewofstrong

opposition,itisunlikelythatthelawwillbeadoptedbeforeparliamentaryelectionsin

October2014.Nevertheless,thediscussionaroundthelawisinterestingbecauseofthree

mainreasons:(1)itcanillustratewhytheconceptofSHIremainsattractive–notonlyfor

Latviabutalsoforothercountries,(2)itshowsthatachangefromNHStoSHIdoesnotimply

majorinstitutionalreforms,and(3)itdemonstratesthepotentialproblemsofintroducing

SHI,i.e.oflinkingentitlementtohealthservicestothepaymentofcontributions.

theCCBY-NC-NDlicense(http://creativecommons.org/licenses/by-nc-nd/3.0/).

1. Introduction

The Latvian government passed a draft Healthcare Financing Law in November 2013 [5]. If this law is ultimately adoptedbyparliament,it willfundamentally change the principles of the national healthcare ﬁnan-cingsystem.Theaimistoconvertthecurrenttaxfunded NationalHealthService(NHS)systemintoaCompulsory

夽 _Open_Access_for_this_article_is_made_possible_by_a_{collaboration}

betweenHealthPolicyandTheEuropeanObservatoryonHealthSystems andPolicies.

∗ Correspondingauthor.Tel.:+37129464223.

E-mailaddresses:umitenbergs@gmail.com, uldis.mitenbergs@aya.yale.edu(U.Mitenbergs).

HealthInsurance(CHI)systembylinkingentitlementto healthservicestothepaymentofincome-related contrib-utions.Thereformwouldhavemajorimplicationsforthe healthsystembymodifyingthemodalitiesfortheraisingof revenues,byexcludingtheuninsuredfromcomprehensive coverage,andpossiblybycompromisingtheeffectiveness oftheestablishedprimarycaresystem[16].

However,thereformwouldnotrequiremajor institu-tionalchangesastheproposedsystemwouldbesimilar tohealthinsurancesystemsinneighbouringEstoniaand Lithuania([24]).Inthese countriesand in severalother centralandeasternEuropeancountries([9,25]), reforms since the early 1990s have led to one national insur-ance fund,which poolsrevenues fromincome taxwith othergovernmentcontributionsandpurchasescarefrom http://dx.doi.org/10.1016/j.healthpol.2014.09.013

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independentpublicandprivateproviders.Therefore,social healthinsurance (SHI)systemsin thesecountriesshare many institutional characteristicswith theLatvianNHS system.Consequently, thedistinction betweenNHSand SHIhasbecomelessrelevantfordescribinginstitutional characteristicsofhealthcaresystemsinternationallythan itwasinthepast[7].

ThediscussionaroundtheproposedHealthcare Finan-cingLaw in Latvia is interesting becauseof three main reasons:(1)itcanillustratewhytheconceptof compul-soryorsocialhealthinsuranceremainsattractive–notonly forLatviabutalsoforothercountries;(2)itshowsthata changefromNHStoSHIdoesnotimplymajorinstitutional reforms,and (3)itdemonstrates thepotentialproblems of introducing SHI,i.e. of linking entitlementto health servicestothepaymentof contributions.Therefore, the purposeofthepaperistodescribethecontextofthe cur-rentreformproposalandtodiscusstheexpectedbeneﬁts andpotentialproblemsasputforwardbyproponentsand opponentsofthereform.

Thenextsectionbrieﬂydescribesthehistoryandthe functioningoftheLatvianhealthsystem,beforeSection3 looksatthepoliticalandeconomiccontextofthereform. Section4thenpresentstherationaleandthecontentof thedraftHealthcareFinancingLaw.Subsequently,the pos-itionsofdifferentstakeholdersarediscussedinSection5 togetherwiththepotentialproblemsputforwardbythe opponentsofthelaw.Finally,Section6concludeswitha briefassessmentofthereformandprovidesanoutlookfor thelikelinessofthereformtobeimplementedinthenear future.

2. TheLatvianhealthsystem

ThemovetowardsCompulsoryHealthInsurancehasto beviewedinthecontextofalmost25yearsofreforms, which radically transformed the Latvian health system afterindependenceofthecountryin1991.Similarasin EstoniaandLithuania([24])and,infact,asinmostcentral andeasternEuropeancountries([25]),Latviaaimedto cre-ateadecentralizedSHIsystemwithmultiplefundsinthe early1990s.

ThereasonsforthisshifttowardsSHIincludedadesire toreturntopre-Sovietinstitutions,tolimittheinﬂuence ofpoliticiansoverthehealthsystem,andtocreatemore stableandindependentrevenuestreamsforthehealthcare sector([18,25]).

Subsequently, because of apparent problems with decentralizedplanningand financing,a recentralization processwasinitiated.Thisfirstledtothecreationofone singlefund,theStateCompulsoryHealthInsuranceAgency in2002.In2005,earmarkingofaproportionofthe col-lectedpersonalincometaxforhealthcarewasabandoned infavourofgeneraltaxfinancing.Finally,the centraliza-tionprocessculminatedinthecreationoftheNHSin2011, effectivelyabandoningtheconceptofsocialhealth insur-ance.Functionsofseveralpreviouslyexistinginstitutions wereincorporatedintotheNHSwiththeaimofcreating onesingleinstitutionfortheimplementationofhealth poli-ciesinLatvia[14].However,thepurchaser-providersplit wasretained,withtheNHScontinuingtopurchasecare

fromindependentpublicandprivateproviders–justas theStateCompulsoryHealthInsuranceAgencyhaddone before.

The Latvian health system providescoverage to the entirepopulation(Latviansandnon-Latvianresidents)and pays for a basic services package, which is guaranteed bytheconstitution.TheNHSreceivesitsresourcesfrom generaltaxrevenues andpurchasescarefrom indepen-dentpublicandprivateproviders[14].Mosthospitalsare publicly owned, while most general practitioners work as independentprofessionals. Specialistsworkeither as independentprofessionals or asemployeesofhospitals. Alldentalpracticesandpharmaciesareprivatelyowned. PatientsareencouragedtoregisterwithaGPoftheirchoice (andmorethan96%doso)whowillthenactasa gate-keeper.Afterreferral,patientscanfreelychooseaspecialist careprovider,althoughactualchoiceisoftenlimited–in particularinruralareas–andwaitinglistsaresubstantial. Oneof themostimportantproblems isthatthe sys-temisseverelyunderfunded:totalhealthexpenditurein 2012wasonlyUS$1188PPPpercapita(correspondingto 6%ofGDP),whichwasthethirdlowestamountspenton healthintheEU[23].Furthermore,onlyabout57%(2012) oftotalspendingcamefrompublicsources–ashare,which is loweronlyin Bulgariaand Cyprus.Insufﬁcientpublic fundingmeansthatpatientsareexposedtosubstantialuser chargesanddirectpayments,inparticularfor pharmaceut-icals[14].Out-of-pocket(OOP)paymentsaccountfor37% oftotalhealthexpenditures,oneofthehighestratesinthe EU(behindonlyBulgariaandCyprus).

Theproportionofthepopulationreportinganunmet medicalneedbecauseofcostsdoubledduringtheﬁnancial crisis,reachingmorethan14%in2011beforereducingto justabove10%in2012[6].InEstonia,Lithuania,and Slove-nialessthan1%ofthepopulationreportanunmetmedical needbecauseofcosts,andtheproportionisbelow3%on averageintheEU.Furthermore,importantinequitiesexist inLatviaastheproportionofthepopulationwithunmet medicalneeds(notonlybecauseofcosts)ismuchhigher in thepoorest incomequintile(29%)thanintherichest incomequintile(10%).

3. Economicandpoliticalcontextofthereform

During therecentfinancial andeconomic crisis,GDP dropped more strongly in Latvia than in any other EU member state,decliningbyalmost18%in2009[22].As partoftheEconomicStabilizationandGrowthRevival Pro-gramme,significantspendingcutsweremadeinthehealth caresector[1].TheMinistryofHealth’sbudgetdropped by12.6%in 2009(to LVL503.7million)[12].Salariesof allhealthworkerswerecutonaverageby20%([24]),and patients’co-paymentswereraisedsignificantly[14]. Pub-licspendingonhealthasashareofGDPdroppedfrom4.3% ofGDPin2007toabout3.4%in2012[23].

Followingparliamentaryelectionsin2011,anew coali-tion government consisting of two centre-right parties (Zatlers’ReformPartyandUnity)andoneright-wingparty (NationalAlliance)tookofﬁce.MembersofUnity(ormore preciselyofapredecessorparty)hadstronglysupported theidea ofreturning toSHIalready undertheprevious

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government(2009 until2011).Under theimpressionof theeconomiccrisis,themostimportantargumentsatthe timewerethatlinkinghealthservicestothepaymentof incometaxwouldcontributetoincreasingincometax rev-enuesandthatexcludingLatvianswhoemigratedabroad (andconsequentlydidnotpayincometax)fromreceiving healthservicesathomewouldimproveserviceavailability forresidentsinLatvia.In2009,aworkinggroupwas estab-lishedtoassessthefeasibilityandbeneﬁtsofintroducing SHI[2]buttheresultingreportdidnotsupportachangeof theﬁnancingsystem[11].

Nevertheless, when Dr Ingrida Circene from Unity was appointed Minister of Health in 2011, the idea ofintroducingcompulsoryhealthinsurancere-emerged. Thegovernmentincludedtheintroductionofcompulsory healthcareinsuranceinitsactionplan,principallyarguing withtheaimofincreasingpublicspendingforhealth[3]. InMay2013,theCabinetofMinistersformallysupported theintroductionofcompulsoryhealthcareinsurance[4], andadraft“HealthcareFinancingLaw”waspassedbythe CabinetofMinistersinNovember2013[5].Thelawwas originallyscheduledtobeenactedinJuly2014.However, bySeptember2014ithadnotyetpassedthesecond(of three)readingsinparliamentbecauseofstrongopposition frommultiplestakeholders(seeSection5).

4. TheproposedHealthcareFinancingLawandits

expectedbeneﬁts

ThemainaimofthedraftHealthcareFinancingLawisto overcomethelackofpublicresourcesforhealth,toensure financialsustainability,andtoimproveaccessofthe popu-lationtohealthservices.Specifically,expendituresaretobe increasedby0.25%ofGDPperyearinordertoreach4.5%of GDPby2020[16].Thebenefitsofsuchincreasedspending areexplicitlymentioned(seeTable1):morerehabilitation services,improvedaccesstopharmaceuticals,reducedcost sharing,andincreasedsalariesofhealthcareprofessionals. Thedraftlawsuggeststhatraisingmoreresourcesfor healthcouldbeachievedthroughtheintroductionof “Com-pulsoryHealthInsurance”.Accordingtothelaw,twomain changeswouldhavetobeimplemented:(1)Earmarking a proportionofincometaxrevenuesforhealth;and (2) linking eligibility to health services to the payment of incometaxorcontributions.Theunderlyingassumption isthatmakingeligibilitytohealthcareservicesdependent on income tax payment will provide incentives to pay taxes, which wouldcontribute toreducing theshare of theshadoweconomy,andconsequentlyleadtohighertax revenues.

Asaresultofthereform,thecompositionoftheNHS budgetwould change(Fig.1).In2014(pre-reform),the budget is entirely based on generaltax revenues, thus includingresourcescollectedthroughdifferentforms of taxes.From2015onwards(post-reform),theCHIbudget wouldconsistofthreeparts:(1)anearmarked“State Com-pulsoryHealthInsurancePayment”,whichwouldbeequal tothecentralgovernment’sshareofincometax(i.e. cur-rently20%)(theremaining80%ofincometaxrevenuesare currentlyallocatedtomunicipalities).(2)Otherallocations fromgeneraltaxrevenues,whichwouldstillaccountfor

themajorityofCHIresources,i.e.anestimated63%in2015. (3)Voluntaryinsurancecontributionsfrompeoplewhodo notpayincometax,whichwould,however,contributeonly averysmallproportiontooverallCHIrevenues.Growth oftheCHIbudgetfrom2015to2016isexpectedtocome mainlythroughagrowthofthecentralgovernment’s bud-getallocation(Fig.1).

Eligibilitytothefullsetofhealthcareservicescurrently availableintheNHSwouldbelimitedtothreecategories ofthepopulation:

1.Payersofincometaxwhohavepaidtaxesforatleast 11 monthsduringthe calendaryear orwho have an annual taxable income above the minimal monthly salary(_D320in2014)timestwelve.

2.Exemptgroups,includingchildrenunder18,retiredor disabledpeople,registeredunemployed,fulltime stu-dentsbetweenage18 and30,peoplereceivingsocial beneﬁtsandothers.

3.Payersofregularvoluntaryinsurancepremiums(D28 permonth)orthosewhomakeaone-timepaymentof three timestheminimumwage atthetime of need-inghealthcareandsubsequentlycontinuetopayregular premiums.Ithasbeenestimatedthatthisgroupwould consistofonlyabout7250people(anestimated5%of the145,000Latvianresidentswhodonotpayincometax andwhodonotbelongtoanyoftheexemptcategories) [16].

Nevertheless, a narrowly deﬁned package of basic healthcare services would continue to be available to theentirepopulationinordertoensureconformitywith theconstitution.Thiswouldincludeemergencycareand all reimbursed pharmaceuticals, plus elective care for selectedpatientgroups(e.g.diabetics,psychiatricand can-cerpatients)andconditions(e.g.pregnantwomen).

The law does not propose significant institutional changestothehealthsystem,i.e.thepoolingofresources bya singleinstitution and thepurchasing of care from independentproviderswouldberetained.Moneywould continuetoflowfromthestatebudgettotheNHS;and carewouldcontinuetobepurchasedbytheNHSwithits regionalbranchoffices.

5. Stakeholderpositionsandpotentialproblemsof

thereform

TheMinisterofHealthwasstronglysupportiveofthe draftHealthcareFinancingLaw. Shebelieved thatthere wasnopoliticalandpublicsupportforincreasingtheshare ofthegovernmentbudgetforhealth,andthatintroducing insurancewastheonlyoptionavailableforincreasing pub-licexpendituresonhealth[21].Inaddition,theMinistry arguesthatthecurrentwayofﬁnancingisunfairbecause taxpayershavetocoverthecostsofservicesconsumedby others[16].

However,thereisnouniformsupportofthedraftLaw evenamong Unityparty members,withtheMinistryof Financebeingopposedtotheideaofearmarkingincome taxforhealth.Infact,“differencesinopinions”,including thoserelatedtothedraftLaw,and“lack ofconstructive

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Table1

Healthcarespendingandprovision:2011comparedwithtargetsfor2016and2020.

2011 2016 2020

CentralgovernmenthealthcarebudgetasapercentageofGDPa _3.4% _3.7% _4.5%

ShareofgeneralgovernmentspendingasapercentageofTHE 59% 64% 68%

Shareofprivatespending(OOPandVHI)asapercentageofTHE 41% 36% 32%

Volumeofpubliclyﬁnancedrehabilitationservices

Children 1417 9239 19,739

Growth n/a 552% 114%

Adults 1438 22,166 154,896

Growth n/a 1441% 599%

Numberofpatientsreceivingreimbursedpharmaceuticals 524,282 581,927 661,927

Growth n/a 11% 14%

Cost-sharing

Patientfee(co-payment)perdayforin-patientstay(startingfromthesecondday)b _12.81 _6.40 _6.40

Co-paymentforinpatientsurgicalinterventions 42.69 21.34 21.34

Shareofpubliclyﬁnancedoutpatientspecialistvisits 35% 49% 74%

Salaryratioversusaveragesalary

Physicians 1.18 1.58 2.18

Nurses 0.71 0.95 1.31

Nurseassistants 0.47 0.63 0.87

Source:[4,16].

a₂₀₁₁_data_is_based_on_WHO_Regional_Ofﬁce_for_Europe₍₂₀₁₄₎_and_refers_to_all_public_expenditure_on_health_(not_only_from_the_central_government). b _According_to_the_Draft_concept_of_healthcare_system_ﬁnancing_model_–_the_actual_patient_fee_per_day_for_in-patient_stay_was_13.52_EUR_in₂₀₁₁_(Cabinet ofMinisters.RegulationsNr.1046.Availableat:http://likumi.lv/doc.php?id=150766#piel1).

cooperation”ledtotheresignationoftheMinisterofHealth onJuly7,2014[13].AmongthesupportersofthedraftLaw isTheLatvianUmbrellaBodyforDisabilityOrganizations (SUSTENTO).SUSTENTO’ssupportisrelatedtotheaimof increasingpublicexpendituresforhealth;andthe organi-zationsupportstheideaofintroducingcompulsoryhealth insurance([26]).

Oppositiontotheproposedlawcomesfrom municipal-ities,fromtheOmbudsmanoftheRepublicofLatvia[17], andfromprofessionalorganizationsofphysicians. Munic-ipalitiesaremostlyconcernedaboutlosingsomepartof theirshare of income tax. Other criticism is related to fourmainproblems,whichwerealsohighlightedduringa consultativemeetingheldbyexpertsoftheWorldHealth OrganizationuponrequestoftheMinistryofHealth(the resultsofwhichwereleakedtomassmedia)[21]:

•First, it is questionable if the reform would lead to increasedpublicexpendituresonhealthand sustaina-bilityofﬁnancing.AsisevidentfromFig.1,thesizeofthe totalpublichealthcarebudgetwoulddependlargelyon thesizeofthegeneralstate’sbudgetallocation.Thereare nobindingexpendituretargetsinthedraftlaw[16].The healthcarebudgetwouldcontinuetodependonpolitical negotiationsinparliament.

•Second,itisunlikelythatthewillingnesstopayincome taxwouldincreaseasaresultofthereform.Despiteits name,thecompulsoryhealth insurancewould be vol-untaryforthoseworkingintheinformaleconomy.Asa result,workersintheinformaleconomycouldchoseto remainuninsuredortopayvoluntarypremiums,which –atcurrentpremiumlevels–wouldbemoreattractive thanpayingincometax.

Fig.1.Budget(inmillionEUR)forprovisionofhealthcarein2014andprojectedcompositionoftheCompulsoryHealthInsurancebudget2015–2016. *AccordingtothedraftLaw,somevoluntaryinsurancepremiumswouldbecollectedin2014:thosejoiningthesystemvoluntarilymuststartpayments ofinsurancepremiumsasofJuly2014inordertobeeligibleforpublichealthcareservicesasofJuly2015.**BasedonplannedbudgetforJuly–December 2015,adjustedtoannualbudget.Note:Thebudgetforprovisionofhealthcarein2014includesasmallamountofincomefrompaidservicesandother income;theﬁnalapprovedbudgetforprovisionofhealthcarein2014was609.9millionEuros,whichincluded608.8millionbudgetallocationfromthe centralgovernmentand1.1millionEurosfrompaidservicesandotherincome[10].

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•Third,thereform would compromiseuniversal cover-age:anestimated137,000people[16]wouldbeleftout of thepublichealthcare system(beyondbasic health-careservices).Thiswouldincludevulnerablepeoplewith irregularorlowincomeiftheydonotfallintoanyofthe exemptedcategoriesandareunableorunwillingtopay voluntarypremiums.

•Fourth,thereformwouldleadtoconsiderableadditional administrativeburden:veriﬁcationofinsurancestatus, administeringthecollectionofvoluntarycontributions, ensuringaccessfor exemptedpopulationgroups, rais-ingawarenessoftheneedtoobtainhealthcareinsurance –sufﬁcientresourcesforthesetaskswouldhavetobe madeavailableinordertoensurepropertransitiontoan insurancesystem.

•Fifth,thereformcouldunderminetheestablished pri-marycaresystem.Peopleexcludedfromcoverageand unabletopayfor timelyprimaryor secondary ambu-latorycare,wouldstillbeeligibletoreceiveemergency careathospitals.Thiscouldleadtoanincreaseduseof emergencyservicesinhospitals,potentiallycontributing tolessefﬁcientpatternsofserviceprovision.

Forphysicians,lackofaccesstocareforuninsuredis themostimportantargumentagainstthereform.However, speculationsaboutmore palpableﬁnancial reasonsalso exist:GPsmightlosesomeoftheircapitationpayments, if the reform was implemented because theycurrently receivepaymentforregisteredemigrantswhoneveruse theirservices.

Onlyrelativelylittleattentionhasbeenpaidto impli-cationsofthereformforprogressivityoffinancing.Thisis becausethereformisnotexpectedtohaveasignificant impactonhowthesystemisfinanced:itwillcontinueto befinancedmainlythroughtaxes(anearmarked propor-tionofincometaxplusgeneraltaxation).Itisdifficultto predicttheeffectofvoluntarycontributionson progressiv-ity.Iftheycontributetoraisingrevenuesfrompeoplewith goodincomesintheinformaleconomy,theymay,infact, increasefairness.However,iftheyplaceadisproportionate burdenonlowincomehouseholds,theywillbeunfair.

6. Conclusions:assessmentofandoutlookforthe

reform

Table 2 summarizes the expected benefits of the proposedHealthcareFinancingLawandthepotential prob-lemsputforwardbyopponentsofthereform.Both,the expectedbenefitsandthepotentialproblemsmirrorthose discussed for other countries[8,19]. Governments con-templating the introduction of SHImostly do so based onargumentsthatitwouldimprovetheabilityofraising revenuesforhealth,makinghealthcarefinancingmore pre-dictable(independentofpoliticalinterference),and that peoplewouldbemorewillingtocontributeifeligibility forhealthcareservicesislinkedtomakingcontributions [19].However,itisclearthatthehealthcarebudgetcould alsobeincreasedindependently ofwhetherincome tax is earmarkedfor healthor not,and thatlinking health-care entitlement to the payment of contributions will createaccessproblemsfortheuninsured[20].Inaddition,

Table2

ExpectedbeneﬁtsandpotentialproblemsoftheHealthcareFinancing ReformLaw.

Dimension Expectedbeneﬁtsa _Potential_problems Publichealth

budget

Earmarkedrevenues willleadtogrowthof thepublichealth budgetandgreater sustainabilityofthe healthcareﬁnancing system

Therearenospeciﬁc bindingexpenditure targetsinthedraftlaw [16].Theassumptionthat aninsurancesystemwith earmarkedrevenuesfor healththroughpayroll contributionsoffersmore stablerevenueforhealthis notsupportedbyevidence [9]. Effectof earmarking Linkingeligibilityto paymentof contributionswill provideanincentive topaytaxes,leading toareductionofthe shadoweconomy andhighertax revenues

Itisunlikelythat motivationtopaytaxes wouldincreaseif earmarkingisinplace. Workersintheinformal economycouldchoseto remainuninsuredortopay voluntarypremiums, which–atcurrentpremium levels–wouldbemore attractivethanpaying incometax[21]. Accessto

care

Morepublic resourcesforhealth willleadtoimproved accesstohealthcare services(forthose coveredby insurance)

Universalcoveragewillbe compromised:an estimated137,000people [16]wouldbeexcluded fromthepublichealthcare system(beyondbasic healthcareservices).There isalsoariskofbeing excludedfromthesystem despiteeligibilityfor exemption.Thiscouldlead todelaysinreceiving servicesonlyafterappeal. Equity Improvedequity

becausetaxevasion willbereduced, makingeverybody contributetohealth accordingtoability topay

Generaltaxfinancinghasa greaterpotentialtoachieve equityinfinancing–the richcontributewitha greatershareoftheir incomethanthepoor[21]. Efficiency Improvedefficiency Underminingthe

establishedprimarycare systemandpotentially contributingtoless efﬁcientpatternsofservice provision.Additionalcosts associatedwiththe implementationofthe reform[16]. Healthstatus Improvedhealth

statusbecausemore publicresources allowtoprovide morehealthservices

Deteriorationofhealth statusduetoworseningof access.

a_Based_on_[4]_.

theadministrativeburdenofcollectingcontributionsand runningacomprehensiveexemptionsystemcanbe sub-stantial.

ThedevelopmentoftheLatvianhealthcaresystemsince 2002showsthat switchingbetweenSHIandNHSisnot relatedtolargeinstitutionalreforms.Poolingofresources and purchasing of care are carried out by onenational

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institution underrelatively tight control of the govern-ment,independentofwhethertheinstitutioncarriesthe word insurancein its name. Therefore, the conceptsof NHSand SHIareunable toadequately describe institu-tionalcharacteristicsofahealthsystem[7].Nevertheless, asillustratedinTable2,theregulatorychangeoflinking entitlementtohealthcareservicestothepaymentof con-tributionscanimplysigniﬁcantchangestothefunctioning ofthehealthsystem,whichcanhavepotentialbeneﬁtsbut mayalsocreateimportantproblems.

DespitebeingacceptedinaﬁrstreadinginParliament attheend of 2013,it is unlikely that thedraft Health-careFinancingLaw will beenactedin its current form. Inresponsetoconsiderableoppositionfromstakeholders, Parliament’sBudgetandFinanceCommissiondecidedin March2014toestablishaworkinggrouptopreparethe secondreadingofthedraftHealthcareFinancingLaw.Yet, bySeptember2014,asecondreadingforthelawhadnot beenscheduled.MinisterofHealthIngridaCircenewasone ofthemostimportantsupporters,pushingforthelawtobe enacted.However,asmentionedabove,sheresignedinJuly 2014becauseoflackofsupportfromthegovernment coali-tion[15].Herresignationmakesitevenmoreunlikelythat thelawwillbepassedbyParliamentpriortothe upcom-ingelectionsin October2014.It isunclearwhetherthe introductionofcompulsoryhealthinsurancewillbecomea pointontheagendaofafuturegovernment.Whilemultiple stakeholdersarestronglyopposedtotheidea,the appar-entlackofpublicﬁnancingforhealthandthesupportfrom certain(right-wing)politicians,mightbringthetopiconto theagendaonceagain.

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