Health Plan Expenses Exceed Budget Outlay

The government’s calculations underestimated public expenditure in the Health Reform Plan, as it did not take into account budget constraints due to the decline in oil prices or changes in the number of people willing to have medical insurance coverage (11 million instead of 5 million).

The statement was made by Health Minister Hassan Qazizadeh Hashemi who introduced President Hassan Rouhani’s landmark healthcare scheme in 2014.

The government’s official portal Dolat.ir hails the plan as one of the top achievements of the Rouhani administration for helping reduce healthcare costs by 30% since its implementation.

Earlier, public healthcare and services were saddled with numerous problems, including insufficient facilities, high medical costs and centralization of specialized care in large cities.

Deputy Health Minister Iraj Harirchi recently said there is no option but to go ahead with Health Reform Plan since its popularity rate among Iranian people hovers around 85% and the country’s top officials will not allow its revocation.

“The reforms helped reduce people’s share of healthcare payments by 16.8% annually, which equals 210,000 rials ($5.3) per month for a household. Currently, 2.32% of Iranians are saddled with crushing health expenses that should be reduced to 1% based on the Sixth Five-Year Development Plan (2017-22),” he said.

Yet critics are less complimentary about the plan.

“The objectives of Health Reform Plan were its strong points,” university professor Mostafa Emadzadeh told the Persian weekly Tejarat-e Farda. Three main objectives of the plan, namely providing people with financial protection against the impacts of ill health, making fair allocation of healthcare and improving the quality of such services, are all worthy and important.

“The decision to carry out such a plan was timely and important, but the reliance of the scheme on the government’s unsustainable oil and gas revenues was wrong,” he said.

“Before Rouhani’s government, the country’s budget had a surplus, thanks to oil prices reaching $140 a barrel. But during his term, prices plunged to below $50. It also became clear that insurance companies were burdened with crippling debts and had become bankrupt, making them incapable of fulfilling their responsibilities.”

Emadzadeh noted that other flaws with the plan were its focus on treatment rather than prevention, physician-oriented system and the widening gap it created between specialists’ income and other hospital staff.

“The government claims that it has made increasing commitments in Health Reform Plan, but the fact is that the failure of the plan is due to the poor conditions of hospitals and their equipment, shortage of beds, desperate insurance institutions and their unsustainable, shoestring budget,” he said.

“Iran’s healthcare system suffers from a number of shortages. As we speak, 6-7% of GDP are allocated to the health sector compared with 18% in advanced countries. The healthcare system of most countries is tied with their taxation system, including tax on tobacco, alcoholic or non-alcoholic beverages. The sustainable, generally increasing revenues from the taxation of these products go to the health system of the country.”

On private sector’s role in the healthcare system, Emadzadeh said privatization of hospitals does not seem to be a constructive suggestion.

“Governments should have direct intervention in two sectors of education and health. Private entities aim to maximize their profits and minimize the costs, which is not acceptable when it comes to the health sector,” he said.

The university professor said the government needs to grant facilities to the private sector such as affordable land and loans, and encourage people to build hospitals.

Emadzadeh is pessimistic about the survival of Health Reform Plan due to the government’s outstanding debts to hospitals, unless the government introduces a revised version of the plan or funds its expenditures from sustainable sources of revenues.