According to the statement of the Deputy Minister of Labour, Health and Social Affairs of Georgia, Zaza Sopromadze, the Ministry is using the money allocated for the Universal Healthcare Programme very economically. This is manifested in the fact that the expenditure on healthcare in Georgia is significantly lower as compared to other countries and constitutes a mere 2% of the GDP.
FactChecklooked into the accuracy of the aforementioned statement.
The Universal Healthcare Programme was enacted in February 2013, gradually replacing the State Insurance Programme throughout 2014. Unlike the State Insurance Programme which aimed to provide targeted groups of citizens with health insurance services, the Universal Healthcare Programme’s beneficiaries include individuals living on the territory of Georgia and not possessing private insurance policies as well as non-citizens of Georgia who live on its territory and have a refugee or humanitarian status.
The amount of money allocated for the Universal Healthcare Programme in 2013 equalled GEL 88 million of which GEL 70 million was actually spent. From 2014, individuals using the services of private insurance companies also became Universal Healthcare Programme beneficiaries. In addition, due to the universal nature of the programme, the number of beneficiaries and the number of hospital visits increased significantly. In total, GEL 338.5 million was spent on the Universal Healthcare Programme in 2014. A total of GEL 470 million has been allocated for this programme in 2015 with GEL 371 million of this money having already been spent in the first eight months of 2015.
Chart 1:
Growth Rate of the State Insurance Programme and the Universal Healthcare Programme Expenses
Source: Ministry of Finance of Georgia
The growth rate of the money allocated for healthcare programmes was on the decrease from 2008 to 2011. In 2008, healthcare programme beneficiaries were those living below the poverty line. National artists, painters and Shota Rustaveli Award winners were also added to the list of beneficiaries in 2009. In 2013, the healthcare programme became universal and its expenses that year grew by 97%. In 2014, the Universal Healthcare Programme’s expenses increased by 31.4%. The planned growth rate in 2015 is 15.6%.
The Universal Healthcare Programme’s expenses with regard to the GDP look like this: in 2013, universal healthcare expenses constituted 0.3% whilst State Insurance Programme expenses were 0.9% of the GDP. In 2014, when the State Insurance Programme was replaced with the Universal Healthcare Programme, universal healthcare expenses constituted 1.2% of the GDP. According to the data of the first two quarters of 2015, the Universal Healthcare Programme’s expenses are 1.8% of the GDP. Hence, the Deputy Minister’s statement that universal healthcare expenses are approximately 2% is true.
According to the data of the World Bank, the expenses of developed states on healthcare in 2013 [1]varied from 8% to 10% of their GDP whilst this number was usually below 2% of the GDP in developing countries.
Table 1:
Share of Expenses on Healthcare in GDP by Country
| Developed Countries | Share in GDP | Developing Countries | Share in GDP | |
| 1 | Netherlands | 10.2% | Armenia | 1.9% |
| 2 | Denmark | 9.1% | Kenya | 1.8% |
| 3 | France | 9.0% | Afghanistan | 1.7% |
| 4 | Germany | 8.7% | Azerbaijan | 1.2% |
| 5 | Japan | 8.4% | South Africa | 1.2% |
| 6 | Norway | 8.2% | Pakistan | 1.1% |
| 7 | USA | 8.1% | Sudan | 1.0% |
| 8 | Sweden | 7.9% |
It is only logical that the share of healthcare programme expenses is higher in developed states than it is in Georgia. The prices and quality of medical services are much higher in developed countries than they are in developing ones. In addition, healthcare (money spent on health by both the state as well as by individuals) has a much higher share in the economies of developed states. For example, the share of healthcare in the national economy is 17% in the USA, 13% in the Netherlands, 12% in France, 11% in Germany, 11% in Canada, 10% in Japan and so on. The share of healthcare in the Georgian national economy is 6%. The richer the nation, the more it spends on healthcare. In addition, it should also be noted that most Western countries started focusing upon social affairs decades ago with social expenses having grown hand in hand with the growth of the economy. Hence, in the given case, the comparison with developed countries is inappropriate and does not provide enough argumentation to decide how economically the money allocated for the Universal Healthcare Programme is spent. In addition, spending money economically means assessing how much is spent given individual economic capabilities and it has nothing to do with how much other countries are spending. Further in addition, as the table makes clear, certain countries spend less on their healthcare programmes than Georgia does.
The most important issue for the Universal Healthcare Programme is managing its financial resources as well as the expected risks more effectively which will not only increase the availability of medical services for beneficiaries but increase the quality of these services as well. Maintaining and improving the quality of services is highly dependent upon the amount of allocated funds. In the case of low funding, medical facilities might face a lack of qualified personnel and a problem in the quality of their services. Hence, in order to achieve the programme’s aims, it would be necessary to formulate effective mechanisms for the management of expenses (instead of spending economically) and for the state to minimise financial risks.
The Universal Healthcare Programme is being implemented by the Social Services Agency without the participation of private insurance companies. In this case, then, the state becomes a competitor for the private insurance companies which negatively affects the development of the insurance market. In addition, by excluding private insurance companies, the state takes all of the associated financial risks upon itself. Within the terms of the programme, the state is obligated to fund each and every case; however, it becomes impossible to calculate the number of cases or the necessary expenses. Consequently, the Universal Healthcare Programme’s budget might turn out to be insufficient for funding all of the cases occurring throughout the year.
The dynamics of the Universal Healthcare Programme’s expenses attest to this assumption. The programme’s initially planned expenses amounted to GEL 231.5 million in the first two quarters of 2015; however, the actual expenses equalled GEL 268.7 million. The programme’s annual budget amounts to GEL 470 million of which GEL 461 million has already been spent as of 30 September 2015. Taking into account the fact that hospital visits tend to increase in November and December, we can assume that the growth rate of the Universal Healthcare Programme’s budget will not decrease and at least GEL 138 million more will have to be spent by the end of the year which is GEL 84 million over the initial annual budget.
Conclusion
The money allocated for the Universal Healthcare Programme has a trend of increase. The amount of money allocated for the programme grew from GEL 88 million to GEL 470 million from 2013 to 2014. The programme is run by the Social Services Agency without the participation of private insurance companies. Within this reality, the state not only becomes a competitor for the private insurance market but it also fully takes on the financial risks associated with insurance. This practice cannot be considered an effective mechanism for managing expenses.
The Universal Healthcare Programme’s expenses constitute 2% of the national GDP of Georgia whilst this share is much higher in developed countries and varies from 8% to 10%. Significant expenses for healthcare in developed countries is due to the substantial share of healthcare in the national economy, the prices for healthcare, its quality and the financial abilities of a specific country. In addition, whilst assessing the programme, the most important issue is not how economical it is but, rather, how effectively expenses are managed which means the improvement of healthcare services.
FactCheck concludes that Zaza Sopromadze’s statement is HALF TRUE.________________________ [1] The data for 2014 have not yet been published.
