Minister of Health and Labor Tanel Kiik (Center) proposed an additional targeted tax during the March 18 cabinet meeting, which would be used to finance the budget of the Estonian Health Insurance Fund.
Kiik said that mainly financing healthcare from the social taxes of working people was unsustainable, as the number of people who worked flexibly was growing. The new tax would take into account rental income, dividends, interest and license fees.
Kiik said this would see an additional 45,000 people pay the new tax and it was estimated that Health Insurance Fund would receive more than EUR 160 million.
“Estonia has an efficient healthcare system, where good treatment results are achieved at low costs, but long queues for treatment and a large proportion of uninsured people are a concern,” the minister said. “Residents’ expectations for healthcare are growing, while the share of people who contribute is decreasing.”
He added: “If the current situation continues, people will have to pay more and more out of their own pockets, which is why healthcare financing needs a systemic change.”
Estonia allocates 6.7% of GDP to the healthcare sector, which is smaller than the European average of 9.6%.
Kiik said a number of important decisions had been taken by governments in recent years to allocate additional funding to healthcare, but this did not completely solve the problem.
“It is known that with the current model we will not be able to secure enough income for health insurance in the long run. This is particularly well illustrated by the fall in employment associated with the COVID-19 crisis and the consequent fall in tax revenues,” he said. “The decline in tax also immediately reduces health insurance revenues. As it is not conceivable to reduce the volume of medical services, it is necessary to increase the funding for healthcare.” (ERR/Business World Magazine)