Proposing three options to increase health insurance premiums
The Ministry of Health has proposed a roadmap to increase health insurance premiums by increasing the contribution rate from 2025 to a maximum of 6% of the basic salary or monthly salary by 2035. The current health insurance premium is determined as a percentage of the monthly salary used to pay social insurance, pensions, unemployment benefits or basic salary depending on the participating group, currently at 4.5% and a maximum of 6%. Let’s explore more in this article with S4B Vietnam
1. Context of the roadmap and amendment
The Ministry of Health is seeking comments on the draft revised Law on Health Insurance. In the Law Policy Impact Assessment Report, the Ministry said that the above contribution rate is not commensurate with the benefit level. Meanwhile, the total expenditure of the Health Insurance Fund is always higher than the previous year and the need to expand the scope of payment is increasing. In the coming years, the Fund will increase expenditure due to the implementation of calculating the full price of medical services, while the law does not have a mechanism and roadmap to gradually increase the contribution rate.
Based on the above reality, the Ministry of Health proposed three options to gradually increase the contribution level to suit the scope of health insurance benefits and the medical examination and treatment needs of participants.
The Ministry of Health has proposed a roadmap to increase health insurance premiums
2. Option one
In option 1, The Ministry of Health proposed to maintain the current maximum contribution level of 6% but include a roadmap for increasing the contribution level in the revised law. Specifically, from January 1, 2025, the contribution level will increase to 5.1% of the monthly salary used to calculate social insurance contributions for employees, unemployment benefits or basic salary, depending on the participating group. From January 1, 2035, the contribution level will increase to 6% of the monthly salary of employees.
According to the Ministry of Health, this option helps increase the Health Insurance Fund, medical facilities have more funding, increase the people’s rights to medical examination and treatment, access to services as well as treatment effectiveness.
However, this roadmap also increases expenditures for the state budget, enterprises, households and employees. According to statistics from the Vietnam Social Security in 2021, with the current contribution rate of 4.5% of the basic salary, the budget is spending nearly 42,300 billion VND. Increasing the contribution rate to 5.1%, the state budget spends an additional 5,700 billion VND per year and nearly 14,100 billion VND if the health insurance contribution rate increases to 6%.
For enterprises, health insurance contributions in 2021 will reach 29,200 billion VND. If the contribution rate increases to 5.1% of the employee’s monthly salary, enterprises will pay an additional nearly 3,900 billion VND and increase more than 9,730 billion VND if the contribution rate is 6%.
3. Option two
In this option, the maximum contribution rate is kept at 6% as in the current law, but the roadmap is increased at a higher rate. Specifically, from January 1, 2025, the contribution rate will increase to 5.4% of the employee’s monthly salary, unemployment benefits or basic salary, depending on the participating group. From January 1, 2035, the contribution rate will increase to 6%.
Similar to the first option, this roadmap also increases the costs of the state budget, enterprises, employees and households. Specifically, if the contribution rate increases to 5.4% in 2025, the state budget will spend an additional VND 8,500 billion; enterprises will spend more than VND 5,840 billion; employees will spend VND 2,920 billion and households will spend nearly VND 4,870 billion.
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4. Option three
In this last option, the solution is to maintain the current regulation of the maximum contribution rate of 6%, not taking into account the increase roadmap but assigns the Government to regulate when necessary. This option does not increase social costs, but it is difficult for the Government to decide when to increase because the law does not stipulate. Medical facilities face a cost burden in the context of an increase in the number of people using health insurance, the Health Insurance Fund may lose its revenue and expenditure balance.
After assessing the pros and cons, the Ministry of Health chose option three because it would not increase expenditures from the state budget, enterprises, or support for workers’ relatives. The increased roadmap like the first two options will be considered in the next general revision of the Law on Health Insurance when socio-economic conditions and research time are met.
The revised Law on Health Insurance is expected to be submitted to the National Assembly at the May 2024 session and take effect from January 1, 2025. By the end of 2023, the country will have nearly 93.7 million people participating in health insurance, covering over 93% of the population. Vietnam aims to cover over 95% of the population with health insurance by 2025.
Should you have any question further on health insurance latest update, please contact S4B Vietnam for consulting service, especially for foreigner investors and businesses.
>>>Read more: Things you need to know about Statutory Insurance
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