Money or life — Faultline

So far only for self-payers, soon it may be possible to use it with an insurance card: The Astghik Medical Center in Yerevan

One law, one deadline, one new promise: Since January 1st, Armenia has been gradually introducing universal compulsory health insurance with the aim of reforming the health system. What sounds like welfare in government jargon is actually a belated attempt to begin to regulate one of the most ruthless private medical markets in post-socialist countries. The Armenian government under Prime Minister Nikol Pashinyan has set out to transform the entire health system: away from the brutal market principle and towards a collectively financed system.

It is one of the largest social policy measures in Armenia in recent decades. All citizens should now have health insurance so that no one has to go without necessary medical treatment due to lack of money. But the success of the project will depend on whether it is possible to create a permanently financeable system that involves employers and employees in combating the shadow economy and at the same time ensuring the quality of medical care.

Anyone who became seriously ill waited until treatment could no longer be postponed and then sold their car or went into debt with relatives.

The registration of all residents of the country should be completed by January 1, 2029. By then, all population groups should be integrated into the insurance model.

Until now, a cruel rule applied on the elegant boulevards of Yerevan and in the province's decaying villages: those who have no money stay sick. Patients paid over 85 percent of total healthcare expenses out of their own pockets. In practice, this meant that the sick person handed cash to the treating doctor at the bedside.

The state share of the health budget languished at a ridiculous 1.4 percent of gross domestic product for years. The consequence of this neoliberal policy of the past decades: Anyone who became seriously ill waited until treatment could no longer be postponed and then sold their car or went into debt with their relatives.

In Armenia, medical care was not a basic right, but a privilege. Between 2014 and 2018, almost six percent of households fell below the poverty line applicable in Armenia due to accumulated medical bills. According to the most recent official national statistics, a total of nearly 22 percent of the population lived below the poverty line in 2024. A person is considered poor if their monthly consumption does not exceed 53,420 drams (around 125 euros). The emergency room became the last resort for those who could not afford timely treatment.

The new “Law on General Health Insurance” is now intended to bring about a turning point. The idea behind it corresponds to the European social insurance model: A central, public insurance fund, the Universal Health Insurance Fund (UHIF), collects the contributions, bundles the financial risks and acts as a powerful large-scale buyer that demands medical services and medicines and sets uniform prices for hospitals and pharmacies. The so-called basic care includes over 1,200 medical services (family doctor visits, hospital treatments) and just as many medications. The regular monthly contribution that insured people have to pay is set at 10,800 drams - the equivalent of around 25 euros. But the social-democratic concept shows significant flaws. If you look at how the individual stages of the reform are to be specifically financed and implemented, the deep contradictions of Armenian class society become apparent. The pace of reform had to be slowed down now.

Health care reform is not a groundbreaking socialist regulation, but rather a long-overdue pragmatic measure to repair, in the style of capitalism, a system that has long since collapsed.

The original announcement that the entire population would be fully covered by 2027 turned out to be wishful thinking. Now it is said that the goal should be achieved by 2029. The reason for this delay is not least to be found in the high level of unemployment and the widespread underemployment of those who nominally have jobs, as well as in a huge shadow economy.

In order not to completely overwhelm the poor and low-wage earners, the government is planning complex subsidy models for the coming years: Anyone who earns less than 200,000 drams (almost 470 euros) per month will receive heavy subsidies from the state and employers from 2027. The employee's own contribution would then be a symbolic 2,000 drams. However, this shows the problem of a government that is trying to pursue social policy in a black money economy. It has been customary in business circles for decades to officially register employees only with the minimum wage, while the actual wage is paid out in an envelope bypassing the tax authorities.

The fight against the lack of medical care resulting from poverty collides with the fight against tax evasion.

Pashinyan is faced with a paradox: a progressive subsidy model for low earners creates an incentive for employers to declare wages low in order to benefit from state aid. The fight against the lack of medical care resulting from poverty collides with the fight against tax evasion.

The fact that the new Armenian health insurance system is described as “comprehensive” does not mean that health care will be free in the future. The law includes negative lists and reimbursement limits. Dentures and numerous specialized surgical treatments are excluded or require enormous additional payments. The insurance industry, which has so far enriched itself by insuring a narrow, wealthy class, does not have to fear for its survival. Similar to neighboring Georgia or France and Germany, the private insurance companies are not being liquidated, but are simply switching to the lucrative market for supplementary insurance. Anyone who wants preferential treatment, a single room or better medical care continues to pay extra. The two-class system will not be abolished, but will only be somewhat weakened in terms of basic care.

Health care reform is not a groundbreaking socialist regulation, but rather a long-overdue pragmatic measure to repair a system that has long since collapsed in the style of capitalism. Whether the reform will ultimately succeed will not be determined by the Ministry of Health's cheering reports about increasing numbers of insured people. Rather, it will become clear in practice: Do people have access to medical care in an emergency? Or will universal health insurance end up being just another tax burden while doctors continue to only work for cash? The Armenian experiment has just begun.