In recent weeks, the Health Insurance Fund (Tervisekassa) has been in the spotlight over its summer retreat and new office space. But at the same time, a bigger issue looms: how to cope with a situation where social tax revenues are no longer enough to sustain the current health insurance system, while the reserve fund used to cover an annual shortfall of up to a couple hundred million euros will run out in just a few years.

Even before the summer retreat scandal unfolded, it had been decided that on August 22 the fund's supervisory board would discuss healthcare financing.

Although outgoing Health Insurance Fund head Rain Laane will submit his resignation to the board, he told ERR that the most important item on the agenda is the outlook for the fund's finances over the next four years.

By September 1, Minister of Social Affairs Karmen Joller (Reform) must present the government with the Health Insurance Fund's four-year financial plan, and this is exactly what the board will now debate.

According to Laane, the cause of the sector's financial troubles is straightforward: the population is aging, people are living longer and demand for healthcare services is rising. At the same time, other costs and prices are increasing.

"That means 13 percent from labor taxes plus the 13 percent paid on non-working pensioners is no longer enough to cover healthcare needs," he said.

There are several possible scenarios for getting out of the situation — by focusing on efficiency and better management or through a paradigm shift that would see Estonians living healthier lives.

"That's only temporary, of course, because people will live longer, but they'll still need healthcare. What we'll discuss this Friday is which efficiency measures can be introduced — such as cutting duplicate tests or reforming family doctor funding. Those changes are possible, but taken together, they still won't deliver a balanced budget," Laane said.

This means, he added, that political choices will have to be made. While the supervisory board can give its opinion, it will ultimately be up to the minister of social affairs to propose next steps to the government.

"This isn't a decision the Health Insurance Fund's management board can make on its own. We can make proposals. And if someone says we haven't done that, we respectfully disagree," Laane said.

Family medicine crisis, funding model and databases in focus

For the next four years, the Health Insurance Fund's management board has drafted a development plan with three main priorities. The first is strengthening primary care, which means resolving the family doctor shortage partly through technology and partly through organizational measures.

The second priority is the funding model. Currently, 95 percent of financing is based on fee-for-service, which Laane said is not the most effective way to achieve the best outcomes.

"In Europe it's very clear that those who have switched to outcome-based funding have better health results. But that requires a political decision, because today's healthcare system is not accustomed to measuring results in that way," Laane said.

The third priority is organizing health data and using it more effectively so that decisions can be made across the necessary databases.

"Right now it doesn't work," Laane admitted, noting that part of the issue lies in legal restrictions. "Maybe some laws need to be amended. If data is available and artificial intelligence can be used, then decisions can be made by looking forward, not just in the rearview mirror. These are the foundations needed to bring order to the system," he said.

However, Laane added, even these three directions will not fully solve healthcare's funding problems. Looking at somewhat wealthier countries, he pointed out that they have reached a social agreement to invest more in certain sectors. In Estonia today, that already applies to national defense, which receives 5 percent of GDP, as well as education and internal security.

"If health is also a field where society agrees to invest more, then the tax revenues collected could be distributed a little differently by agreement," Laane said.

Plans to also amend occupational healthcare system

According to the Health Insurance Fund's chair, a plan to reform the occupational health system is also on the table, though the different parties involved do not see eye to eye. Laane stressed that occupational health should be better integrated with primary care, meaning the family doctor system.

"The first step would be to get the data moving," Laane said. "Employers are paying a considerable amount of money and it's understandable that they'd like to see better health outcomes in return."

Asked how to address the situation in which private clinics provide only the profitable services while state hospitals are left covering the loss-making side, Laane explained that the Health Insurance Fund conducts a public procurement every five years to purchase healthcare services, especially in areas where the state hospital network does not offer full coverage across specialties.

"That means outside Tallinn and Tartu, but even in Tallinn and Tartu we purchase services where the hospital network's facilities are not sufficient," Laane said.

Currently, about 93 percent of specialist care is purchased from hospitals in the state network, while 7 percent comes from the private sector. Laane said the balance point that serves society well is somewhere between 7 and 10 percent.

"It's also a political issue and a question for the supervisory board. They set the tone for how much, to what extent and which services should be bought in from the private sector," Laane added.

Pressure from private medicine considerable

Asked how much pressure private medicine exerts on the entire sector, the Health Insurance Fund chair said there is no secret about it.

"Everyone pressures everyone else, and to be honest, we're not in an easy situation," Laane said, describing the current state of affairs. "There are different solutions on the table and every interest group wants theirs to be the one adopted. But let's not get ahead of ourselves — the fund's supervisory board has six members and the meeting is on Friday."

When asked whether Estonia might consider closing hospitals, Laane replied that there are 19 hospitals owned by the state or local governments as part of the hospital network development plan, most of them county-based.

"Each county should have a facility that provides specialist care, healthcare close to home," Laane said, adding that emergency departments will remain in every county.

According to the Health Insurance Fund chief, the million-dollar question in healthcare is how to get the right patient with the right problem to the right doctor at the right time. At the same time, he stressed it is important for people to understand that not every health concern requires an immediate solution.

"Some problems can wait longer, while others are critical and need faster intervention. There are different ways to manage that. We've talked a lot about e-consultations, which is one option, though there are challenges that need to be worked out first. The digital sphere will definitely help in this," Laane said.

This year's deficit under €167 million

This year, the Health Insurance Fund has been allowed to use up to €167.6 million from last year's retained earnings. According to Laane, the year will end with a better result than expected, though the deficit will still exceed €100 million.

He added that next year's deficit, as listed in the state budget strategy, can certainly be reduced, but that does not mean healthcare can cope without additional investment.

The Health Insurance Fund has repeatedly warned that its retained earnings will run out in 2027. Laane said it is up to the current Riigikogu to decide how to proceed.

"Technically it could be left to the next Riigikogu, but by then it will already be too late," he added.

In Laane's view, drastic changes are not needed in healthcare, since the system is fragile and interconnected. Without a full understanding of those connections, well-meaning reforms could create ten new problems for every one solved, which is why every step must be carefully considered.

On Friday, the competition for the Health Insurance Fund's next chair will be announced. Laane said he wishes the new leader strength and endurance: there will be no shortage of work, and there are plenty of people eager to engage with them. How quickly a new chair will be found and how many candidates will step forward will become clear in the coming months.

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