Why the MHI system is short of money: a comparison of social health insurance contribution bases and rates in developed OECD countries and in the Russian Federation

• Andrey V. Ragozin
• Alexey A. Kudinov
• Taisiia A. Chirkova
• Angelina O. Popkova
• Artem A. Sivodedov

Abstract

The relevance of the study is due to the high share of personal health payments of the population in current health expenditure in the Russian Federation – according to the World Bank, 27.76% in 2020, which is significantly higher than the average for developed OECD countries – 18%. The study compared the base and rates of social health insurance contributions withheld from personal income in the Russian Federation and developed OECD countries.

The results showed that in the compared OECD countries the social health insurance contribution base is much broader: contributions are withheld not only from the wages of employees and income from self-employment and self-employment (as in the Russian Federation), but also from income from capital, rents, and in many countries also from old-age pensions. At the same time, the level of informal employment and the shadow economy in the Russian Federation is about 2 times higher than in developed OECD countries – which further reduces the MHI contribution base in Russia. In turn, the MHI contribution rate in the Russian Federation is much lower than in developed OECD countries, where contributions are often 2–2.5 times higher than in the Russian Federation.

These studies suggest that one of the reasons for the excessive share of personal payments of the population in current health care expenditure in the Russian Federation is the MHI contribution base, which is many times lower than in developed countries and which is not compensated by a proportional increase in the rate of these contributions.

A conventional solution to the problem could be to expand the MHI contribution base by deducting it from capital income and rent, and to increase the contribution rate and/or equalise it for all categories of policyholders. However, given the scale of informal employment and the shadow economy in Russia, the authors consider a more systematic and innovative approach to replace MHI premiums with a universal targeted tax (contribution) on non-cash financial transactions and on cash withdrawals and deposits.

Keywords:health care financing; MHI; contributions; informal employment; shadow economy; earmarked tax on non-cash transactions

References

1. WHO. Out-of-pocket expenditure as percentage of current health expenditure (CHE) (%). [Electronic resource]. URL: https://www.who.int/data/gho/data/indicators/ (date of access May 02, 2023).

2. Grenaderova M.V., Borisova S.S. Comparative analysis of social contributions in Russia, the USA and Europe. Vestnik Altayskoy akademii ekonomiki i prava [Bulletin of the Altai Academy of Economics and Law]. 2020: (9): 226–32. (in Russian)

3. Sisigina N.N. Financial support of modern health insurance systems. Finansoviy zhurnal [Financial Journal]. 2017; (1): 77–90. (in Russian)

4. Federal Revenue Service. Official website [Electronic resource]. URL: https://ww.nalog.gov.ru/rn77/yul/str_vznos/ (date of access April 13, 2023). (in Russian)

5. Federal Revenue Service. Professional income tax [Electronic resource]. URL: https://npd.nalog.ru/ (date of access April 13, 2023). (in Russian)

6. Contributions: German Federal Ministry of Health [Electronic resource]. URL: https://ww.bundesgesundheitsministerium.de/beitraege.html (date of access March 27, 2023).

7. What is the amount of my contributions to be paid? Deutsche Rentenversicherung [Electronic Resource]. URL: https://www.deutsche-rentenversicherung.de/ (date of access March 27, 2023).

8. Guidelines for the application of the minimum advance payment: Ministry of Health of Slovakia [Electronic resource]. URL: https://ww.health.gov.sk/?Minimalne-poistne-1-1-2023 (date of access April 18, 2023)

9. For whom the state should pay taxes: Dovera Slovakia [Electronic resource]. URL: https://ww.dovera.sk/najcastejsie-otazky/ (date of access April 18, 2023).

10. Health insurance in the Czech Republic: Czech Ministry of Health [Electronic resource]. URL: https://kancelarzp.cz/en/usefull-links-info/ (date of access April 18, 2023).

11. Social and Health Insurance: Czech Tax Portal [Electronic Resource]. URL: https://www-mesec-cz.translate.goog/danovy-portal/ (date of access March 27, 2023).

12. Health insurance: Estonian Hospital Fund [Electronic resource]. URL: https://ww.tervisekassa.ee/inimesele/ravikindlustus (date of access March 27, 2023).

13. Estonian health insurance act: State Gazette. URL: https://www-riigiteataja-ee.translate.goog/akt/113032019136?_x_tr_sl=et&_x_tr_tl=ru&_x_tr_hl=ru&_x_tr_pto=wapp (date of access April 3, 2023).

14. Contribution tables: Ministry of Health of Slovenia [Electronic resource]. URL: https://zavezanec.zzzs.si/wps/portal/portali/azap/ (date of access March 27, 2023).

15. Table of premiums for fiscal year 2020 (from March 2022): Japan Health Insurance Association [Electronic resource]. URL: https://www-kyoukenkaipo-or-jp.translate.goog/g7/ (date of access March 27, 2023).

16. National health insurance contributions and insurance taxes: Ministry of Health of Japan [Electronic resource]. URL: https://www.mhlw.go.jp/stf/newpage_21517.html (date of access April 5, 2023).

17. CSG and CRDS with earned and replacement income: Official website of the French administration [Electronic resource]. URL: https://www-service--public-fr.translate.goog/ (date of access March 27, 2023).

18. Insurance fee: Ministry of Health of Poland [Electronic resource]. URL: https://www.zus.pl/firmy/rozliczenia-z-zus/skladki-na-ubezpieczenia/zdrowotne (date of access April 18, 2023).

19. Changes in health contributions since 2022: Insurance Poland [Electronic resource]. URL: https://www.zus.pl/o-zus/o-nas/programy-transformacji-cyfrowej-zus/zmiany-od-2022-r./zmiany-skdroskladcezwotnej (date of access April 18, 2023).

20. Your social security contribution: Austrian Health [Electronic Resource]. URL: https://ww.gesundheitskasse.at/cdscontent/ (date of access March 27, 2023).

21. Social security for the self-employed: Austrian Economic Chamber [Electronic resource]. URL: https://www.svs.at/cdscontent/load?contentid=10008.727911&version=1576489471 (date of access April 3, 2023).

22. Health insurance: Austrian Federal Ministry of Social Affairs, Health, Care and Consumer Protection [Electronic resource]. URL: https://www.sozialministerium.at/Themen/Soziales/Sozialversicherung/Krankenversicherung.html (date of access March 27, 2023).

23. Health insurance: Austrian Pension Insurance Institute [Electronic resource]. URL: https://www.pv.at/cdscontent/?contentid=10007.707690&portal=pvaportal (date of access March 27, 2023).

24. Law No 4387 of 2016. Unified social security system [Electronic resource]. URL: https://ypergasias.gov.gr/wp-content/uploads/2021/02/ν-4387-2016.pdf (date of access March 27, 2023).

25. Contribution rate: South Korea National Health Insurance Scheme [Electronic resource]. URL: https://www-nhis-or-kr.translate.goog/english/wbheaa02500m01.do?_x_tr_sl=en&_x_tr_tl=ru&_x_tr_hl=ru&_x_tr_pto=sc (date of access March 27, 2023).

26. Chapter 6. Insurance premiums: National Health Insurance Act [Electronic resource]. URL: https://law.go.kr/LSW/ (date of access April 4, 2023).

27. PwC. In: Tax Summaries. URL: https://taxsummaries.pwc.com/netherlands/individual/other-taxes (date of access April 6, 2023).

28. Werkgeversheffing Zvw of bijdrage Zvw? URL: https://www.belastingdienst.nl/wps/wcm/connect/ (date of access March 31, 2023).

29. Avis aux employeurs. In: Centre Commun De La Securite Sociale. URL: https://ccss.public.lu/fr/publications/avis/20230114-avis-80-99.html (date of access April 5, 2023).

30. Avis aux non-salariés Taux de cotisation au 01.01.2022. URL: https:/ccss.public.lu/dam-assets/publications/2022/ccss-20213203-avis60-FR-ED.pdf (date of access March 31, 2023).

31. Revenu professionnel. In: Centre Commun De La Securite Sociale. URL: https://ccss.public.lu/fr/independants/cotisations-sociales/revenu-professionnel.html (date of access April 5, 2023).

32. Luxembourg: Pension system in 2018. URL: https://www.oecd.org/els/public-pensions/PAG2019-countryprofile-Luxembourg.pdf (date of access March 31, 2023).

33. Health insurance premiums: Israel National Insurance Authority [Electronic resource]. URL: https://www.btl.gov.il/Insurance/Health_Insurance/ (date of access March 27, 2023).

34. Sodra Information Center [Electronic resource]. URL: https://www.sodra.lt (date of access April 10, 2023).

35. On social security: Federal Public Service – Social Security of Belgium [Electronic resource]. URL: https://socialsecurity.belgium.be/sites/default/files/content/docs/fr/publications/tout-cequerite-sociale-fr.pdf (date of access April 07, 2023).

36. What amounts are deducted from my pension? Belgian Federal Pension Service [Electronic Resource]. URL: https://ww.sfpd.fgov.be/fr/paiement/brut-net#AMI (date of access March 27, 2023).

37. Ragozin A.V., Safonov A.L., Grishin V.V. The problem of the «stowaway» in the modern institute of social insurance: who is guilty and what to do. Sotsial’noe i pensionnoe pravo [Social and Pension Law]. 2022; (3): 45–56. DOI: https://doi.org/10.18572/2070-2167-2022-3-45-56 (in Russian)

All articles in our journal are distributed under the Creative Commons Attribution 4.0 International License (CC BY 4.0 license)