On November 15, 2015, the President of Kazakhstan, Nursultan Nazarbayev, signed a law “On the Compulsory Social Health Insurance”. Based on the law, the country is implementing a compulsory social health insurance system (CSHI) within the framework of the “100 concrete steps” program proposed by the President. This new system is expected to be much more effective and successful to overcome the problems of the previous public funded health system. The successful application of the CSHI is a very important step in the country’s social policy and the population’s health.
The government of the country decided to choose the new system because of several factors. The first reason was that in the previous system, the health expenses of the population were fully by state funds. Despite the fact that the government was constantly increasing its expenses on the populations’ health, it was expected that the expenses could not cover constantly growing demand for health coverage because of increased fertility rate and aging of the population. Therefore, the country needed a new system, which would require the participation of not only the state but also the private citizens and employers to the health funding. The second reason was that the government’s public health system has been widely criticizing because of low quality of medical care, low qualified of doctors, ineffective work of hospitals and polyclinics, and long queues.
The implementation of the CSHI allows solving these problems. The population under the CSHI make their contribution to their healthcare. This allows covering constantly growing demand for health coverage because of increased fertility rate and aging of the population. In addition, the new healthcare system allows the population to choose their medical center. They can choose not only public hospitals and polyclinics but also private medical centers. This fact allows the population to choose the best center, the best doctors, which will increase the competition among these centers. Increased competition will also increase the quality of the health service, which will have a positive effect on the nation’s health.
The only negative factor of the new system is that it has negative effect of the income of the population and private companies. However, it is important to note that the contributions are not very high. The population and private companies make their contributions to the Social Health Insurance Fund (SHIF). The SHIF is a non-commercial joint stock company owned by only the Government of Kazakhstan. The government will be responsible for all activities of the fund and will determine the norms and limits of the fund. The assets of the fund will be formed by the contributions of the population, private companies and government and will be used only to cover health expenses of the population. The assets of the fund will be managed by the National Bank of Kazakhstan.
It is also worth mentioning that the SHIF will act as an organization that chooses which medical center will be allowed to offer their services under the CSHI. The SHIF will also control the quality of services of medical centers and will create a rating of these centers and publish these ratings online.
Starting from July 1, 2017, employers started making compulsory contributions to SHIF in the amount of 1% of employees income. These compulsory contributions of employers will be increased to 1.5% in the beginning of 2018, to 2% in 2020 and to 3% in 2022. Employees will start making their contributions in 2019, in the amount of 1% and these contributions will be increased to 2% in 2020. The compulsory contributions of individual entrepreneurs, private notaries, private bailiffs, and attorneys will be 5% of two official minimal wages. Unproductively self-employed individuals will pay 5% of an official minimal wages. The state will also make contributions in the amount of 3.75% starting from July 2017, 4% in 2019, 4.5% in 2022 and 5% in 2025 for socially unprotected population: children; mothers with many children; participants and disabled veterans of the Great Patriotic War; people with disabilities; people registered as unemployed; people who study and are brought up in boarding organizations; people who are enrolled in full-time education in technical and professional organizations, post-secondary, higher education, and postgraduate education; people on leave for the birth of a child (children), the adoption of a newborn child (children), the care of a child (children) until they reach the age of three; unemployed pregnant women, as well as nonworkers actually raising a child (children) until they reach the age of three; pensioners; people serving sentences; people held in temporary detention facilities and pre-trial detention centers.
If a person will not pay his compulsory contributions, he will not be covered by the medical insurance and cannot get free medical help. However, it is important to note that the government still offers some free medical help. The state guarantees free of charge (i.e., regardless of compulsory insurance) the following types of medical care: first aid and sanitary aviation; medical assistance for socially significant diseases, such as oncology, tuberculosis, diabetes, psychiatric pathologies, and also in emergency cases; prophylactic vaccinations.
It is important to note that if an employer does not pay the compulsory contributions in a timely manner, the fund will charge the employer with accrued interest in the amount of 2.5 times of the refinancing rate established by the NBK for every overdue day. Moreover, if the employer will not pay its contributions, the state revenue authorities have the right to collect money from the bank accounts of the payer within the limits of his debt.
The fund will prepare a report for every contributor on their contribution to the fund. Moreover, the fund will prepare a report on the services that the contributor took through the CSHI. These attempts will be made to make the fund transparent. Furthermore, the fund will publish an annual financial report; a development strategy for five years, a short-term development plan and an annual plan; and as it was noted above it will publish the ranking of medical centers.
Overall, in exchange for its contributions, the population gets a highly competitive, financially stable and transparent healthcare system. It can be expected that due to this new system, more new private medical companies will open in the country, while public medical centers will lose their share. Since the service offered by medical centers will be free of charge for every person that made a contribution to the fund, the demand for services of a medical center will not depend on its prices. The center will compete by hiring highly skilled doctors and by buying new medical technologies, and overall improving the efficiency of medical service. Besides, the medical centers can start hiring foreign highly skilled doctors. The presence of foreign highly skilled doctors will have a positive effect on the population health and will allow bringing to the country contemporary knowledge in the healthcare sphere.
 According to the Ministry of Finance of Kazakhstan, from 2011 to 2017, the budget expenses on health grew by 74.6% (9% average yearly growth rate) from 0.63 billion tenge in 2011 to 1.10 billion tenges in 2017. In 2016, the government spent 1.04 billion tenges. It is important to note that the health expenses is one of the biggest spheres in the total budged expenses. In 2017, the health expenses account for 11.1% of the total expenses and stays on third place among other spheres.
 It is a self-employed person that has income lower than the subsistence level.
Note: The views expressed in this blog are the author's own and do not necessarily reflect the Institute's editorial policy.
Daniyar Nurbayev is a research fellow at the Eurasian Research Institute. Daniyar completed his bachelor’s degree in Finance in the Kazakh-British Technical University in 2013. In addition, he holds Masters degree in Finance from the Kazakh-British Technical University (2015).