Proposal to increase health insurance premiums and retirement age

The Social Insurance Fund (SIF) is likely to have an imbalance in revenue and expenditure, and the Health Insurance Fund (HIF) has started to have a deficit since 2017. Based on that reality, the Ministry of Finance has proposed to study increasing the retirement age and increasing the HI contribution rate.

The Ministry of Finance has just drafted a report to the Prime Minister on reviewing and perfecting the social insurance, health insurance, and unemployment insurance systems and implementing state support solutions to expand the number of participants.

Increase retirement ageto stabilize the fund

According to the Ministry of Finance, in the 2015-2017 period, the state budget has allocated more than 130 billion VND to pay pensions and allowances to those who retired before January 1, 1995. The budget for paying social insurance for employees who worked in the state sector before 1995 is more than 22,000 billion VND. The National Assembly has assigned the Government to allocate a budget to transfer annually from now until 2020.

The Ministry of Finance calculates that in the next 20 years, the Social Insurance Fund will still ensure its balance. However, on the condition that solutions must be implemented synchronously to develop social insurance participants; the average salary increase rate for social insurance contributions is 10%/year (as in the period 2010-2016); the salary increase roadmap (both basic salary and pension) is 7%/year on average. However, in the long term, there are some potential risks of social insurance fund imbalance, such as: The situation of slow and increasing social insurance payment debt; the retirement age in Vietnam is low compared to the world (the average Vietnamese retires at 54 years old, while the retirement age in Japan is 70 years old, the UK and Germany is 67 years old...). At the same time, the life expectancy of Vietnamese people is increasing, the pension period is prolonged.

The Ministry of Finance has proposed to consider increasing the retirement age and health insurance premiums. Photo: Nhu Y.

Based on the above analysis, the Ministry of Finance proposed that the Government allow the Ministry to convert more than VND 22,000 billion of the budget that must be transferred to the Social Insurance Fund into Government bonds. Of which, in 2018, VND 6,000 billion was converted into bonds, in 2019, VND 6,000 billion was converted, and in 2020, VND 10,090 billion was converted. Since the Social Insurance Fund currently also invests heavily in bonds, the above conversion is similar to the fund buying bonds. Previously, the Ministry of Finance converted VND 324,000 billion of the state budget borrowed from the Social Insurance Fund into the form of Government bonds.

The Ministry of Finance also proposed that the Ministry of Labor, Invalids and Social Affairs study and propose the level, subjects, and roadmap for raising the retirement age in accordance with the reality of Vietnam and the general trend of the world. As Vietnam is about to enter the period of population aging, there will be a shortage of young workers in the future; in fact, many retirees continue to participate in the workforce, have the need and health to work more. In addition, raising the retirement age will take advantage of experienced and qualified workers. "Therefore, raising the retirement age is feasible," the Ministry of Finance analyzed.

Previously, also for the reason of stabilizing the Social Insurance Fund, in the draft of the Labor Code (amended), the Ministry of Labor, Invalids and Social Affairs also proposed to increase the retirement age. With the roadmap of increasing the retirement age by 6 months each year, until men reach 62 years old and women reach 60 years old.

Research on increasing health insurance premiums

Regarding health insurance, the draft report of the Ministry of Finance stated that the number of people participating in health insurance has exceeded 77.8 million, equivalent to 83.2% of the population. By the end of 2016, the health insurance fund had a surplus of more than 49,900 billion VND, but from 2017 there will be a large deficit (in 2017, the deficit was 11,300 billion VND, by 2020, the deficit will be about 28,000 billion VND). This deficit is mainly due to the increase in the price of medical examination and treatment services.

Meanwhile, the issuance of health insurance cards to subjects supported by the state budget is still duplicated in large numbers and occurs commonly in localities. One person belonging to many subjects is issued many health insurance cards. In the period 2010-2014, nationwide, there were more than 2.2 million duplicate health insurance cards, with the budget spent to support 990 billion VND.

Regarding the cause of duplication, the Ministry of Finance said that it was mainly due to the application of information technology in health insurance management for a long time before 2016, which still had many limitations. The health insurance information system has not been connected between units in the social insurance sector. Currently, the price of medical examination and treatment services outside of health insurance is lower than the price of medical examination and treatment services using health insurance, so it has not encouraged people to participate in health insurance regularly and long-term. Only sick people buy health insurance. Along with that is the situation of debt payment, profiteering from the health insurance fund...

From these analyses, the Ministry of Finance recommends that the Government continue to maintain a stable budget support mechanism for health insurance participants from now until 2020. At the same time, the Government needs to assign the Ministry of Health to integrate and eliminate overlapping and ineffective universal health care policies and regimes...

In particular, the Ministry of Finance recommends that the Ministry of Health preside over and coordinate with relevant agencies to submit to the Government a roadmap for adjusting health insurance contribution rates to ensure sufficient funding for medical examination and treatment under the health insurance regime.

The proposal of the Ministry of Finance was made in the context that the Government is implementing solutions to support businesses and reduce the contribution rate for some types of insurance. Specifically, the Government has decided to reduce the contribution rate of the Labor Accident and Occupational Disease Insurance Fund from 1% to 0.5% of monthly salary, effective from June 1, 2017; and submit to the National Assembly to reduce the unemployment insurance contribution rate from 1% to 0.5% of monthly salary.

According to Tienphong