Government employees to fund health budget gap

Insurance rate remains unchanged, public servants start paying contributions

About a week after approving an increase in the health insurance rate to 10%, the government renounced its plan following a heated public debate. Instead, government employees will start paying their portion of the contributions, the way private sector employees do.

And the winner is...

The change will affect some 150,000 people employed in the central and local administrations, the judiciary, the interior ministry, the defence sector and the armed forces. They will divide their social and pension insurance payments with their employer, i.e. the state. The ratio for the health insurance is 60:40, the contributions for pension depend on employees' age. As a direct consequence salaries in the public sector will fall. Possible compensation is only likely in the interior ministry's system.

The change of plans was announced by finance minister Simeon Dyankov at a news conference. The proposal will be discussed by the cabinet this week. A meeting with employers and trade unions is scheduled for next week.

Hindsight

The cabinet's decision of last week prompted debates in the media. The private sector slammed the government's plans, saying that will increase the burden and force many employers into the grey sector. According to data of the Bulgarian Industrial Association, some 1.6 million Bulgarians do not have health insurance at present.

Earlier this month health minister Bozhidar Nanev said that the National Health Insurance Fund was short of BGN 316 million. He suggested a revision of the insurance rate by 2%. However, Dyankov said the BGN 300 million gap was not based on reliable analysis and the shortage is yet to be estimated.

Equality

The latest proposal of the government is based on the idea of equality between state and private employees. The economies are expected to amount to some BGN 150 million. The money will not be used for filling the budget gap before the size of the gap is established, the finance minister was adamant. The proposal has to be approved by the council of ministers within two weeks and then submitted to the parliament.