Health reform policy-making: Fiscal sustainability matters (The case of Iran’s PresidentCare)

Abstract

The government of Iran has implemented a major health system reform program, called the Health Reform Plan (HRP). HRP covers a wide range of structural, policy, pricing, and tariff reforms in a wide range of health promotion programs, including reducing the share of payment made by patients hospitalizing in public hospitals, promoting natural childbirth, supporting the retention of physicians in underserved areas, and providing financial protection for incurable or needy patients.Two years after the implementation of RouhaniCare, this study aims to review and analyze the main bottleneck of the plan: Fiscal sustainability. The findings of this study, based on a fiscal simulation model, show that, despite some favorable changes in health indicators, including a considerable decrease in catastrophic health expenditure and a reduction in out-of-pocket health costs for inpatient services, the gap to finance HRP will threaten the continuation of the reform in the coming years. HRP will cost approximately 2% of GDP in the medium-long term. Considering the current path of government revenues, this is fiscally unsustainable, and government will face a menu of options in the near future: reallocating current expenditures in favor of health sector spending; increasing tax revenues, including imposing new health sector linked corrective taxes; and reforming HRP so that it places less of burden on public finance spending.