Alexander Katsaga: Public Funding Is the Best Path to Sustainable Healthcare
Public health insurance (PHI) is a key pillar of Uzbekistan’s ongoing healthcare reform. Alexander Katsaga, an international consultant with the World Health Organization (WHO) and based in Canada, shared with Kursiv Uzbekistan his views on the PHI rollout, the main challenges, and the relevance of international experience.
Why healthcare models cannot simply be copied from abroad
No healthcare system is perfect. Each has its advantages and disadvantages. Directly transplanting a foreign model is rarely effective.
Extensive groundwork is required to introduce any system. This includes understanding a country’s culture, history, and institutional structure. The quality of medical education, availability of clinical protocols, and the frameworks for licensing and accreditation must all be taken into account.
It is common to hear suggestions such as «Let’s adopt this country’s system.» But systems must be adapted to local conditions to be effective and serve the population properly.
Why Uzbekistan is focusing on tax-based funding rather than payroll contributions
Before launching healthcare reforms, Uzbekistan conducted a detailed assessment. This included an analysis of living standards, the economy, and demographic trends. Based on this, the WHO recommended funding PHI through general taxation.
There are several reasons for this approach. First, a large portion of the population works in the informal sector. The number of formally employed individuals is relatively low, which creates a risk of insufficient funding.
Second, people in employment tend to be healthier, while elderly and vulnerable groups require more healthcare. A tax-based model ensures these groups are prioritised.
Why payroll-based healthcare taxes may not work
Some neighbouring countries, such as Kazakhstan and Kyrgyzstan, have introduced payroll taxes to fund healthcare. However, this has not significantly increased overall health budgets. In many cases, it has merely led to a reallocation of existing funds.
Adding new taxes without reducing existing ones increases the burden on both businesses and individuals. Small and medium-sized enterprises are particularly affected and may be pushed further into the informal economy.
For this reason, many countries are moving away from earmarked contributions, shifting instead to more stable funding sources. This trend is often linked to broader shifts such as population ageing.
Medical inflation: why healthcare costs are rising faster than other expenses
The number of retirees is increasing, creating growing demand for publicly funded healthcare. These individuals are not economically active but rely on state support.
Healthcare services are becoming more expensive due to technological advances. This has led to the term «medical inflation,» which typically exceeds general inflation.
Ageing populations, the growing burden of chronic diseases, and the introduction of high-cost technologies all contribute to rising expenses. Shifting these costs onto employers or individuals would reduce economic competitiveness.
Countries such as France and Germany are increasing their reliance on public funding. Others, including Australia, Canada, the United Kingdom, and Ukraine, have already built systems entirely based on this model.
What are the advantages of publicly funded healthcare
The healthcare model being recommended for Uzbekistan has delivered positive outcomes elsewhere. In some cases, such systems outperform those with higher levels of private-sector or contribution-based funding.
Research from the COVID-19 pandemic shows that publicly funded healthcare systems responded more effectively.
These systems are more stable and less dependent on market conditions or business activity. As a result, interest in them is growing globally.
A key trend now is the move towards universal health coverage and guarantees for all citizens.
Tax-funded systems allow equal access to medical services nationwide, regardless of income or health status.
How does healthcare provide support and spread risk
The principle is straightforward: the wealthy support the poor, and the healthy support the sick.
Modern healthcare systems have an important social function. Risk pooling makes insurance more effective. This applies not only to financial risks, but also to responsibility for managing illness.
In a national health insurance system such as Uzbekistan’s, risk is shared at the national level. Previously, funding was allocated by region or district, and the population was divided between those with and without insurance.
This fragmented system left some people without access to care during serious illness. Nationwide pooling resolves this issue and expands coverage.
How much funding does healthcare require
There is no clear answer to whether healthcare systems have sufficient funding. No country considers its healthcare budget fully adequate. More resources are always needed to increase salaries, acquire new technology, and upgrade equipment.
Governments fund healthcare according to national budgets and policy priorities. There is an informal benchmark: healthcare systems should receive around 5% of GDP at minimum.
In Europe, this figure ranges from 1.5% to 10–12% of GDP. In Uzbekistan, it currently stands at 2.6% — in line with Central Asia’s average, but still insufficient.
This shortfall means that not all essential services can be guaranteed, and out-of-pocket payments remain high.
How can the health budget be used more effectively
Two factors must be considered: available resources and spending efficiency. In 2025, Uzbekistan plans to allocate 2.6% of GDP to healthcare.
When funding is used efficiently, the population benefits significantly. International experience shows that investment in primary care is crucial. Most healthcare services can and should be delivered at this level.
In developed countries, 60–80% of patients are treated in primary care settings. This is cost-effective and essential for preventing illness and managing chronic conditions.
How is the new primary care model structured
A modernised primary healthcare model is being developed using capitation-based funding. Under this approach, providers receive funding per registered patient, adjusted by age and gender.
Working-age men generally use fewer services and cost less. Infants and women of reproductive age require more care. Special coefficients are applied to reflect this.
These adjustments ensure fair allocation of resources among primary care providers. Incentive schemes and performance monitoring mechanisms are also being introduced to enhance service quality.
When primary care cannot meet a patient’s needs, they are referred to hospitals. Under the insurance model, hospitals are paid for services provided — not for bed capacity or infrastructure.
Payments are based on diagnosis complexity and chronic conditions. Medical providers are reimbursed according to established tariffs. While the concept is simple, implementation involves many technical details, requiring support from countries with relevant reform experience.
Why digitalisation is essential for reform
Digitalisation plays a critical role in healthcare reform. Decisions within the insurance system must be based on reliable, detailed, and up-to-date information.
Legacy Soviet-era statistical methods are no longer adequate. Data was often collected annually, on paper, and held limited analytical value.
Delays in digitalisation are among the main technical challenges for Uzbekistan’s PHI fund as reforms progress.
Alexander Katsaga provides technical support to the Ministry of Health and the PHI fund, including the pilot programme currently underway in Syrdarya region.
