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200 Economic crisis, health systems and health in Europe: country experience
activities, assessment of patients' health status, immunization, assessment of
cardiovascular risks, and promotion of cancer screening programmes. GPs failing
to meet these criteria will see their annual remuneration (capitation payment)
reduced by up to 9%.
4. Implications for health system performance
and health
4.1 Equity in financing and financial protection
In Latvia, more than 60% of total health expenditures come from general tax revenue.
Therefore, equity in financing depends most importantly on the progressivity of the
tax system. Vanags (2010) recently assessed the progressivity of the tax system using
the Kakwani index following the implementation of a tax reform in 2010 and found
the Latvian tax system to be slightly progressive, with a Kakwani index of 0.048.
However, the overall progressivity of health care financing needs to be interpreted
in view of the high level of OOP payments as a share of total health expenditures,
which increased from 34% in 2008 to over 37% in 2012 (Table 6.2). In 2010,
the third income quintile spent 8.5% of total household expenditures on OOP
payments: this share was smaller for both the two richer and two poorer quintiles.
The richest quintile spent the second lowest share of total household expenditures
on OOP payments (Fig. 6.3). The smallest share spent on such payments was by the
lowest income quintile, which may indicate that the implemented Emergency Social
Safety Net Strategy was effective in protecting the lowest quintile from excessive
OOP payments.
In summary, while the tax system is mildly progressive and OOP, as well as tax
subsidies for VHI are, at least for higher income groups, strongly regressive, the
overall progressivity of the Latvian health financing system remains somewhat
unclear. It is most likely that it is roughly proportional – if not mildly regressive.
If current reform proposals to switch to a compulsory health insurance system
and to link a large proportion of personal income tax revenue to health are
implemented, the importance of income tax in health care financing will increase,
while the reliance on OOP payments will be reduced. This may contribute to a
more progressive health care financing system (Mitenbergs et al., 2012). However,
it is not possible to draw a clear conclusion without further analysis (particularly
as a part of the population may be excluded from coverage).
4.2 Access to services
Equity in utilization of health care services may have decreased through the costsharing
applied to outpatient care, but again, the Social Safety Net measures
worked in the opposite direction, protecting the poorest populations. However,