The government has introduced an action plan to deduct 1 percent from the salaries of people’s representatives and government employees who receive wages and allowances from the state treasury. The collected amount will be deposited into the Health Insurance Fund to ensure sustainable healthcare financing.

Currently, a social security tax mandates a 1 percent deduction from the salaries of both government and private sector employees, which is deposited into the Social Security Fund (SSF) to support various social security schemes.

The Health Insurance Board, which provides healthcare coverage of up to Rs 100,000 per person for a family of five at an annual premium of Rs 3,500 has been struggling financially due to claims exceeding its income. Recently, the board reported pending claims of approximately Rs 15 billion. Some hospitals have suspended health insurance services due to delays in reimbursement from the government. While the government allocates Rs 7.5 billion annually to the Health Insurance Board, it only collects Rs 3 to 4 billion from insured individuals, and even that amount is used to clear previous dues. According to the board, annual health insurance expenses exceed Rs 13 billion.

To address this financial shortfall, the government has proposed deducting 1 percent from the salaries of all government employees. This initiative follows recommendations from the Insurance Reform Suggestion Task Force, formed by the Ministry of Health. The government and the task force jointly released the action plan and report on Sunday.

Under this plan, 1 percent of salaries of people’s representatives and government employees will be deducted, with an equal contribution from the government or employer body, making health insurance enrollment mandatory. The action plan states that this process will be completed within six months to one year.

Additionally, the government aims to expand health insurance coverage to private-sector employees, informal sector workers, and foreign tourists within the same timeframe. The plan also includes a provision for separately categorizing individuals with chronic diseases, granting them special coverage of Rs 100,000. Moreover, the action plan proposes expanding specialized health services and increasing insurance coverage to Rs 500,000 for patients with kidney disease, Alzheimer's, heart disease, and other severe chronic conditions.

The task force recommended increasing health insurance coverage to Rs 500,000 for critical illnesses, arguing that the current allocation of Rs 100,000 is inadequate for severe and chronic diseases or when multiple family members require treatment. However, the final decision on this increase rests with the Council of Ministers.

To fund the proposed Rs 500,000 benefit package, the task force suggests that employees in both government and private sectors contribute 1 percent of their annual salaries, with employers matching that amount. Other proposed measures include integrating treatment assistance and subsidy programs, implementing progressive premiums for wealthier families, and imposing an insurance tax on air tickets and financial transactions to sustain the program.

The task force report highlights concerns about the program’s sustainability, noting that only 24 percent of the Health Insurance Board’s expenditures are covered by collected premiums, while the government provides the remaining 76 percent. If the current model continues, the government will need to allocate an additional Rs 32 billion in subsidies by 2025 and Rs 62 billion by 2030.

Speaking at the report’s release event, Health Minister Pradeep Poudel emphasized that health insurance can be managed without imposing additional financial burdens on citizens. "This is the responsibility of all three levels of government. The funds currently spent by all three tiers of governments on citizens' healthcare should be used to strengthen the insurance fund," he stated.

Minister Poudel noted that consolidating resources under a single system would address financial challenges. "Since the Rs 3 billion allocated in the budget each year is insufficient, we have increased it multiple times this year," he added. "The upcoming budget will raise it to Rs 10 billion."

The task force, led by Dr. Shambhu Acharya, submitted its report to Minister Poudel on December 31. The committee included senior cardiologist Dr. Bhagwan Koirala, development economist and current Executive Director of the Health Insurance Board Dr. Raghuraj Kafle, as well as officials from the ministries of Health and Finance. Based on their findings, an action plan was also presented to Prime Minister KP Sharma Oli.

According to the Spokesperson for the Ministry of Health Dr. Prakash Budhathoki, both the report and action plan have been made public and are now in the implementation phase. The government first launched the health insurance program in 2015, and as of now, approximately 8.4 million citizens have enrolled.

This story has been updated to correct that the Health Insurance Board currenlty provides healthcare coverage of up to Rs 100,000 per person for a family of five at an annual premium of Rs 3,500.