Estonian Health Fund's 2026 budget deficit smaller than forecast

TALLINN - The deficit in the Estonian Health Insurance Fund's (Tervisekassa) 2026 budget, approved by its supervisory board, is significantly smaller than previously forecast, but maintaining services at the current level will require using reserves accumulated in previous years.

Compared to the state budget act from a year ago, the improvement amounts to nearly 73 million euros, with the expected deficit now at 104.9 million euros instead of the previously projected 177.6 million. As a result, the Health Insurance Fund's reserves accumulated over previous years will decrease by approximately 17 percent.

Contract volumes for healthcare services will not decrease, meaning that for patients, the number of treatment cases and the availability of services in 2026 will remain at the same level as the previous year. The healthcare services budget will increase by 87.1 million euros compared to the 2025 budget forecast. This more positive outlook is due to better-than-expected revenue collection and more conservative contract management, along with efficiency measures such as continuously aligning service prices with actual costs.

According to Karmen Joller, Minister of Social Affairs and chairwoman of the Health Insurance Fund's supervisory board, it is clear that the Estonian healthcare system needs more funding in the coming years. However, she noted that it is essential to first identify where this money will create the most value. She also stressed the need to find areas for greater efficiency, eliminating duplication and occasional overpayments. "We must end a situation where some services are funded at the expense of others, our hospitals compete instead of cooperating, and the uneven quality of primary care forces people to go to the emergency room," Joller said, giving examples.

"The Health Insurance Fund began streamlining the system last year, and we are continuing this work this year. For example, the change in price caps for laboratory tests allows us to invest an additional 11.4 million euros in emergency medicine, modernize several specialties, expand the target audience for screenings, and implement a new funding model in primary care that supports quality," the minister of social affairs added.

The projected balance of the Health Insurance Fund's reserves is nearly 626.6 million euros at the end of 2025, of which 440.5 million euros constitutes retained earnings.

According to Siiri Lahe, CEO of the Health Insurance Fund, the main goal for the coming years is to move towards a balanced budget. "Every euro directed to healthcare must support an increase in healthy life years. In the year ahead, we must critically assess to what extent services can be intelligently optimized, and when and how much additional funding healthcare needs," Lahe said.

Lahe emphasized that this is a sector where current demand exceeds supply, while the range of services and medicines has expanded significantly over time and will continue to do so. "Meanwhile, according to 2024 OECD data, Estonia's healthcare expenditure is 7.8 percent of GDP, which is significantly below the European Union average of 9.3 percent," she added.

According to a recent analysis by the Foresight Centre, the Estonian Health Insurance Fund is one of the most autonomous and strategic purchasers of healthcare services in Central and Eastern Europe.

"Our goal is to move step-by-step from a fee-for-service model to funding based on patient health outcomes. The use of new and innovative solutions in healthcare is inevitable, but it must be considered that most developments do not yield immediate financial benefits, but rather in the long term," Lahe added.

The Health Insurance Fund's 2026 budget totals just over 2.6 billion euros, the majority of which covers the costs of healthcare services, medicines, and benefits for temporary incapacity for work.