Gov’t Announces Progressive Contribution Model for Aasandha Scheme

The government has unveiled plans to implement a progressive contribution model for high-income earners, starting next year, to help alleviate the financial burden of providing free medical treatment through the state-funded Aasandha health insurance scheme.

Aasandha, the largest government subsidy expenditure, has faced rising costs, prompting the need for significant reforms to ensure its long-term sustainability. According to the 2025 budget presented to Parliament, two key changes to the Aasandha programme are set to take effect in April, with the aim of saving an estimated MVR 600 million annually.

advertisement

advertisement

advertisement

Under the new model, individuals earning more than MVR 60,000 per month, or those subject to income tax, will be required to contribute a specific amount to the Aasandha scheme. The Ministry of Finance states that this adjustment will create a more equitable system, ensuring that those with higher incomes contribute to the cost of healthcare, while maintaining free access for the most financially vulnerable members of society.

The proposed changes are inspired by similar systems in developed countries, such as South Korea, where individuals make pre-payment contributions to the tax authority alongside income taxes.

Additionally, a co-payment system will be introduced for wealthier individuals using certain healthcare services. High-income earners will contribute a portion of the costs for outpatient services and non-essential medication, with an annual cap on out-of-pocket expenses. Once the cap is reached, services will remain fully covered. The contribution rates and expenditure caps will vary according to income levels, with exemptions for minors under 18, individuals over 65, and those receiving treatment for chronic conditions.

For those seeking care from private healthcare providers, Aasandha currently covers a fixed portion of the bill, with out-of-pocket expenses depending on the provider. The Finance Ministry plans to standardize these rates and the amounts deducted by Aasandha. The Ministry also plans adjustments to the medical welfare system managed by the National Social Protection Agency (NSPA), including providing benefits to high-income individuals in the form of interest-free loans rather than subsidies.

In 2023, the government allocated MVR 2.6 billion to Aasandha, while the 2024 budget reduces this allocation to MVR 1.9 billion. Financial experts have highlighted the need for reform to ensure the scheme’s sustainability amid rising healthcare costs in recent years.