The growing demand for health insurance, both in Bulgaria and globally, highlights the urgent need for a broad public debate on the financing of the Bulgarian healthcare system and the role of private health insurance. This position was emphasized by ABZ representatives during a discussion on global trends and innovations in healthcare, held as part of an event organized by Mercer Marsh Benefits. Speakers included Angel Videnov, CEO of Bulstrad Life Vienna Insurance Group, and Irina Peycheva, Director of Health Insurance at Generali Insurance AD. The event provided an opportunity for HR professionals to explore developments in the health insurance market in the context of inflationary pressures.
Medical Inflation and Its Impact on Insurance
Angel Videnov pointed out that general medical inflation does not reflect the specific cost structure of health insurance, where the largest share of payments comes from outpatient services and medication — segments experiencing especially rapid price increases.
According to official data from the National Statistical Institute, as of March 2024, the general annual inflation rate was 3%, while medical inflation exceeded 9%. However, just as overall inflation fails to capture individual consumption patterns, aggregate medical inflation fails to reflect the real impact on insurers, whose costs are driven by the sharply rising prices of outpatient care and pharmaceuticals.
Market Dynamics and Growing Claims
Irina Peycheva noted that trends in Bulgaria mirror global developments:
These factors contribute to higher claims ratios, which in turn exert upward pressure on insurance premiums. However, insurers have limited control over these costs, as the prices of most medical services are determined by the National Health Insurance Fund (NHIF).
The Need for Clearer Roles Between NHIF and Insurers
A major challenge identified by ABZ is the overlap between the services covered by the NHIF and private health insurers. Currently, insurance policies often duplicate what is already included in the NHIF coverage. Clients end up paying both mandatory NHIF contributions and insurance premiums, resulting in increased costs and inefficiencies.
ABZ calls for a clear delineation of the operational scope of the NHIF and private insurers to avoid overlap and improve cooperation. This should be part of a broader healthcare reform that enables shared financing of healthcare services through stronger partnerships between all stakeholders — funders, providers, and regulators — especially in light of Bulgaria’s demographic challenges.
Managing Rising Costs Through Efficiency
Because insurers have no influence over NHIF pricing or the frequency of healthcare utilization, they focus on the only lever they can control: internal efficiency. By optimizing administrative processes and containing operating costs, insurers strive to offer more favorable conditions to clients. However, these efforts alone cannot offset the growing prices of medical services, which inevitably affect premium levels.
Frequent NHIF pricing changes, sometimes occurring more than once per year, pose a further challenge. Unlike other businesses, insurers cannot modify the terms of existing contracts, meaning they absorb the impact of cost increases during the contract term. As Irina Peycheva explained, adjusting premiums is only possible when issuing new policy offers.
The Role of Digitalization and Patient Health Records
Digitalization is viewed as a critical tool for improving customer experience, streamlining operations, and increasing insurer efficiency. Angel Videnov emphasized that a key priority is the digitalization of medical records:
“Digitalization allows us to reduce our operating costs, become more efficient, and ultimately offer better prices to our clients.”
Establishing comprehensive electronic health records for each patient, containing historical medical data, would reduce redundant diagnostic procedures and unnecessary treatments — both for the NHIF and private insurers. This would also improve transparency in the use of medical services.
ABZ advocates for shared access to medical records for all financing entities — at least for services they have paid for — as a way to improve cost control and system oversight.
Telemedicine and Legal Frameworks
ABZ representatives also highlighted the potential of telemedicine, particularly in specific areas of healthcare service delivery. However, they stressed the need for adequate legal regulation to ensure the safe and effective implementation of telehealth services.
In conclusion, ABZ underscored the importance of strategic reforms, digital innovation, and clear role definitions between public and private actors as key to strengthening Bulgaria’s healthcare system and ensuring that health insurance remains a sustainable and effective solution for both employers and individuals.
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