Analysis of Factors Affecting Budget Deficit of Iran Health Insurance Organization Using Vector Error Correction Model

Financing is strongly believed to be the main function of any health system and insurance organizations play a critical role in the health financing system of all countries. Accordingly, in order to enable the insurance companies to take steps towards meeting the assigned goals, creation of a balance in the budget and also financial management of their resources and expenses are needed. Therefore, the current research is conducted with the purpose of analyzing the factors affecting the budget balance of health insurance organizations.

This research which is considered an experimental study has used the monthly data of premium, coinsurance, treatment, and overhead costs, and the number of services purchased by the Iran Health Insurance Organization during 2008 - 2019, and the vector error correction model (VECM) to analyze short and long-run relationships, estimate parameters and predict relationships. In addition, the approach of the present research in the selection of variables is based on the mediating role of this organization in the expenditure reimbursement, behavior management, and the purchasing of healthcare services.

The results indicated that in the long term, the insured's coinsurance and the premium paid to the Iranian Health Insurance Organization have a negative effect on the budget deficit, respectively -0.27 and -0.9. In contrast, the budget deficit is positively impacted by treatment and overhead costs with a coefficient of 2.41 and 0.67 and the number of services purchased by Iran Health Insurance Organization with a coefficient of 139576.

According to the findings of this study, the health insurance organization can use strategies such as increasing premiums and coinsurances, reducing treatment and overhead costs, and also the number of purchased services, to control and minimize its budget deficit.