Viljar Arakas: Healthcare financing needs to change
In Äripäev Raadio's morning programme, Meliva Chairman of the Board Marja-Liisa Alop — one of three finalists in Estonia's Manager of the Year competition — interviewed Viljar Arakas, CEO of Eften Capital. The conversation covered challenges facing Estonia's economy and public sector, focusing primarily on healthcare financing and the need for reform. Arakas, who has chaired the government's efficiency and economic growth council for nearly a year, shared his views on public-private cooperation and proposed solutions to bottlenecks in Estonian healthcare.
Bringing a private-sector mindset to the public sector is valuable
Arakas confirmed that bringing private-sector thinking into the public sector is certainly beneficial. He pushed back against the notion that people in the public and private sectors are fundamentally different, citing Taavi Kotka and Paavo Nõgene as examples of people who have succeeded in both. According to Arakas, the main difference lies in perspective: entrepreneurs focus first on their own company and sector, then on the broader economic environment, whereas the public sector looks only at the wider environment while constantly facing pressure from various competing interests.
“The greatest value of our council is that it has brought private- and public-sector people to the same table and made them talk to each other,” Arakas explained, stressing that this has required political will. He added that people working in the public sector are often just as capable as those in the private sector.
Getting out of the healthcare financing crisis requires different thinking
Marja-Liisa Alop highlighted concerning figures for Estonian healthcare: Estonia ranks among the lowest in the EU for healthy life years, while the Health Insurance Fund’s budget has grown by nearly a billion euros over the past six years — yet even that isn’t enough, and reserves are being drawn down.
Arakas acknowledged that healthcare problems are complex, appearing simpler from a distance than they are up close. He stressed that the problem isn’t the quality of medical care but its financing. Estonia spends less on healthcare as a share of GDP than the EU average, while also collecting less tax revenue. In his view, the current financing model is unsustainable in the long run.
“Any system that’s built to be market-resistant… and then just gets more money thrown at it, never works,” Arakas said critically, pointing to the need to open the system to the market and let treatment funding move together with the patient.
As one key solution, Arakas proposed expanding employers’ options for investing in their employees’ health. He believes the current €400 fringe-benefit tax-free threshold has outlived its usefulness. He dismissed the Ministry of Finance’s concerns about potential abuse, comparing it to banning cars out of fear of speeding. Arakas sees employer-provided private healthcare as part of a broader motivation package and would consider it a significant step forward. “It’s strange to say there’s no money, when we’re not turning anyone away either,” Arakas summed up the current situation.
On tax policy, Arakas noted that while Estonia’s overall tax burden is below the EU average, VAT and social tax rates are too high. He favors introducing new, low, flat-rate taxes rather than raising existing ones further.
Why is change in healthcare so slow?
Asked why change happens so slowly in healthcare, Arakas said it is, unfortunately, a system where new ideas and new people aren’t always welcomed. He stressed that healthcare needs more than isolated regulatory tweaks — it requires comprehensive restructuring.
Arakas called on all parties running for the Riigikogu to be asked for long-term solutions to the healthcare financing crisis. He warned that while Estonia’s low national debt allows the problem to be postponed, doing so is short-sighted and could lead to a situation similar to Finland’s, where debt has grown out of control.
The full interview can be heard here: https://www.aripaev.ee/saated/2026/04/28/arakas-meditsiinisektor-peab-riigikogult-pikaajalist-lahendust-kusima
