The idea to finance healthcare on the fund principle was launched for the first time in the Principality of Bulgaria in 1878, in the theoretical work "Considerations on the Establishment of the Medical Sector in Bulgaria" written by Dr. Dimitar Mollov. In it the author introduced the thesis to raise contributions in a health fund from a specially designated land fund which would be cultivated by the population. The resources from this fund would thus cover fully or partially the expenditures for healthcare to the benefit of the insured persons. In 1936 was published the book "Comprehensive Health Service" written by Dr. Zachary Botchev. The idea was to establish a comprehensive and accessible for the entire population system of healthcare to be financed by an insurance fund and to be managed in a democratic and decentralized way with the wide participation of the public and of the professional associations.
The first Health Insurance Act in Bulgaria - "Workers' Insurance Against the Risks Disease and Incident Act" - was passed in 1918. In 1924 the Parliament voted the "Public Insurance Act" which introduced the mandatory insurance of all workers and public servants in state and private enterprises and organizations against the risks incident, disease, maternity, invalidity and old age. Insurance against unemployment was introduced by a separate law in 1925. Medical care was delivered on behalf of the Public Insurance Fund in which 2/3 of the income was collected from the employers and from the state and 1/3 - from the employed. From the means of the Fund were authorized loans for construction of health and social establishments. The insured persons had the right to a free choice of a medical doctor.
The changed socio-economic environment after 1944 reflected on health insurance in Bulgaria as well. In 1945 was passed the "Act on the Fund "Health Insurance of Employees, Retired Persons and Members of Their Families" by virtue of which the scope of the insured persons was enlarged. The Constitution of the People's Republic of Bulgaria (1947) set radical changes in the healthcare field. In 1948 - 1949 the private hospitals, clinics, dental unions and pharmacies were expropriated. After 1950 the health insurance principle in the financing of healthcare was replaced by the state health system which was financed through common tax incomes to copy the Soviet model system "Semashko".
The contemporary system of a mandatory health insurance is governed by the Health Insurance Act (1998, State Gazette # 70).
This political vote came in response of the heavy problems in the public taxation financed system of healthcare and as a continuation of the common tendencies in the countries of Central and Eastern Europe and of the historical tradition in the country.
The adopted Law governs at one and at same time the questions of the mandatory and voluntary health insurance. It creates legislative framework for the organization of the mandatory health insurance to follow a public contract model.
Organization and Management
The mandatory health insurance system is designed as a state monopoly. It has the exclusive right to grant mandatory health insurance and to guarantee the observance of the insurance rights in respect of all nationals. This decision is based on subtle arguments.
The system is socially oriented and is one of the layers of social protection of the population. If the market of the mandatory health insurance were differentiated between more players, the overall cost expenditures of all established funds would have been higher compared to that of the national system. This is so because of the well known fact that in the field of health insurance acts the market defect "savings from scale" (diminishing returns) which makes the market unjust and relatively closed for new players. Through monopoly it is possible to accumulate a common fund for the goals of the social health insurance, out of which one can put aside means for development and crediting of other innovative activities, while at the same, if there occurs shortage of means - to receive subsidies from the state. The existence of monopoly does not necessarily mean that there exists exclusive and monopoly conduct, which is a more important indicator for violations of the Protection of Competition Act, compared to the market share of the players. Monopoly conduct would mean to diminish the volume of the service packages and to increase the volume of the contributions without an adequate quality increase of the services. But it is envisaged in the Law that the Minister of Health defines the Guaranteed Medical Services Package and supervises its observance through the "Health Insurance Supervision" Department. The adoption of the volume of the contribution is effectuated through a purely public way by the vote of Parliament. The choice of one fund for social health insurance brings into balance the interrelations with the health services providers who are also associated and represented by the professional organizations of the doctors and the dentists. The Law does not provide for a re-distribution mechanism to level the risks, which would have been necessary in the process of functioning of more than one independent funds.