In a surprising policy U-turn, the Maldives government has reversed its earlier decision to phase out the dual health insurance system, reigniting the provision of Aasandha coverage for individuals holding private insurance. This move marks a retreat from a reform agenda aimed at streamlining the public health insurance service and curbing financial wastage. But why has the government backtracked, and what does this mean for the broader push for economic stability in the Maldives?
Back in October 2024, the government introduced a significant shift in healthcare policy. For outpatient services, individuals with private health insurance were required to exhaust their private policy limits before accessing Aasandha, the national health insurance scheme. Only if a service wasn’t covered or if their private coverage was depleted would Aasandha step in. This was a clear attempt to prioritise private insurance, reduce overlap, and ease the financial burden on the state-funded scheme.
For five months, private hospitals adhered to this system, billing solely from private policies. The policy was part of a wider economic reform agenda launched last year to address the Maldives’ mounting fiscal challenges—challenges brought up by a public debt that reached USD 8 billion (122.9% of GDP) in 2023, according to the World Bank. Reforming Aasandha, which has historically been a significant drain on public finances, was seen as a critical step towards fiscal discipline. By March 6, 2025, Aasandha had already consumed MVR 426.3 million of its MVR 1.8 billion annual budget, highlighting the urgency of cost-saving measures.
This month, however, the government quietly began discussions with private hospitals to revert to the dual insurance model. As of Wednesday, hospitals have resumed billing both private insurers and Aasandha—including the standard MVR 100 consultation fee—simultaneously, much like the pre-reform system.
The reversal follows another recent climbdown: the government’s decision to abandon plans to scrap the double pension system. Together, these retreats suggest a pattern of buckling under pressure. Public backlash against the initial Aasandha reforms was fierce, with citizens decrying reduced access to a scheme they view as a fundamental right. The dual insurance system, while inefficient, had allowed flexibility and broader coverage—a comfort the public was unwilling to relinquish. Political expediency may have tipped the scales against sticking with the reforms.
The Maldives’ economic woes provide crucial context. The International Monetary Fund (IMF), in its February 2025 Article IV Mission report, urged “broad-based fiscal reforms” and “sustainable public finance” to avert a crisis. Reforming Aasandha was a cornerstone of this agenda, aimed at reducing wasteful expenditure—such as the duplication inherent in dual billing.
Yet, the government’s decision to revert suggests a prioritisation of short-term stability over long-term restructuring. The tourism-driven economy, projected to grow by 5% in 2025 (IMF), remains vulnerable to external shocks, as seen during the COVID-19 pandemic. With MVR 1.8 billion allocated to Aasandha this year, reinstating dual coverage risks accelerating budget depletion, especially if uptake surges among private policyholders. The move could be a bid to appease a restive populace and maintain social harmony, but it raises questions about the government’s commitment to tackling the structural issues at the heart of its economic malaise.
Critics argue that this reversal undermines the Maldives’ chance to enact meaningful change. The original reform, though unpopular, aligned with recommendations from international bodies like the World Bank, which in October 2024 called for “urgent implementation of comprehensive economic reforms” to address fiscal vulnerabilities. Trimming Aasandha’s scope could have freed up resources for critical investments while forcing private insurers to bear more responsibility.
Instead, reverting to dual insurance perpetuates a system riddled with inefficiencies. Billing both Aasandha and private providers for the same service inflates costs without improving outcomes, a problem the government itself acknowledged last year. The lack of transparency around this decision—coupled with the absence of a clear alternative plan—further erodes confidence in its reform credentials. As Fitch’s downgrade of the Maldives’ credit rating to CC in August 2024 signals, investor and creditor trust is already fragile.
The government’s next steps will be telling. Will it offer a revised reform package to balance public expectations with fiscal prudence, or has it abandoned the pursuit of efficiency altogether? With Aasandha’s budget under strain and economic risks mounting, the Maldives cannot afford to kick the can down the road indefinitely. For now, the reinstatement of dual insurance feels like a concession to political realities rather than a solution to the nation’s deeper challenges. True reform, it seems, remains elusive.
