1 1 High-Level Preparatory (HLP) Meeting for the 63 rd Session of WHO/SEA Regional Committee, New Delhi, 28 June – 1 July 2010 Financing for Universal Coverage Agenda item 7.1 2 2 High-Level Preparatory (HLP) Meeting for the 63 rd Session of WHO/SEA Regional Committee, New Delhi, 28 June – 1 July 2010 Background to health financing efforts in the Region Key remaining challenges HLP recommendations on way forward to be submitted to the to the Sixty-third Session of the Regional Committee for its consideration Overview 3 3 High-Level Preparatory (HLP) Meeting for the 63 rd Session of WHO/SEA Regional Committee, New Delhi, 28 June – 1 July 2010 Background to health financing efforts In 2005, at the World Health Assembly, Member States endorsed a Resolution on Sustainable health financing, universal coverage and social health insurance In consultation with countries, Region Office formulated a health care financing strategy for the Asia-Pacific region Further, these regional health financing priorities have been captured in the upcoming WHR 2010 Financing for Universal Coverage. 4 4 High-Level Preparatory (HLP) Meeting for the 63 rd Session of WHO/SEA Regional Committee, New Delhi, 28 June – 1 July 2010 Background to health financing efforts (contd) Member States have initiated in-depth and collaborative reviews of their health financing policies and strategies SEARO has undertaken health financing and expenditure reviews with local institutes as stock-taking exercises in eight countries Capacity building in both technical issues and particularly their practical application at (multi) regional and country level 5 5 High-Level Preparatory (HLP) Meeting for the 63 rd Session of WHO/SEA Regional Committee, New Delhi, 28 June – 1 July 2010 Key persistent challenges High out of pocket spending Final challenges to achieving universal coverage Unreached/underserved NCDs Quality of care Engaging the private sector in the national health agenda 6 6 High-Level Preparatory (HLP) Meeting for the 63 rd Session of WHO/SEA Regional Committee, New Delhi, 28 June – 1 July 2010 Key persistent challenges (contd) More money for health and more health for the money Equity Efficiency Shifting away from out of pocket spending to social protection through pre-payment schemes General government revenues Social insurance Using provider payment mechanisms for strategic engagement of the private sector 7 7 High-Level Preparatory (HLP) Meeting for the 63 rd Session of WHO/SEA Regional Committee, New Delhi, 28 June – 1 July 2010 Recommendations To conduct a series of technical assessments, in Member States, on the health financing situation, in views of identification of strengths and gap in achieving universal coverage and compile into a regional report. This may be done through the platform and technical contributions in the are of the Health Economics and Financing Observatory established by SEARO To draft South-East Asia Regional Strategy on universal coverage and a convene regional consultations in order to finalize the Strategy
High-Level Preparatory (HLP) Meeting for the 63 rd Session of WHO/SEA Regional Committee WHO/SEARO, New Delhi, 28 June – 1 July 2010 Agenda item 7.1 SEA/HLP-Meet/7.1 25 June 2010 Regional Strategy on universal health coverage There has been strong and consistent commitment to improving equity in health through universal coverage in the Region as well as global level from WHO and Member States. An overall financing strategy towards achieving this goal has been developed for the Asia-Pacific Region jointly by South-East Asia Region Office and Western-Pacific Region Office. Further, these regional priorities will be a focus of the forthcoming 2010 World Health Report, Financing for universal coverage. Key challenges to financing for universal coverage in the Region are high and potentially impoverishing out-of-pocket spending on health; a large and poor informal sector that is most vulnerable to the high cost of access to care; a large and mostly unregulated private sector that dominates provision of care; and an increasing burden of non-communicable disease requiring high-cost individual care. There are three choices in progress towards universal coverage that health financing reform needs to consider: priority population to be reached with a chosen benefit package at a feasible public subsidy. A practical approach to shift from out-of-pocket payments towards equity and universal coverage is a step-by-step move, first to an intermediate stage of a mix of community initiatives to protect the informal sector and social insurance for the formal sector with general government revenues focusing on public health and the poor; and, a next stage that consolidates community and social insurance into national level social protection schemes with continued public investment in public health and target population. In-depth technical assessments of the potential of this approach to sustainable financing for universal coverage in Member States is recommended to formulate a strategy for the Region to be considered by the Sixty-fourth Regional Committee in 2011 for further action. The attached working paper is submitted to the High-Level Preparatory (HLP) Meeting for its review and recommendations. The recommendations made by the HLP Meeting will be submitted to the Sixty-third Session of the Regional Committee for its consideration.
REGIONAL COMMITTEE Provisional Agenda item xx Sixty-third Session SEA/RC63/xx Bangkok, Thailand 7–10 September 2010 25 June 2010 Regional Strategy on universal health coverage
SEA/RC63/xx Background 1. Universal coverage for health has been high on global, regional and national agendas for some time. In 2005, at the World Health Assembly, Member States passed a resolution on “Sustainable health financing, universal coverage and social health insurance”. Subsequently, in consultation with countries, South-East Asia Region Office formulated a healthcare financing strategy towards fulfillment of these goals for 2006-2010, 1 which was revised for 2010-2015 2 in line with the World Health Report 2008 3 recommendations on universal coverage reforms to strengthen the primary health care orientation in health systems. Further, these regional health financing priorities will be a focus of the forthcoming 2010 World Health Report, Financing for universal coverage. 2. Universal coverage for health has three dimensions: a population dimension (who is to be covered); a health service dimension (which services are to be covered); and a financing dimension (what share of costs are to be covered by subsidies).4 Figure 1 below captures these aspects. Figure 1: Three ways of moving towards UC Source: WHR 2008 3. This approach to universal coverage allows three reinforcing strategic choices for countries to advance toward equity in health: in the choice of the benefit package, in the selection of priority populations and in public subsidy of cost of care. 1 Bi-Regional Health Care Financing Strategy (2006-2010). WHO SEARO and WPRO. 2 Health Financing Strategy for the Asia-Pacific Region (2010-2015). WHO SEARO and WPRO. 3 WHR 2008 Primary Health Care: Now More Than Ever. WHO Geneva. 4 WHR 2008 Primary Health Care: Now More Than Ever. WHO Geneva. pp 24-34. SEA/RC63/xx Page 4 Health financing in the South-East Asia Region 4. As illustrated by Figure 2, countries in the Region are at different levels in terms of equitable financing through a mix of government expenditure and social insurance. Figure 2: Health financing in the South-East Asia Region (2009) Source: NHA 2009 Source: NHA 2009 5. Significantly, as Figure 3 indicates, the Region as a whole has the highest proportion of total health expenditures from out-of-pocket payments—the most regressive form of health financing, which is associated with high catastrophic spending on health as well as impoverishment (Figure 4). 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Ti m o r - L es t e Ba n gl a d e sh I n di a My an m a r Ne p a l Bh ut an I nd o n e s ia T h a ilan d DP RK M a l d i ve s Sr i La nk a P e rc e n tage of E x p e n d iture Government Expenditure Social Security Expenditure Out of Pocket Expenditure Other Private Expenditure SEA/RC63/xx Page 5 Figure 3: Out of pocket spending on across regions (2005) Source: WHO 2005 Figure 4: Health-related catastrophic health spending and impoverishment (2007) Source: K Xe et al 2007 6. In addition to the central financing issue of high out-of-pocket payments, a regional health financing strategy for universal coverage must take into account three further challenges with regard to the context, systems and epidemiology: SEA/RC63/xx Page 6 (1) A large and poor informal sector that is most vulnerable to the high cost of access to care; (2) A large and mostly unregulated private sector that dominates provision of care; and (3) An increasing burden of non-communicable disease requiring high-cost individual care. Health financing sub-functions 7. How resources are collected and pooled in a health system impacts both the volume of resources available—and hence progress on each dimension of universal coverage—as well as equity. A key aspect is separating the contributions of households from their access to care. Out– of-pocket payments directly link access to care to ability to pay; pre-payment financing mechanisms, on the other hand, allow these to be separated, and hence have the potential to provide a subsidy for access for priority populations such as the poor and the elderly. 8. General government revenues and insurance constitute the main pre-payment options for financing health. Of these, revenue-based systems are the most equitable, as associated tax structure in countries is usually progressive. Further, governments have full control over these public resources and may employ them to advance on universal coverage in line with national health policy decisions. Of course, public investment in health will be constrained by the overall resource envelope, the priority given to health and the ministry of health’s capacity to negotiate its budget. 9. Social health insurance schemes are the next best option. These are mandatory contributions based on payroll or income, but with the same benefits to all members. However, it is difficult to capture the informal sector in such schemes, and an effective mix social insurance with general revenues may be needed to achieve universal coverage under such a plan. Community-based health insurance for the informal sector has been suggested as an interim measure to institutionalize the principles of social insurance. It is important to underline the short- and medium-term financial feasibility of such schemes; both contributions and pools are small—and, consequently, the size of the benefit package offered is small as well. Private health insurance is recommended as an optional top-up protection– it does not lend itself as a social protection mechanism as contributions are based on individual risk ratings and linked to differential benefits. 10. Once resources for health have been collected and pooled, they must also be used in the most efficient way with respect to purchase of services. Alternative provider payment methods are relatively unexplored in countries of the Region as an incentive mechanism to improve performance in the public sector as well as to engage the private sector in the national health agenda. Line-item budgets are used in the public sector in most countries and fee for service in the private sector. However, neither is an effective choice for influencing service provision or cost containment to improve the efficiency of the health system. With adequate monitoring and regulation, a combination of the capitation contracting model and diagnostic related groupings SEA/RC63/xx Page 7 (DRGs) with global budgets has demonstrated a potential to contain costs and improve performance. Practical steps towards universal coverage 11. Figure 5 illustrates a practical move towards universal coverage starting from a point of limited protection in a system financed mainly by out-of-pocket payments, to universal coverage through prepayment options. Figure 5: Practical steps towards universal coverage Source: Carrin et al 2008 12. This is the “squeeze from top” approach: initially, there is a limited formal sector to contribute to social insurance, but as the economy grows, the proportion of this segment of the population rises as well—squeezing down on the informal sector and increasing the contributory base for the social insurance pool. At the same time, some of the poor enter the informal sector and participate in community-based financing initiatives. But for a smooth transition, efforts must be made to harmonize different schemes from the design stage, especially benefit packages and provider payment mechanisms, so as to minimize tensions when consolidating social protection for universal coverage. Also, throughout this transition and with the achievement of universal coverage, there remains an important albeit changing role for general government revenues—to subsidize target groups or care, notably preventive and promotive services. Recommendations 13. In light of the issues and options discussed above, Member States and WHO-SEARO are requested to consider the following recommendations: SEA/RC63/xx Page 8 (1) To conduct a series of technical assessments in Member States on the health-care financing situation, with a view toward identification of strengths and gaps in achieving universal coverage, and to compile a regional report. This may be done through the platform and technical contributions in the area of the Health Economics and Financing Observatory established by SEARO. (2) To draft a South-East Asia regional strategy on universal coverage, based on evidence from the technical reviews. (3) To convene regional consultations in order to finalize the South-East Asia regional strategy. (4) To submit the South-East Asia regional strategy on universal coverage for consideration by the Sixty-fourth Regional Committee in 2011 in order to take further action. References K Xu, D Evans, G Carrin, A Aguilar, P Musgrove, T Evans. (2007). ‘Protecting Households from Catastrophic Health Spending.’ Health Affairs, 26, no.4 (2007): 972-983. Carrin, guy, Inke Mathauer, Ke Xua & David B Evans ‘Universal coverage of health services: tailoring its implementation’. Bulletin of the World Health Organization November 2008, 86 (11). WHO 2009. Health Financing Strategy for the Asia-Pacific Region (2010-2015). WHO SEARO and WPRO. WHO 2008. World Health Report. Primary Health Care: Now More Than Ever. WHO Geneva.