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Technical briefs for achieving the medium-term health care finacing strategic targets in the WHO Western Pacific Region (2008)

31 décembre 2008 Organisation mondiale de la santé

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WHO Library Cataloguing in Publication Data 7HFKQLFDOEULHIVIRUDFKLHYLQJWKHPHGLXPWHUPKHDOWKFDUH¿QDQFLQJVWUDWHJLFWDUJHWVLQWKH:HVWHUQ3DFL¿F Region (2008) 1. Delivery of health care – economics. 2. Health care economics and organizations. :HVWHUQ3DFL¿F,:RUOG+HDOWK2UJDQL]DWLRQ5HJLRQDO2I¿FHIRUWKH:HVWHUQ3DFL¿F ,6%11/0&ODVVL¿FDWLRQ:$ © World Health Organization 2008 $OOULJKWVUHVHUYHG The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the World Health Organization concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Dotted lines on maps represent approximate border lines for which there may not yet be full agreement. 7KHPHQWLRQRIVSHFL¿FFRPSDQLHVRURIFHUWDLQPDQXIDFWXUHUV¶SURGXFWVGRHVQRWLPSO\WKDWWKH\DUHHQGRUVHG or recommended by the World Health Organization in preference to others of a similar nature that are not mentioned. Errors and omissions excepted, the names of proprietary products are distinguished by initial capital letters. The World Health Organization does not warrant that the information contained in this publication is complete and correct and shall not be liable for any damages incurred as a result of its use. 3XEOLFDWLRQVRIWKH:RUOG+HDOWK2UJDQL]DWLRQFDQEHREWDLQHGIURP0DUNHWLQJDQG'LVVHPLQDWLRQ:RUOG+HDOWK 2UJDQL]DWLRQ$YHQXH$SSLD*HQHYD6ZLW]HUODQGWHOID[H PDLOERRNRUGHUV#ZKRLQW5HTXHVWVIRUSHUPLVVLRQWRUHSURGXFH:+2SXEOLFDWLRQVLQSDUWRULQZKROHRUWR translate them – whether for sale or for noncommercial distribution – should be addressed to Publications, at the DERYHDGGUHVVID[ HPDLOSHUPLVVLRQV#ZKRLQW)RU:+2:HVWHUQ3DFL¿F5HJLRQDO3XEOLFDWLRQVUHTXHVWIRUSHUPLVVLRQWR UHSURGXFHVKRXOGEHDGGUHVVHGWR3XEOLFDWLRQV2I¿FH:RUOG+HDOWK2UJDQL]DWLRQ5HJLRQDO2I¿FHIRUWKH :HVWHUQ3DFL¿F32%R[0DQLOD3KLOLSSLQHV ID[HPDLOSXEOLFDWLRQV#ZSURZKRLQW

Acknowledgements Foreword Abbreviations Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Ensuring Adequate and Sustainable Health Financing Arrangements . . . . . . . . . . . . . . . . . . . . . . . General taxes . . . . . . . . . . . . . . . . . . . . . Earmarked or hypothecated taxes . . . . . . . . . Social health insurance . . . . . . . . . . . . . . . Medical savings accounts . . . . . . . . . . . . . . User fees . . . . . . . . . . . . . . . . . . . . . . . External funding . . . . . . . . . . . . . . . . . . . ȱ ¢ȱȱȱȱę . . . . . . . Societal consensus and public acceptance. . . . . National health accounts . . . . . . . . . . . . . . Reducing Out-of-Pocket Payments and Reducing Financial Barriers . . . . . . . . . . . . . . . . . . . . . ȱ ¢ȱę . . . . . . . . . . . . . . . . Targeted public subsidies . . . . . . . . . . . . . . Social health insurance as a strategy for reducing out-of-pocket expenditures . . . . . . . . . . Waivers and exemptions . . . . . . . . . . . . . . Social safety nets . . . . . . . . . . . . . . . . . . . Ĝ¢ȱȱěȱȱ ȱȱ ȱ ȱȱȱĜ¢ . . . . . . . . . Service provision and payment . . . . . . . . . . ȱ ǰȱęȱȱȱ . Selected Country Papers . . . . . . . . . Cambodia . . . . . . . . . . . . . . . China . . . . . . . . . . . . . . . . . Indonesia . . . . . . . . . . . . . . . Malaysia . . . . . . . . . . . . . . . Philippines . . . . . . . . . . . . . . Thailand. . . . . . . . . . . . . . . . Mongolia . . . . . . . . . . . . . . . Lao People’s Democratic Republic Viet Nam . . . . . . . . . . . . . . . Kyrgyzstan . . . . . . . . . . . . . . Republic of Moldova . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Contents

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. 3 . 3 . 4 . 6 . 9 . 9 10 12 13 14

. . . . . 16 . . . . . 20 . . . . . 21 . . . . . 23 . . . . . 24 . . . . . 27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 28 29 30

. 32 . 28 . 38 . 44 . 57 . 63 . 71 . 82 . 88 . 108 . 113 . 118

Acknowledgements

he World Health Organization acknowledges the contribution of Dr Maria Ofelia Alcantara of the Philippines and Professor Soonman Kwon of the Republic of Korea, and appreciates the ěȱȱȱ¡ȱ ȱȱ¢ȱȱȱȱ ȱ Interregional Meeting on the Implementation of the Strategy on ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ South-East Asia Regions held in Ulaanbaatar, Mongolia, in 2006. Technical input was provided by Mr Dorjsuren Bayarsaikhan and editorial work by Ms Kimberly Chase Fullerton.

he WHO Interregional Meeting on the Implementation of the Strategy on Health Care Financing for Countries in the ȱ ęȱ ȱ Ȭȱ ȱ ȱ ȱ ȱ ȱ Ulaanbaatar, Mongolia, from 28 to 31 August 2006. The meeting ȱ Ĵȱ ¢ȱ řşȱ ȱ ¡ȱ ȱ ŗŝȱ ȱ ȱ ȱǰȱȱ ȱ ȱȱęȱ¡ȱȱ ȱ ȱȱȱ ȱȱĜȱȱȱȱ ǰȱ ǰȱ Ȭȱȱ ȱ ȱ ȱ ęǯȱ ȱ Observers from the Ministry of Health of Mongolia and experts from international agencies, such as the Asian Development Bank (ADB), Health Care for the Poor (HEMA), the Japan International Corporation of Welfare Services (JICWELS), GTZ (the German Development Agency), the Organisation for Economic Cooperation and Development (OECD) Regional Centre in the Republic of Korea; and the United Nations Economic and Social Commission ȱȱȱȱęȱǻǼǰȱȱȱȱ to the discussion and outcome of the meeting. ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ strategies from global, regional and national perspectives by ȱ¢Ȭęȱȱȱęȱǰȱȱ and experiences. The meeting developed a strategic action frame ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ resources; reduce out-of-pocket health expenditures and remove ęȱ ȱ ȱ ȱ ǲȱ ȱ ȱ ȱ Ĝ¢ȱ ȱ ěȱȱȱȱęǯȱ WHO Regional Director ȱȱȱę

Foreword

Abbreviations

ADB AFD AMC APVVP BOR BTC CBHI CPA ȱ CUP DFID ȱ ȱ GDP GFATM GTZ HEF HMO HNI HSMP HSRA ȱ ILO JICWELS KASAPI km2 LIC MDG MHIF MOU MSA NGO NHA NHI NHIP

Asian Development Bank Agence Française de Développement Advance Market Commitment Andhra Pradesh Vaidya Vidhana Parishad Bed occupancy rate Belgian Development Cooperation Agency Community-based health insurance Complimentary package of activities ȱȱȱęȱ Contract unit of primary care Department for International Development ȱȱĴ ¢ȱȱȬęȱ ȱ¢ Gross domestic product Global Fund to Fight AIDS, Tuberculosis and Malaria German Development Agency Health equity fund Health maintenance organization Healthnet International Health sector master plan Health sector reform agenda ȱęȱ¢ International Labour Organization Japan International Corporation of Welfare Services Kalusugan sigurado at abot-kaya sa PhilHealth Insurance Square kilometre Low-income card Millennium Development Goals Mandatory health insurance fund Memorandum of understanding Medical savings account Nongovernmental organization National health account National health insurance National health insurance programme

NHS ȱ OD PhilHealth POGI RCMS RDF RMAS SHI SSS SWAp TB UNFPA UNICEF UNTFHS URC USAID VHC WHO

National health service ȱ ȱ¢ȱĜ Operational district Philippine Health Insurance Corporation PhilHealth Organized Group Initiative Rural cooperative medical scheme Revolving drug fund Rural medic-aid scheme Social health insurance Social health insurance scheme Sector-wide approach Tuberculosis United Nations Population Fund United Nations Children’s Fund United Nations Trust Fund for Human Security University Research Company United States Agency for International Development Voluntary health card World Health Organization

he WHO Strategy on Health Care Financing for Countries of ȱȱęȱȱȬȱȱȱǻŘŖŖŜȮŘŖŗŖǼǰȱ ȱȱŘŖŖśȱ¢ȱȱȱȱȱęĞ¢Ȭ¡ȱȱȱȱ ȱĴȱȱȱȱęǰȱȱȱȱ ęȱ ȱ ȱȱ ȱ ȱ ęǯȱ ȱ ¢ȱ ȱ ȱ ǻŗǼȱ increase investment and public spending on health; (2) achieve universal coverage and strengthen social safety nets; (3) develop prepayment schemes, including social health insurance (SHI); (4) support the national and international health and development process; (5) strengthen regulatory frameworks and ȱǲȱǻŜǼȱȱȱȱȱęȱ policy development and implementation; and (7) strengthen monitoring and evaluation. The WHO interregional meeting held in Ulaanbaatar, Mongolia, in August 2006 discussed the implementation of the Strategy. The meeting focused on three main issues: (1) ensuring adequate and ȱ ȱ ęȱ ǲȱ ǻŘǼȱ ȱ ȬȬ ȱ ǻǼȱ ¡ȱ ȱ ȱ ęȱ ǲȱ ȱ ǻřǼȱ ȱ ȱ Ĝ¢ȱ ȱ ěȱ ȱ ȱ ȱ ęǯȱȱȱȱ¡ȱȱȱȱȱȱ three important issues, with additional information on international experience and evidence. Selected country papers presented at the meeting are also discussed.

Background

Ensuring Adequate and Sustainable Health Financing Arrangements

ȱȱȱ¢ǰȱęȱȱȱȱȱanism to ensure adequate and sustainable health care with equitable access for the entire population. The Regional Strategy on Health Care Financing proposes that low- and middle-income ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ śƖȮŝƖȱ ȱ GDP. The medium-term target also includes sustained increases in per capita health spending through public health investment. The Strategy recommends increased public spending on health by an additional 1% of GDP as minimum and sustained rising public ȱ ȱ ȯȱ ȱ ȱ śŖƖȮŝŖƖȱ ȱ ȱ ȱ spending by 2010.

The share of the government budget allocated to health care is a measure of its priority compared with other claims on government resources. In principle, the health budget share can vary from year to year, but the target is to increase health spending overall. This is an important policy objective for many developing countries where total health spending is relatively low. The health sector in these countries needs additional investments to ensure that necessary health services are available for the entire population. The International Monetary Fund (IMF) introduced the concept of ȃęȱ Ȅǰȱ ęȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ to provide resources for desired purposes without prejudice to the ¢ȱ ȱ ȱ ȱ ęȱ ǯȱ ȱ ȱ ȱ ȱȱęȱȱȱȱȱ¡ȱǰȱȬ£ȱ expenditures, establish social health insurance, and increase borrowing and the receipt of grants. Revenue mobilization potenȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ŗŚƖȱ ȱ central government tax revenues as a percentage of GDP for lowincome countries, 16% for middle-income countries and 22% for upper-middle-income countries. In countries with low tax ratios, ȱȱȱȱȱęȱǯ1 As mentioned above, the spending levels of some countries are Ĝȱȱȱȱȱǯȱȱǰȱȱȱ need to increase public investment and at the same time strengthen public expenditure management to meet key social and ȱǯȱȱĴȱȱȱȱȱȱȱ ȱ ȱ ěȱ ȱ ȱ ȱ ȱ ¡£ȱ ȱ outcomes. In reality, most developing countries have the potential to improve population health outcomes by rationalizing the ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ Ğȱ favours high- and middle-income residents in urban areas, while those in rural areas receive fewer services. ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ resources in disease prevention and health promotion are cost 1

ȱ ǰȱǯȱȱȱȱȱęȱȱȱȱȱǯȱ ȱ Policy and Planning, 21 (2) 2006.

2 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

ěȱȱȱȱȱǯ2ȱȱǰȱěȱȱ scale up access to necessary interventions to prevent a larger number of avoidable deaths in low- and middle-income countries need to be continued. A scaled-up response will require not only a major increase in funding for health, but also strong commitment ¢ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ¢ȱ and inequity, together with broad support from the international community and partners. The WHO Commission on Macroeconomics and Health (CMH) estimated that developing countries need to spend US$ 35 per person to scale up essential health interventions that would save eight million lives by 2010.3 ȱȱ¢ǰȱȱȱȱȱęȱȱȱment has been recognized and vital commitments have been made at various levels. For example, African heads of state in 2001 Ĵȱȱȱȱȱ¢ȱȱȱȱ that resources are made available for the health sector. They agreed to allocate at least 15% of their national annual budgets to the health sector.4 Maȱ ȱ ęȱ ȱ ¢ȱ ȱ ȱ ȱ

general taxation, earmarked taxes, social and private insurance, ¢Ȭȱ ęǰȱ ¡ȱ ǰȱ ȱ ȱ sources, e.g. user fees. However, applied policy studies are still ǰȱȱȱȱęȱȱȱĞȱĚȱ¢ȱ opinions, rather than analysis of reliable data, information and evidence. ¢ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ěȱ ȱ ȱ Ĝȱ ȱ ěȱ £ȱ ȱ ǰȱ ȱ ȱ ȱ Ěȱ ȱ ȱ ȱ ȱ ways to mobilize those resources equitably. Although the princiȱ ȱ ȱ ȱ ȱ ęȱ ȱ ¢ȱ ȱ ȱ ¢ ǰȱȱ¡ȱ ȱ ȱȱȱęȱȱ ȱę¢ȱȱȱěǯȱȱȱ¢ȱȱǰȱȱęȱȱȱȱȱȱȱȱ¢ȱ £ȱȱȱȱęȱǰȱȱȱ excessive burden of out-of-pocket payments driven by user fees, ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ and enhance the accountability of institutions responsible for managing resources and service provision. Evidence suggests that for most developing countries, out-ofȱ ¢ȱ ȱ ȱ ȱ ęȱ ȱ ǰȱ ¢ȱ impacting low-income and other vulnerable population groups as any single illness can drive them into poverty. Government 2 ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ Ȭěȱ ¢ǰȱ 2003. 3

ȱ ȱȱ ǯȱȱ¢ȱȱȱęȱȱȱ ǰȱŘŖŖřǯ

4 Abuja declaration on HIV/AIDS, TB and other related infectious diseases, Addis Ababa, Organization of African Union, 2001.

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 3

spending on health is low and resources are limited when political will and government commitment to invest in health services lack transparency. This scenario is most obvious when scarce government budgets are skewed towards hospital care rather than public health interventions. ȱȱȱȱȱȱ ȱȱȱęȱȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ¢ȱ ȱ £ȱ ȱ ęȱ resources for health care, but also its potential to maintain and ȱ ȱ ¢ǰȱ ǰȱ ǰȱ ¢ǰȱ Ĝ¢ȱ ȱ ěȱȱȱȱ¢ǯȱȱȱȱȱȱ ǰȱȱęȱȱȱȱ¢ȱ£ȱ as public and private. Public sources refer to government and quasi-government revenues collected through general income, ǰȱ ȱ ¡ȱ ȱ ¡ȱ ęȱ ǯȱ ȱ Tax revenue is the major source of funding for any government. For example, compulsory levies in the form of taxes and social contributions accounted for around 90% of total government revenue in the European Union in 2004.5 Taxes can be levied directly ȱǰȱǰȱȱęȱȱ¢ȱȱȱ and commodities. Direct and indirect taxes can be levied at the national, regional or local levels. Indirect taxes can be general, ȱ ȱ ȱ Ȭȱ ¡ǰȱ ȱ ȱ ȱ ęȱ ǰȱ ȱ ȱ an excise tax. Social or compulsory health insurance contributions ȱĞȱȱȱȱ¢ȱ¡ȱȱ¢ȱǯȱȱȱ following provides brief descriptions of major public and private ȱęȱȱȱȱ¢ȱȱȱȱ mobilization.

General taxes

General taxation is the principalȱȱȱęǰȱȱȱ ȱȱȱȱę¢ǯȱȱȱȱȱ general taxation are its broad revenue base—the tax revenue can be drawn from a diversity of sources, mechanisms, and tradeěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ǯ6 In developing countries, general tax revenues come from many sources including duties on imports and exports. Countries that export oil and minerals potentially have more revenue than those with agriculturally-based economies. The second most important ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ęǰȱ ȱ ¢ȱ more revenues than personal income taxes, the third most important source. General tax revenues may not always be a stable source for health ȱęǰȱȱȱȱǱȱȱ ȱȱ¢ȱquently given to health care in national budget decisions; the instability of developing countries’ economies, especially those heavily dependent upon taxes on imports and exports; and the frequent 5 6

Tax revenue in the EU. Statistics in focus. Economy and Finance, 2/2006.

Funding health care: options for Europe. European Observatory on Health Care System Series, 2002.

4 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

use of public expenditure as a tool of macroeconomic adjustment policy. Politics also plays an important role in the allocation of genȱ¡ȱȱȱȱȱȱȱȱȱěȱgrammes. Therefore, funding health care through general taxation is subject to annual budget allocation and public spending negotiations. Hypothecated taxes are earmarked for health care and can be either direct or indirect taxes. They have some advantages over general ¡ȱȱȱ¡ȱȱȱȱȱȱę¢ȱ for health purposes. Earmarked taxes can be assigned to fund certain priority programmes. It may be practical to earmark tax revenues on certain goods and activities that may have adverse health implications, e.g. alcohol, tobacco, and automobile pollution. Sin ¡ȱ ȱ ¢ȱ ȱ ¢ȱ Ĝȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ items will make their purchasing prices higher. With higher prices, consumption of these unhealthy items will be lowered. Therefore, the ill-health consequences from their consumption will be lowered as well. Thus, there would be a fair balance between the tax revenues generated from these unhealthy items and the cost related to the ill-health consequences. Sin taxes can be earmarked at the national level or within a local government area. However, such ȱ¡ȱȱȱĜȱȱȱȱ¢ȱ¢ȱȱ politically unpopular and even regressive because their burden falls disproportionately on low-income groups. %R[1DWLRQDOKHDOWKLQVXUDQFH1+,¿QDQFHGE\JHQHUDOWD[DWLRQ 8QLWHG.LQJGRP+HDOWKFDUHLVFRRUGLQDWHGE\WKH1DWLRQDO+HDOWK6HUYLFH1+6HVWDEOLVKHGLQDQG VXSSOLHVFRPSOHWHKHDOWKFDUHEHQH¿WVIRUDOOFLWL]HQVLQFOXGLQJPHGLFLQHVDQGGHQWDODQGRSWLFDOEHQH¿WV 7KH1+6LVUXQZLWKWD[SD\HUIXQGVDQGLVPDQDJHGE\WKH'HSDUWPHQWRI+HDOWK,WGHOHJDWHVPRVWSDWLHQW FDUHWRRUJDQL]DWLRQVNQRZQDVSULPDU\FDUHWUXVWVZKLFKUHFHLYHRIWKH1+6EXGJHW &DQDGD +HDOWK FDUH LV ¿QDQFHG SULPDULO\ WKURXJK SURYLQFLDO DQG IHGHUDO SHUVRQDO WD[DWLRQ DQG FRUSRUDWH LQFRPH WD[HV 6RPH SURYLQFHV XVH RWKHU DQFLOODU\ IXQGLQJ PHWKRGV HJ VDOHV WD[HV SD\UROO OHYLHV DQG ORWWHU\ SURFHHGV $VVLVWDQFH IURP WKH *RYHUQPHQW LV LQ WKH IRUP RI ¿VFDO WUDQVIHUV &DQDGD¶V PHGLFDUH provides universal, comprehensive coverage for medically necessary hospital and physician services, free of charge at the point of service. 6FDQGLQDYLD +HDOWK FDUH LV EDVHG RQ WKH SULQFLSOH WKDW EHQH¿WV VKRXOG EH JLYHQ WR DOO FLWL]HQV ZKR IXO¿O FHUWDLQFRQGLWLRQVUHJDUGOHVVRIHPSOR\PHQWRUIDPLO\VLWXDWLRQ7KHODUJHVWVKDUHRIWKH¿QDQFLDOEXUGHQLV FDUULHGE\WKHVWDWHDQGLV¿QDQFHGIURPJHQHUDOWD[DWLRQQRWHDUPDUNHGFRQWULEXWLRQV7KHVWDWHLVLQYROYHG LQ¿QDQFLQJDQGRUJDQL]LQJLWVFLWL]HQV¶ZHOIDUHEHQH¿WVWRDIDUJUHDWHUH[WHQWWKDQRWKHU(XURSHDQFRXQWULHV creating taxation systems that have both a broad basis and a high burden. The state or local authorities— UDWKHUWKDQLQGLYLGXDOVIDPLOLHVFKXUFKHVRUQDWLRQDOZHOIDUHRUJDQL]DWLRQV²XQGHUWDNHPRVWVRFLDOZHOIDUH WDVNV&LWL]HQVDUHHQWLWOHGWRDZLGHUDQJHRIVHUYLFHVSURYLGHGE\DXWKRULWLHVDQGERWKKHDOWKVHUYLFHDQG education are free. 6RXUFHV+HDOWK)LQDQFLQJLQ'HYHORSHG&RXQWULHV8QLWHG6WDWHVRI$PHULFD8QLWHG.LQJGRPRI*UHDW%ULWDLQDQG1RUWKHUQ,UHODQG &DQDGD,QWHUQDWLRQDO$SSURDFKHVWR+HDOWK)LQDQFLQJDQG+HDOWK,QVXUDQFH 0LQLVWU\RI)RUHLJQ$IIDLUVRI'HQPDUN&RSHQKDJHQ'HQPDUN&RQGLWLRQVRI/LIH7KH6FDQGLQDYLDQ:HOIDUH0RGHO>2QOLQH@$SULO $YDLODEOHIURP85/KWWSZZZXPGN3XEOLNDWLRQHU80(QJOLVK'HQPDUNNDSDVS

Earmarked or hypothecated taxes

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Social health insurance

Many middle- and high-income countries use health insurance to ęȱ ȱ ȱ ȱ ȱ ȱ ¡ǯȱ ȱ ȱ ȱ ȱ major types of insurance programmes: social health insurance and private health insurance. Social health insurance is regulated by law and government decrees, which stimulate compulsory coverage and premium payment. Premiums are not risk-related and every member is required to contribute according to their ǯȱȱȱȱȱȱȱȱęȱȱ regardless of the premiums paid. Unlike social health insurance, private health insurance membership is selective and premiums are risk-related. Therefore, social health insurance provides more opportunities for pooling health risks and funds that enable indiȱȱȱȱȱȱȱȱȱęȱtrophe associated with illness. Private insurance is subject to such anomalies as moral hazard (the insured becomes less careful in keeping healthy), adverse selection (the sick are more likely to purchase insurance), and cream skimming (only the healthy will be selected and enrolled by the insurance companies). Adverse selection and cream skimming can be easily resolved by making sure that all members of a population become insured. This is normally achievable through social health insurance.

6 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

Social health insurance can insure a portion of the entire populaȱ ȱ ȱ ęȱ ȱ ȱ ǰȱ ¢ǰȱ ȱ ȱǯȱȱ¢ȱȱȱȱȱȱȱęǰȱȱȱ ¢ȱ ęȱ ȱ ¢ȱ ȱ ¢ȱ ¢ȱ employed workers and social insurance contributions imposed on employers. As employers, governments contribute to health insurance schemes as shared premiums for civil servants or as subsidies ȱȱȱęȱȱȱȱȱǯȱ Social health insurance is administered through a variety of government agencies, including ministries of health, labour or social welfare, or quasi-state bodies such as social security organizations. When a single national agency directs the insurance plan, the risks are usually pooled countrywide. Social health insurance has both advantages and disadvantages. Some argue that it promotes high-cost, hospital-based, doctorcentred, curative health care and that it frequently results in inequalities in the quantity and the quality of services between those covered by the plans and those not. Others believe that social health insurance improves equity, access and service utilization by ȱȱȱȱ¡ȱęȱȱȱȱȱ costs. Social health insurance can also reduce budgetary pressures

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on governments and free up resources to devote to rural areas, health promotion and disease prevention. Some social health insurance schemes are responsible for direct provision of services by owning and operating hospitals, clinics and health stations. Compulsory social health insurance mandates everyone to purchase health insurance, and choices may vary from public to private insurance plans. In developing countries, many are employed in the informal sector, a challenge to expanding social health insurance coverage. An important economic activity for the rural population, such employment is characterized by self, family or small cooperative businesses, and much occurs outside tax authorities’ reach. Those employed in the informal sector generally ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ Ĝȱ ȱ ȱ ȱ ęȱ ȱ ȱ ¢Ȭ¢ȱ ǯȱ ȱ ȱ ǰȱ ȱȱĞȱǰȱȱȱȱȱȱ¢ȱȱ premiums based on regular, e.g. monthly, contributions.

8 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

To successfully reach all portions of the population and still be ǰȱȱȱęȱȱȱȱȱ must take all of these challenges and conditions into account. ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ payment schemes to make insurance plans more acceptable and sustainable to the informal sector. ȱ ȱ ȱ ěȱ ¢ȱ Ȭęȱ ȱ Ȭęȱ ȱ companies or plans on an individual or group basis. In some countries, private hospitals sponsor health insurance plans that ěȱȱȱȱȱ ȱȱȱȱȱǯȱȱȱ 1929, the Blue Cross Plan was initiated by Justin Ford Kimball for Baylor University Hospital in Dallas, Texas, as a hospital prepayment plan for teachers. Under private insurance, consumers ¢ȱȱȱȱȱȱȱęȱȱences, and the premium is calculated based on the subscriber’s risk characteristics and the underwriting rules used to select the risk. ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ¡ȱ ęǰȱ ȱ ¡ȱ ȱ ęȱ ǯȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱ ¢ȱ ȱ ȱ ǰȱ and that premium is calculated based on average risks. A limited number of countries have introduced medical savings accounts (MSA), which are another form of dedicated tax. Under MSA, individuals contribute to a personal health savings account on a compulsory basis that can only be used for the health care of ȱ ȱ ȱ ȱ ¢ǯȱ Ğȱ ȱ ȱ ȱ ȱ ǰȱ ȱ person may use a portion of this account for non-health purchases, such as housing or education. MSA provide individuals an incenȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ğȱ avoid certain issues associated with traditional health insurance schemes, such as moral hazard, adverse selection, cream skimming, and others. ȱ ȱ ¢ȱ ȱ ȱ ęȱ ȱ ȱ ¢ǯȱ Like private retirement savings, MSA accrue national savings that

Medical savings accounts

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can then be used for investment projects or to support the stock market. However, MSA are also subject to depreciation like any other investment—even the safest investments can be eroded by Ěȱȱ¢ȱǯȱȱȱȱȱȱȱ¢ȱ limited capacity for risk pool. For example, an individual may develop a very expensive disease, e.g. cancer or liver failure, ȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱ ǯȱ ȱ Thus, many argue that MSA must also be supported by insurance that covers catastrophic health expenditures.

User fees

The mobilization of funds by charging the users of health services has been widely practised in the developing countries of Africa and Asia since the 1980s. World Bank-supported user charges, privatization and decentralization in the health sector were a major means for structural adjustment reform.7 Later, transition economies followed the same path of charging for medical services in publicly owned health facilities. Medical professionals working in the public sector were also allowed to have private practices. However, poorly regulated user fees rarely met the initial expectations of increasing health sector revenues, improving service quality and rationalizing health service utilization. User ȱ ȱ Ğȱ ȱ ȱ ȱ Ȭȱ ȱ Ȃȱ level, without adequate information and analysis of health service costs, household capacities to pay, and impacts of health payments on people’s livelihood. Income that is generated through user fees that are set at higher decision-making levels are rarely retained at provider levels, and therefore, no incentives are provided to improve health care delivery. User fees set at the provider level

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0DGDJDVFDU ,Q XQLIRUP XVHU IHHV ZHUH LQVWLWXWHG DW DOO OHYHOV RI SXEOLF KHDOWK FDUH SURYLVLRQ 7KH UHYHQXHJHQHUDWHGPDGHDVLJQL¿FDQWFRQWULEXWLRQWR¿QDQFLQJRSHUDWLRQDOH[SHQGLWXUHVDQGPDGHJHQHULF HVVHQWLDO GUXJV UHDGLO\ DYDLODEOH DW DFFHVVLEOH SULFHV ,Q WKH IHHV ZHUH VXVSHQGHG UHVXOWLQJ LQ D VLJQL¿FDQWLQFUHDVHLQKHDOWKFDUHXWLOLVDWLRQE\WKHSRRUDQGDQLUUDWLRQDOLQFUHDVHLQJHQHULFGUXJFRQVXPSWLRQ7KHUHIRUHVHUYLFHSURYLGHUVZHUHXQDEOHWRVXVWDLQDYDLODELOLW\RIHVVHQWLDOGUXJVGXHWRODFNRIIXQGV 6RXUFH+RQGD$8VHU)HHV3ROLF\DQG(TXLWDEOH$FFHVVWR+HDOWK&DUH6HUYLFHVLQ/RZDQG0LGGOH,QFRPH&RXQWULHV²ZLWKWKH&DVH RI0DGDJDVFDU7RN\R-,&$KWWSZZZMLFDJRMSHQJOLVKUHVRXUFHVSXEOLFDWLRQVVWXG\WRSLFDOSROLF\SGISROLF\SGI$SULO

World Bank, Financing health services in developing countries: An agenda for reform, Washington, DC, 1987.

10 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

%R[([WHUQDOKHDOWKFDUH¿QDQFLQJLQ&DPERGLD Cambodia allocates a high proportion of its central budget to the health sector. However, government UHYHQXH GRHV QRW HYHQ FRYHU WKH PLQLPXP SDFNDJH RI FDUH¶V FRVW )XQGV SURYLGHG E\ H[WHUQDO ¿QDQFLQJ VRXUFHVH[FHHGIXQGVIURPJRYHUQPHQWUHYHQXHGHPRQVWUDWLQJWKHLPSRUWDQFHDQGLQÀXHQFHRIGRQRUVLQ health sector development. ([SHQGLWXUHVIURPH[WHUQDO¿QDQFLQJVRXUFHVLQZHUHHVWLPDWHGDW86PLOOLRQ0RUHWKDQRQH KDOI ZHUH IURP ELODWHUDO GHYHORSPHQW DVVLVWDQFH RQH WKLUG IURP PXOWLODWHUDO VRXUFHV DQG WKH UHPDLQGHUIURPWKHQRQSUR¿WVHFWRU7KH8QLWHG6WDWHVRI$PHULFDFRQWULEXWHGRQHWKLUGRIWRWDO¿QDQFLQJ DVVLVWDQFH 86 PLOOLRQ GHYHORSPHQW EDQNV 8QLWHG 1DWLRQV DJHQFLHV DQG WKH (XURSHDQ FRPPXQLW\ FRQWULEXWHGDQRWKHURQHWKLUG86PLOOLRQDQGWKHQRQSUR¿WSULYDWHVHFWRUFRQWULEXWHGDSRUWLRQ86 11.2 million). 'RQRU IXQGV ZHUH DOORFDWHG SULPDULO\ LQ IRXU PDMRU DUHDV FRPPXQLFDEOH GLVHDVHV PDWHUQDO DQG FKLOG health, reproductive health and strengthening the health system. Donor priorities were consistent with the KHDOWKVHFWRUDQG&DPERGLD¶V0LOOHQQLXP'HYHORSPHQW*RDOV0'*7KH*RYHUQPHQWDOORFDWHGDERXW RIGRQRUIXQGVWR0'*WDUJHWV :KHQ JRYHUQPHQW SODQV PDWFK GRQRU SULRULWLHV DQG IXQGV DUH DOORFDWHG HIIHFWLYHO\ DQG HI¿FLHQWO\ KHDOWK VHFWRUGHYHORSPHQWLVHQKDQFHG([SHFWHGRXWFRPHVLQWKHFRXQWU\¶VVWUDWHJLFKHDOWKSODQDUHDOVRDWWDLQHG 6RXUFH0LFKDXG&([WHUQDO5HVRXUFH)ORZVWRWKH+HDOWK6HFWRULQ&DPERGLD*HQHYD:+2$YDLODEOHIURP85/KWWSZZZ ZKRLQWPDFURKHDOWKGRFXPHQWVPLFKDXGBDQQH[DSGI

not only escalate health care costs, but also distort the quality of care and challenge professional ethics by generating unnecessary ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ sick patients seeking care. In some situations, user fees have replaced government salaries of health professionals. In these situǰȱȱȱ¢ȱěȱȱ¢ȱǰȱ¢ǰȱǰȱ £ǰȱ ȱ ȱ Ĝ¢ȱ ȱ ěǰȱ ȱ ȱ push an increased number of people into poverty. A study shows that in Asia alone, 78 million people are pushed into poverty every year due to medical care payments.8 In many developing countries, user fee driven, out-of-pocket spending is a large portion of total health expenditures.9 In some situations, user fees play a ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ǰȱ such as those addressing HIV/AIDS. In principle, user fees are advised for certain purposes. One of these purposes is to regulate health-seeking behaviours and minimize tendencies to overutilize costly services. However, people ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ because of the costs. Income from user fees is expected to generate resources for health care, act as a revolving fund for the purchase of necessary medical supplies and medicines, and improve the ¢ȱȱǯȱȬȱ¢ȱǰȱȱȬ¢ǰȱȱĚȱ O’Donnell 0., Van Doorslaer E., Rannan-Eliya R., et al. Who pays for health care in Asia. Equitap Project Working Paper, 2005. 9 8

World Health Statistics 2007. WHO, Geneva.

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 11

rate preset for each visit, and co-insurance all require patients to pay for services. The private sector providers rely on patients’ direct payments for income, unless governments provide some subsidy for delivering essential and public health goods. User fees are widely used in public health facilities. As shown in Box 6, many ways of charging new user fees in public health facilities exist and depend on appropriate administration ȱȱǯȱȱȱȱȱȱȱęȱ ȱȱȱĜ¢ȱȱǰȱȱȱȱsibility and provider accountability, and improve the quality of services and expand coverage. It is important that governments set the maximum ceiling of payments for each health care compoǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ǰȱȱȱ¢ȱęȱȱȱǯ

External funding

External funding support for health in various forms is an imporȱ ȱ ȱ ȱ ęȱ ȱ Ȭȱ ǯȱ ȱ ȱ¢ǰȱĜȱȱȱǻǼȱȱȱȱ been increasing to meet international development targets. The UN International Conference on Financing for Development that took place in Monterrey, Mexico in 2002 discussed the quality, ěȱȱȱĚ ȱȱ ¢ȱȱȱȱȱȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ Ĝȱ ȱ ȱ for a substantial increase in ODA to support developing countries and reach the UN target of ODA as 0.7% of GNP of industrialized countries. The support included eradicating extreme poverty and reducing child mortality, improving maternal health, combating HIV/AIDS, malaria and other diseases.10 Such assistance narrows ȱ ȱ ȱ ęȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ improve health interventions in critical areas without compromising other health services ¢ǰȱȱȱȱȱȱȱȱȱ ȱęȱ methods. International organizations and donor countries proȱȱȱȱȱęȱȱǯȱȱȱ June 2005, an international donor conference in Berlin proposed a contribution levied on plane tickets to support health programmes, including HIV/AIDS and other pandemics. The United Kingdom proposed an International Finance Facility (IFF) to provide addiȱęȱȱȱǰȱȱȱȱȱ a long-term basis. Under IFF, donors make long-term pledges on ȱ¢ȱȱȱǯȱȱęȱȱ ȱȱȱ to ensure that every child has primary schooling, the rate of infant and maternal mortality is improved, HIV/AIDS is radically reduced and poverty is halved by 2015.

Ȃȱ ȱ ȱ ȱ ǻ¢Ǽǯȱ ȱ ȱ Ǳȱ Ǳȱ ĴǱȦȦ www.europa-eu-un.org/articles/en/article_1144_en.htm

12 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

Since 2001, the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM) has been supporting developing countries ěȱ¢ȱȱǯȱȱȱȱȱ¢ȱȱ by the G8 countries. In February 2007, through the initiative of the G8 and other international community leaders, the advance market commitment (AMC) was launched. The AMC provides ęȱȱȱȱȱ¢ȱȱȱȱȱ and development on new vaccines to combat diseases that dispro¢ȱ ěȱ ȱ ǯȱ ȱ ȱ ȱ ment of donor countries to subsidize the purchase of new vaccines Ğȱ ¢ȱ ¢ȱ ǰȱ ȱ ȱ Ȃȱ ǰȱȱȱȱȱȱȱȱęȱ and market barriers in developing new vaccines for diseases ¢ȱ ěȱ ȱ ȱ ȱ ȱ ȱ capacities. ¢ȱȱ ¢ȱęȱȱȃȱ¢ȱȱȱ¢ȱȱ ȱęȱȱĜ¢ȱ¢ȱȱȱȱȱ ensure enough resources to continue activities with long-term ęǯȄȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ¢ǰȱ ȱ bility, and organizational and managerial sustainability. These components are relevant to ensure sustainable health care ęȱ ȱ ¢ȱ ȱ ¢ǯȱ ȱ ¢ȱ ȱ ȱ depend on future economic and income growth, domestic resource £ǰȱ ¡ȱ ȱ ȱ Ĵȱ Ĵȱ ȱ ȱ ¢ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ Ĝ¢ȱ ȱ ȱ spending. The decline of developing countries’ economies in the 1980s led to economic structural adjustments, declining donor assistance and a decrease in government spending on health. ǰȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ Ěȱ ȱ ¢ȱ ȱ ȱ ǯȱ ȱ ¢ȱ ěȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ largely dependent on the international community’s contributions. ȱ¡ȱęȱȱęȱȱȱǰȱ ȱȱȱȱȱȱȱȱȱȱęȱȱ external sources by increasing the mobilization of domestic resources. ȱ Ğȱ ȱ ȱ ȱ ȱ ęȱ ȱ able for the health sector. Therefore, political and government stability in developing countries largely ensure continued support ȱȱȱȱȱȱęǯȱȱȱȱȱĚȱȱȱȱęȱȱǯȱ Health care should not be limited to political and government agendas only—it should also feature a social agenda by individuals, organized groups and civil societies. Good health is every individual’s right, and as such, governments must respect this basic right. Individuals must remind their leaders of the need to

Sustainability of health care nancing

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 13

access quality health care, and as a group, a stronger and louder voice is heard. When individuals are vigilant about their right to quality health care, politics can be neutralized. ȱȱęȱȱȱȱ¢ȱȱȱȱ sustainable health care system, a health programme’s success also depends on its organization. Organizational sustainability hinges on such factors as political and market force change, managerial and technical capabilities and trained health professionals. Many developing countries continue to struggle with health care ęȱ ȱ ȱ ȱ ȱ ȱ ¡ǯȱ ǰȱ ȱ ȱ ȱ need to educate national and subnational governments in health ȱęǯȱȱȱȱȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ improve the process of developing sustainable health care ęȱ ǰȱ ȱ ȱ ȱ ǯȱ ȱ ȱ analytical skills and managerial abilities at all levels of developing ȱȱęȱȱȱȱǯȱ

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14 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

ȱ ȱ ęȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ broad consensus among relevant stakeholders and participation of the population, civil society forces and other relevant actors in the health sector. For example, extending existing SHI systems or introducing new systems requires a series of dialogues with social partners—employers, workers, government institutions, health service providers, professional associations and other social groups, e.g. ȱȱȱęȱǯȱ Sometimes, cultural values may also impede the acceptance of ȱȱęȱ¢ȱȱǯȱȱȱȱȱǰȱ ȱ ȱ ȱ ȱ ¢ȱ ěȱ Ȃȱ ȱ ȱ ȱ ǯȱ ȱ ¢ǰȱ ȱ ȱ ¢ȱ ǰȱ ȱ Ěences the successes and prospects of reform measures. If consumers are not persuaded by good quality health services, cannot use them or if the availability of services and their usage is restricted, the population will be less willing to support and

Societal consensus and public acceptance

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TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 15

ȱ ȱ ȱ ȱ ęȱ ǯȱ ¢ȱ ȱ ȱ ensure that there are adequate resources to make quality health ȱ ȱ ȱ ȱ Ĝȱ ȱ ȱ ȱ ȱęȱȱȱȱǯȱ ¢ǰȱ ȱ ȱ ȱ ęȱ ȱ ȱ developing countries need a coherent sectoral, multisectoral and interdisciplinary approach that takes appropriate account of the complex interplay between relevant state authorities, institutions, health service providers and the population.

National health accounts

National health accounts (NHA) allow countries to generate and ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ¡ȱȱęǯȱȱ ¢ȱȱȱȱȱ ȱ ęȱ ȱ ȱ ȱ Ȭȱ ǰȱ ¢ȱ ȱ ȱȱȱ¢ȱȱęȱȱȱȱęaries of national spending. This type of information explains the function of any health system and how to make health care ęȱȱȱǯȱ NHA contain descriptive statements as well as reference documents that can be used to mobilize additional resources and to improve equity and access to health services by reducing excessive ęȱ ȱ ȱ ȬȬȱ ¢ȱ ǯȱ ȱ ȱȱ ȱȱȱ¢ȱȱȱȱȱȱěȱȱ Ĝ¢ȱȱȱȱȱǯȱȱ¡ǰȱȱ declining gains in life expectancy from increasing health expenditures can be tracked, raising questions about what is being purchased and what the appropriate level of national spending for health is. Subaccount levels of NHA can also track resources for ęȱ ȱ ǰȱ ǯǯȱ Ȧǰȱ ȱ diseases and medicines’ costs. ȱȱęȱȱȱȱȱȱȱ ȱ¢ȱęȯȱ ȱȱȱęȱ varies in each country. In 1993, the World Bank estimated that the minimum requirement for essential public health services in lowincome countries is US$ 12 per capita.11 In 2001, the WHO Commission on Macroeconomics and Health revised early estimates to propose US$ 35 per person for low-income countries.12 In this regard, NHA could help to provide detailed analyses on ȱ ȱ ęȱ ȱ £ȱ ȱ ȱ ȱ ȱ ȱȱȱȱęȱ¢ǯ

11 Smith J., and Subbarao K. What Role for Safety Net Transfers in Very Low Income Countries? Washington, DC, World Bank, 2003 (Social Protection Discussion Paper Series, No. 0301). 12

WHO, Geneva. National Health Accounts [Online]. April 2007.

16 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

educing out-of-pocket payment is one of the three main focus areas of intervention. The Strategy on Health Care Financing ȱȱȱȱȱęȱȱȬȱȱȱ proposes to reduce out-of-pocket payments to below or around 50% of total health spending for those that currently spend more than 70%, and below 40% for those that currently spend above 50% to below 70%. The Strategy recommends that Member States ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ ȬȬ ȱ ¢ȱ ȱ ȱ ȱ řŖƖȱ ȱ ȱ ȱ ęǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ŘŖƖȮřŖƖȱ ȱ ȱ ¢ȱ ¢ȱ ęȱ ȱ ȱ ȱ ȱ ǰȱ ȱ řŖƖȮśŖƖȱȱȱȱȱ¢ȱŘŖŗŖǯȱȱȱȱȱǰȱȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ęȱ ȱ ȱ ȱ 70% or more and private out-of-pocket payments to remain 30% or less.

Reducing Out-ofPocket Payments and Removing Financial Barriers

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ȱ ȱ ęȱ ǰȱ ȱ ȱ ȱ ȱ ¡ȱ with out-of-pocket payments, are associated with various fees for medical treatment, services and goods. Out-of-pocket payments ȱȱȱęȱȱȱ Ȭǰȱȱȱ poor population groups to access needed health services, as health ȱ ȱ Ğȱ ȱ ȱ ȱ ȱ ¢ǯȱ ȱ ¢ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱĜȱȱ¢ȱȱǰȱȱȱȱǯȱȱ Low-income countries bear the highest burden of out-of-pocket ¢ȱ ȱ ęȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ŗǰȱ ȬȬ pocket payments in total health expenditures account for more than 70%, as compared to 15% in high-income countries. In most high-income countries, health expenses are raised largely through prepayment mechanisms, e.g. taxes or health insurance premiums, with the potential for cross-subsidy and protecting households ȱęȱǯ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ǰȱ health spending is catastrophic for more than 80 million people and causes the impoverishment of nearly 40 million people every year.13ȱ ȱ ȱ ȱ ȱ ȱ Řǰȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȬȬȱ payments. Therefore, it is increasingly recognized that policies to reduce poverty need to include measures to reduce out-of-pocket payments and catastrophic health expenses.14 The dire situation associated with out-of-pocket payments can be ȱȱȱ¢ȱęȱȱȱ from general taxation and social health insurance. As shown in ȱřǰȱȱȱȱȱȱȱȱȱęȱȱ relatively low, thus the majority of the population is inadequately 13

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O’Donnel,0., E. Van Doorslaer, Rannan-Eliya et al. Who pays for health care in Asia. Equitap Project Working Paper ,2005 Sekhar B., Bhushan I., Catastrophic out-of-pocket payments in India: Evidence from National Sample Survey, 2. Asian Development Bank. 14

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 17

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ȱ ȱ ęȱ ȱ ¢ȱ ȱ ȱ ȱ ¢ȱ cross subsidies is feasible with prepayment schemes. However, the prepayment schemes can be assessed in terms of progressivity. Extension of coverage of the population by prepayment schemes should use the respective advantages and complementaries of ¡ȱ ȱ ěȱ ȱ ǯȱ ȱ ¡ȱ ȱ that neither compulsory SHI nor voluntary community-based health insurance (CBHI) can achieve universal coverage alone. Ĵȱǰȱȱȱ¢ȱ ȱ¢ȱȱ voluntary health insurance schemes, as well as developing appropriate systems to merge them and compensate for each others’ weaknesses, are needed. This would require subsidies for the poor and disadvantaged, conversion of direct payments into prepayments with voluntary insurance schemes, family coverage for the insured and use of appropriate provider payment methods. Studies show that catastrophic health expenditures can occur in all countries at all stages of development. It is likely that catastrophic incidences are high in countries where available health services require out-of-pocket payments, households have low capacity to pay and there is lack of prepayment or risk pooling.15 Countries reducing out-of-pocket payments and catastrophic expenses improve their chances of reducing poverty. The strategies to reduce out-of-pocket payments may include various measures aimed at extension of population coverage through prepayment, protection of the poor and disadvantaged, designing an approȱ ęȱ ȱ ȱ ȱ ¡ǰȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ Ȭȱ ȱ ȱ ȱ ȱ ȱȱȱ¢ȱĜ¢ǯȱ Proactive, innovative and coordinated actions are needed to enhance overall awareness among policy and decision makers about the poverty impacts of out-of-pocket payments and catastrophic health expenses. It is critically important that donors and international development agencies also understand the magnitude of health payments that undermines many development objectives. An important factor in this process is political will and ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ęǰȱ rather than short term interests coming from time bound political appointments. Some countries may need policy dialogue mechanisms to discuss, translate and monitor their economic growth relative to social gains, such as reductions in out-of-pocket payments, catastrophic expenses and poverty.

ȱȱ ȱ ęȱ ¢ȱ ȱ ȱ ȱ ȱ expenditure. Technical Briefs for Policy-Makers. Number 2, 2005. World Health Organization.

18 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

The connection between ill health, health care costs and poverty ȱ Ĵȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ǰȱ Ĝǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ making low-income and vulnerable populations poor, and the poor become poorer. Therefore, developing countries must confront the adverse impacts of health expenditure by reducing outȬȱ ¢ȱ ȱ ȱ ęȱ ȱ ȱ ȱ needed for health care services. Reducing the risks of diseases with increased disease prevention and health promotion will prevent people from facing high health care payments. Appropriate purchasing and contracting capacities also can ensure cost ěȱȱ¢ȱȱȱȱȱěȱǯȱȱěȱ investment in health and the rational use of available resources will result in reductions of health payments and enhancing the population’s health. In turn, a healthier population will generate incremental gains in economic growth and its well-being. Ȃȱȱȱȱȱęǰȱȱȱȱ ȱ ȱ ȱ ȱ ǯȱ ȱ Ȭȱ ęȱ approach necessitates that all governments increase public investments and strengthen stewardship actions. In addition, it is necessary to address and solve problems associated with shrinking ȱ ȱ ǰȱ Ĝȱ ¢ȱ ¢ǰȱ ȱ ȱ quality and the imposition of user fees at all levels. Today, many countries aim to increase government health care funding, localizing the management of selected health services and improving government spending on the poor’s health needs. Governments have employed various approaches and schemes at the national or community level to reduce out-of pocket health expenditures and to ensure equitable access to health care for all, especially among the disadvantaged sectors. Some of these approaches are presented below. ¢ȱ ęȱ ȱ ȱ Ȭȱ ȱ Ȭ managed schemes that require residents of a community to contribute funds to public facilities or hospital services, to community-based initiatives, such as community-based health insurance ȱȱȱȱǻǼǯȱȱȱĴȱȱȱȱuous drug availability at the community level through community ęǯȱ ¢ǰȱ ¢ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ community cooperation and self-reliance.16 The community takes ȱ ȱ ȱ £ȱ ȱ Ȃȱ ȱ ȱ ęǰȱ organize and manage health care. Although various kinds of ¢ȱȱ ȱȱȱȱěȱǰȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ǰȱ ȱ ¢ȱ ȱ access to health services, and reduce health risks and associated

Community nancing

Hsiao W. Health Care Financing in Developing Nations, A Background Paper. 2000

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 19

%R[&RPPXQLW\EDVHGKHDOWK¿QDQFLQJLQ/D8QLRQ3KLOLSSLQHV 7KH 257 +HDOWK 3OXV 6FKHPH LV D FRPPXQLW\EDVHG LQLWLDWLYH WKDW SURYLGHV VRPH VRFLDO VHFXULW\ IRU LWV PHPEHUV WKURXJK YROXQWDU\ SUHSD\PHQW ,WRSHUDWHV LQVHYHUDO /D8QLRQ SURYLQFH YLOODJHV DQG LVIRXQGHG RQ D WUDGLWLRQDO IRUP RI VROLGDULW\ NQRZQ DV VDUDQD\²WKH SUDFWLFH E\ IDPLO\ DQG IULHQGV RI FRQWULEXWLQJ DQ DPRXQWRIPRQH\DVDVVLVWDQFHWRUHODWLYHVRUQHLJKERXUVLQWLPHVRIGHDWKRUVLFNQHVV7KHVFKHPH¶VLQLWLDO target populations were the poor and marginalized sectors, who had little or no access to basic health care services due to geographic, economic and social factors, but it was later expanded to include other population sectors. 0HPEHUVKLSLVRQDIDPLO\EDVLVDQGQRH[FOXVLRQVDUHLPSRVHGRQDQ\PHPEHURUEHQH¿FLDU\GXHWRSUH H[LVWLQJFRQGLWLRQVRULOOQHVVHV0HPEHUVDUHUHTXLUHGWRSD\DPLQLPDODPRXQWZLWKÀH[LEOHSD\PHQWWHUPV HJPRQWKO\TXDUWHUO\VHPLDQQXDOO\DQGDUHEDVHGRQPHPEHUV¶*RYHUQPHQW6HUYLFH,QVXUDQFH6\VWHP RU6RFLDO6HFXULW\6\VWHPVWDWXVDQGIDPLO\VL]H)DLOXUHWRSD\GXHVIRUWZRFRQVHFXWLYHPRQWKVLVEDVLV IRUH[SXOVLRQ5HHQUROHHVDUHFRQVLGHUHG¿UVWWLPHPHPEHUVDQGDTXDOLI\LQJSHULRGLVUHTXLUHGWRSUHYHQW IDPLOLHVIURPMRLQLQJRQO\ZKHQWKH\DUHVLFNRUZKHQH[SHQVLYHWUHDWPHQWLVQHHGHG +HDOWK EHQH¿WV DUH OLPLWHG WR WKH KHDOWK VHUYLFHV RIIHUHG E\ WKH FRQWUDFWLQJ KRVSLWDO 3ULPDU\ FDUH DQG FRQVXOWDWLRQV DUH HQVXUHG DW VDWHOOLWH FOLQLFV DQG SURYLGHG E\ D SK\VLFLDQ RQ D ZHHNO\ EDVLV 3D\PHQW WR SURYLGHUV LV PDGH WKURXJK FDSLWDWLRQ IRU KRVSLWDO SURYLGHUV DQG PRQWKO\ ¿[HG VDODULHV IRU SULPDU\ FDUH providers. The dropout rate, due to non-payment of contributions, was initially high. This has gradually been reduced as more in the community learn of real cases in which patients were covered for high health care expendiWXUHV 6XFK VWRULHV DUH VSUHDG E\ ZRUG RI PRXWK DQG WKURXJK WKH VFKHPH¶V QHZVOHWWHU 7KH VFKHPH KDV also adopted a new policy in which membership cards are released to the new members only after they DWWHQG DQ RULHQWDWLRQ VHPLQDU ZKHUH WKH FRQFHSWV SROLFLHV DQG SURFHGXUHV RI 6+, DUH H[SODLQHG 7KHVH VHPLQDUV DOVR VHUYH DVDYHQXH DWZKLFK PHPEHUV DVNTXHVWLRQV SURYLGH IHHGEDFN DQG VHHN FODUL¿FDWLRQ UHJDUGLQJVRPHRIWKHVFKHPH¶VSROLFLHV 6RXUFH ,QWHUQDWLRQDO /DERXU 2UJDQL]DWLRQ 257 +HDOWK 3OXV 6FKHPH LQ WKH 3URYLQFH RI /D 8QLRQ 3KLOLSSLQHV $ &DVH 6WXG\ RI D &RPPXQLW\ %DVHG +HDOWK 0LFUR,QVXUDQFH 6FKHPH *HQHYD KWWSXQSDQXQRUJLQWUDGRFJURXSVSXEOLFGRFXPHQWV$3&,7< 813$1SGI0D\

ęȱ ǯȱ ȱ ǰȱ ¢ȱ ęȱ ȱ ȱ encouraged and supported by governments through policies, ȱ ȱ ȱ ȱ ęȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ě¢ȱ ȱ ȱ ȱ ȱ improvement and the reduction of medical poverty in communities. Good initiatives include the Cooperative Medical System in China, community health insurance schemes in Lao People’s Democratic Republic, Dana Sehat in Indonesia and Thailand’s health card system.17 ȱȱȱ¡ȱȱȱȱęȱȱȱ health, one policy approach is targeted public subsidies. Governments adopt this approach to improve equity and access and increase health gains. Targeted public subsidies mainly support those groups that are the most in need or the most vulnerable. 17

Targeted public subsidies

Ibid

20 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

There are multiple ways of targeting government health subsidies. ȱȱȱȱȱȱȱęȱȱǰȱȱ ȱȱ ȱȱȱ ȱȱȱȱ ȱȱęǯȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ £ȱ ěȱ ȱ programmes, services, facilities, population groups, consumers ȱ ǯȱ ȱ ȱ ȱ Ğȱ ȱ ȱ ȱ ȱ health programmes that are organized on a vertical basis and are controlled by the central government, e.g. those for prevention, immunization and maternal and child health. Such services are either provided directly by the government or by nongovernmental organizations. If public subsidies are targeted and used to support government health facilities that provide services to all citizens, services are provided either free of charge or with minimal fees. Some subsidies are targeted to ensure that the entire population has equal access to a basic level of health services. ȱȱȱȱȱȱȱȱęȱȱȱ age groups. For example, in a programme for the low-income population, those who pass a means test become eligible for free or nearly free health services, and the patient is usually restricted to visiting only designated health facilities. But in the United States of America, patients choose private or public facilities and physicians through its Medicaid programme, in which services for ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ¢ȱ ȱ ¡ǯȱ ȱ Governments also can target health care services in a particular region that is located remotely, has a larger poverty impact or has a large ethnic minority population. Examples are China’s poverty alleviation programmes or the United States of America’s Indian Health Service. In China’s poverty alleviation programmes, the Government stresses anti-poverty work in impoverished, ethnic minority areas and extends preferential policies and measures, i.e. through budget appropriation. The Indian Health Service is an agency within the Department of Health and Human Services responsible for providing federal health services to American Indians and Alaskan Natives. It provides a comprehensive health services delivery system and the opportunity for tribal involvement in

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TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 21

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developing and managing programmes. Services are provided directly and through tribally contracted and operated health programmes.

Social health insurance as a strategy for reducing out-of-pocket expenditures

In recent years, several low- and middle-income countries developed social health insurance aimed at universal coverage that ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ cross-subsidy element is the most important feature in social ȱȱǰȱ ȱȱȱĝȱȱǰȱ high and low health risk individuals, and is intergenerational, i.e. it occurs throughout the elderly, economically active and inactive population groups. To share the risks of catastrophic losses, the risk and fund pool ȱȱĜ¢ȱǯȱȱȱȱȱ ȱȱȱ minimum group size of more than 5000 people may be stable ȱȱȱ ȱȱȱȱȱ ǰȱȱęȱȱ can be predicted with reasonable variance. Ideally, the group size should be close to 10 000.18 When the risk pool is small, various alternative insurance options can be used to stabilize the expected ęȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ Ȭȱ which can address this issue. Through re-insurance, an insurance company protects itself against the risk of loss with other insurance companies. By utilizing re-insurance, the insurance company ȱěȱȱȱȱȱȱȱ¢ȱȱȱ ȱ assets would allow. Central and local governments also target their funds to subsidize health insurance premiums for the poor and other vulnerable groups to ensure that they have the same access and health bene18

Ibid

22 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

%R[&RORPELD¶VH[SHULHQFHLQWDUJHWLQJWKHSRRU ,Q WKH PLG V &RORPELD EHJDQ LPSOHPHQWLQJ D PDMRU KHDOWK UHIRUP NQRZQ DV /DZ WR LPSURYH WKH WDUJHWLQJRISXEOLFKHDOWKVXEVLGLHVIRUWKHSRRU0XQLFLSDOLWLHVZHUHJLYHQUHVRXUFHVWRFDUU\RXWKRXVHKROG surveys to identify the poor. Poverty was determined on the basis of various household characteristics, e.g. TXDOLW\DQGVL]HRIFRQVWUXFWLRQQXPEHURIKRXVHKROGPHPEHUVDQGHGXFDWLRQOHYHOV7KHHIIRUWDSSHDUHG ODUJHO\VXFFHVVIXOLQUHDFKLQJWKHSRRULQPXQLFLSDOLWLHVWKDWUHFHLYHGDGHTXDWHUHVRXUFHV<HWVRPHIDPLOLHVZKRZRXOGRWKHUZLVHQRWTXDOLI\IRUWKHVXEVLG\UHQWHGDSRRUIDPLO\¶VKRXVHIRUDIHZKRXUVSULRUWR EHLQJVXEMHFWHGWRWKHVXUYH\WKXVGHIHDWLQJWKHWDUJHWLQJWRRO$OVRVRPHLQGLYLGXDOVVXEMHFWWRDVVHVVPHQW E\VRFLDOZRUNHUVLQSXEOLFKRVSLWDOVDUHVDLGWRSXUFKDVHIDOVHXWLOLW\ELOOVDVWKHVHGHWHUPLQHKHDOWKVHUYLFHV¶FRVWV)DOVL¿HUVRIELOOVDUHVWDWLRQHGLQNLRVNVRXWVLGHRIKRVSLWDOVDQGVHOOFXVWRPL]HGELOOVWKDWPDNH WKHEX\HUORRNSRRU 6RXUFH %LWUDQ 5 HW DO :DLYHUV DQG ([HPSWLRQV IRU +HDOWK 6HUYLFHV LQ 'HYHORSLQJ &RXQWULHV :DVKLQJWRQ '& :RUOG %DQN 6RFLDO3URWHFWLRQ'LVFXVVLRQ3DSHU6HULHV1R

ęȱ ȱǯȱȱ ǰȱȱȱȱȱȱȱȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ęȱ ęȱ ȱ ȱ ¢ȱ ǯȱȱȱęȱ¢ȱ¢ȱȱȱȱ ȱȱȱ systems—and the larger social institutions—are structured. ¢¢ǰȱȱ ȱęȱȱ ȱǱ (1) There is a single, universal and broad basic package made available to every individual in the country or region. ǻŘǼȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ subgroup to decrease the main causes of mortality and morbidity or to reduce inequities. (3) There are multiple packages that coexist, each ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ęȱȱǯ

In preserving equitable access to health services under a system of ȱ ǰȱ ȱ ȱ ¢ȱ ȱ ¢ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ěȱ ¢ǯȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ ȱ ęcial protection to the poor and other vulnerable groups. A waiver is a right conferred to individuals that entitles them to obtain health services in certain health facilities at no direct charge or at a reduced price. The existence of waivers implies that the health system will be able identify those exempted from the rest of ȱǯȱȱ¢ȱȱȱȱȱȱȱȱęǰȱ waivers seek to improve both equity in access and equity in the ęȱȱȱǯ Whereas waivers are associated with certain individuals, exemptions are associated with certain services. An exempt service is one that is to be provided at no charge or at a reduced price to patients. ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ

Waivers and exemptions

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 23

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ǰȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ¢ȱ the population, those that have externalities, or those that are purely for the public good. Vaccinations are a typical example of an exemption whose purpose is to correct market failures and to promote immunization. A system of waivers and exemptions requires one initial basic decision: determining which population group(s) and service cateȱȱȱȱȱȱęǯȱȱ£Ȃȱȱqȱ ȱ øǰȱ ȱ ¡ǰȱ ěȱ ¢ȱ ¡ȱ ȱ ȱ £Ȃȱ population through a countrywide network of public and private providers, to which the country must pay for exempt services on the basis of diverse payment systems. ȱȱȱ¢ȱȱȱęȱȱȬęaries of waivers, along with the need to identify them at the point of service, imposes major administrative demands on the health system. Here, many design options arise, and these impose a series of consequences for the health system, in terms of incidence ȱęȱȱȱǯȱȱŗȱǰȱȱȱȱ of questions, the design options faced by the policy-maker wishing to adopt a system of waivers. The last two columns show that some questions apply both to waivers and exemptions, whereas others apply only to one or the other system.

24 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

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TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 25

A successful waiver programme requires that the value of services waived equals the available programme funding. Lack of clarity ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ğȱ ȱ ȱ ęȱȱĜȱȱȱȱ¢ȱȱȱ ȱȱ compromised. Designing a system of exemptions also entails determining who ȱ ȱ ȱ ¡ȱ Ǳȱ ǰȱ ȱ Ȭęȱ ȱ ȱȬęȱǯȱȱȱȱȱȱȱ ȱ ȱȱ¢ȱ ȱęȱȱȱȱ¢ǯȱȱȱation is that the providers of exempt services are all public, and ȱȱȱȱȱȱę¡ȱ¢ȱǯȱȱȱȱ cases, the payment system is easy to manage. Universal provision of health services that are free of charge to all, in government ȱ ȱ ęȱ ȱ ȱ ǰȱ ȱ ȱ £ȱ system of exemptions. In some situations, the funding of exempt ȱ¢ȱȱȱ¢ȱȱ¢ȱȱęȱ¢ȱ to the provider of exempt services on the basis of a previously agreed-on payment mechanism, in which case, management may become more complex.

Social safety nets

Social safety nets are non-contributory transfer programmes targeted to the poor or those vulnerable to poverty and shocks.19 ȱęȱȱȱȱ¢ȱȱȱȱȱ¢ȱȱ a whole considers it unacceptable for people to be excluded from basic social services. Social assistance and social welfare programmes are social safety nets. Social safety nets play an important role in redistributing income to the needy in society and helping them overcome short-term poverty. A more recently idenęȱȱȱ¢ȱȱȱȱȱȱȱȱȱ ȱ ǯȱ ěȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ the intergenerational transmission of poverty and allow societies ȱ ȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ vulnerable economic groups are not excluded from social services and continue to receive quality services, social assistance and protection. The system includes free or subsidized health care services, insurance schemes, cash transfers, waivers, exemptions, public works programmes, food distribution and feeding programmes, discount and voucher schemes and any other direct ȱ ȱ ȱ ęǰȱ ȱ Ȭǯȱ ȱ ¢ȱ net arrangements are also important in protecting household income. Universal coverage for promotive, preventive, curative and rehabilitative care by all population requires a blend of safety net systems. However, there is no formula for the right mix of safety net programmes. The World Bank suggests that the safety net as a

World Bank. Safety Nets and Transfers. Available from: URL: www. worldbank.org/safetynets

26 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

whole should provide coverage to the following three rather ěȱǱ ȱ Ȋȱ ȱȱȱȯȱȱȱȃȱȄȱȱholds are poor. • The transient poor. This group lives near the poverty line, and may fall into poverty when an individual household or the economy as a whole faces hard times. • Those with special circumstances for whom general ¢ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ Ĝǯȱ Their vulnerability may stem from disability that ȱȱȱȱȱȱĴȱȱĜcient standard of well-being.

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 27

Improving the E ciency and E ectiveness of Health Care Financing

he Regional Strategy on Health Care Financing targets ȱȱȱȱȱěȱȱǰȱ essential health services and primary health care to 20% to 30% of total health expenditure by 2010. The Strategy encourages the ȱ ȱ ¢Ȭęȱ ȱ ȱ ȱ ȱ ȱ morbidity and mortality as the positive health outcomes of costěȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ include gradual reduction of the share of hospital-based curative care, non-essential drugs as a percentage of total health spending from the baseline by 2010. ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ Ĝ¢ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ǰȱ Ĝȱ ȱ ȱěȱȱȱęȱȱȱĴȱ ȱ ȱ ȱ Ĝ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ Ğȱ Ĝȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ expensive urban and hospital-based curative care, which is not directed at the major causes of ill health. The weak capacity of ¢ȱȱȱǰȱęȱȱȱȱ ȱ ěȱ Ĝ¢ȱ ȱ ěǯȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ęȂȱ Ĝ¢ȱ ȱ ěȱ ȱ focus on both the demand and supply side of the health system. Due to the imperfect nature of the health market, the utilization of health services and resources is largely determined by supply. ǰȱ¢ȱȱȱȱĜ¢ȱȱ¢ȱȱ crucial prerequisites for the overall success of a health care system.

Allocative and technical e ciency

ȱĜ¢ȱȱȱ ȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęǯȱ ȱ ȱ ȱ ǰȱ ȱ Ĝ¢ȱ ȱ ȱ ȱ ȱ ȱ achieve a particular improved level of output, e.g. health status, with the least cost. As such, in the health care sector, one should Ĵȱȱȱȱȱȱȱ¢ȱǰȱǯǯȱ tertiary hospitals and other specialized institutions, to basic health services including immunization, vector control and health education. £ȱȱȱȱȱěȱȱȯ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ¢ȱ ȱ government hospitals and their eventual conversion into government corporations—without compromising their social responsibility—results in less dependence on direct government subsidies, leads to self-sustaining facilities, encourages competition among hospitals and increases responsiveness to clients’ health needs. Local health system reforms, through the establishment of local ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ £ǰȱ enables the sharing of limited health facilities, human resources

28 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

and services. This will also enable the active participation of the ȱȱȱȱȱȱȱěȱȱĜȱ health sector performance at the local level. Improving public health programmes decreases the load on secondary health care facilities and reduces governments’ burden to address preventable diseases as a public health problem. This ultimately allows resources to be allocated to emerging and chronic diseases. Examples of public health programmes that showed impact are in the areas of family planning, immunization, major communicable diseases and health promotion, as well as ǰȱȱ¢ȱȱęȱ¢ȱǯ ȱĜ¢ǰȱȱ ȱȱȱĜ¢ǰȱȱȱ the relationship between input and output. Whatever combination of inputs is used, it should produce the maximum feasible ǯȱ ȱ Ĝ¢ȱ ȱ ȱ ȱ ¢ȱ ȱ plishing an activity given that it is worth doing. Therefore, ȱ Ĝ¢ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ maximum output for a given level of resources, or minimum cost for a given level of output. Examples include reducing the length of hospital stays and increasing the utilization of less specialized personnel. ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ £tion of delivery and payment mechanisms. Several elements of £ȱȱȱȱȱȱȱĜ¢ȱȱ quality, including centralization versus decentralization of the ¢ǲȱ ȱȱȱęȱȱȱ£ǰȱǯǯȱ ǰȱȱȬęǰȱȱȱȬęǲȱȱȱ ȱ ȱ ǲȱ ȱ ȱ ȱ ęȱ ȱ ǯȱ Some countries are restructuring the organization of their public ȱ ¢ȱ ȱ ęȱ ȱ ǯȱ ȱ ȱ scheme, governments target their tax revenues to the patients, i.e. the money follows the patient, and hospitals’ revenues depend on how many patients choose that hospital. Government hospitals are reorganized as autonomous organizations known as “public ǰȄȱȱ¢ȱȱ ȱȱȱȱȱȱȱȱȱ Kingdom. The worldwide experience shows that such a scenario works best if patients, rather than a bureaucratic agency, have choice and purchasing power. When patients can choose providers, providers are forced to compete, enhancing technical Ĝ¢ȱȱȱȱ£ȱȱȱȱȱ on price. Furthermore, providers can compete for patients on quality of services and the competition mainly occurs among private ǯȱ ȱ ǰȱ ȱ Ğȱ ȱ ¡ȱ ǰȱȱȱȱȱȱȱěȱȱ ȱĞȱȱȱȱȱȱǯȱȱǰȱȱȱ ęȱȱȱ ȱȱȱȱȱ ȱȱ

Service provision and payment

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 29

and hospitals, there must be supply-side control of new technology and the number of specialists. In Canada and the United Kingdom, people’s choice on hospitals and specialists is regulated with general practitioners as gatekeepers to contain health care costs. In the United States of America, a similar system was introduced through managed care organizations, in which every new ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ order for insurance to pay for it. In low- and middle-income countries, the quality of services improves as patients can choose ǰȱȱȱȱȱȱĜȱǯȱȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ěȱ ǰȱ drugs and good management. ¢ȱȱ¢ȱȱȱȱȱȱȱȱěȱ ȱĜ¢ȱȱěȱȱ¢ȱěȱȱȱ of the key actors in the system, including patients, hospital administrators, physicians, pharmacists and insurance. The behaviours are constrained and motivated by incentives deterȱ ȱ ěȱ ¢ȱ ǯȱ ȱ ȱ ȱ ęȱ and payment systems are not systematically linked and coordiǰȱȱȱȱȱ¢ȱĚȱȱȱ¢ȱȱices declines. The form and amount of payment determine a physician’s choice ȱ ȱȱȱȱȱǯȱȱȱȱȱĴǰȱȱȱ¢ȱȱȱȱȱȱĚȱ¢Ȃȱ decisions on how many hours to spend in public and private ȱ ǯȱ ȱ ȱ ȱ ěȱ ȱ ¢ȱ encourage patients to pay under the table. ȱ ȱ ȱ ǰȱ ęȱ ȱ ȱ ěȱ Ȃȱ behaviour. For example, the price that a patient must pay at the ȱ ȱ ȱ Ěȱ ȱ ¢ȱ ȱ ¢ȱ ȱ ȱ ǯȱ¢ȱȱȱȱȱĚȱȂȱsions on where to seek care. ȱ ¡ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ǰȱ numerous econometric studies have been conducted to estimate the price elasticity of demand, which comprises a major part of ȃȱ£ǯȄȱȱęȱȱ¢ȱȱȱęȱ packages and user fees. Price is a key determinant of decisionmaking for both consumers and providers, serving as the key economic allocative mechanism to ration scarce resources, such as health services and drugs. Empirical studies have found that physicians can both set prices and induce demand if there is weak regulation of service provision.

Budgeting, nancial planning and management

¢ȱ ȱ ěȱ Ğȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ěȱ ȱ ęȱ ȱ ȱ ȱ table access at least to basic and essential health services by all ȱǯȱȱ ȱęȱȱ¢ȱĚȱ

30 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

equity, access, coverage and availability of needed health care at ěȱǯȱȱȱȱȱǰȱęȱning and management activities that occur at every level of health service delivery. Health budgeting helps to project the costs and revenues of a ęȱ ¢ǰȱ ǰȱ ǰȱ ȱ £ǰȱ ȱ ȱ certain period of time, usually a year. Therefore, budgeting is the process of translating decisions into implementation with availȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ęȱ resources, along with sources of funds required for achieving policy, strategy or service objectives across several years, usually řȮśȱ ¢ǯȱ ȱ ǰȱ ęȱ ȱ ȱ ȱ ȱ ȱ fying funding requirements, together with the source of funds, to support either policy or strategic intent or in the case of individual agencies—service provision. The aim is to ensure consistency between health sector goals and funding. Financial management ȱǰȱ£ǰȱȱȱȱȱęȱȱȱȱ£ȱȱȱęȱǯ ȱȱȱȱȱȱǰȱǯǯȱęǰȱ human resources, appropriate medical technology, diagnostic ȱȱȱǰȱȱȱȱȱĜȱȱȱ ȱ ¢ǯȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ętion of tasks, the specialization of skills and activities, an avoidance of overlap and a maximization of existing resources and tech¢ȱ ȱȱǰȱęȱȱȱment practices. ȱȱȱȱȱǰȱęȱȱȱ ȱ ȱ ȱ ȱ ȱ ěȱ ǯȱ ȱ ȱ ¡ǰȱ budget laws regulate the process of developing annual budgets ȱȱȱęȱ¢ȱȱȱǯȱȱȬȱȱ Ȭȱęȱȱȱȱȱȱȱȱȱ ȱěȱȱȱȱ¢ȱǰȱȱȱęǯȱȱȱȱȱȱȱ ȱȱ Master Plan, Medium Term Expenditure Framework (MTEF), Public Expenditure Review (PER), costing of achieving the MDGs, ȱǯȱȱěȱȱȱęȱȱȱȱ ȱȱȱȱĜ¢ȱȱěȱȱȱ¢ȱ ęǯȱȱȱȱȱȱȱȱȱȱ ȱ ȱ ȱ ęȱ ǰȱ ȱ ȱ ǰȱ ǰȱ ȱ ȱ ȱ ȱ ęȱ ǯȱ ȱ ȱ ǰȱ ěȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱęȱȱȱǯȱȱ ǰȱȱoping countries use historical budgeting based on past year actual spending. Some tend to use input based budgeting by improving cost data and information. Some tend to use performance based ȱ¢ȱȱĴȱȱ ȱęȱ strategic objectives and indicators. There is also a trend toward ȱ Ȭȱ ȱ ¢ȱ ęȱ ęȱ ȱ ȱ outcomes.

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 31

ȱȱȱȱȱȱȱěȱȱȱ to another, their implementation requires common knowledge ȱ ȱ ȱ ǰȱ ęȱ ȱ ȱ ǯȱ ȱ Since the health sector is the main target, health administrators and managers working at all levels, especially those who are working below sub-national levels, need to possess the knowledge and skills necessary, and play an imperative role in developing ȱǰȱęȱȱȱȱęȱǯȱ ¡ȱȱȱȱęǰȱȱȱȱȱ out-of-pocket payments and other payment options, such as user fees and capitation, require appropriate estimates, resource ȱ ȱ ȱ ęȱ ǯȱ ȱ ȱ ȱ ȱ ȱ knowledge and skills, health facility managers and administrators Ğȱȱȱȱȱȱȱȱȱǯȱȱ¢ȱ Ğȱȱȱȱȱȱȱȱȱȱȱ health sector and, therefore what has been allocated is all they can spend. It limits their incentive to improve their budgeting exercise ȱ ȱ ȱ ȱ Ĝ¢ȱ ¢ȱ £ȱ ȱ ȱȬěȱȱǯȱȱȱȱȱ ǰȱȱȱȱȱȱ¢ȱęȱȱ ȱȱ¢ǰȱ¢ȱȱĜ¢ǰȱȱȱȱȱ objectives of universal coverage, equity and access cannot be achieved easily, unless the issues are addressed appropriately. On the other hand, many public sector reforms, such as decentralization and the delegation of authority and decision making to subnational, provincial and district levels, need to be supported with appropriate capacity and capability in developing reasonable health budgets and plans that contribute to population health improvements.

32 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

ȱ ȱȱȱȱ¢ȱȱ Ĵȱ by national experts in their original form. The selected countries include Cambodia, China, Indonesia, Kyrgyzstan, the Lao People’s Democratic Republic, Malaysia, the Republic of Moldova, Mongolia, the Philippines, Thailand and Viet Nam. The authors presented these papers at the the WHO Interregional Meeting on the Implementation of the Strategy on Health Care ȱȱȱȱȱȱęȱȱȬȱȱ Regions held in Ulaanbaatar, Mongolia, in 2006.

Selected Country Papers

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 33

Cambodia 0V0DU\DP%LJGHOL+HDOWK&DUH )LQDQFLQJ$GYLVRU:+2 Cambodia 'U6RN.DQKD'HSDUWPHQWRI 3ODQQLQJDQG+HDOWK,QIRUPDWLRQ 0LQLVWU\RI+HDOWK

Health Equity Funds in Cambodia

n 2004, Cambodia’s GDP was US$ 328 per capita,1 with a population of 13.09 million.2ȱǰȱę¢ȱȱ¢ȱȱřřƖȱȱȱǰȱ ȱȱȱĞȱȱȱ¢ȱ to the industrial sector, mainly garment and footwear, represented 56% of domestic income. The tourism sector was also increasingly ȱ ȱ ȱ ǯȱ ¢ȱ ȱ ȱ ȱ ¢ȱ ŗƖȮ 1.5% per year over the past decade, but the national poverty rate remains high at 35%. Twenty per cent of the population still exists below the food poverty level.

Background

The Government’s health budget was US$ 59 million in 2005,3 i.e. US$ 4.50 per capita, representing a 1.26% share of the GDP.4 This budget has been steadily increasing over the years, but adequate ęȱ ȱ ȱ ǯȱ ȱ ȱ ȱ disbursement at the end of budget execution is acceptable, i.e. around 98%, provinces and districts face irregular and untimely disbursements, with a large portion of payments carried over to ȱ¡ȱęȱ¢ǯȱȱȱȱȱ ȱȱȱȱ US$ 90 million in 2003,5 US$ 6.90 per capita. The Cambodian Demographic and Health Survey 2000 reveals that the population prefers to use private providers: 68% reported seeking treatment with private hospitals, clinics, drugstores or traditional practitioners, while 11.4% did not seek treatment at all.6 Only 18.5% of the population trusted public facilities for their health care needs. The 2004 Cambodian Socio-Economic Survey reports an average spending of US$ 6 per illness episode in the past 4 weeks.7 Taking into account average household size and incidence of illness, a 2005 World Bank poverty assessment8 estimates OOP expenditures to be around US$ 15 per capita per year. The National Health Financing Charter was introduced in 1996 to allow the establishment of user fee schemes in health facilities. In 2004, income from user fees was reported to be US$ 6.5 million, ȱ ŜŖƖȱ ȱ ȱ ȱ ȱ ȱ ěȱ ǯȱ Although reducing under-the-table payments has been a positive impact of user fees,9 they still represent a considerable barrier to 1

National Institute of Statistics, Ministry of Planning. National Accounts of Cambodia 1993-2005. Phnom Penh, 2005. 2

National Institute of Statistics, Ministry of Planning. Cambodia Inter-Censal Population Survey 2004, General Information. Phnom Penh, 2004. 3 4 5

National Budget Book 2005, Ministry of Health Joint Annual Performance Review 2006, Ministry of Health

Council for the Development of Cambodia, Rehabilitation and Development Board, 7th Consultative Group Meeting 2004 6 7 8 9

National Institute of Statistics, Ministry of Health. Phnom Penh, 2000. National Institute of Statistics, Ministry of Health. Phnom Penh, 2004. World Bank. Cambodia Poverty Assessment 2005.

Wilkinson D. et al. The Impact of User Fees on Access, Equity and Health Provider Practices in Cambodia. Phnom Penh, Ministry of Health, 2001.

34 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

health care for the poor, poor quality of care, the population’s mistrust of public services and a high burden of transportation ǯȱ Ĵȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱȱȱȱȱěȱȱȱȱȱ public facilities’ reduced opening hours and private practice moonlighting. ȱ ŘŖŖŖǰȱ ȱ ȱ ȱ ęȱ ǰȱ ǯǯȱ contracting, health equity funds (HEFs) and CBHI, have been introduced in Cambodia. Although contracting does not directly ęȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ǰȱ ȱ ȱ Ĵȱ ȱ ¢ǯȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ¢ǰȱ ę¢ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ funds, e.g. those from ABD, World Bank, the United Kingdom’s Department for International Development (DFID), United Nations Population Fund (UNFPA), United Nations Children’s Fund (UNICEF), United States Agency for International Development (USAID) and the Belgian Development Cooperation Agency (BTC), through local implementers—both international and local NGOs—to pay for health care for the poor in public facilities. CBHI in Cambodia is currently operated by two NGOs in four schemes. This form of voluntary insurance establishes prepayment mechanisms and purchases health care on behalf of its members, ȱȱȱǯȱȱȱęȱȱȱȱ like user fee revenues at the facility level. Since 2000, several development partners have proposed HEF creation as an interim measure to cover health care expenditures for indigent households. The goal of HEFs is to create a viable system of subsidizing health care for the poor by mobilizing neces¢ȱęȱȱ¢ȱȱ¡ȱȱȱǯ HEFs are based on payment mechanisms derived from underlying user fee schemes at the health facility level. The process begins when the health facility submits an application for approval of its ȱęȱǰȱȱȱȱǰȱȱȱ¢ȱ ȱ ǯȱȱȱ¢ȱȱȱǰȱȱ¢ȱĜcially adopts its fee schedule, including some criteria to exempt ȱǯȱȱ¢ǰȱȱǰȱęȱȱȱȱȱȱ facility, taking into account the provider’s expected ability to generate complementary revenues from user fees. Patients wishing to be exempted from fees are subject to a means test to determine their eligibility when they arrive at the facility. Patients found not eligible for exemptions, along with patients not applying for exemptions, are subject to the provider’s customary fees. ¡ȱȱȱěȱȱȱȱȱȱȱȱǯȱ ǰȱ ȱ ȱ ǰȱ ȱ ¡ȱ ¢ȱ ȱ ȱ ȱ ětive. The main reason is that exemptions are granted by health

Health Equity Funds in Cambodia

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 35

ěȱ ȱ ȱ ȱ ¢ȱ ǰȱ ȱ ȱ ȱ Ěȱ ȱ interest, given the incentive they receive from user fees collected ȱ ¢ȱ ǯȱ ¢ǰȱ ȱ ěȱ ȱ ȱ ȱ have the appropriate capacity to adequately determine patients’ eligibility. HEFs can correct such challenges by i) reimbursing the hospital for foregone user fees from poor patients, and ii) independently ¢ȱ ȱ ȱ ȱ ȱ ęȱ ǯȱ Periodically, health facilities should report the level of exemptions provided and the monetary value equivalent to the HEF-subsidized services. For example, the provider may keep a record of all services provided for free and then, based on the foregone user fee revenue, bill the HEF at established prices. The HEF would then ȱȱǰȱĞȱȱȱȱĴǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ donors, which would become depleted due to the reimbursements to the providers. ¢ȱ ȱ ȱ ȱ Ȭęȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ¡ȱ ǯȱȱ ȱ¢ȱȱȬęȱȱȱ ȱ¢ȱ deliver HEF cards to poor households ex ante. Patients then show their HEF cards at the time of care to receive free services. The Ȭęȱ ȱ ȱ ȱ ȱ Ğȱ ȱ ¢ȱ ȱ Ȭęǰȱȱȱȱȱȱ¢ȱȱ and delivering appropriate information to the population on their ǯȱ ȱ ȱ ¢ȱ Ȭęȱ ¢ȱ ȱ ȱ ȱ ȱ Ȭęȱ ȱ ȱ ȱ ȬęȂȱ¡ȱǯ ȱȱ ȱ ȱęȱȱȱȱȱ HEFs: ǻŗǼȱ ęȱ ȱ ȱ ȱ ȱ ę¢ȱ ǯȱ ȱ ȱęȱȱȱȱȱ¢ȱ ȱ¢ȱ ȱȱȱ ęǯȱ¢ǰȱȱ ȱȱȱȱ ȱȱ that should be harmonized to guarantee equity in access to health care for the poor. Typically, the criteria are based on poverty. (2) Identify households that meet the criteria. Once the criteria ȱ ȱ ęǰȱ ȱ ȱ ¢ȱ ę¢ȱ holds, either ex post or ex ante as described previously. More recently, the national HEF framework mandates that HEFs ȱȱ¢ȱȱȱ¢ȱȱ¡ȱȱȱ¡ȱȱę¢ȱ ęȱ ȱ ȱ ȱ ęȱ ȱ ¡ȱ ȱ ȱ ¡ȱ¢ȱȱȱȱęȱȱȱ ȱ¢ȱ have been overlooked in the ex ante process. Conduct outreach activities to promote enrolment and awareness. To promote information on HEFs and how to

(3)

36 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

£ȱ Ȃȱ ęǰȱ ȱ ȱ ȱ ȱ ȱ in their target communities. Outreach involves information dissemination through public communication means, community gatherings or door-to-door household visits. However, many stakeholders believe that information dissemination is not the only purpose of outreach activities. ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡¢ȱȱȱ¢ȱȱęȱȱȱnity’s needs, expectations, and special social or health probȱ ȱ ¢ȱ ȱ ȱ ęȱ ȱ ȱ ǯȱ ȱ ȱ ¢ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ scheme, health facility or health authorities. ǻŚǼȱ ęȱȱȱȱȱȱǯȱ ȱȱ¡¢ȱ ęȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ǯȱ ȱ ¢ȱ noted, a HEF’s main purpose is covering hospital care, keeping near-poor households from falling into poverty or preventing further impoverishment of poor households. The recent national HEF policy foresees that all newly established HEFs, as well as existing HEFs that receive new funding under new conditions, will cover (i) hospital services ȱȱȱ¢ȱȱ Ȭęȱ¢ȱ Package of Activities (CPA)10; (ii) a safe motherhood package ȱ ȱ ȱ ¢ȱ ȱ ȱ Ĵǰȱ ȱ ȱ ȱ referral hospitals; (iii) nonmedical services, such as transportation and food; and (iv) in exceptional cases, other items, e.g. funerals. (5) Monitor the exemption process at the time of care for HEF ęǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęǰȱ ȱ ȱ ȱ ȱ process at the hospital level. HEFs should also be able to monitor the overall quality of health care delivered as well as ȱ ȱ ȱ ȱ ęȱ ȱ paying patients.

ǻŜǼȱ ¢ȱȱȱȱȱȱȱȱęȱ for other subsidies. HEFs must reimburse providers for the ¡ȱ¢ȱȱȱ ȱęǰȱȱȱ ęȱ ǯȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ agree on the fee levels and methods of reimbursement. Second, the HEF and the provider must set a payment system. For example, the HEF may pay the provider once a ȱȱȱȱȱȱȱĴȱ¢ȱȱǯȱ The invoice shows in detail the kinds of services provided to ęǰȱ ȱ Ȃȱ ȱ ȱ ǰȱ ȱ sponding fees waived and the total exemption amount. Other payment methods may also be adopted, e.g. the HEF may The CPA is delivered at referral hospital level. Three levels of CPA, e.g. ŗǰȱŘȱȱřǰȱȱęȱ¢ȱȱ¢ȱȱ ȱȱȱ the range of medical and surgical services delivered by the hospital. 10

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 37

¢ȱ ȱ ę¡ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȃȱ ȱ ¡¢ǰȱ ȱ ȱ ę¡ȱ ȱ ȱ ȱ depending on the population covered rather than on the patients treated. The actual payment mechanism is agreed upon between the HEF and the service providers. ȱ ȱǰȱ ȱȱȱȱ ȱęaries for their transportation and caretakers’ food. In exceptional cases, the HEF also reimburses funeral costs directly to the patient’s family. For this purpose, procedures are needed. It is possible to reimburse the patients upon their arrival to the hospital or at the moment they leave. They can be reimbursed against receipts or on the basis of some predeterȱ ǯȱ ǰȱ ȱ ęȱ ȱ ȱ ¢ȱ informed of reimbursement methods. Secure funding. HEFs must ensure that they receive a steady Ě ȱ ȱ ǰȱ ȱ ȱ ȱ ¢ȱ ǯȱ ȱ ǰȱ funding for HEF operations in Cambodia has come mainly ȱ ǰȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ cating increased public funds to the health sector and to targeting health expenditures to the poor.

(7)

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There are currently 24 HEFs in Cambodia (Figure 4). The selected characteristics of HEFs in Cambodia are shown in Table 2. In the near future, this number is expected to increase substantially with additional ADB funds channelled through the Health Sector Support Project funded by DFID, World Bank, ADB, UNFPA and soon Agence Française de Développement (AFD). Another important donor for HEFs is USAID through the University Research Company (URC). URC runs 8 HEFs in 6 provinces, with a budget of US$ 675 000 per year. The cost per capita of ȱ ȱ ȱ Ǟȱ ŖǯşŖȮǞȱ ŗǯşŖȱ ȱ ¢ǰȱ ȱ ȱ ęȱ ȱ ȱ Ǟȱ řŖȮǞȱ ŚŖȱ ȱ ǰȱ ȱ ¢ǯȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ęǰȱ ǯǯȱ marginal poor, poor and very poor, while transport and food costs are only covered for the poorest patients. BTC funds 7 HEFs in Kampong Cham, Siem Reap and Odar ¢ȱǯȱȱȱȱȱȱǞȱŖǯŗŚȮǞȱŖǯŗşȱȱ ¢ǰȱ ȱ ȱ ęȱ ȱ ȱ Ǟȱ ŗŘȮǞȱ ŘŚȱ ȱ ǰȱ per year. Unlike URC, these HEFs cover 100% of medical costs only for the very poor portion of the population, while other patients are only covered at 75%. Svey Reng province’s HEF is funded by UNICEF and covers all costs of medical services, transport and food for all segments of the poor population. The cost per capita is very low compared to other HEFs at US$ 0.06 per year, probably due to this scheme’s particular administrative arrangements through a local manageȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱȱęȱȱȱǞȱŗŜȱȱǰȱȱ¢ǯ

38 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

Health Net International (HNI) funds 4 HEFs in 3 provinces, and 3 HNI HEFs have recently ceased functioning. Some HNI HEFs are ¢ȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ health centre level while most others cover only referral hospital ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ǯȱȱȱȱȱȱǞȱŗŖȮǞȱřŗȱȱ¢ǯ The Kirivong HEF, implemented by Swiss Red Cross and a local NGO known as Buddhism for Health, is a special case. Known as The Pagoda Equity Fund, this scheme is managed by Buddhist monks who collect contributions from villagers to cover the health care needs of poor in the community. The Pagoda Equity Funds covers primary level health care. ȱȱ ȱȱȱěȱȱȱȱȱęȱǲȱǰȱȱȱȱ ȱȱ ȱȱȱȱȱȱ¢ȱĜǯȱ ǰȱȱ if HEFs increase or improve access to health services for their target populations is crucial. This was the rationale behind the assessment by Dr Peter Annear of RMIT University, in collaboration with WHO Cambodia and with funding from AusAID. Analyzing routine data collected from implementing NGOs, this access study showed that the introduction of HEFs increases the overall utilization of health services without decreasing utilization by fee-paying patients. This implies that poor patients begin using health services once they are covered by HEFs, as illustrated by Figures 5 and 6. Figure 7 demonstrates that coverage by HEFs meet poverty levels in the general population. Combined with contracting, HEFs even achieve coverage of all poor households in districts where the poverty level is higher than the national average. They perform ȱĴȱȱȱ¡ȱ¢ȱ ȱȱȱǯ

Assessment of Access to Health Services for the Poor )LJ ,3' DGPLVVLRQV DQG QXPEHU RI +() LQSDWLHQWV DW 6RWQLNXP 5HIHUUDO +RVSLWDO 6LHP 5HDS province 350 300 80 250 No. of Patients 200 150 100 50 0 Supported by HEF Non-supporter % supported by HEF 70 60 50 40 30 20 10 0 HEF/ IPD (%) 100 90

6RXUFH 6WXG\ RI ¿QDQFLDO DFFHVV WR KHDOWK VHUYLFHV IRU WKH SRRU LQ &DPERGLD 3HWHU $QQHDU 'DYLG :LONLQVRQ &KHDQ 5LWK\ 0HQ DQG 0DXULWV YDQ 3HOW 0LQLVWU\ RI +HDOWK &DPERGLD $XV$,' :+2 &DPERGLD DQG 50,7 8QLYHUVLW\

7DEOH6HOHFWHGFKDUDFWHULVWLFVRI+()VLQ&DPERGLD ,' &RVW&DS <HDU 86± 86 86± 86 &RVW3DWLHQW <HDU 86± 86 86± 86 0HGLFDO %HQH¿WV $OOLQF near-poor) IRUYHU\ poor IRURWKHUV $OO ± Transport %HQH¿WV Poor and very poor only IRUYHU\ poor IRURWKHUV $OO ± )RRG %HQH¿WV 1$ IRU very poor IRU others $OO ±

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TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 39

The National Health Equity Funds Implementation and Monitoring Framework

)LJ $GPLVVLRQV +() SDWLHQWV DQG EHG RFFXSDQF\ UDWHV %25 DW 3KQRP3HQK0XQLFLSDO+RVSLWDO 700 600 500 No. of patients 400 300 200 100 0 2004 EF admissions Non-EF admissions BOR (%) EF total admissions

100 90 80 70 60 50 40 30 20 10 0 2005 Percent

The Ministry of Health has recently issued monitoring and impleȱ ȱ ȱ ȱ ȱ ȱ ěȱ tion models. The new implementation arrangements prescribe disbursement of donor funds for HEFs through government channels. The Ministry of Health becomes the funds recipient for both donor and government counterpart funds, which to date is around US$ 850 000 for 3 years. Implementation is coordinated at a central level by a new equity funds management unit within the central ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ęȱ implementation is either through NGOs and civil society organi£ȱǻȱŗǼȱȱȱ ȱĜȱǻȱŘǼǯȱȱŘȱȱ a considerable advantage on Model 1 in terms of burden of administrative costs, which are quite high as soon as an international or even a local NGO becomes the funds holder. In Model 2, the ȱ ěȱ Ȃȱ ¢ȱ ȱ ǰȱ ȱ ¢ȱ ȱ ȱȱȱęȱȱȱ¢ȱȱ issues. However, Model 1 has the advantage of using an independent funds holder; in such cases, the international or local ȱ ȱ ȱ Ȭ¢ȱ ȱ ȱ ¢ȱ ęȱ leverage towards service providers. Model 3 applies to national tertiary hospitals and institutions only, and the Ministry of Health is the funds holder. Centralized monitoring by the Department of Planning and Health Information will also replace fragmented monitoring arrangeȱ ȱ ȱ ¢ȱ ęȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ę¢ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ǰȱ ȱ ȱ ǰȱ ȱ ȱ ě ȱ members and the system for a smoother transition towards a SWAp.

)LJ 3RYHUW\DQGH[HPSWLRQOHYHOVLQ XVHU IHH VFKHPHV DQG +() H[HPSWLRQ OHYHOV E\ W\SH RI VFKHPH 60 50 Per cent 40 30 20 10 0 Av. of MOH ODs Av. of all Con. ODs Av. of all HEF ODs Exemptions % HEF %

Next Steps and Conclusion The next step is to operationalize the coordination mechanisms described in the national framework. This involves creation of a HEF management unit at the central level as well as the design of appropriate monitoring tools. In addition, the Government is taking practical measures to implement government counterpart funds in areas with the greatest need of social assistance mechanisms for the population. This is a considerable step towards sustainability of HEFs. Despite this commitment, and given the level of poverty as well as the population’s mortality and morbidity rates, it is clear that HEFs in Cambodia will still require sustained donor funding and assistance in the near future.

OD poverty % National poverty %

02+2'VDUH2SHUDWLRQDO'LVWULFWVZKHUHQR¿QDQFLQJVFKHPH and no contracting is in place Con. ODs are Operational Districts with a contracting scheme +663 IXQGLQJ 7KH ¿JXUH VKRZV WKH SHUIRUPDQFH RI +() schemes in districts where contracting arrangements are in place +()2'VDUH2SHUDWLRQDO'LVWULFWVZKHUHRQO\+()VFKHPHVDUH in place.

40 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ǰȱ especially for the poor. CBHI, contract providers and HEFs were implemented to extend access to health care for the near-poor, poor and indigent. Although CBHI does address equity and access ȱ ¢ȱ ȱ ǰȱ Ȃȱ ȱ ęȱ ȱ ȱ still challenged by sustainability. Donor funding is temporary, and the Government must strategize ways to implement economic and ȱȱȱȱȱȱěȱȱȱȱȱ equity will also enrich lives and contribute to economic development. HEFs are useful for countries, which are just beginning to develop their health reforms, in protecting the poor and providing access to health services. This scheme adds resources for health care and is easy to regulate given an existing contract with providers, though on a long-term basis, universal coverage is still ideal. Evidence also shows that HEF implementation increases health ȱ£ȱȱȱȱ ȱȱęȱȱȱȱ ěȱȱ£ȱȱȱ ȱȱěȱȱ¢ǯȱ HEFs identify the health needs of the poor and prioritize intervenȱȱȱȱȯȱȱȱȱȱĜȱȱěȱȱǯȱ¢ǰȱ ȱȱȱ ȱęȱȱȱȱȱ ȱȱęȱȱ transport and food, addressing the issue of not utilizing health services due to geographic and personal barriers. The programme ȱȱȱȱ¢ȱȱǰȱȱȱȱĜȱ ȱ ȱ ȱ ȱ ěȱ ȱ Ě ȱ ȱ ȱ ȱ care. Before, poor patients had to submit documents based on ȱ ȱ ȱ ¡ȱ ǰȱ ȱ ȱ ȱ ȱ Ě ȱ ȱ ȱ ȱ Ěȱ ȱ ȱ ȱ ȱ ȱ ěȱ ǯȱ ȱ programme has also ensured that the poor sector will not pay OOP. Cambodia is in an early phase of implementing health care ęȱǲȱǰȱȱ£ȱ ǰȱȱȱȱȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ęǰȱ ȱ ȱ programme’s design depends on those needs and felt health needs, the population receives care based on its actual needs, making the ¢ȱȱȱȱĜǯȱȱȱ¢ȱȱȱęȱȱ providers in formulating implementation plans and prioritizing essential services. The providers’ concern for their very low salaȱȱȱ¢ȱĴȱȱȱȱȱǯȱ Donor assistance provides capacity development and documents best practices for policy formulation, essential if the Government considers adopting a nationalized programme on health care ęȱȱȱǯȱȱ¢Ȃȱ¢ȱȱȱ¡ȱȱ ȱȱȱęȱȱȱȱȱȱ¢ȱȱ those who need it most. Also, the country’s proactive stance on

Comments on the Country Presentation: Cambodia Discussion

Lessons

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 41

donor alignment and harmonization will provide a venue for support and sustainability. ȱ ¡ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ public-private sector relationship. The decision to tap the private sector as a partner and to manage funds enables Cambodia to focus on other issues of importance for the health sector. Another notable intervention includes the Ministry of Health’s recent initiative to design a national implementation and monitoring framework for HEFs as well as a reporting system. This ȱ ȱ ȱ ȱ ęȱ Ȃȱ ǰȱ ¢ȱ impacts on the poor; guide the Ministry in assessing how the ęȱȱȱęȱȱȱȱȱholders’ performance and compliance in achieving goals. Another initiative undertaken by the Government to address equity and good governance is the integration of a national ¢ȱęȱǯȱȱȱ ȱȱȱȱĜȱęȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ assistance programmes, including equity funds. These funds will be linked to SHI by using them to purchase SHI cards for the poor, ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ Ěȱ ¢ȱ ȱ ǯȱ ȱ scheme shall also require the participation of contracted districts which shall play a major criteria in implementing equity funds ¢ȱȱęȱȱǯ

42 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

he total population of China is over 1.3 billion, and most live in rural areas. As the Government typically prioritizes the health care of rural residents, it introduced the Rural Cooperative Medical Scheme (RCMS) in the 1950s and 1960s to deliver sound health services to those living in the countryside. Contributions came from individuals and rural collectives and covered the medical expenses of minor diseases for farmers. During a time in which drugs and medical facilities were lacking, RCMS provided basic health care, receiving many commendations from WHO and several developing countries. In the 1980s, as economic reform occurred throughout China, rural collectives vital to RCMS ǯȱ ȱ ȱ ȱ ǰȱ ȱ ȱ Ě ȱ ȱ¢ȱȱĴȱȱǯȱ¢ǰȱ ǰȱ farmers have had to pay OOP health care expenses, leading to clear economic burdens. As a result, costs of treating various diseases have become a leading cause of poverty among China’s farmers, and urban-rural gaps in health care access have risen sharply. To lessen the economic burden for farmers and to prevent illnesscaused poverty, the Government decided, in 2002, to establish a countrywide RCMS for China’s new conditions and socioeconomic development in rural areas.

CHINA The New Rural Cooperative Medical Scheme Background

The new RCMS is based on government sponsorship and support ȱȱ¢ȱȱȱȱǯȱȱȱęȱ¢ȱ individuals, collectives and the Government. RCMS is a rural, mutual help scheme that seeks to cover expenses incurred by catastrophe and reduce the frequency of disease-related poverty. ȱ ȱȱȱȱ ȱȱȱěȱȱ from the original RCMS: (1) Enhanced support from the Government. The new RCMS clearly requires the Government and local ȱ ȱ ȱ ęȱ ȱ ȱ ȱ participants, demonstrating the Government’s support and care for farmers. Voluntary participation with each household as a unit. This is the embodiment of the mutual help principle and respects a farmer’s own choice. Operation at the county level, which could ensure ȱȬȱȱĴȱǯȱ Mainly reimbursing expenses to ease economic burdens due to catastrophic disease and to alleviate disease-related poverty. Local governments have been given the autonomy in designing, implementing and supervising the RCMS programme, with the establishment of corresponding Ĝǯȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ informed and allowed to participate in the supervi-

New Rural Cooperative Medical Scheme

(2)

(3) (4)

(5)

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 43

sion, which could make this scheme more transparent, just and equitable. (6) Encouraging the Rural Medic-Aid Scheme (RMAS) while simultaneously delivering basic health care to the most deprived families. ǻŝǼȱ ȱȱęȱǰȱȱ ȱȱȱ ȱ prepared to directly subsidize farmers to improve rural health services, implying a rural health insurance scheme in the future.

Basic Practice

In 2005 the Government held a cross-sector conference for the new RCMS, headed by the State Council and including 14 line agencies, e.g. the Ministry of Health, Ministry of Finance, Ministry of ȱ ěǰȱ ȱ ¢ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ major issues. While the Ministry of Health is in charge of the RCMS’s daily operational work, all provinces, municipalities and autonomous regions established leading teams and consultant teams, composed of relevant governmental bodies. In all pilot regions, local county governments established a corresponding ȱ Ĵǰȱ ȱ ȱ ȱ ȱ Ĝȱ ȱ ȱ ȱ administrative work. Also, pilot counties created supervision Ĵǰȱȱȱȱȱȱȱtives, to strengthen the scheme’s supervision. In all regions, RCMS’s fund-raising mechanism involves the ¢ȱȱ¢Ȭȱ¢ȱȱȱęȱȱ ȱȱȱȱǰȱȱęȱȱȱȱȱ ęȱǯȱȱȱȱ ȱȱȱ¢ȱȱȱ 10 yuan (US$ 1.20) per head per year as their contribution. The local government provided the corresponding 10 yuan for each ȱȱ¢ǰȱ ȱȱ ȱęȱŗŖȱ¢ȱȱ¢ȱ for each participant living in the central and western provinces. All contributions pooled together as the fund, which was managed as a special bank account for reimbursement. ȱȱ ȱȱ¢ȱȱǯȱȱęǰȱȱ in the central and western provinces, covers inpatient costs as well as a portion of outpatient costs. The second type, in the eastern provinces, only reimburses a portion of the inpatient cost and is more popular with the farmers. When going to any designated medical clinic or hospital within the local county for treatment, ȱ ȱ ¢ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ entitlement. If they must seek health care in other counties, it is necessary to have a transfer approval from their local hospital in advance. In most pilot programmes, farmers could get reimbursed at the place of payment, e.g. designated medical clinics and hospitals. The reimbursement, for drugs and services within the prescribed ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ę¡ȱ ȱ ȱ ȱ total cost. The money is then prepaid by designated medical

44 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

ȱȱǰȱ ȱĴȱ ȱȱ¢ȬȱȱĜǯȱ Ğȱ ȱ ȱ ȱ ęȱ ¢ȱ ȱ ȱ Ĝȱ ȱ ȱ ȱ ęȱ department, the prepaid money is then reimbursed from the special bank account. In order to ensure the scheme’s credibility, it was essential to have ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ ǯȱ ȱ ȱ regions also publicized information on revenue and expenditures. In other regions, telephone hotlines and opinion boxes were installed, and volunteer supervisors were recruited to boost the scheme’s transparency. As the new RCMS was moving forward, other corresponding health sector activities should also have been encouraged. The RMAS, which could assist poor farmers in participating in the new ȱ ȱ ȱ ȱ £ȱ ȱ ȱ ȱ ȱ ěȱ Medicare costs, should also alleviate economic burdens in the event of catastrophic diseases. The rural health care network, as well as health service provision, should be promoted, but governments at all levels must input additional resources to improve its ȱȱǯȱ¢ȱ ȱȱȱęȱȱ cut the cost of Medicare and drugs. Greater emphasis had also been rightly placed on both human resources development and ȱ ȱ ȱ ȱ ęȱ ȱ ǯȱ Pharmaceutical governance and supply chain construction is necessary to ensure that essential drugs are available in rural areas at low prices. Since 2003, the new RCMS pilot programme has been operating in various regions. At the end of June 2006, a total of 1399 counties, i.e. county-level municipalities and/or county-level districts, had participated, accounting 48.88 23.7% of the aggregate number of counties in China. The total population of these counties is approximately 495 236 million, of which 396 179 million farmers ȱĴȱȱȱǯȱȱȱȱȱȱȱȱȱ 2006, the total contributions were about US$ 1.4 billion. The pilot report suggests positive initial outcomes. All pilot programmes have taken the initiative to explore organizational management, contribution collection, fund management, medical service provision reimbursement and a supervision mechanism. It took over 2 years to erect a realistic and stable RCMS managerial and operational mechanism, which has accumulated valuable experience for the future rural Medicare insurance scheme. As of the end of June 2006, a total of 282 198 million person-times had received reimbursement with the aggregate expenditure of about US$ 1.1 billion from this scheme. Several provinces have included chronic diseases and inpatient child delivery in the scope

Progress of Pilot Programs

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 45

ȱǰȱ ȱȱęȱȱȱȱ¢ȱ¢ȱ be more willing to visit doctors when they feel sick. When the ȱȱȱȱȱȱȱ¢ȱĞǰȱ poverty triggered by diseases in rural areas was revealed to be less common than before. Furthermore, farmers were more aware of their health and disease prevention. With the help of the RMAS, the enrolment rate of the poor population in pilot RCMS programmes was 64.1%, and the enrolment ȱȱȱȱȱȱȱȃęȬȄȱholds, i.e. elderly persons who do not have an income source and ȱȱĞȱǰȱ ȱşşǯŘƖȱȱŝŖǯřƖǰȱ¢ǯ Nevertheless, the pilot programmes have had problems: (i) a lack of understanding that this is a long, arduous, complicated task; (ii) the new RCMS is yet to be fully funded, and the fund-raising cost is still high; (iii) poverty-stricken families need further help to enlist in RCMS; (iv) due to poor supervision at designated medical clinics and hospitals, irrational medical expenses have been skyrocketing in some areas; (v) the operational mechanism is not innovative enough or fully functional, so it failed to meet the requirement of RCMS; (vi) there is a lack of health awareness and reluctance of mutual help in rural areas; (vii) outdated medical facilities exist; and (viii) ineligible practicing professionals are problematic.

Future Plans

The Government is determined to draw experience from the past and push the new RCMS across the country. Presently and in the future, the focus will be on the following aspects: (1) Accelerating pilot programmes. The new RCMS pilot programme coverage in terms of area covered will be expanded by 40% in 2006 and 60% in 2007. In 2008, this scheme spread across the country; by 2010, it will cover almost the entire rural population. Eastern provinces could be ahead of the time-line by taking into account their conditions; some localities, with adequacy capacity, are also encouraged to move to an SHI scheme.

ǻŘǼȱ ȱ ęȱ ęȱ ȱ ¡ȱ ȱ ȱ coverage. Starting in 2006, the matching contribution from the government budget to rural populations in central and western provinces will increase to 20 yuan (US$ 2.50) from the present 10 yuan. In addition, the local matching contribution should rise, while the individual contribution remains unchanged. Meanwhile, western urban districts in which the farming population is the majority and pilot counties of some eastern provinces will also be included in the scope of this central budget assistance. Therefore, farmers could enjoy ȱȱęȱȱȱǯ

46 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

(3)

Strengthening managerial and the operational mechanisms. While respecting farmers’ choices, it is essential to explore a ǰȱ ȱ ȱ ěȱ ȱ ȱ collection mechanism. With the implementation of government assistance, a sound and stable fund-raising mechanism for the new RCMS should be established. The supervision of ȱȱȱȱęȱ¢ȱȱȱȬ term, up-to-standard operational mechanism with features of democracy and rural participation, to ensure the fund’s safety. Based on previous experience, it is important to improve pilot programmes, establish a standard operational scheme, simplify reimbursement procedures and provide convenience to farmers. It is also vital to develop human resources and information technology to boost the RCMS’s management. Improving corresponding policies and measures. Increasing investment in RMAS and expanding its coverage is necessary, ȱ ȱ ȱ ȱ ȱ ȱ ȃęȬȄȱ holds in rural areas. Accelerating the building of the rural health system is also vital, and it is essential to establish a more reliable county-township-village three-tier health service network and to launch immediately rural health service system planning to improve health service provision. By 2010, the rural health service network, with all necessary facilities, should be recognizable. Meanwhile, it is also necessary to continue the urban assistance campaign to train more ęȱ ȱ ěȱ ȱ ȱ ȱ ǯȱ ȱ to build up the rural pharmaceutical supply chain and supervisory system is also essential. Government, at all levels, should mobilize available resources and employees to regulate this chain, impose stringent quality management and crackdown on illegal activities to ensure that farmers have safe access to necessary drugs.

(4)

The new RCMS has made a modest start. The next few years will be critical as great opportunities and daunting challenges will occur. Nonetheless, the Government pledges to put farmers’ interȱęǯȱȱȱȱ¢ȱȱȱȱ ȱ RCMS throughout the country to achieve its 2010 goal of full coverage in rural areas. The RCMS has addressed the three basic issues of WHO’s strateȱȱȱȱęǱȱȱȱȱȱȱȱ health care spending, decreasing high OOP expenses and ȱĜȱȱȱȱǯȱȱ The most important features of the RCMS scheme are detailed as follows. (1) The scheme is designed to protect the most vulnerable population group, those in rural areas.

Comments on the Country Presentation: China Discussion

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 47

ǻŘǼȱ ȱ £ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ experience in the implementation of the old RCMS. (3) It encourages peoples’ participation as well as ownership through consultations and inclusion of municipal and ȱȱȱȱȱĴǯȱ It addresses basic to tertiary care and provides provisions on rational drug use and regulation. The Government and local governments are strongly Ĵȱȱȱȱǯȱ

(4)

(5)

ǻŜǼȱ ȱȱȱĚ¡ȱȱȱęȱȱȱ covering basic and tertiary cases. (7) Minimal cost sharing is required at 10 yuan a year, ensuring enrolment in the initial phase.

ǻŞǼȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ membership as pure public assistance. ǻşǼȱ ȱ ȱȱĜȱȱȱȱbursement of payments from members. (10) It covers both inpatient and some outpatient costs. (11) It excludes the elderly from payment, a population sector who has no capacity to pay. The challenges of RCMS are described as follows: (1) sustainability and additional fund sourcing, which can be assured of, through increasing economic development in the country;

ǻŘǼȱ ȱ¢ȱȱȱĜ¢ǲȱ (3) (4) issues of adverse selection and moral hazard; ensuring quality of care through quality assurance standards and enhancement of health care providers’ capabilities through incentives and capability-building activities;

ǻśǼȱ ȱ ȱ ȱ ¢ȱ ęȱ ȱ ǰȱ ǯǯȱ ȱȱȱ¡ȱȱęǲȱȱ ǻŜǼȱ ȱ ȱ ȱ ȱ Ěȱ ȱ ȱ RCMS scheme, i.e. domestic and international market forces that determine cost of drugs, medicines, and laboratory re-agents.

48 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

Ȃȱ¡ȱȱĞȱȱȱ¢ȱȱȱ care, as well as its priority and focus. Rapid industrialization and lack of social protection for vulnerable groups resulted in poverty among the rural population. The Government quickly responded by initiating reforms in the health sector designed to target and prioritize this most vulnerable population group. It was also clear to the Government that health resources must be increased to achieve their goals. ȱȱȱȱȱȱ ǰȱȱěȱ from line agencies, and participation from stakeholders and enduser representatives, the RCMS scheme was pilot-tested for further enhancement and improvement towards the goal of universal coverage. Basic services for outpatient and inpatient coverage, ȱǰȱȱ¢ȱȱěȱȱȱȱȱ the scheme. ȱȱȱęȱȱȱȱȱȱȱ ȱȱȱęȱȱȱȱȱ ȱȱ responsibility towards the scheme. The country’s integration of the community in all aspects of the scheme helps ensure such a goal. As such, the RCMS scheme became more acceptable and sustainable, and the farmers witnessed that investment in their own ȱ ȱ ǯȱ Ȃȱ ȱ ȱ ȱ ȱ ȱ Ĝcient system of fund-raising, fund management and a standard monitoring and evaluation process.

Lessons

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 49

Indonesia Background 7KH0DSRI,QGRQHVLD

xperience in Managing Multiple Health Insurance Schemes Dr. Donald Pardede, Centre for Health Financing and Health Insurance, Ministry of Health and Dr. Stephanus Indradjaya, ȱȱĜȱ Ȧȱ In 2005, Indonesia’s population was over 222 million, with a density level of 106 people per square kilometre (km²) and a growth rate of 1.59%. The population density on the island of Java is the highest, and the most populated province is Jakarta, with 12 957 people per km². Other provinces in Java have a population density of approximately 1000 per km². The population distribution between islands or provinces is still imbalanced: more than one half of the population, 59.24%, is in Java; 20.79% in Sumatra; 5.44% in Kalimantan; 7.14% in Sulawesi; and only 7.97% in the Nusa Tenggara islands, Maluku islands and Irian. Of the total population, 57.86% live in rural areas, and 42.14% live in urban ǯȱȱȱ¢ȱȱȱ ȱȱȱ ȱŖȮŗŚȱ ¢ȱ ȱ ŘşǯśŝƖǰȱ ŗśȮŜŚȱ ¢ȱ ȱ ŜśǯşŖƖǰȱ ȱ ȱ elderly compose 4.53%. The labour force rate is 47.60%, and almost 70% of the population works in the informal sector. In 1995, the infant mortality rate was estimated to be 55 per 1000 ȱ ǰȱ ȱ ȱ ȱ řŘȱ ȱ ŗŖŖŖȱ ȱ ȱ ȱ ŘŖŖŚȮŘŖŖśǯȱ The maternal mortality rate was estimated to be 373 per 100 000 live births, and decreased to 262 per 100 000 live births during the same period. In 2005, the average male and female life expectancy was 68.4 years. Health facilities are predominantly government-run, with 7413 health centres and 22 000 subcentres. Of those health centres, 1942 health centres have beds, and 3112 are mobile health centres. There are a total of 534 public hospitals, which includes those in districts and referral hospitals in provinces, and 432 private hospitals. Total hospital beds number 112 379, or 5 beds per 10 000 persons. ȱ ȱ ȱ ȱ ȱ ę¢ȱ ȱ ȱ ȱ 5.2 trillion or 569,239,320 US$ in 2003 to Rp 13.5 trillion or 1,477,832,850 US$ in 2006, increasing spending from 2.7% of the GDP in 2004—US$ 19 per capita—to 3.2% in 2006—around US$ 26 per capita. Thirty-six per cent of total spending came from government and 64% from the public. Due to the implementation of Social Security Law, health insurance coverage increased to 40.59% in mid 2005.

National Health Insurance: A Component of Social Security System

This law was passed in October 2004 to improve the social security system that currently covers only a small portion of society— active and retired civil servants, members of the armed forces and the police, and some private sector workers—by instituting the Askes, Jamsostek, Taspen and Asabri programmes. The programmes’ objectives are to provide basic protection to all

50 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

members and their dependents, to achieve social welfare for all Indonesians and to synchronize multiple schemes into one uniform scheme of basic health insurance. At present, implementation of the new social security system covers only small portion of the population, e.g. civil servants and some private sectors, ȱ ¢ȱ ȱ ęȱ ȱ ȱ ȱ ¢ȱ ȱ ěȱȯǰȱǰȱȱȱȯȱȱ ěȱȱȱ¢ȱǯȱ The law is in accordance with the 1945 Constitution (amended), Article 34, which mandates social protection for all. The law will ȱ ¢ȱ ęȱ ȱ ȱ ȱ ȱ ȱ welfare and in providing a legal foundation to stop the fragmentation in the current system’s administration. The Government is expanding social security participation, in keeping with the law’s mandate, by providing health insurance to 60 million poor people through the Askeskin programme. In the future, when all the implementing regulations for the law have been formulated and are operational, implementation of the social security system will eventually encompass all social security programmes and all portions of society. The main objectives of NHI in the new social security system are: (1) integrating the existing health protection schemes into a compulsory SHI scheme by changing the legal status of ¡ȱ ȱ ȱ Ȭęȱ ȱ ęǰȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ fund—short-term adjustments for the next 5 years; aiming towards universal coverage, including informal sector ȱ ȱ ȱ ¡ȱ ŘśȮřŖȱ ¢ǰȱ ȱ ȱ ȱ ǰȱ instituting voluntary coverage for those not covered while the upper-income self-employed may opt out;

(2)

ǻřǼȱ ȱ ęȱ ȱ ¢Ȃȱ ȱ ¢Ȃȱ premiums; (4) basing premiums for workers in the informal sector on ȱ ǰȱȱȱȱȱęǲȱ covering premiums for 60 million considered poor through government subsidies; utilizing proposed cost sharing of 10% with charges up to a maximum of 1 month of minimum wage, except for the poor; and

(5)

(6)

ǻŝǼȱ ȱȱȱȱȱ ȱęǯ As shown in Figure 8, the law establishes an adequate national ȱ ¢ȱ ¢ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ęȱ ȱ improve people’s welfare. The system is expected to have a direct

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 51

)LJ 2UJDQL]DWLRQDQGPDQDJHPHQW RIWKH6RFLDO6HFXULW\/DZ President National/Social Security Council

impact on increasing economic development and be able to prevent, by 2015, some challenges from the upsurge in the number of elderly people without health or pension insurance. It is estimated that by 2025, 11% of the population, around 24.5 million people, will be over the age of 60. The mechanisms for the system’s implementation are outlined in the law as follows: (1) the president establishes general policy and synchronizes implementation with the assistance of the National Social Security Council, which shall be established by a presidential regulation; the National Social Security Council is responsible for conducting study and research, making policy recommendations on investment and the budget for recipients of assistance, and monitoring and evaluating implementation of the national social security system; the four current social security administering bodies, their legal entities and implementation mechanisms must be brought into compliance with the law within 5 years of law’s enactment date, and additional administering bodies may be established by the law; the national social security programme covers health insurance, work accident insurance, old age pension, public pension and life insurance; the Government may take special measures to safeguard the ęȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ǰȱȱȱ¡ȱȱȱȱĴȱȱ ȱ ęǰȱ ȱ Ĵȱ ¢ȱ ȱ and amounts.

Board

PT. PT. PT. PT. J A M B O S T E K A S K E S T A S P E N A S A B R I SS Carrier

SS Carrier

J A M B O S T E K

A S K E S

T A S P E N

A S A B R I

I N F O R M A L

National Social Security Carriers

(2)

Branch

Branch Branch Branch Branch Branch Branch

• Each single existing carrier follows its own regulation • For pro t entities

• National Social Security Council directs main policy • National Social Security carriers implement the programme, not-for-profit • Synchronization of multiple schemes (HI : Askes, Jamsostek, Informal)

(3)

(4)

(5)

The institutions established by the law are: (1) the National Social Security Council, a national body that ȱȱȱȱĴȱȱȱ¢ȱ¢ȱ and monitoring implementation of this policy; social security administering bodies, e.g. Askes, Jamosostek, Asabri and Taspen, and their legal status shall be changed ȱȱ¢ȱȱȱęȱ£ǲȱ social security administering bodies that will have regional Ĝȱȱ¢ǲȱȱ an agency to monitor implementation of the national social security system at the provincial level, and to make recom-

(2)

(3)

(4)

52 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

mendations on the national social security policy to the National Social Security Council. To achieve universal coverage and to ensure fairness in health care ęǰȱ ȱ Ȭȱ ȱ ȱ ȱ ȱ ęȱ ȱ gramme in social security has been repealed by the law. Of the population’s 222 million people, roughly 40.59% are covered ¢ȱȱȱǻȱşǼǯȱȱȱȱęȱȱȱ comparable one to another, one cannot assume that this portion of ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ěȱ ȱ strophic illnesses. This scheme’s legal basis is derived from government regulations (Nos. 69/1991 and 6/1992). In the civil servant compulsory health insurance scheme, about 14 million members are insured. The scheme is managed by PT Askes, a state-owned company, and all civil servants, pensioner civil servants, military personnel and veterans must contribute 2% of their basic monthly salary, regardless of marital or family status. In 2004, the Government began ȱ ȱ ȱ ǯȱ ȱ ¢Ȃȱ Ȭęȱ ȱ ȱ not consistent with the concept and the philosophy of SHI. ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ medically necessary regardless of their rank or income. Higherȱ ȱ ȱ ȱ ȱ ȱ ęȬȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ Ĵȱ ȱ ȱ ǰȱ ȱ Ȭȱ civil servants are entitled to second- and third-class room and ǯȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ consist of public health centres and public hospitals. Askes pays the provider using prospective payments, mostly per case and per ǯȱȱ¢ȱȱ ȱȱȱ¢ȱȱȱěȱ determine the level of payment to providers to ensure that Askes maintains its transparency. The increase in premiums for compulsory members has, on average, been lower than the increase in health care expenditures, because the Government does not determine changes in wages on a regular basis. However, health care costs, especially drug prices, ȱ¢ȱȱȱȱĚȱȱ¡ȱǯȱ To ensure that Askes remains transparent, the Government determines payment rates to public hospitals, normally below the published rates of hospital services set by local governments. The ěȱ ȱ ȱ ȱ ǰȱ ȱ ȱ £ȱ ȱ ȱ ¢ȱ ǰȱ ¢ȱ ¢ȱ ȱ ŖƖȮśŖƖȱ ȱ ȱ ȱ ȱ £ȱ ȱ ǯȱ ȱ ěȱ ȱ Ğȱ ȱ ¢ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ Ğȱ ȱ ȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ Askes to the members. This leads to dissatisfaction among both ȱěȱȱȱȱǯ

Existing Health Insurance Schemes

Askes: Civil Servant Social Health Insurance Scheme

)LJ &XUUHQWKHDOWKLQVXUDQFH FRYHUDJHLQ,QGRQHVLD Min. of Labor Min. of Finance Min. of Health Min. of Defense

JAMSOSTEK

Private insurers

ASKES HMOs

Military Health Services

T Social Security Social HMO

S Free Health Services

Commercial Health Insurance

Legend Technical oversight Technical oversight

PT ASKES • Civil servants • Commercial • Scheme for the poor HMOs • Traditional HMO • Local gov’t initiatives COMM’L FINANCING

Coverage (million people) 2.9 M 5 M inc. Personal Accident 14M + 60 M +2M 2M

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 53

ȱȱȱȱȱȬęȱǰȱȱȱȱȱ the stakeholders. SHI implementation in other parts of the world ȱ¢ȱȱȱęȱǯȱȱȱȱȱȱbursed at cost, complaints are limited as the SHI carriers do not ȱ ¢ȱ ęȱ ȱ ǯȱ Ȃȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ Ğȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ Reform Bill currently under debate in Parliament. Although, in theory, all members have the right to receive compreȱȱǰȱ¢ȱȱęǰȱ¢ȱȱ with higher incomes, do not use their entitlements due to the perceived low quality and hassle in obtaining them. Susenas data shows that only one third of members who needed health services ȱȱęǯȱȱ¢ȱ¢ȱȱȱȱȱ the system. However, for catastrophic medical care, e.g. renal dialysis and open heart surgery, almost all members used their entitlements. About 75% of renal dialysis centre patients are Askes members in contrast to 7.4% of Askes members in the general population.11 Askes faces several issues linked to the trend to transform public hospitals into autonomous or state enterprise hospitals. The transformation is followed by price increases, as rumours abound that autonomous hospitals will no longer receive government subsidies. Other problems include the perceived poor quality of health services provided in public hospitals, the policy that pregnancy treatments related to the third child and beyond are not covered, the policy that military pensioners are not covered during active duty and the demand for decentralized management in line with a law on local autonomy now being implemented in the country. In addition to administering the compulsory scheme, Askes is Ĵȱȱȱȱȱȱȱȱȱȱ private sector. Currently, Askes has contracts with over 2500 companies covering about 1.5 million members, an increase from 131 635 members in 1994. Commercial members are entitled to ȱȱȱȱęǰȱȱȱȱȱples, provided by public and private health care facilities. There ȱ ęȱ ěȱ ȱ ȱ ¢ȱ ¢ȱ ȱ ȱ ęȱ ȱ ȱ ęȱ ȱ ȱ ȱ ǯȱ Payments to health care providers are negotiated on a prospective ǯȱȱȱȱȱęǰȱȱȱȱȱȱȱ based on an underwriting assessment of the prospective groups. ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ¢ȱęǯ

Thabrany et al. Review of Health Care Financing in Indonesia. Centre for Health Economic Studies, University of Indonesia, Depok, 2002.

54 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

The legal basis for Jamsostek, the scheme covering salaried employees in the private sector, is the Social Security Law. All employers having 10 or more employees are obliged to join Jamsostek. The law prescribes that (i) participation in the health insurance programme is conditional; (ii) only employers are mandated to pay the premium of 3% for singles and 6% for married persons from wages, i.e. noncontributory schemes; (iii) the wage ceiling remains at Rp 1 million (US$ 120) per month since 1993, freezing revenues for SHI contributions while costs of ȱȱȱȱǲȱȱǻǼȱęȱȱȱȱȱ employees and family members, but only up to the three children.12 Membership has grown from 199 000 members in 1991 to 2.9 million in 2002, but only small employers tend to enrol their employees in Jamsostek, while larger employers opt out. By 2002, Jamsostek covered less than 5% of eligible employees; in 2002, however, 18.8 million employees were enrolled in the other three Jamsostek social security programmes. A national labour survey estimated that there were 56.2 million workers fully employed in the year 2000,13 and data from commercial insurance companies show that the total membership in private health insurance companies was about 4 million people in 1999.14 In addition, there are currently 1.5 million members of Askes enrolled in private sector. ȱȱęȱ¢ȱȱȱ¢ȱ¢ȱȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ǰȱ Ěȱ ȱ ȱȱȱ ȱǯȱȱęȱȱȱ that Jamsostek lacks the management capacity to organize its health care programme, especially when dealing with health care providers. The second issue is related to the salary ceiling for ȱ ǯȱ ȱ Ěȱ ȱ ȱ ȱ ȱ ȱ updated for 10 years, despite devaluation and changes in salary structure. As a result, the average contribution received by Jamsostek per member has been very low, i.e. in 2000, it was only Rp 5224. or .57 US$15 Askes currently sells a more limited health insurance package for Rp 20 500 or 2.24US$ per person per month.16 With such a low average contribution, Jamsostek cannot negotiate with high quality health care providers, losing employers’ trust. Another structural problem of Jamsostek is its ȱ ęȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ŜŖȱ ¢ǰȱ including a maximum of 20 days in an intensive care unit. Renal 12 13

Jamsostek: Private Employee Social Security Scheme

Jamsostek, 1999.

International Labour Organization. National Labour Force Survey. ILO, Jakarta, 2000 .14 Djaelani, F. Health Insurance Industry in Indonesia. Paper presented at the Ȭęȱȱȱ ȱǰȱǰȱŘŖŖŘǯ 15 16

Jamsostek, 2002 Askes. PT Askes marketing circulations. Jakarta, 2002.

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 55

dialysis, cancer treatment, cardiac surgery, congenital diseases and organ transplants are not covered at all, further discouraging employers from enrolling their workers in Jamsostek. Table 3 shows the comparison of Askes and Jamsostek schemes.

Commercial Health Insurance JPKM:

The Jaminan Pemeliharaan Kesehatan Masyarakat (JPKM) Health ȱ £ȱ ǻ Ǽȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ Ȭȱ ęȱ ȱ ¢ȱ ȱ managed care organizations. The Ministry of Health promoted JPKM, expanding its membership through the growth of JPKM bapels. Bapels are non-insurance companies that sell health insurance in the form of a managed care product. The managed care product becomes an insurance product, because it involves risk transfer among the members. Ministerial decrees provide regulations regarding the licensing requirements to sell these types of health insurance. Using social security funds, the Ministry of Health provided incentives to set up a pre-bapel as a private corporation or foundation, to be developed as a licensed JPKM organization. This promotion was based on the Health Act of 1992, which encourages the Government to encourage JPKM develop ment. ǰȱȱ¢ǰȱȱȱȱěȱȱęǰȱȱ practice, none of the 24 licensed bapels provide truly comprehenȱęȱȱȱȱȱ£ȱȱȱȱȱǯȱ The majority of licensed bapels sell combinations of managed care and traditional commercial insurance products due to market ǯȱ ȱ ȱ ȱ Ȃȱ ęǰȱ ȱ ȱ ȱ bapel is Askes, which administers health insurance to civil servants. This is rarely acknowledged as Askes is not licensed by the

7DEOH$VNHVDQG-DPVRVWHNVFKHPHFRPSDULVRQ Characteristics *URXSVPDQGDWHG $VNHV Civil servants, retired civil servants, retired military personnel, veterans and the poor &LYLOVHUYDQWV RIEDVLFJRY¶WQRFHLOLQJ 3RRU 5S86SHUFDSLWDSHU month &RPSUHKHQVLYHEHQH¿W -DPVRVWHN Private employers with at least 10 employees or SD\VDODULHVRIOHVVWKDQ5SPLOOLRQRU 86SHUPRQWK VDODU\IRUVLQJOHV VDODU\IRUPDUULHGHPSOR\HHV &HLOLQJ5SPLOOLRQRU86SHUPRQWK XQFKDQJHGVLQFH &RPSUHKHQVLYHEHQH¿WFDQFHUWUHDWPHQW cardiac surgery, haemodialysis, congenital diseases are excluded (PSOR\HUV 'HSHQGHQWFRYHUHGVSRXVHFKLOGUHQ 37-DPVRVWHNIRUSUR¿W

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Carrier

56 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

Ministry of Health but by a government decree with higher legal ǯȱȱȱŘŚȱȱǰȱ¢ȱ ȱ ȱęȱȱȱ ¢ȱȱ ȱȱȬęȱǯ Ȭęȱ ȱ ȱ ǯ Before 1992, many large ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ employees on a voluntary basis. An insurance act was passed in ¢ȱŗşşŘȱĴȱȱȱȱȱȱance products; simultaneously, the Social Security Law prescribed conditional mandatory health coverage through Jamsostek. As such, the opt-out clause in Jamsostek allows commercial insurance companies to continue to sell health insurance to employers. The insurance act does not regulate any conditions of the health insurance contract. Regulation is limited to insurance business practices, and these companies can sell any health insurance product considered commercially viable. The main form of the health insurance products are the traditional indemnity insurance or managed care. ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ insurance as riders or as a separate line of business. They had a market advantage due to past relationships with employers in selling life or general insurance products. By 2000, insurance companies collected health insurance premiums totalling over Rp 360 billion, or 39,408,876 US$ more than double the amount collected by Jamsostek. Their market performance, in terms of the number of people covered and the amount of premium, earned higher revenues than JPKM. However, only large employers purchase health insurance from the private commercial insurance ǯȱȱȱȱ¢ȱĞȱȱȱ¢ȱance and do not enrol their employees in Jamsostek, and these ȱ ȱ ȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ employees. Therefore, many experts have recommended that the opt-out clause in the law be removed to ensure that all employers provide health insurance to their employees. ȱȱ¢ȱȱȱęȱǯ Dana Sehat ȱȱ¢ȱȱȱęȱȱ ȱȱ ȱ ȱ ȱ ȱ Ğȱ ȱ ȱ ȱ ȱ fees in public health facilities. Experience has shown that Dana Sehat failed to address the access problems due to very low beneęȱȱ ȱȱǯȱȱȱȱ ȱȱ ¢ȱ ȱ ȱ ȱ ȱ Ȭȱ ȱ ¢ȱ Ĵȱ the contribution based on consensus among the households. However, there was no incentive for households to contribute to Dana Sehat when they could pay health centre services for the same amount that they contributed as a premium. In addition, ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ for members, as Dana Sehat did not cover most of these services or ¢ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ £ǯȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ Ȭ term membership. As such, since the introduction of the scheme,

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 57

ȱ ȱ ȱ ¢ȱ Ĵȱ ǯȱ Ğȱ ȱ ȱ ȱ Askeskin, this programme is no longer viable as most Dana Sehat members are now Askeskin card holders.

The Askeskin Program for the Poor: The Most Expansive Initiative

In early 2005, as measured by the national standard, Indonesia ȱ ȱ řŜȱ ȱ ȱ ęȱ ȱ ǯȱ ȱ ŘŖŖśǰȱ ȱ compensate the increasing oil prices, the Government provided the poor with health cards that entitled the holders to free health services in public health care facilities. The money for the compensation programme was distributed directly to public health centres and hospitals based on the number of poor within the facilities’ area. Health centres provided primary health care, mother and child health care, and childbirth care, while hospitals provided for outpatient and inpatient care by exempting user charges for the card holders. Evaluation of this programme showed that there had been inappropriate utilization of health services. Most health centres experienced low absorption of the funds provided, while many public hospitals fell short. However, the funds allocated to certain health facilities could not be transferred to other facilities, resulting in inequity across facilities and populations. As a pilot project in 2002, Askes initiated a programme to provide health care for the poor in Musi Banyuasin district, South Sumatra. The district government contracted Askes to cover 20 000 poor residents, mostly in remote areas. The district government paid a contribution equivalent to US$ 0.40 per person per month. In 2003, the number of poor covered was expanded to 167 000 people, about one third of the district population, at the same contribution level. Based on this programme, the Ministry of Health expanded the same system to the national level, in accordance with the Sistem Jaminan Sosial Nasional Law17 that prescribes mandatory government contributions to insure the poor through a designated social security organization. In November 2004, the Ministry of Health and Askes discussed ȱ ȱ ȱ ȱ ȱ ¢ȱ ŘŖŖśǯȱ Ĝȱ designation of Askes was issued by the minister of health’s decree ȱ ȱ ŘŖŖŚǯȱ ȱ ¢ȱ ȱ ȱ ęȱ ȱ ȱ number of poor, at that time, was 36 146 700, and the level of contribution was Rp 5000 or .54 US$ per capita per month. In January 2005, the programme began, based on the following principles. ǻŗǼȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ comprehensive health services for the poor, the same services that are provided for government employees, except that in

Known as Badan Penyelenggara Jaminan Sosial, or BPJS of the law of SJSN.

58 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

ȱ ȱ ȱ ęǰȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ third-class rooms. (2) Comprehensive health care services using the managed care concept are provided through mainly public health care facilities administrated by Askes. To ensure portability of health care services throughout the country, the programme will be implemented countrywide. The programme is based on a SHI mechanism in which the contribution is paid by the Government based on the number of individuals covered. The assignment of Askes to administer the programme ȱȱȱȱȱȱę¢ȱȱ in administering the program.

(3)

(4)

(5)

¡ȱȱĞȱǰȱȱȱȱȱȱȱ covered, how the fund is distributed and the delivery of primary ȱ ¢ȱ ȱ ȱ ȱ ǯȱ Ğȱ ȱ 2005, the number of people to be covered has been increased to ȱŜŖȱǰȱȱȱȱȱȱęȱance for health services in public hospitals. ȱȱȱǯ The Government and the Ministry of ȱ ȱ ęȱ řŜȱ ŗŚŜȱ ŝŖŖȱ ȱ ȱ ȱ ȱ ȱ conducted by the Central Statistics Agency in December 2004. The number of indigent in each district was calculated and then multiplied by the Government’s contribution, i.e. initially Rp 5000 or .54$ per capita, to be paid by Askes. The district government then assigned each individual indigent person to receive a programme card, at that time called the JPKMM card, issued by Askes. The ȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ ęȱ ȱǯȱ ȱ ȱ ȱ ȱ ę¢ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ Ğȱ ȱ ¢ȱ ǰȱ Ȃȱ women’s organizations and health centres. Since mid 2005, the coverage increased to 60 million people, and not only covered the extremely poor but also the poor and near-poor. ęȱ ȱ ǯȱ ęȱ ȱ ȱ ȱ ȱ consist of: (1) primary health care provided at health centres and subhealth centres, and midwife services at the village level; delivery provided by midwives working at the village level or doctors in health centres, hospitals or clinics; drugs are covered if prescribed from a formulary developed by Askes known as the DPHO list of drugs;

(2)

(3)

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 59

(4)

other medical supplies, e.g. pins and screws, are also covered; and for secondary health care, a referral from a primary care provider is required, and care will be provided at district hospitals. In cases of emergency, however, a patient may visit a public hospital without referral from a health centre. If needed, a district hospital will refer a patient to a provincial hospital if medical equipment is limited or specialty care is needed.

(5)

ȱ ȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ ȱ child health care services, other than requiring a newly-graduated general practitioner to provide mandatory services in health centres, a midwife is appointed to provide primary maternity care, i.e. antenatal care and birth delivery, in a village. By assigning a midwife to provide services at a village level, access to maternity care is easier for local women. In addition, the midwife can also assist in treating simple medical problems and in delivering very ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ midwife is managed by a health centre, which is a headed by a doctor. The major problems of existing schemes in Indonesia are provided in Table 4.

7DEOH3UREOHPVRIH[LVWLQJVFKHPHVLQ,QGRQHVLD -DPVRVWHN $GYHUVHVHOHFWLRQGXHWRRSW out provision /DUJHHPSOR\HUVDUHOHVVOLNHO\ WRHQUROWKHLUHPSOR\HHVLQ6+, and low-income employees enrol, while higher-income opt out Retired private employees are not covered Expensive procedures are not covered Poor law enforcement low enrolment ,QWHJUDWLRQZLWKQRQKHDOWK programmes ODFNRI LQFHQWLYHVWRIRFXVRQ6+, program )RUSUR¿WHQWHUSULVH $VNHV6FKHPHIRU&LYLO6HUYDQWV 7RRDPELWLRXVEHQH¿WVIRUVPDOO contributions • High cost sharing due to small contributions, but the *RYHUQPHQWKDVEHJXQ contributing to reduce cost sharing • History of relatively low reimbursement levels to providers leading to poor TXDOLW\RIVHUYLFHV1HZ reimbursement levels are closer to public facilities tariffs and are subsidized +LJKHUUDQNHGFLYLOVHUYDQWV UHFHLYHEHWWHUEHQH¿WV $GYHUVHVHOHFWLRQIURPUHWLUHG military personnel )RUSUR¿WHQWHUSULVH $VNHV6FKHPHIRUWKH3RRU • Data discrepancy of the HOLJLEOHGLIIHUHQWHVWLPDWHV IURP&HQWUDO%XUHDX RI6WDWLVWLFVDQGORFDO governments Card distribution issues due to data problems and remote areas leading to use of other mechanisms SURQHWROHDNDJHV 8QHTXDOVHUYLFHDYDLODELOLW\ DQGTXDOLW\ Transportation cost still a barrier to access /LPLWDWLRQRIFDUULHU¿HOG staff members /DFNRISURYLGHUV¶ NQRZOHGJHRQJXLGHOLQHVLQ service provision

•

• • •

•

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60 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

To implement the National Social Security Law, some government regulations must be developed such as the following: ǻŗǼȱ ę£ȱ¢ȱǰȱǱȱ ȱ ǻǼȱ ȱȱĞȱȱȱȱȱȱ Social Security Law following the ruling of the Constitutional Court; (b) mapping and harmonizing all regulations and legislation related to the administration of the Social Security Law following the ruling of the Constitutional Court; ȱ ǻǼȱ ęȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ regional governments in regard to developing the national social security system in implementing regulations for the Social Security Law and that concerning regional governments; and ȱ ǻǼȱ ȱ ȱ Ğȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ security administering body to accommodate regional aspirations; ǻŘǼȱ ę£ȱ£ȱǰȱǱȱ (a) accelerating the establishment of the National Social Security Council according to the Social Security Law; (b) providing the legal basis for the formation of national social security administering bodies; and (c) preparing for the transition of Askes, Jamsostek, Asabri and Taspen into social security administering bodies; (3) building stakeholder participation including: (a) preparing training modules and implementing training for national social security system trainers; (b) accelerating the organization/implementation of the socialization and dissemination of the law to all stakeholders, e.g. central, provincial, district and municipal governments; employers; employees; the mass media and the general public; (c) accommodating regional aspirations; (d) building social security information and management systems; (e) developing human resources that understand and care about social security systems; and (f) building public opinion that is conducive to developing a national social security system; expanding social security programme participation and ęȱǱȱ (a) developing designs, strategies and plans for expanding ȱȱȱęȱȱȱ¢ȱǰȱ for the short term, medium term and long term; (b) increasing the participation of regional governments in achieving universal social security coverage;

The Way Forward

(4)

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 61

(c) preparing supporting infrastructure and facilities for implementing national social security programmes; (d) identifying regions for the accelerated implementation of the national social security system, including expanding coverage using a regional approach; and (e) promoting partnership and harmonization among all stakeholders, including international organizations.

Conclusion

Since the 1950s, Indonesia has been implementing health insurance schemes, starting with community health funds; in 1968, the formal health insurance scheme for civil servants was implemented. The country changed how it provided health insurance in 1992 through the passage of 3 laws: the Health Act, the Social Security Law, and the Insurance Law. These laws promote the ȱȱȱȬęȱȱǯ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ access and quality of care. Due to previous experience, a national social security law was passed in 2004, and such a SHI will bring about an NHI system in Indonesia. To implement the social security system, however, government regulations are still under development.

62 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

The issues of low-level spending for health, high OOP payments ȱĜȱȱȱȱȱȱȱ ¢ȱȱȱ through the Askeskin programme, with initial reforms in inteȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ equity in health care for all Indonesians. It is not clear why richer employees usually opt out of the programmes, as this is contrary to world experience, in which the rich are more likely to buy more health insurance. By addressing this issue, the plan to expand the insurance system can be facilitated. Gaps in the health system, weak public health programmes, ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ǰȱ ěȱ ȱ ¢ǰȱ Ĝȱ ȱ ȱ health purchasers and sustainability are some issues confronting the present health schemes in Indonesia. The Government begin reforms through the following activities: ǻŗǼȱ ę£ȱ¢ȱǰȱǱȱ ȱ ǻǼȱ ȱȱĞȱȱȱȱȱ ȱ No. 40/2004 following the ruling of the Constitutional Court; (b) mapping and harmonizing all regulations and legislation related to the administration of Law No. 40/2004 following the ruling of the Constitutional Court; ȱ ǻǼȱ ęȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ regional governments in regard to developing the national social security system in implementing regulations for Law No. 40/2004 and Law No. 32/2004 concerning regional governments; and ȱ ǻǼȱ ȱ ȱ Ğȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ security administering body to accommodate regional aspirations; ǻŘǼȱ ę£ȱ£ȱǰȱǱȱ (a) accelerating the establishment of the National Social Security Council according to Law No. 40/2004; (b) providing the legal basis for the formation of national social security administering bodies; and (c) preparing for the transition of PT Askes, PT Jamsostek, PT Asabri and PT Taspen into social security administering bodies; (3) building stakeholder participation including: (a) preparing training modules and implementing training for national social security system trainers; (b) accelerating the organization/implementation of the socialization and dissemination of the law to all stakeholders, e.g. central, provincial, district and municipal

Comments on the Country Presentation: Indonesia Discussion

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 63

governments; employers; employees; the mass media and the general public; accommodating regional aspirations; building social security information and management systems; developing human resources that understand and care about social security systems; and building public opinion that is conducive to developing a national social security system;

(4)

expanding social security programme participation and ęȱǱȱ (a) developing designs, strategies and plans for expanding ȱȱȱęȱȱȱ¢ȱǰȱ for the short term, medium term and long term; (b) increasing the participation of regional governments in achieving universal social security coverage; (c) preparing supporting infrastructure and facilities for implementing national social security programmes; (d) identifying regions for the accelerated implementation of the national social security system, including expanding coverage using a regional approach; and (e) promoting partnership and harmonization among all stakeholders, including international organizations.

Lessons

ȱ ¡ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱ service delivery. Although the Government is gradually increasing investment in health through the Askeskin programme, the same problems and issues regarding access, equity and quality care are still emerging from the existing schemes. No single health care ęȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ensure wider population coverage and equitable access to health care. In addition, lessons from these schemes are valuable in formulating policy reform and implementation. The country seems to be aiming toward SHI and coverage for the ȱǰȱę¢ȱȱǯȱȱ¢Ȃȱȱȱ Ěȱȱȱȱȱȱȱȱȱǰȱ with a large portion of the population reaching retirement age without social protection. The Government is conducting careful steps to respond to this issue. Legislation of the national social security law championed additional health care resources, a message to law-making bodies and their leadership. The law also became the framework for strategic policies that will guide the Government in pushing for health care ȱ ȱ ęȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ strong political will manifested in the passage of a national law ensures that universal coverage will be pursued even during administration change.

64 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

entrally located in South-East Asia, Malaysia includes two land masses separated by the South China Sea. Peninsular Malaysia, comprised of 12 states, forms the southern tip of the Asian mainland. The states of Sabah and Sarawak are on Borneo Island along the northern border of Indonesi The population of Malaysia is multiethnic, with Malays, Chinese and Indians forming the major community groups. The population was estimated at 26.1 million in 2005 and is projected to increase to 32 million by the year 2020. Malaysia’s population is ¢ȱ¢ǰȱ ȱřřƖȱ ȱȱŖȮŗŚǰȱŜřƖȱ ȱȱ ȱ ŗśȮŜŚȱ ȱ ŚƖȱ ȱ ȱ Ŝśǯȱ ȱ ŘŖŖśǰȱ ȱ ȱ ȱ ȱ ȱǞȱŚśŖŖǰȱ ȱȱȱȱ ȱ ȱ ȱśƖȮ 6%. In 2005, the unemployment rate was 3.4%, and in 2003, the literacy rate was 95%. The life expectancy at birth in 2005 for both females and males were 76.4 and 70.6 years respectively. Also that year, the infant mortality rate was 5.1 per 1000 live births, and the maternal mortality rate per 1000 live births was 0.4.18 In 2002, the Malaysian NHA reported that Malaysia spent about 3.8% of GDP on health. The proportion of public to private sector expenditure for the same year was 56:44. Analysis of the subcomponents of the 2002 public sector expenditure showed that the Ministry of Health contributed 86%, making it the largest contributor to this sector.19 ȱ¢ȱȱ ȱȱȱȱȱȱęȱȱȱ care in the country. Other government agencies and private sector supplement its role to safeguard the population’s health. The Ministry of Higher Education is responsible for the operation of university hospitals as teaching hospitals. The Ministry of Human Resources inspects factories to enforce regulations designed to protect workers’ occupational safety and health. The Social Security Organisation, under the Ministry of Human Resources, ȱ ȱ ęȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ work-related illnesses. Estate hospitals established in various plantation estates also are under the jurisdiction of the Ministry of Human Resources. The Ministry of Defence provides health services for its personnel as well as for the local population around its military cantonments. The Ministry of Rural Development is involved in ensuring the health of Aborigines through their own hospitals and jungle medical posts. Although the Government controls local authorities, local authorities also undertake some health-related services, e.g. environmental sanitation and enforcement of food hygiene laws. The existence of a dual health system

Malaysia The Role of Public Financing in Ensuring a Safety Net: The Malaysian Experience Dr. Rohaizat bin Yon Planning and Development Division, Ministry of Health, Malaysia

Background

http://rds.yahoo.com/_ylt=A0S020oAR0lIIQQBjOqjzbkF/SIG=...wana.com.my/en/ak/accessibility/images/location_map.jpg (1 of 2)6/6/2008 10:20:46 PM

Planning and Development Division, Ministry of Health. Health Facts 2005. Malaysia Putrajaya FT, 2005. 19 Planning and Development Division, Ministry of Health. Malaysia National Health Accounts Project (Health Expenditure Report 1997-2002). Malaysia Putrajaya FT, 2006

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 65

in Malaysia allows for the public and private medical and health services to coexist.20

Health Policy on Safety Nets

Under the Constitution, the Government is responsible for the provision of health services, including services provided in government hospitals and clinics, maternal and child health, care of psychiatric patients, control of poisons and dangerous drugs, medical practices and public/population health.21 Health services are highly subsidized by the Government at minimum or no cost at primary, secondary and tertiary public health care facilities, ensuring a safety net for the needy. No one is denied access to health care in government facilities regardless of nationality or ability to pay. With the exemption process in place, services for disadvantaged groups, e.g. the poor, pensioners and the elderly, are provided free of charge. The revenue earned by the Government from fees collected for health care services only ȱȱŘƖȮśƖȱȱȱ¢ȱȱ Ȃȱȱating budget.22

The Safety Net in the Current Malaysian Health Care System

The Ministry of Health provides a comprehensive rage of health care services. The lowest level of health services is provided through rural health clinics (klinik desa). Each rural health clinic is ȱ ȱ ȱ ȱ ȱ ŘŖŖŖȮŚŖŖŖȱ ǯȱ ȱ groups in rural areas enjoy comprehensive health services ranging from outpatient curative care to preventive, promotive and rehabilitative services. These relatively inexpensive services were delivered free of charge to the population.23 The next level of health services is provided through maternal and child health clinics and health clinics (klinik kesihatan) that provide comprehensive primary health care services. All hospitals then concentrate on the provision of secondary and tertiary health care services. Services provided at community polyclinics and hospitals are highly subsidized by the Government.24 In 2005, 957 health clinics, 1900 rural health clinics and 200 mobile clinics existed. The Ministry of Health had a total of 128 hospitals, including six special medical institutions, throughout the country. These hospitals and special medical institutions provided a total

20 Ismail M. & Rohaizat B. Health care reform and changes: the Malaysian ¡ǯȱ Ȭęȱ ȱ ȱ ȱ ǯȱ ŘŖŖŘǰȱ ǯȱ ŗŚǯȱ ǯŗǲȱ Rohaizat B. & Abu B. Malaysian Health Care System. In Wieners, W. (ed.) ȱ ȱǯȱȱǰȱŘŖŖŖǱŘŝřȮŘŞŗǲȱȱȱǯǰȱ Rohaizat B., Haniza S. Developing the Malaysian health system to meet the challenges of the future. Medical Journal of Malaysia. 2004, Vol.59, No.1. 21 22

Ibid. Ibid. 23 Planning and Development Division, 2005; Ismail M. & Rohaizat B., 2002; and Rohaizat B. & Abu B., 2000 24 Ibid..

66 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

of 35 210 beds for secondary and tertiary care. Treatment for all ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ charge.25 Basic health care through health facilities is currently available to and accessible for more than 95% of the population in Peninsular Malaysia and more than 70% of the population in Sabah and Sarawak. These estimates are higher if outreach services, such as ȱ ȱ ȱ ȱ ǰȱ Ě¢ȱ ȱ ices, mobile health teams and dental clinics, are counted. Health and medical care services have been gradually decentral£ȱȱȱǰȱȱȱȱȱȱĜ¢ǰȱ ȱ the implementation of a national referral system to ensure provision of integrated health care to the population. This referral system serves to provide highly specialized care to augment the basic services provided in health clinics. A key objective of this ¢ȱȱȱȱȱ¢ǰȱ¢ȱȱĴȱ£tion of resources. Primary health care is therefore the foundation of the Malaysian health care system, and is supported by secondary and tertiary medical care. To further improve the accessibility of health services for the poor, the Government has developed a national health assistance fund ǻȱȱ ȱ Ǽȱȱęȱ¢ȱȱ¢ȱ health services needed by the poor. In addition, the Government has given various tax deductions or tax relief up to a maximum of RM 5000 or 1,482 US$ each, respectively, to pay for medical expenses, support equipment and medical expenses for parents.26 Contributors of the Employees Provident Fund are allowed to withdraw their savings to pay for medical bills. The Social Security ȱȱȱęȱȱȱȱ¢ȱ who are sick or injured due to work-related conditions. The private health sector is the second major provider of health services, operated through private hospitals and clinics that have been expanding throughout the country, especially in urban areas. Over the past few decades, the private sector has become increasingly involved the provision of health care for the country, compleȱ ȱ Ȃȱ ěǯȱ ȱ ¡ǰȱ ȱ ŗşŞŖǰȱ ȱ were 50 private hospitals with 1171 beds, and in 2005, the number had increased to 224 hospitals with 10 794 beds. Most of these hospitals are concentrated in the state capitals and urban areas. It is estimated that there are about 5000 private general practitioner clinics providing a range of primary health care services in Malaysia.27 25 26

Role of the Private Sector

Ibid

ȱȦȦ¡ȱǯȱȱȱǯȱǰȱȱǻĴǱȦȦ www.hasilnet.org.my, accessed ) 27

Planning and Development Division, 2005; Ismail M. & Rohaizat B., 2002; and Rohaizat B. & Abu B., 2000

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 67

The private health insurance industry is growing rapidly, Ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ accessibility to quality health care. Private health insurance, as all other health insurance, is licensed, legislated, monitored and controlled by the Central Bank of Malaysia. The premium paid for private medical insurance is given the tax exemption up to the maximum limit of RM 3000.28 or 1, 034 US$. The development of the private health sector is in line with the Government’s policy to encourage the private sector to power economic growth. The private health sector should complement ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ health services.29

Safety Nets in the Proposed National Health Care Financing Mechanism

To further improve accessibility and equity, as well as integrated and comprehensive coverage of health care services, the Government is planning to develop an appropriate national health ęȱ ǰ30 supposedly superior to the existing one. ȱ ȱ ȱ ěȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ groups including the poor, the elderly and the disabled. The existing health policy on safety nets is expected to remain. ¢ǰȱ ȱ ȱ ȱ ȱ ęȱ ȱ should be in line with the fundamental principles of equity that are based on community-rated NHI, national solidarity, social and individual responsibility and a belief that health care is the shared economic responsibility of all citizens—that the healthy and the ĝȱȱȱ¢ȱȱ£ȱȱȱ ȱȱǰȱȱ¢ȱ for the old, the working population for the pensioners and small families for larger families.31 Malaysia enjoys a comprehensive range of health services, with ȱ ȱĴȱȱȱȱȱȱȱȱ high-quality health care. This is in line with the objective of the health services, which is to raise and continuously improve the health status of individuals, families and communities. No one is denied access to health care in government facilities regardless of nationality or ability to pay. With the exemption process in government health care facilities, services for disadvantaged groups, e.g. the poor, pensioners and the elderly, are provided free

Conclusion

28 29

Inland Review Board, Year.

Merican M., Rohaizat B., Mahani A. Managing the growth of health ¡ȱ ȱ ȱ ěȱ ȱ ȱ ȱ ¢ǯȱ ¢ȱ Journal of Public Health Medicine. 2003, Vol.3(1):1-10. Economic Planning Unit, Prime Ministers’ Department. The Ninth Malaysia Plan (2006-2-010). Kuala Lumpure, Percetakan Nasional, 2006. 31 30

Merican, M., Rohaizat, B., Haniza, S., 2004 and Merican M., Rohaizat, B., Mahani A., 2003.

68 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

of charge.32 The health policy on safety nets is expected to remain ȱȱȱȱȱȱęȱǯ ȱ¢ǰȱȱȱȱęȱ¢ȱȱȱalization and integration of health sector initiatives to achieve Ĵȱ ȱ ǯȱ ȱ ȱ ȱ ¢ȱ £ȱ ¢ȱ the Government, and basic health care services are free of charge in government-owned clinics: rural health units and maternal and ȱ ȱ ǯȱ ȱ ¢ȱ ȱ ¢ȱ ěȱ ȱ ȱ ȱ charge at the clinics, but it also has a mechanism that ensures additional resources for the poor if they are hospitalized through the national health assistance fund. This institution was estabȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ poor. Additional support from the Government comes from various tax deductions or tax relief with a maximum of RM 5000 from each to provide for payment on medical expenses. Other social safety nets include the Employee Provident Fund (EPF), in which members can utilize their contributions to pay for their medical bills. For the private sector, Social Security Organization (SOCSO) oversees their medical needs. ȱȱȱȱȱȱĜȱȱȱęȱ ǰȱȱ ȱȱȱęȱěȱȱȱ sector reform through establishing additional hospitals to increase access to health care and also reaching out to geographicallyȱ ȱ ȱ ȱ ȱ ȱ Ě¢ȱ doctor services. The Government also encourages the development of private providers and closely monitors private health insurance to assure quality of health care. ¢ǰȱ ȱ ȱ ȱ ęȱ ¢ȱ ȱ ȱ ȱ payments and lessened the burden of disease on the majority of ȱ ȱ ǯȱ ǰȱ ȱ ěȱ ȱ resulted in the enhancement of health outcomes, as clearly Ěȱ ȱ ȱ ȱ ǯȱ ȱ ¢ȱ ȱ ȱ ¢ȱ ȱ infant mortality rate and maternal mortality rate. ȱ ȱ ȱ Ȭȱ ¢ǰȱ ȱ ȱ ȱ ęȱ system has concentrated the Government’s capacity on providing health care to the disadvantaged. The programme is enhanced by ensuring that facilities and health care providers are accessible to the majority of the population, i.e. 95% of the population in Peninsular Malaysia and more than 70% in Sabah and Sarawak have access to health care. The role of the private sector also ȱ ȱ Ȃȱ ěǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ę¢ȱ ȱ ȱ ȱ capital and urban areas.

Comments on the Country Presentation: Malaysia Discussion

Lessons

Ibid

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 69

The challenge that currently confronts Malaysia is sustaining ȱ ǰȱ ȱ ¡Ȭȱ ęȱ ȱ ȱ ȱ ȱ etary burden for the Government. However, the Government is now planning to rationalize its spending through the development ȱ ȱ ȱ ȱ ęȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ solidarity, national solidarity, equity, social and individual respon¢ȱ ȱ ȱ ¢ǯȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ Ȃȱ ȱ ȱ needs. The move towards such a system is commendable, as there have ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęǯȱ Furthermore, the current system is so successful that there have been reports of non-Malaysians using the system. Finally, Malaysia’s health care system is propelled by strong political will and government priority. Mobilizing resources and ȱȱȱȱȱ£ȱȱȱĜȱȱ ȱ ěȱ ȱ ǯȱ ȱ ǰȱ ěȱ ȱ addressing equity and coverage to the poor population occur. A solid organizational structure complemented by good interministerial cooperation, as well as private sector participation, ensures ȱ ěȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ ȱ ęȱȱȱȱȱǰȱ¢ȱȱȱvantaged. In addition, the widespread distribution of quality health facilities at all levels of care ensures accessibility and equity.

70 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

ocated in South-East Asia, the Philippines is an archipelago of 7107 islands situated between the Philippine Sea and the South China Sea. It has a population of 85 million growing at a rate of 2.36% per year. Considered as a middle-income country, the Philippines’ GDP per capita in 2004 was US$ 1106. With a life expectancy of 65 years for males and 72 for females, Filipinos live longer than the populations in the neighbouring countries of Indonesia, the Lao People’s Democratic Republic and Cambodia, but has lower rates than Malaysia, Thailand, Japan and ǯȱȱ¢ȱȱŘşȱȱŗŖŖŖǰȱȱ ȱȱęǰȱȱ country expects to meet the MDG targets for infant mortality rates. Maternal mortality, on the other hand, is lagging behind at 175 per 1000 live births, due mostly to postpartum haemorrhage, hypertension and its complications, sepsis, obstructed labour and complications from abortions. ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ access to quality health services.

The Philippines Enrolling the Informal Sector in Social Health Insurance: The Philippine Experience Dr Shirley B. Domingo Department Manager, Philippine Health Insurance Corporation

Background

In 1998, the leadership in health, headed by then-Secretary of Health, Alberto G. Romualdez, took up the challenge of reforming ȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ęǱȱ ȱ health, hospitals, health regulation, interlocal health zones and ȱ ȱ ęǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Health Sector Reform Agenda (HSRA). A comprehensive planning ¡ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ǯȱ ȱ ȱ ȱ succeed, acceptance by law-makers and other government and private sector stakeholders, including the population and the donor community, was necessary. As such, extensive advocacy activities were undertaken. In 2001, Dr Francisco T. Duque, the new Secretary of Health, emerged as the new leader of this initiative. Formerly the head of the Philippine Health Insurance Program, the implementing agency of the National Health Insurance Program (NHIP), the SHI scheme in the Philippines, Secretary Duque began implementing a package of reforms known as FOURmula 1. This package, which was HSRA’s implementation framework, covered four areas of reform: (i) reforms in public health and hospitals were integrated into the health service ¢ȱǰȱĚȱȱȱȱȱȱȱȱ integrated health services from public health to hospital care; (ii) reforms in health regulation were aimed towards ensuring quality ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ¢ȱ ěȱ drugs and medicines; (iii) reforms in governance at the national ȱ ȱ ǲȱ ȱ ǻǼȱ ȱ ȱ ȱ ȱ ęǰȱ ȱ was considered the driving force behind all the reform packages. In both reform packages (HSRA and Fourmula 1) , the goal was to add more resources to disease prevention and the promotion of well-being and to avoid the more expensive option of hospital

Reforming the Health Sector

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 71

inpatient care. By corporatizing hospitals or increasing and retaining hospital income, subsidies to hospitals could be redirected to public health programmes. Health regulation reforms included strategies to ensure quality in the provision of health ȱ ȱ ȱ ȱ ȱ ęȱ ǯȱ ȱ prominent feature in this component was lowering drug prices, which are very high in the Philippines compared to other neighbouring countries. The success of both reform packages was ȱȱȱȱȱȱȱęǰȱę¢ǰȱȱȱ successful implementation of the SHI scheme, known as NHIP. Through quality assurance programmes and the strength of its ęȱ ȱ ȱ ¢ȱ ǰȱ ȱ ȱ ȱ ȱ NHIP would assure continued implementation of the reforms and promote equity and quality in the provision of health services. As in all SHI schemes, universal coverage is a prerequisite for NHIP sustainability.

Health Care Financing in the Philippines

Since the devolution of health services to local government units ȱ ŗşşŗǰȱ ȱ ȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ĜȂȱ ȱ ȱ ǯȱ ȱ ȱ ȱ quality of health services, especially in government health centres and hospitals. In 1995, Congress passed an act to create the Philippine Health Insurance Corporation (PhilHealth) to administer NHIP. Its guiding principles were universality, social solidarity, equity, care for the indigent, quality assurance and local government unit participation (Figure 10). Membership is categorized into four sectors. The employed sector, composed of the government and private sectors, comprised 15.2% and 44.5%, respectively. Payment of premiums is shared between the employees and the employers, presently set at 1.25% of the salaȱȱȱȱȱȱ@ȱŘśȱŖŖŖȱȱśŜŝȱǞȱȱǯȱ¢ǰȱ this sector is easily captive due to mandatory payroll deductions of premiums. However, law non compliance is still seen, especially in the private sector, but around 63% of potential members in this sector are covered. The Non-Paying Program covers retirees or members who have been paying premiums for 10 years and who are at least 60 years old. This programme began on 14 February 2002, and as of June 2005, 230 635 persons were members, comprising 0.5% of total members. Enrolling the indigent population required strong marketing ěȱ ȱ ȱ ŘŖŖŚǰȱ ȱ ȱ ȱ ȱ ȱ ȱ national and the local governments. Depending on a municipali¢Ȃȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ŗŖƖȮśŖƖȱ ȱ ȱ ȱ government units. Payment of these premiums comes out of the unit’s share of nationally collected taxes known as the internal revenue allotment and from local taxes. In 2004, the Government, to ensure the enrolment of at least 5 million poor Filipinos, shouldered the total cost of the premiums. This increased the coverage of the poor population to 77% of potential members. To date,

72 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

ȱ ȱ ¢ȱ ȱ ȱ ěǰȱ ȱ ȱ (Indigent) Program is supported by a majority of local government Ĝǯ In 2005, the Medicare scheme for overseas Filipino workers was ę¢ȱ ȱ ȱ ǯȱ ȱ ȱ ȱ ¢ȱ ȱ ¢ȱ ȱ premium before going abroad, this sector is also easily captive. Finally, the informal sector, comprising around one third of the population, was included in the Individually Paying Program. In 2003, out of the potential 16.3 million in the informal sector, only 2.7 million, or 17%, were enrolled in NHIP—the largest gap in ǯȱ ȱ ȱ ȱ ěȱ ȱ ȱ Ȭ ęȱ ǰȱ ȱ Ȃȱ ¢ǯȱ ǰȱ ȱ ȱěǰȱȱȱ ¢ǯȱȱȱȱ ȱ ȱȱȱǰȱȱęȱȱȱȱ¢Ȭ paid professionals such as doctors and lawyers. Causes of non enrolment include lack of funds for the lower income groups or lack of interest for professionals. Similarly, reaching out to potenȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȭěȱ ȱ ¢ȱ ȱ approached individually; therefore, administrative costs limit ȱěȱȱȱǯȱȱ In addition, the programme faced serious adverse selection issues. With the requirement of only 3 months of paid membership prior to availing services, many potential members enrolled only when they were in need of medical services. A study showed that this sector had the highest availment rate, especially in the catastrophic ȱ ¢ǯȱ ǰȱ ȱ ȱ ȱ ȱ ȱ @ȱ řŖŖȱ ȱ 7 US$ which is the premium cost of 3 months, the member can ¢ȱ¡ȱęȱȱȱ@ȱřŖȱŖŖŖǯȱȱŜŞŗȱǞǯȱȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ǯȱ Ğȱ ȱ ȱ ǰȱ ȱ ȱ Ğȱ ȱ ȱ ȱ ȱ ȱ premium payments. Thus, only one half of the registered members are active members. Due to this sector’s issues and the serious implications in NHI’s sustainability, PhilHealth developed a scheme of enrolling the informal sector through organized groups. This scheme was pilot tested in 2003 with the assistance of the German Technical Corporation (GTZ) and was known as the PhilHealth Organized Group Initiative (POGI). With the goals of strengthening solidarity and risk sharing and minimizing adverse selection, POGI identięȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ membership for the informal sector. Similarly, it explored the possibility of an alternative payment scheme for this sector. The target clientele of this programme were the cooperatives. The conceptual framework is illustrated in Figure 11.

)LJ 3KLO+HDOWK PHPEHUVKLS DFWXDO YVSRWHQWLDO In millions 40.0 31 40.0 30.0 20.0 52 10.0 0.0 Govt Poor Private Informal Potential Membership PhilHealth Coverage 1.6 1.8 9 2 24 16.3

)LJ 2UJDQL]HGJURXSVDQG 3KLO+HDOWKSDUWQHUV LQLPSOHPHQWLQJ1+,3 FRQFHSWXDOIUDPHZRUN

PREMIUM PAYMENT ORGANIZED GROUPS

Filipinos

HOSP. & REGULAR OUTPATIENT (BENEFITS) PhilHealth

Recruitment/enrolment > Conduct of IEC/advocacy > Collection & remittance of members’ contribution > Submission of reports

> Capability-building (IEC) > ID generation > Group premium

Reaching the Informal Sector through Organized Groups

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 73

Under POGI, an organized group who wants to partner with ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ǰȱ Ĝ¢ǰȱ stability, operations, structure and assets. An orientation on NHIP ȱȱȱȱĜȱȱȱȱȱȱȱ£ȱȱ ȱȱȱęȱȱȱȱǯȱȱȱ by both sides, a memorandum of agreement was forged between the corporation and the organized group. The organized group had a minimum enrolment of 50 to avail of the following programme incentives: (1) inpatient care, with limits for room and board, professional fees, and laboratories that are the same for all other PhilHealth members;

ǻŘǼȱ ȱȱęȱȱ¢ȱǲ (3) outpatient diagnostic packages for those who pay annual premiums; availment of the more than 1500 hospitals nationwide; and,

(4)

ǻśǼȱ @ȱŗŖȱȱǯŘŘȱǞȱȱ¢ȱ ȱȱȱȱȱȱȱized group. Under the scheme, cooperatives acted as marketing and premium ȱȱ ȱȱ ȱęȱǱ (1) orient their members to the programme and conduct Information Education Campaigns; recruit and enrol the members, collect the members’ premiums and remit the same to PhilHealth; and, submit regular reports to PhilHealth.

(2) (3)

(4)

POGI was pilot tested in only two provinces: Southern Leyte and ǯȱ Ğȱ ŗȱ ¢ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ programme was conducted by WHO, the International Labour Organization (ILO) and GTZ, showing low programme enrolment. ȱȱ ȱęǱȱ ǻŗǼȱ ȱřŖƖȮśŖƖȱȱ£ȱȱȱ ȱ¢ȱ existing members of PhilHealth; (2) members in project sites preferred lower premiums and more Ě¡ȱ¢ȱǲȱ

ǻřǼȱ £ȱ ȱ ȱ ȱ ěȱ ¢ȱ Ȃȱ massive 2004 enrolment campaign for indigents. In this

74 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

period, 5 million PhilHealth cards were disbursed to those whose premiums were paid for entirely at the Government level. The need for a revised model to contend with organized groups arose, yielding a second model known as KASAPI, an acronym for kalusugan sigurado at abot-kaya sa PhilHealth Insurance, meaning ȃȱ ȱ ȱ ȱ ěȱ ȱ ȱ ǯȄȱ ȱ ǰȱȱȱȱȱȃȱ ȱȱȱȱǯȄ In this model, the target organized groups were larger, with memberships of at least 1000 and active members of at least 70% ȱ ŝŖŖǯȱ ȱ £ȱ ȱ ęȱ ǰȱ ȱ cooperatives, NGOs, people’s organizations and Community Based Health Insurance CBHCOs. The group was pre-evaluated ȱ ȱ ȱ ę¢ǰȱ Ĝ¢ǰȱ ȱ ȱ ȱ ȱ ȱ liquidity. Group premium rates depended on group size, percent of members enrolled and mode of payments, e.g. monthly, quarterly, semiannually and annually, as shown in Tables 5 and 6. ȱęȱǰȱ¢ȱȱȱęȱǰȱ ȱ no longer given. The programme was also implemented in a wider geographical area covering 7 out of 16 country regions.

7DEOH*URXSSUHPLXPVFKHGXOH Percent of 0HPEHUV Enrolled Percent of 0HPEHUV Enrolled *URXS3UHPLXP %DQG Regular Premium 86 86 86 86 86 86 86 86 Discounted $QQXDO5DWH 86 86 86 86 86 86 86 86 *URXS3UHPLXP 2QH<HDU 86 86 86 86 86 86 86 86 Per Payment 86 86 86 86 86 86 86 86 4XDUWHU Premium 86 86 86 86 8 86 86 86

*URXS6L]H

XS ± ± ±

$ $ $ $ $ $ $ $

*URXS6L]H

XS ± ± ±

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 75

7DEOH*URXSSUHPLXPVFKHGXOH4XDUWHUO\ZLWKD±GLVFRXQW *URXS6L]H Percent of 0HPEHUV Enrolled 6RXUFHVKLFRQIHUHQFHGHEDVDBSKLFSGI0D\

*URXS3UHPLXP 2QH<HDU 86 86 86 86 86 86 86 86 Per Payment 86 86 86 86 86 86 86 86

XS ± ± ±

The programme was successful for all partners. For PhilHealth, it was a means to reach out to the informal sector on the way to ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ Ĝciency in enrolling this sector, but most importantly, it dismissed ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ Ȃȱ ęȱ stability. For the partner organizations, it meant additional ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ ¢ȱ ȱ Ě¡ȱ ȱ ȱ ȱ ęȱ ȱ ¢ȱ enjoyed by regular members. Potential revenues for the organized group meant bigger incomes. Lastly, for the informal economy ǰȱ ¢ȱ Ě¡¢ȱ ȱ ȱ ȱ ȱ ȱ ěable NHIP membership, leading to health coverage when necessary. A healthy population means a healthy and progressive nation.

Comments on the Country Presentation: Philippines Discussion

In the Philippines, the health sector provider is composed of ȱȱȱȱȱȱȱěȱ¢ȱȱȱ due to disparities in services. Private practice, being more robust in terms of health technological capacity and oriented towards ȱ ęǰȱ ¡ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ population, while public health care, centred on extending service to the poor population, lacks resources and conducts health transactions primarily through OOP payments. It is in this context that the Government initiated the development of the NHIP, the key feature of the FOURmula 1 for health care implementation strategy, based on the principle of SHI. The NHIP’s main funcǰȱ ȱ ǰȱ ǰȱ ęȱ ¢ǰȱ ȱ ¢ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ targets for the country’s health sector reform. PhilHealth, the institution that manages the SHI programme, aims ȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ implemented various schemes to address OOP expenses. Among the payment schemes are fee for service, capitation, case payment

76 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

and global budget. Fee for service is the predominant scheme that ȱ¡ȱȱȱȱȱȱęȱǯȱȱ there is no standard support value for each case of hospitalization. The disparity in terms of type of hospitals, i.e. private and public, and in terms of primary and secondary categories of hospitals, ěȱȱȱȱȱȱȂȱȱǯȱȱ ȱ ěȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ Ȃȱ ȱȱȱȱȱȱȱȱęȱȱȱǯȱ ȱ ȱ ȱ ǰȱ ȱ £ȱ ȱ ęȱ ȱ ȱȱȱȱǯȱȱ¢ȱ@ȱřŖŖȱǻǞȱŜǼȱȱǰȱ ȱȱęȱȱȱȱ¢ȱȱȱȱǯȱȱȱ ¢ǰȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ principle of burden of disease. It enhanced case payment for safe motherhood through its normal spontaneous delivery package, which also covers newborn screening and promotes breastǯȱ ȱ ęȱ ȱ ȱ £ȱ ȱ ¢ȱ ȱ cataract surgery, TB directly-observed therapy package, malaria ęȱ ȱ ȱ ȱ ęȱ ǯȱ ȱ ȱ ȱ overseas Filipino workers, selected public hospitals will be given a global budget by PhilHealth to perform services such as primary care consultation and diagnostics services for these workers and their dependents. Another innovation that PhilHealth is developing is the implementation of rational drug use in hospitals. In this scheme, health care providers will use a drug price reference index to curtail the mark up of drugs available in the hospital pharmacy, which ¢ȱȱȱŘŖƖȮśŖƖǯ To market and expand the knowledge of SHI, PhilHealth, with the support of GTZ, designed a course for national and local policymakers and other stakeholders known as the Social Health Advocates and Champions Course. This course was created to cope with devolution and entice prioritization of health service delivery at the local level. It was also designed to deepen local Ȃȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ development of health systems and how good health service delivery could result in the total development of their respective municipalities. PhilHealth, as the implementer of the NHIP, has been able to ȱ ȱ ¢Ȃȱ ȱ Ě ȱ ȱ ȱ ȱ ȱ ęȱ ȱ harmonize reforms congruent to the strategies of the HSRA and its implementation framework, FOURmula 1. PhilHealth, as in other countries, is having problems covering the informal sector, a large ȱ ȱ ȱ ȱ ǯȱ ȱ ěȱ ȱ ȱ ȱ this is through group enrolment combined with incentive prepayment schemes.

Lessons

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 77

It is also evident that the programme recognizes the importance of considering alternative provider payment schemes that are suitable for each membership category and designing responsive packages based on the burden of disease of most Filipinos. ȱ ǰȱ ȱ ȱ ȱ ¡ȱ ěȱ ȱ ȱ ȱ system to increase coverage and support value, which is directly ěȱ ¢ȱ ȱ ȱ ęȱ ǯȱ ȱ ȱ ȱ ¢ȱ ȱ ěȱ ȱ £ȱ ȱ ȱ ȱ ȱ ȱ ęȱ given its excess budget. The programme should also consider the importance of political will, intensify support on the basis of enhancing health outcomes and not merely act as a pension fund ȱȱȱȱ ȱȱǯȱȱȱęȱ ¢ȱȱ Ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ sector such as the rapid migration of Filipino health workers ǯȱ ȱ ȱ ȱ ęȱ ¢ȱ ȱ Ěȱ ¢Ȭȱ ȱ £ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ oping the health sector towards alleviating the plight of poor Filipinos. In trying to reach out to the informal sector and sustain its enrolǰȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ęȱ packages and payment schemes that will not compromise members’ ability to provide for their other basic needs. Group enrolment with provider and organized group incentives has ȱ ęȱ ȱ ȱ ȱ ǯȱ £ȱ lessons from previous programme models also helps to improve programme implementation. Tapping formal groups to reach out ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęǰȱ ȱ making the partnership appear as income-generating for the partner organization is an innovative way to ensure a winning proposition for all stakeholders.

78 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

rior to achieving universal coverage in early 2002, the Government employed a piecemeal approach, gradually extending health insurance to target populations. This approach ȱȱ£ȱȱěȱȱȱȱǰȱ namely the Low-Income Card (LIC), the Voluntary Health Card ǻ Ǽǰȱ ȱ ȱ ȱ ȱ ęȱ ȱ ǻǼǰȱ ȱ the Social Health Insurance Scheme (SSS).33 As a result, four fragmented public health insurance schemes covered around 70% of the total population, or approximately 62 million people. In addition, about 30% of the total population was uninsured despite the Ȃȱěȱȱ¡ȱȱȱǯȱȱŗşŜŖǰȱ CSMBS was implemented for government employees and their dependants, including parents, by using the fee for service reimbursement model. The largest scheme, in terms of population coverage before 2001, was LIC for the poor, which was introduced in 1970 and was later extended to cover those more than 60 years old, children less than 12 years old and the disabled. VHC was developed in 1980, and the scheme increased population coverage from 1.4% in 1991 to 20.8% in 2001. A rapid increase in coverage of VHC between 1996 and 2001 was due to the 50% government subsidy of the premium to households.34 In 1990, SSS was introduced to employees who worked in the formal private sector. This ȱ ȱ ęȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ Government, employer and employee. The capitation model was adopted to pay health care providers. This scheme had limited capacity to extend its coverage to employees in the informal sector, especially those who worked in agriculture. Before 2001, uninsured persons who were very poor and could not ěȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ȱ ǰȱ ¢ȱ requesting this action through social workers in hospitals. Apart from the regular government health budget, public hospitals ȱȱȱȱȱęȱȱȱȱ ǰȱ CSMBS and OOP payments. Table 7 describes the salient features of the four public insurance schemes before universal coverage. A large gap was observed in terms of the amount of government subsidy per capita, in favour of CSMBS (B1778 or 56.35US$ per capita in 1996) and against LIC (around B280 or 8.87US$). Prior to 2001, this table was produced and monitored on a regular basis by reformists as it demonstrated a need to minimize the gap of inequity in government subsidies and health services provided

Thailand Reforms towards Universal Coverage: Experiences from Thailand Dr Viroj Tangcharoensathien, Ms Walaiporn Patcharanarumol and Mr Phusit Prakongsai, International Health Policy Program, Ministry of Public Health and Dr Pongpisut Jong-Udomsuk, National ȱ¢ȱĜǰȱ Health Insurance Coverage before Universal Coverage

http://rds.yahoo.com/_ylt=A0S020riuUxI9iIARGajzbkF/SIG=12g831e4f/EXP=1213074274/**http://www.nationsonline.org/maps/thailand_political_map.jpg

http://rds.yahoo.com/_ylt=A0S020riuUxI9iIARGajzbkF/SIG=12g831e4f/EXP=1213074274/**http://www.nationsonline.org/maps/thailand_political_map.jpg (1 of 2)6/9/2008 1:06:55 PM

Tangcharoensathien V., Teokul W., Chanwongpaisarn L. Challenges of implementing universal health care in Thailand. In Kwon H. (ed). Transforming the Developmental Welfare State in East Asia. Houndmills, Pelgrave, United Nations Research Institute for Social Development, 2005. 34

Tangcharoensathien et al., 2005.

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 79

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Reform Contexts

This section highlights key historical events, the contexts and enabling environments, several key actors and other important dialogues related to the development of universal coverage.35 During the past two decades, large-scale government investment in the public health service infrastructure—especially in rural areas, where two thirds of the population live—facilitated the capitation contracting model of universal coverage. There was extensive geographical coverage even at the most periphery level, namely in health centres at subdistrict levels ȱȱȱȱśŖŖŖǯȱěȱ¢ȱȱȱȱȱȱ ęȱȱȦȱǰȱȱ ȱ¢ȱęȱěȱ members and quality health personnel who gradually gained the

Overall System Contexts

Tangcharoensathien V., Wibulpolprasert S., Nitayarampong S. Knowledgebased changes to health systems: the Thai experience in policy development. ȱȱȱȱ ȱ£ǯȱŘŖŖŚǰȱŞŘǻŗŖǼǱŝśŖȮŝśŜȱȱ ȱ A., Mills A., Tangcharoensathien V. Learning from Thailand’s health reforms. ǯȱŘŖŖŚǰȱřŘŞǱŗŖřȮŗŖśǯ

80 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

Ȃȱ ęǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ the population. Integration of public health interventions, e.g. prevention, disease control and health promotion, at all levels of care occurred, but there were no longer any vertical programmes ȱ ȱ ȱ ǰȱ Ȧȱ ȱ ¡¢ȱ Ĵȱ ǯȱ Private sector growth in urban facilitates served as a contract model for the SHI and universal coverage schemes. In addition, there was a strong technical skill set, research capacity ȱ ęȱ ȱ ȱ ȱ ȱ ¢ȱ ¢ǯȱ ȱ ěȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ¢Ȭȱ was key for evidence-based policy development, not only on the universal coverage scheme design but also other public health policies.36 Evidence on the relationship between cost escalation and the feefor-service reimbursement model used by CSMBS warned that future reforms could not repeat the mistake of applying fees for services. The SHI contract model with capitation and acceptable quality of care and cost containment provided the precedent for the universal coverage scheme. LIC means testing, i.e. measurement of houseȱ ȱ ǰȱ ȱ ȱ ¢ȱ ěȱ ȱ ȱ ȱ Ȭǰȱ ȱ ȱ ȱ ȱ ěȱ coverage of health risk protection. In addition, VHC characteristics of voluntary contribution, adverse selection and moral hazard ȱ ǰȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ scheme. ȱ ȱ ȱ ȱ ¢ȱ Ğȱ ȱ ȱ economy indicated an early recovery in 2001. Existing human assets, the public health infrastructure and health facilities were ¢ȱ Ĝȱ ȱ ȱ ȱ ȱ ¢ȱ down to the subdistrict level, so implementing a universal coverage scheme required no additional government investments. There was strong political will and government commitment to provide universal access to health services for the entire population with a minimal co-payment. The universal coverage scheme was one social obligation made to the constituency during the 2001 general election campaign, as universal health care coverage was chosen an important issue instead of those in other sectors, such as education. The policy of universal coverage was highlighted in the seventh of nine urgent government policies declared by Prime Minister

Economic Context

Political Context

ȱǯȱȱȱȱȮȱȱȱȱǯȱǰȱ Bulletin of the World Health Organization. 2004, 82(10):723.

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 81

)LJ5HODWLRQVKLSDPRQJSROLWLFLDQV UHIRUPLVWVDQGUHVHDUFKHUV Politicians Evidence based policy Knowledge Reformists Researchers

Thaksin Shinawatra, delivered to the National Assembly on 26 ¢ȱŘŖŖŗǯȱ ȱȱȱĜȱǱȱ “To provide universal health insurance with a view to reducing the overall cost to the country and the people in acquiring health care, capping each hospital visit (or admission) at B30. All Thai people will be guaranteed equal access to a nationally acceptable ȱȱȱǯȄ The public gave universal coverage its full support as it promised ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ minimal incidence of catastrophic expenditures.

Relationship of Politicians, Reformists and Researchers

A positive and close relationship between politicians, reformists and researchers was observed; the politicians and reformists made tough decisions, while the reformists and researchers generated knowledge and evidence. Therefore, evidence-based political decisions were made through the bridging role of reformists. Reformists translated knowledge from researchers to an evidencebased policy for politicians, ensuring successful implementation (Figure 12). In conclusion, the technical capacity to produce evidence creates a sound foundation for reform, coupled with strong political will and overwhelming public support.

Reform Content Reform Objectives

ȱ ¢ȱ ȱ Ěȱ ȱ Ȃȱ Ǳȱ ǻǼȱ ȱ Ĝ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ beginning with primary care, while ensuring proper referral and long-term cost containment through the capitation contract model; (ii) ensuring equity across schemes through the standardization of ęȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ three public insurance schemes, and convergence and standardization of resource use through a smaller gap of per capita budget ȱ ȱ ęȱ ȱ ȱ ěȱ ȱ ȱ ǲȱǻǼȱ£ȱĚȱȱȱȱ ȱtion of purchaser and provider split functions, whereby the ȱ ȱ ¢ȱ Ĝȱ ǻ Ǽȱ ȱ ȱ ȱ ȱ scheme governance and the Ministry of Public Health and other public and private sectors serve as health care providers; (iv) ensuring concerns from all stakeholders are taken into account through active participation by all members in the National Health Security Board; and (v) ensuring quality of care through an accreditation system and utilization reviews. Although the Hospital Accreditation Institute had been functioning for 6 years, accreditation was still on a voluntary basis and not yet adopted as a condition for contracting. The contractor for the universal coverage scheme required a new accreditation mechanism, not a conventional hospital accreditation system, due to the geographical monopoly of district health systems (DHSs), the sole contractor in the district. As such, quality could not be applied as a contract condition.

82 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

As a result, by early 2002, three public insurance schemes covered 97% of the population, leaving only 4% uninsured. Government employees and their dependants (10% of the population) were covered by CSMBS, and SHI covered private sector employees (13% of the population), but not their spouses and dependants. The universal coverage scheme covered the remainder of the population, 74%. People who were covered by LIC, VHC and the uninsured are currently under universal coverage. Payment of health care providers is dominated by the closed-end method in the SHI and universal coverage schemes, but CSMBS applies the fee-for-service reimbursement model. The health insurance schemes in early 2002 are shjown in Table 8. ȱ ¢ȱ ȱ ȱ ȱ ¢ȱ ŘŖŖŗȱ Ğȱ ȱ ȱ tion and the Government was formed. At the same time, the legislative process started at the end of 2001. By November 2002, the National Health Security Act was promulgated by the House of Representatives and endorsed by the Senate. The NHSO was established as an autonomous body with its own governing board, chaired by the Minister of Health and Dr Sanguan Ĵ¢ǰȱȱęȱ ȱ¢ȱ ǯȱȱ The operation of the universal coverage scheme was completed prior to legislative processes. The legislative process involved all policy stakeholders through the parliamentary processes.

Three Public Schemes in Thailand

Legislation of the Universal Coverage Scheme

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TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 83

Main Features of the Universal Coverage Scheme

ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡Ȭęǰȱ noncontributory, public mandatory scheme. This scheme replaces two previous public insurance schemes and includes the previously uninsured 30% of total population. The budget for the scheme is calculated on a per capita basis while the budget for system administration is separated from the health insurance fund, and its amount is based on year by year negotiation. From previous health insurance systems and management examples,37 SHI or SSS is the predecessor to this scheme. The SHI contract model, through an arrangement with competitive public and private provider hospitals, split the role of purchaser, e.g. the ȱ ¢ȱ Ĝǰȱ ȱ ȱ ȱ ǰȱ ǯǯȱ ȱ ȱ private. However, the contract model for the universal coverage scheme is only feasible in the geographic area of the Ministry of Public Health’s health care infrastructure. The scheme advocates the use of a primary care network as the major provider, as this ȱȱěȱȱȱ¢ȱȱȱtions. The contract model requires registration with a provider, either a public or private contract unit of primary care (CUP). The typical CUP in the scheme is a DHS, which includes a district hospital and all health centres in that district. There are a total of 700 CUPs throughout the country, each responȱȱȱŝŖȱŖŖŖȱǯȱęȱȱȱȱȱȱ registered CUP, and pay a B30 (US$ 0.70) co-pay for an outpatient procedure or an admission, with an exemption for the previous LIC holders. However, if one bypasses the registered CUP, one is ȱ ȱ ¢ȱ ȱ ǯȱ ęȱ ȱ ȱ ȱ ȱ ȱ any health care provider, if not registered, at their own cost. The closed-end provider payment method is one of the scheme’s main features. Not only does it feature capitation, but there is an additional payment for accidents and emergencies based on the fee scheme, and payment for high-cost care is based on a fee schedule. The purchaser-provider split at a high level is another key feature of universal coverage scheme design. NHSO serves as the health ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ¢ȱ methods, while the Ministry of Public Health and other public and private medical institutions serve as major providers for members.

Tangcharoensathien V., Supachutikul A., Lertiendumrong, J. The social security scheme in Thailand: what lessons can be drawn? Social Science & ǰȱ ŗşşşǰȱ ŚŞǱşŗřȮşŘřȱ ȱ ȱ ǯǰȱ Ĵȱ ǯǰȱ ȱ ǯǰȱ Tangcharoensathien V. The response of providers to capitation payment: a Ȭ¢ȱȱǯȱ ȱ¢ǰȱŘŖŖŖǰȱśŗǱŗŜřȮŗŞŖǯ

84 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

ȱ ȱ ęȱ ȱ ȱ ȱ Ěȱ ¢ȱ historical experiences, such as LIC providing a comprehensive service package including outpatient service, inpatient care, prevention and health promotion services. In order to minimize barriers to access care, neither deductibles nor co-payments at points of service were introduced, except a nominal fee of B30 (US$ 0.70). Capitation is applied to pay health facilities for outpatient, prevention and health promotion services. Accidents and emergencies outside registered CUPs are paid on a fee schedule set and centrally managed by the NHSO. Inpatient services are paid by a global budget ceiling and the application of Diagnostic-Related Group. Currently, the global budget was set at the provincial level, but in the future will be set at the national level. Evidence from the Health and Welfare Survey conducted by the ȱ ȱ Ĝȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ǯȱ ¢Ȭęȱ ȱ ȱ ȱ ȱ ȱ poorest quintile, and another 25% to the poor quintiles, as shown in Figure 13. In contrast, CSMBS covers mostly the wealthiest group; 52% belongs to the richest quintile. Among SHI members, 49% also belongs to the richest quintiles. ęȱ ȱ ¢ȱ ȱ 38 to compare the preuniversal coverage time-frame of 2001 with the post-universal coverage year of 2004.39 A concentration index measures the distribution of payments. A positive value indicates the rich contributes a larger share than the poor, and a value of zero indicates that everyone pays the same, irrespective of ability to pay. For outpatient services, in the post- phase, the pro-poor subsidy was very pronounced at the DHSs. The concentration index was 0.3326 and -0.2921 for health centres and district hospitals, respectively. It is slightly less progressive at provincial hospitals’ outpatient services, as the index is -0.1496. For inpatient care, it is more progressive in favour of the poor at district hospitals, as the concentration index was -0.3130 in 2001 and -0.2666 in 2004. However, a weaker progression is observed in favour of the poor at provincial hospitals, as the index was -0.1104 in 2001 and -0.1221 in 2004. In conclusion, the pro-poor subsidy was strongest at the DHS level. DHSs play a key role in fostering the pro-poor nature of public subsidy, as it is a close-to-client ȱȱĴȱȱ¢ȱȱȱȱǯȱ ȱ Ĵȱ ǯǰȱ ȱ ǯǰȱ ȱ ǯȱ ¢ȱ ȱ ȱȱ£ȱȱȱ¢ȱȱȮȱȱȱȱ Universal Access to Health Care. Nonthaburi, International Health Policy Program, Ministry of Public Health, 2005. 39

Achievements of the Universal Coverage Scheme, 2002–2005 Universal Coverage for the Poor Universal Coverage is Pro-Poor Subsidy

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TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 85

Impact of Universal Coverage: Catastrophic Illnesses and Impoverishment

Evidence of catastrophic expenditure and impoverishment due to medical bills—by using the national representative household survey dataset from NSO SES 2000, where 24 747 households were surveyed during the pre-universal coverage phase40 compared to SES 2002, where 34 785 households were surveyed41 and 34 843 in 200442 in post-universal coverage phases43—indicates that the incidence of catastrophic health expenditure, as measured by more than 10% of total household consumption expenditure, has been reduced from 5.4% to 3.3% and 2.8%. On impoverishment due to OOP, the increase in the poverty headcounts due to OOP payments dropped from 2.1% to 0.8% to 0.5%. In conclusion, the reduction in catastrophic expenditure and ȱ ȱ ȱ ȱ ȱ ȱ Ğȱ ȱ ȱ coverage reform. The scheme provides a comprehensive coverage of health care, e.g. outpatient, inpatient, accident and emergency, dental services and high-cost care, with a nominal fee at the point of service.

Why a General Tax-Financed Universal Coverage Scheme?

ȱȱȬȱ¢ȱ ȱȬęȱ ȱ¢ȱ (EQUITAP) study44 estimates a concentration index of various ȱȱȱȱęȱȱȱȱŘŖŖŘǯ45 ȱȱęȱȱȱ ȱȱȱȬȱȱ¢ǰȱȱȱȱȱȱȱęȱ in Thailand is quite progressive, as the concentration index equals 0.5929, as shown in Table 9. ȱ¡ȱȱȱȱȱȱȱęȱȱǰȱ with the highest index of 0.9057. Indirect tax and social insurance contribution are similarly less progressive than the direct tax as their index is 0.57. SHI contribution, in theory, should be more progressive, as the contribution equals the percentage of individual insurable income. However, it does not achieve as high an index rate as it should, because the maximum payroll was introȱȱȱȱęȱȱȱ ǯȱȱ The concentration index for general tax (direct and indirect) is 0.6996 as estimated by the writers. This is quite satisfactory, as it is more progressive than the income-related SHI contribution. If Thailand approves the contributory scheme for the informal

41 42 43 44

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O’Donnell O. et al. Who pays for health care in Asia? EQUITAP Project, Working Paper #1. 2005. 45

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86 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

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sector, similar to schemes applied in the Republic of Korea and the Philippines, the best option is income-related contribution, which ȱ ȱ ¡ȱ ȱ ȱ ę¡ȱ ȱ ȱ ȱ ȱ ȱ contribution rates. Then, the progressivity of SHI contributions would be less than using general tax. However, it is not possible to ȱ ȱ ěȱ ȱ ǰȱ ȱ ȱ ȱ ¢ȱȱȱȱȱĜǯȱǰȱȱ¢ȱ ȱ ȱ ȱ ȱ ȱ ¡Ȭęȱ ȱ ȱ ȱ ȱ sector by integrating them into the universal coverage scheme. It took 27 years of gradual coverage extension to people in the formal and informal sectors, since a formal government policy on Ȭȱęȱ¢ȱȱŗşŝśǰȱȱȱȱǯȱ Universal Coverage was completely achieved in April 2002. Strong political support, health system capacity and resilience to the 6-month countrywide programme scale-up in 2001 all enabled ȱȱȱǯȱ ȱĜȱȱȱȱ ȱ Ĝǰȱ ȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ ȱȱȱȱ¢ȱȱȱěȱǯȱ Lessons from various health insurance schemes set precedents for the design of universal coverage, e.g. SHI or SSS for the contract model and CSMBS for not using cost escalation. VHC was not the policy choice in achieving universal coverage, but rather a temporary scheme for capacity building. Targeting the poor under LIC ȱȬȱȱȱ¢ȱěȱȱȱȱ non-poor. Therefore, the fragmented health insurance schemes could never reach universality. Capacity to provide evidence, especially health systems research, and to link evidence to policy decision by bridging the role of reformists to politicians were the most crucial Thai experiences. The integral relationship among researchers, reformists and politicians is recognized. ȱȱȱěȱ¢ȱȱ ȱȱȱ by people. It materialized in a country with extensive geographical ȱȱȱȱȱȱěȱǯȱȱ

Conclusion and Lessons Learned

Enabling Factors for Achieving Universal Coverage

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 87

such, there is no need for new investment in infrastructure, making the universal coverage budget reasonable for the ǯȱ ȱ ȱ ȱ Ĝ¢ȱ ȱ ȱ close-to-client strategy was applied, through the advocacy of ¢ȱȱǰȱ ȱȱȱĴȱȱȱ¢ȱȱ and easy access. There is no way to achieve universal coverage through a contributory scheme, especially among the informal sector, and there is no ěȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ǰȱ ȱ ȱ ¡Ȭęȱ ȱ ȱ ǯȱ ȱ genuine partnership between the Ministry of Public Health and ȱ ȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱę£ȱȱȱȱȱȱȱȱ the National Health and Welfare Survey and the Socio-Economic Survey to monitor and evaluate health policy outcome.

Achievements of the Universal Coverage Scheme

The universal coverage scheme covers mostly the poor, and one half of its members belong to Quintile 1 and Quintile 2. In addition, empirical evidence indicates that the budget subsidy is propoor, and DHSs are a major hub of fostering the pro-poor nature ȱ ęȱ ȱ ǯȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ DHSs in order to further reduce the incidence of catastrophic illnesses and further reduce impoverishment from medical bills. ȱ ǰȱ ȱ Ȭǰȱ ŘŖȬ¢ȱ ęȱ 46 indicates that by 2020, the total health expenditure will be 3.88% of GDP, ȱȱȱ ȱȱ ȱȱęȱ¢ǯȱȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¡ȱ ȱ ęȱ ȱ universal coverage scheme.

Comments on the Country Presentation: Thailand Discussion

Achieving universal coverage was not easy for Thailand, but the Government took the initiative to champion the programme’s institutionalization and implementation. Such action was possible due to existing evidence-based data on Thailand’s previous expeȱ ȱ ȱ ȱ ȱ ęȱ ǯȱ Policies were also easy to establish because of the strong integration of research, social insurance champions and advocates, and politicians who were willing to buy into and roll out the programme. Furthermore, the programme was carefully developed to consider local needs and government capability. Pressing issues, in accordance with the WHO strategy on health ęǰȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱȱȱǰȱȱȱ¢ȱȱȱĜcient use of resources. There is, however, slight concern on the sourcing of resources, which is purely on a taxed-based method, 46 ȱȱ ǯȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ęǱȱ ȱŗȱęȱȱȱȱȱȱȱȱǯȱȱ ȱ ȱǯȱŘŖŖŜǰȱŗśǱŗŝȮřŖǯȱǻȱǼ

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ȱ¢ȱ ȱȱȱĜȱȱȱ¡ǯȱȱ of resources based on risk sharing is one way to address this problem and to also promote social solidarity. ęȱȱȱȱȱȱȱ¡ǯȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱ Ȭ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ Ȃȱ mentations are necessary to provide health security and ensure health care. Second is that health reformists and health care policy research advocates must be strongly linked to politicians who champion the initiatives in reforming the health sector through ȱȱęǯȱȱȱȱȱȬȱ¡ȱ and a strong research capability to determine strategies based on local experience must be present. Utilizing results of monitoring and evaluation activities from previous and current programmes help to improve implementaȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ěȱ ȱ Ĝcient programme implementation. In addition, strong political ȱȱ¢ȱȱȱȱ¢ȱěȱ implementation help ensure sustainability.

Lessons

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Mongolia Reaching Multisectoral Consensus on Health Care Financing Reform: A Work in Progress (The Mongolia Experience) Dr Indermohan S. Narula : Representative and Technical Adviser, International Cooperation of Welfare Services (JICWELS) Dr B. Bulganchimeg: ĜȬȬȱȱ and Planning of the Sector, Ministry of Health

ince 1991, the Mongolian economy has been moving from a centrally planned system to a market-oriented system. This transition, the macroeconomic recession that followed and the ȱ ȱ ȱ ȱ ǻȱ ȱ řŖƖȮŚŖƖȱ ȱ ȱ ȱ ȱ ȱ ¡Ǽȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱǯȱȱȱȱȱȱĚȱȱȱȱ ȱȱȱȱȱȱȱȱęǯȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ the areas of decentralization, privatization and private sector development and involvement in the health sector. Additionally, informal user fees were gradually introduced in public sector facilities in the 1990s to compensate for the loss of health sector funding. In 1994, to address this acute funding shortfall, a health insurance system was introduced and integrated into the overall ȱ ȱ ęȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ funding source, primarily for the public health sector. ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ęǰȱǯǯȱȱȱ¢ǰȱȱȱ¢ȱȱȱȱȱ changing health market, several players become more actively involved in the reforms. As the main actor, the Ministry of Health dominated SHI introduction, the establishment of NHAs, development of a medium-term expenditure framework of the Health ȱ ȱ ȱ ǻ Ǽȱ ŘŖŖŜȮŘŖŗśǰȱ £ȱ ȱ ȱ ȱ in public health facilities, and development and, to some extent, regulation of private health sector. The Ministry of Finance, on the other hand, took the lead in initiȱ ȱ ȱ ęȱ £ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ǯȱ ȱ ¢ȱ ȱ ȱ Welfare and Labour took the primary responsibility of reorganizing and institutionalizing the SHI fund that was created under the Ministry of Health and also developing a medium-term health insurance development strategy. This strategy is supported by the independently appointed oversight National Social Insurance Council and the Health Insurance Council. In addition, there are several key partners, e.g. the State Social ȱ ȱ Ĝǰȱ ȱ ȱ ¢ȱ Ĵǰȱ ȱ ȱ ȱ Ĝǰȱ ȱ ȱ ȱ ȱ ȱ organizations like public and private sector employers’ associations, public and private health care providers, and international partners such as ADB, World Bank, International Monetary Fund, various United Nations agencies, WHO and JICWELS, that ȱȱĚȱȱȱȱȱȱȱęȱ system through consultations, donor meetings, supporting national programmes, projects and some routine health care delivery activities. ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ęȱ multisector consensus to comply with all partners’ and stake-

Background

90 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

holders’ interests and mandates to strengthen the health care ¢ȱ¢ȱ¢ȱȱȱȱęȱ ȱȱȱ ȱ ȱ ȱ ȱ ¢ǯȱ ȱ ȱ ȱ ě¢ȱ implement the Public Sector Management and Finance Law and ȱ Ȃȱȱȱęȱǯȱȱȱȱ employed to initiate and sustain the dialogue have been interministerial meetings and working groups; joint orders/decrees ȱȱȱȱǰȱęǰȱȱȱ ȱȱ labour; deliberations and decisions about health insurance funding by the National Social Insurance Council and Health Insurance ǲȱ ȱ ȱ ȱ Ĵȱ ǲȱ ȱ various international partner round-table meetings. In implementing health sector reforms, the following challenges were confronted: ǻŗǼȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ understanding, knowledge and skills to conceptualize and implement the reform. (2) Many reforms required extensive revision of the legal and policy frameworks in the Government, central and line ministries and the Ministry of Health so that they could ȱĴȱ£ȱȱǯȱ There were a wide variety of actors involved in health care ęǰȱǯǯȱȱȱȱǰȱȱȱȱ government agencies, international partners, NGOs, the ȱ ȱ ȱ ȱ ęǰȱ ȱ ȱ Ĝǯȱȱ ȱȱȱ¢ȱȱęȱment-related traditions and practices of outmoded concepts regarding transparency and accountability that prevailed during Soviet times. Because of the clash of new and old paradigms, many probȱĚȱȱ ȱȱȱȱȱ and Finance Law and its implementation procedures.

(3)

(4)

ǻśǼȱ ȱ¢ȱĞȱȱȱȱȱȱpinning the primary health care approach has also necessitated changing the organization, structure and behaviour of health professionals. (6) The HSMP’s requirement to use a SWAp as a tool in its implementation has also raised several issues that will require preparation and the development of additional capacity to be built into the health sector.

ǻŝǼȱ ȱȱȱ¢ǰȱ ȱěǰȱ¢ȱȱ Ĝ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ tices, which has been repeatedly described in the interna-

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tional and domestic evaluations and need assessment surveys, also act as background constraints to the consultative process. In the last few years, the Ministry of Health has raised the issue of ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ immense energy to working closely with the main stakeholders ȱ ǯȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ęȱ ȱęǲȱȱǰȱ¢ȱȱȱęȱȱ were developed in partnership with domestic and international experts in line with the HSMP and its companion documents, especially the medium-term expenditure framework. The Ministry of Health and international partners jointly organized high-level ȱȱȱȱȱĴȱǰȱȱ ȱȱȱ supporting multisectoral working groups, and discussed their recommendations at a national consensus and international ȱȱȱȱĴȱȱȱȱȱǯȱȱ ultimate purpose of these activities was to gain approval for and ęȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ¢ȱ ȱ ȱ related health insurance development strategy. Several modalities were suggested to initiate implementation of the approved policy and strategy, such as capacity building of relevant stakeholders, ȱ ȱ ȱ ȱ ȱ ęǰȱ ¢ȱ ȱ policy-makers and strengthening multisectoral communication. During consultations, the main actors raised many critical issues regarding the separation of purchaser and provider functions. Such an action was approved in the HSMP and proposed by the technical assistance inputs to the ADB-supported Health Sector Development Program. It proposes creating a single purchaser system, employing output and standard cost-based payment methods, requiring allocation of more resources for primary health care and public health activities, and reducing current inefęȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ reporting mechanisms. The stakeholders accepted the recommendations but those relating to operating a single purchaser system—i.e., the agency responsible, autonomy issues, links to the state budget, the health insurance fund and other sources of revenue for the public health sector, and the capitation payment method for the primary care level—still must be addressed. The stakeholders involved with the health insurance fund’s oversight, management, governance and operations have been encouraged to introduce a capitation payment method only in situations where the payment is based on those who are insured. Another issue that still needs consensus is the body, e.g. the Ministry of Health or the health insurance fund, that should become the sole purchaser of health services. The Ministry of Health recognizes this step as moving towards a single purchaser system but ¡ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ensure quality and accessibility of health services. The Ministry of Social Welfare and Labour, representing the health insurance fund,

92 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

explained that as a purchaser of health services, the health insurance fund must improve their fund management and purchasing mechanisms. Yet, due to its experience with the other insurance funds, it was best placed to undertake that role through the SSIGO. As a result of the recent multisectoral discussions to build consensus in the health sector, the following has been achieved: (1) Parliament has approved the amendments to the Health Law and the Citizens’ Health Insurance Law that are focused on accreditation of facilities as a prerequisite for payment eligi¢ǰȱ ȱ ȱ ȱ ¢ȱ ǲȱ Ȭȱ ęǲȱ ¢ǰȱ ¢ȱ ȱ Ĝ¢ȱ ȱ ȱ ǲȱ ȱ tives for increasing the responsibility of the insurers and stakeholders. The Government has approved the HSMP, including wellęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęǯȱ ȱ ȱ ȱ ȱ ȱ ȱ Ȭȱ expenditure framework, planning and budgeting framework, and monitoring and evaluation framework, which are tools for the HSMP’s implementation.

(2)

ǻřǼȱ ȱȱȱęȱ¢ȱȱȱȱȱ¢ȱ ȱĞǰȱȱȱȱ ȱ the participation of relevant stakeholders in line with health ęȱǯ ǻŚǼȱ ȱȱȱęȱ¢ȱȱȱȱȱ ȱ ęȱ ȱ ȱ ȱ ¢Ȭȱ ȱ Ȭ makers at the high and middle levels to advocate for a single purchaser system and the related policy components. (5) An agreement by the key stakeholders to pilot the outputbased budgeting process in pilot aimags, hospitals and districts was established.

Despite the achievements mentioned above, several weaknesses in ȱȱȱȱȱ ȱęǰȱ and lessons learned were noted as follows: (1) Consultation with a variety of stakeholders and operational ȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ rather limited and was only undertaken at a late stage of the ¢ȱȱ¢ȱȱȱę£ǯȱ

ǻŘǼȱ ȱȱȱę£ȱȱ ȱ£ȱȱ inadequate to generate ownership and commitment.

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(3)

Policy was developed by consultants for endorsement by the Ministry of Health and other sectoral stakeholders instead of vice versa. Consultation for consensus building required a longer timeȱ ȱ ȱ ȱ Ěȱ ȱ ȱ ȱ ȱ provided.

(4)

ȱȱȱȱȱȱȱěȱȱȱ ȱ ęȱ ǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ě¢ȱ ȱ ȱ ȱ learned from recent experiences. The following factors must be considered: (1) (2) generating relevant evidence for decision-making; generating support and ownership through consultative mechanisms;

ǻřǼȱ ȱ¢ȱȱȱȱęȱȱȱ a win-win orientation for all stakeholders; ǻŚǼȱ £ȱ ȱ ȱ ęȱ ȱ ȱ ȱ development of appropriate accounting tools; and (5) system sustainability through joint planning and routine monitoring.

These factors can be made operational by the following key actions that institutionalize the consensus-building process for ȱȱȱȱȱęȱǱȱ (1) building a relevant evidence base for policy-level decisionmaking through routine monitoring and periodic assessȱȱȱȱȱęǰȱȱ¢ǰȱȱ ęȱȱ ǲ

ǻŘǼȱ ȱȱȱȱȱȱȱęǰȱ planning and management studies and projects supported by external donors such as ADB, JICWELS, WHO and World Bank; (3) creating institutional and human resources capacity for ȱ ȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱȱęȱ¢ȱ ǰȱȱȱmentation within the context of a SWAp and the HSMP; developing routine monitoring and evaluation tools using a core indicator set for reporting performance of the consensusȱ ȱ ȱ ȱ ȱ ęȱ reforms within a SWAp framework for reporting progress

(4)

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and challenges experienced, especially at the national and international consensus meetings; and (5) establishing institutional mechanisms to replace the current ad hoc meeting approach for conducting regular national and international consensus meetings of the sector ministries, international partners and stakeholders.

Considering Mongolia’s short period of transition from a centralized Soviet-style system to a democratic market-oriented system, recent initiatives and activities are clear evidence of its leadership’s vision and willingness to move forward in the health sector. Also, the Government is commended for undertaking the challenging ȱ ȱ ȱ ȱ ȱ ęȱ ¢ǯȱ ȱ ȱ ȱ ȱ ȱȱ¢ȱȱǰȱȱĜ¢ȱȱȱęȱment system, the allocation of resources and the transparency and accountability of the health care delivery system, including the private sector. Much has been accomplished in a relatively short time, and the consequences of these accomplishments are clear indications of the challenges that must be addressed in the short- and medium-term ȱȱȱęȱȱȱȱȱ¢ȱȱȱȱȱ eventually implemented. To address and enhance health outcomes, decrease OOP payments ȱȱĜ¢ȱȱěȱȱȱȱęǰȱ the Government initiated various policy and institutional reforms to address the problems in the health sector brought about by change in the political and economic system. The Government also instigated collaboration and partnership among key stakeholders and actors involved in the enhancement of health care. ȱȱȱȱęȱȱȱȱȱȱȱ forward mainly because problems brought on by the sudden ¢ȱĞȱȱȱ¢ȱȱ¢ȱȱěȱȱȱ commitment of critical government agencies to adapt to the new status quo. The present social protection scheme for health is in the process of reform and enhancement. The present reforms in ȱ ȱ ęȱ ¢ȱ ȱ ȱ ¢ȱ ǰȱ ȱ ȱ ȱ technical assistance to formulate a strategy, one of which is the proposal to establish a single purchaser system. The technical assistance also brings forth the provider payment schemes in the proposed SHI programme. As for strategy at the ground level, more resource allocation on primary health and public health activities, issues of accounting, and reporting mechanisms were also discussed. For the provider payment scheme, there are discussions among the stakeholders to use the capitation payment method to pay for health services. The major issue in the

Conclusion

Comments on the Country Presentation: Mongolia Discussion

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implementation is to reconcile what agency shall be tapped to implement the national health insurance programme. The Ministry ȱ ȱĜȱȱȱȱȱȱȱȱȱȱ ȱęȱȱȱȱȱȱȱȱȱȱȱȱ sole purchaser of health care. The health insurance fund argued its worth on the basis of fund management and experience in the ȱȱȱȱęȱǯȱȱ To resolve the issue, a multisectoral discussion on pressing issues was held. Among the meeting’s achievements, Parliament approved amendments to the Health Law and the Citizens’ Health Insurance Law, focusing on accreditation of facilities as a prerequisite for payment eligibility. Also included in the law are: ¢ȱ ǲȱ Ȭȱ ęǲȱ ¢ǰȱ ¢ȱ ȱ Ĝ¢ȱ ȱ ȱ ǲȱ ȱ ȱ ȱ ȱ ȱ responsibility of the insurers and stakeholders. A health care ęȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ Ğȱ ȱ ǯȱ ȱ ¢ǰȱ ȱ ȱ resulted in the development of a Health Sector Master Plan for ŘŖŖŜȮŘŖŗŖȱ¢ȱȱ ȱȱȱęȱȱȱ ȱȱȱȱȱęǯȱȱȱȱȱȱ a medium-term expenditure framework, planning and budgeting framework and monitoring and evaluation framework as tools for the plan’s implementation. A SWAp was also initiated to ensure rational and integrated management of donor assistance. Strong multisectoral collaboration and dialogue ensured that challenges to the strategies were given emphasis in the level of consensus, thus motivating ownership and agreement among stakeholders. ȱ ěȱ ¢ȱ ȱ ȱ ¡ȱ ȱ ȱ ȱ tives of the leadership to enhance health outcomes through adding more resources for health. Available technology and existing evidence-based practices in reforming the health sector were also utilized and are still being enhanced by the Government to suit the Mongolian experience.

Lessons

ȱȱ ȱȱȱǰȱȱȱ ȱĜȱ ȱ ęȱ ȱ ȱ ȱ ȱ ¢Ȭȱ ȱ ȱ guidance in policy and support for implementation of health care ęȱȱȱ¢ȱ¢ǯȱȱȱ¢ȱȱȱȱ process of successfully addressing the problems regarding spending for health, increasing allocation for health care and decreasing the burden of disease. Reforms become more acceptable to all when all sectors are involved from project conceptualization to implementation and a ȱȱȱȱȱĴȱȱȱȱǯȱ The process may be time-consuming, but the end-result more than makes up for the tedious process.

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By resorting to a multisectoral consensus to arrive at solutions and strategies, implementation is facilitated and fast-tracked, as commitments by all sectors have been previously obtained. This process also eliminates the Government taking most of the blame when reforms do not turn out as expected. Responsibility is equally shared. A multisectoral approach provides a wide array of perspectives and the end, ensures the individual agenda of stakeholders are covered and addressed. As shown by the Mongolian experience, this approach works well when there is one central agency orchestrating the whole process and when each stakeholder is able to work harmoniously with the rest.

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The Lao People’s Democratic Republic Development of Community Based-Health Insurance in the Lao People’s Democratic Republic Background

The Lao People’s Democratic Republic is a land-locked country of 236 800 km2 in South-East Asia with a population of about 5.6 million, making it the least densely populated country in the Region. The land is very mountainous, and as of 1989, 47% was covered by forest. The population is most concentrated in the lowland areas near the Mekong River; however, about 50% of the population live in upland, remote areas where access to roads and ȱȱĜǯȱȱȱȱȱȱȱȱȱ fewer services. The population can be broken down into at least 47 Ĝ¢ȱ£ȱȱǰȱ ȱȱ ȱǰȱǯǯȱȱ Lao Loum, who are concentrated in the regions near the Mekong River, comprising 52% of the population. Administratively, the country has a central government, one capital, 17 provinces, 139 districts and about 10 552 villages. About 85% of the population exists in the economy’s informal sector, and over 85% of this population lives in rural areas. Subsistence agriculture is the major economic activity, with rice as the staple crop. Considerable dietary supplementation is also from nontimber forest products. Timber, hydroelectric power, garments and tourism are major foreign exchange earners. Ğȱ ȱ ȱ ¢ȱ ǰȱ ȱ ȱ Ȃȱ Democratic Republic was established in 1975 based on a socialist system of governance. It remains a single-party socialist democratic state. In the mid-1980s, in response to slow economic growth, the New Economic Mechanism was adopted, which has gradually introduced market reforms into the economy and has opened the country to outside investment, international aid and tourism.47 The New Economic Mechanism did lead to economic growth, and a reduction in poverty has occurred. The economy’s growth rate averaged almost 6% during the 1990s, although this slowed during the Asian economic crisis of the late 1990s. The ęȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ and lowland areas along the Mekong River. With an estimated per capita income of US$ 390,48 the Lao People’s Democratic Republic remains one of the poorest countries in the ȱȱȱęȱȱȱȱȱ¢ǯȱȱĜȱ poverty rate has fallen from 46% in 1993 to 32% in 2003. Still, today, nearly 71% of the population lives on less than PPP US$ 2 a day, and 23% live on less than PPP US$ 1 a day.49 Almost all below those poverty lines are in the informal sector. The country’s overriding development priority is to no longer be a least developed country by 2020. In addition, according to its

47 48 49

Ron, A. MR/year/number. 2004 estimate, source: WB 2005 Ron, A. MR/year/number.

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National Poverty Eradication Programme, the Government is Ĵȱ ȱ ȱ ¢ȱ ¢ȱ ŘŖŗŖǯȱ ȱ ȱ Ȃȱ Democratic Republic is also a signatory to MDGs. ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ achieved over the last decade. The maternal mortality rate fell from 530 to 405 per 100 000 live births from 2000 to 2005, the infant mortality rate from 104 to 70 per 1000 live births, and life expectancy has increased from 50 years to 59 years for men and 52 years to 63 years for women from 1995 to 2005. However, the Lao People’s Democratic Republic still shows one of the lowest levels for those indicators in the Region. Diarrhoeal diseases, acute respiratory infections and malaria remain the most common causes of morbidity and mortality. Utilization of health care services is very low with 0.7 outpatient consultation per capita per year and an inpatient admission rate of 30 per 1000 people.51ȱ ȱ ȱ ȱ ȱ ę¢ȱ underutilized. The provision of health care relies on the public network, which includes 4 central hospitals, 5 regional hospitals, 13 provincial hospitals, 127 district hospitals and about 750 health centres. There are also about 5700 village-revolving drug kits that are managed by village volunteers who extend services to remote areas. The private sector is currently not well regulated. It includes about 2000 private pharmacies and about 300 private clinics mainly in ȱȱȱȱěȱ¢ȱȱȱȱȱěȬ¢ȱ hours. There are an unknown number of informal drug sellers and traditional practitioners. So far, the private sector includes no hospitals.52 As in many developing countries, the human resources available in the health sector are inadequate, both in quantity and quality with geographical, institutional and skills imbalances. The number of medical health workers in regular public facilities is 1.24 per 1000 inhabitants, while WHO recommends a minimum level of 2.5 medical health workers per 1000. Due to the low level of recurrent funds available for the health sector, health workers are very poorly paid, e.g. less than US$ 37.50 per month on average,53 and their geographical distribution is therefore further skewed towards ȱ ȱ ȱ ¢ȱ ȱ Ĵȱ Ĵȱ ȱ ȱ ȱ conditions.

Health Situation and Health Care Financing50 Health Indicators

Health Services Provision

Source: Dr Aviva Ron report on CBHI, April 2007, Mid Term Review of the Lux Dev project in Vientiane province; October 2006; WHO evaluation team; introduction. 51

Source: Public expenditure review, Lao PDR, 2005, chapter 6 Ron, A. MR/year/number

. Source: Public expenditure review, Lao PDR, 2005, chapter 6

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Health Care Financing

From 1975 until the late 1990s, the health sector was characterized by a universal system that was free for patients at the time of use. However, the system’s quality was low due to a chronic lack of funds, lack of infrastructure, poor facility maintenance and a lack of personnel to deliver quality health services. Much of the population lost faith in the public health care system, and facilities ȱę¢ȱ£ǯȱ¢ȱȱȱȱ¢ǯȱ Since the mid-1990s, market mechanisms have been gradually introduced into the health sector including RDFs at 86% of public health facilities; village-level, private pharmacies and user fees. User fees were actually introduced in 1995 through Decree 52 for ęȱ ǰȱ ȱ ȱ ŘřŖȱ ¡ȱ ȱ ȱ ȱ ȱ possibility to add a 25% margin on drugs charged to patients. ȱ ȱ ę¢ȱ ȱ ȱ ¢ȱ ȱ ȱ drugs in public health facilities and increased donor funding that greatly contributed to health sector development and to improvements in core health indicators, the introduction of user fees— ȱ ȱ ȱ ȱ ȱ ę¡ȱ ȯȱ ȱ ęȱ increase in OOP household expenditures on health care. The ȱȱȱȱȱ¡ȱęȱȱȱ in which households actually bear the major share of the country’s health expenditures. The estimated total average health expenditure in 2005 was around US$ 12 per capita with about 10% from ȱǰȱřŖƖȮřśƖȱȱȱǰȱǯǯȱȱȱ ǰȱȱśśƖȮŜŖƖȱȱȱȱȱ¡ǯȱ Of household expenditures, it is estimated that about one third is spent on public facilities’ fees and two thirds is spent in private facilities, mainly pharmacies, private clinics or informal drug sellers. Of the Ministry of Public Health’s recurrent public budget, ŜśƖȮŝśƖȱȱȱȱǰȱȱȱȱȱȱ ¢ȱ ȱ ŜŖƖȮŞŖƖȱ ȱ ȱ ȱ ȱ ȱ ǰȱ e.g. DRF and fees, made to patients at the time of use. Donor funding is linked to individual projects with no current SWAps or direct budgetary support mechanisms. Overall, as the health sector remains critically underfunded, public health workers make very low wages, and public health facilities receive limited running costs budgets. Consequently, health facilities are forced to derive the major share of their revenue from ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ services and are exposed to catastrophic health expenditures.

Rationale for Developing Community-Based Health Insurance

Limiting the Negative Impact of User Fees Initially introduced as an interim measure to prevent the closure of many public health facilities, user fees and RDFs are having well-known negative implications in the absence of a functioning exemption system and safety nets.

100 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

In theory, according to Decree 52, very poor patients are exempted from paying user fees. Current practice shows that the percentage of patients exempted is actually far less than the percentage below the poverty line. Many people delay seeking health care, and the poor may eventually forego seeking health care entirely due to the fear of having to pay large amounts in cash, particularly at the time of illness when income may be lower than usual. Unexpected and high medical expenditures can tip a low-income family into poverty, especially if they must sell assets to pay for health care. ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ěȱ Ȃȱ behaviour. RDFs are seen as a source of revenue, and the existing ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱ ȱ ȱ ȱ matched by the providers’ demand in this context. Two issues ȱȱȱǱȱęǰȱȱȱ¢ȱȱ providers is not adequately regulated and controlled; and second, the cost mark-up is not adequately controlled, and charges to the patient may be much higher than the 25% as set in Decree 230.54 ȱ ȱ ȱ ěǰȱ ȱ ȱ ȱ ȱ ȱ ȱ channel more resources at the public facility level, the Government decided to reinforce and develop social health protection for the ȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ more stable funding. ȱ ęȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ 2001 implementation of Decree 207 under the Ministry of Labor and Social Welfare’s initiative and administered by the Social ¢ȱ Ĝȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ŘŖŝȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ęǰȱ ǯǯȱ ȱ maternity grant, funeral grant, pension for retirees and invalids, and targets salaried employees in the private and state-owned enterprise sectors. The decree covered workers in enterprises with over 100 workers for several years, and then changed to cover those with over 10 workers. Now, it is about to be amended to cover enterprises with even a single salaried worker to conform to the changes contained in the new 2006 labour law. However, compliance is rather low, as enforcement of registration and contribution collection from enterprises requires appropriate provisions to be implemented under the new law. For instance, several large companies, e.g. banks, currently provide some social security ęȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ their workers with this scheme. ȱŘŖŖŗǰȱȱȱ¢ȱĜȱȱȱȱȱȱ the municipality of Vientiane and has expanded to Vientiane province, Savannaketh province in 2006 and Khammouane province in

Protecting the Informal Sector Population and Moving towards Universal Health Care

Ron, A. MR/2004/number

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 101

2007. At the end of 2006, the total number of persons covered was over 60 000, including insured workers and dependent spouses ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ęȱ ¢ȱ ȱ ŚƖȱ salary contribution, with 2% paid by the employer and 2% by the ¢ǯȱ ȱ ȱ ęȱ ȱ ¢ȱ ȱ ȱ care, without co-payment or limits on the number of contacts or services provided. The health care providers are paid according to ȱ ȱ ǰȱ ǯǯȱ ȱ ę¡ȱ ȱ ȱ ȱ ȱ ȱ family unit per year, regardless of actual use. Recent developȱȱęȱȱȱ¢ȱȱĚȱȱȱȱ ȱĜȱ ȱȱȱǯ55 The Ministry of Labour and Social Welfare has also started to reform a civil servant social security scheme, beginning with a pilot of this new scheme in the municipality and province of Vientiane in 2006. The Government, as employer, now allocates a ȱ ¢ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ person covered, e.g. civil servant, pensioner, spouse or child, to ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ¢ȱȱȱ¢ȱĜȂȱǯȱȱ ȱȱȱ will include a 4% contribution for health care, with 2% paid by the Government as the employer and 2% by the employee. The civil service scheme is to cover more than 500 000 people. Currently, over 65 000 persons are covered in the pilot areas. However, over 80% of the population exists in the rural and informal labour sector, and are excluded from these schemes. In ǰȱ ȱ ȱ ȱ ȱ ȱ Ĝ¢ȱ ȱ enforcing mandatory tax and insurance payments in the formal sector, none of the mandatory schemes can support an extension into the informal sector. In that context, a voluntary health insurance strategy has been adopted for the informal sector. In 2000, the Ministry of Health established a health insurance division in the Department of Finance and Planning, and requested technical assistance from WHO to develop health insurance for ȱ ȱ ȱ ȱ Ȭȱ ǯȱ ȱ ęȱ support from the United Nations Trust Fund for Human Security ǻ Ǽǰȱ ȱȱȱȱęȱȱȱȱ preparation of CBHI national regulations and for the implementation of three CBHI pilot schemes from 2002 to 2005. With the approval of a new UNTFHS grant, a second phase of the project began in 2006 to expand the CBHI network, and more bilateral donors are now supporting or planning to support the development of CBHI in the Lao People’s Democratic Republic, including the Luxembourg Development Co-Operation and AFD. CBHI schemes are regulated under Ministry of Health Regulation 723, which was revised and signed in 2005, and protects 3372 families for a total of 17 988 persons in December 2006.

Ron, A. MR/2007/number.

102 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

With the overarching goal of universal health coverage, the Government and its development partners have already succeeded in establishing close cooperation between the three schemes so ȱ ȱ ęȱ ǰȱ ȱ ¢ȱ ȱ ȱ ȱ implementation are similar so the eventual merger of the systems could occur in the distant future. In 2006, with 2.6% of the total population protected under the three schemes, SHI is still in its infant stage in the Lao People’s Democratic Republic. However, its role in providing access to ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ £ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ŘŖŖśǰȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ foresees the creation of a public welfare health insurance fund to cover the poor and low-income households that cannot contribute regularly to any of the insurance schemes. The key features of the current social insurance schemes are shown in Table 10. The CBHI schemes’ core design has been developed according to a single model principle with adaptations for local conditions. As for all CBHI in developing countries, the design’s challenge was to ȱ ȱȱȱȱȱěȱȱĴȱȱ the informal sector’s population. Based on lessons learned in voluntary health microinsurance ǰȱ ęȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ People’s Democratic Republic: (1) family membership to limit adverse selection and avoid absurd gaps in coverage within a family;56

Community-Based Health Insurance: Design General Approach and Key Design Features

ǻŘǼȱ ěȱ ȱ ȱ ¢ȱ ¢ǰȱ ¢ȱ to catch up with late payments over three months in cases of ȱ Ĝǰȱ ȱ Ȭ¢ȱ ȱ ȱ ȱ large families; ǻřǼȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ prevention, primary health care and hospital care to encourage appropriate health-seeking behaviours and reinȱ ȱĴǲ (4) capitation payment for contracted public health providers in ȱȱȱȱȱȱȱĴȱȱ containment as providers receive no incentives to overprescribe; and a clear referral system with a gatekeeper mechanism to encourage appropriate health-seeking behaviours and ensure

(5)

ȃ¢ȄȱȱęȱȱȱȱȱȱȱȱȂȱȱ Republic’s family book.

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 103

104 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

7DEOH.H\IHDWXUHVRIWKHFXUUHQWWKUHHVRFLDOLQVXUDQFHVFKHPHVLQ/DR3'5 6RFLDO Health Insurance VFKHPH &666&LYLO servant social VHFXULW\ VFKHPH PRQLWRULQJ 7DUJHW population &RQWULEXWLRQ SUHPLXP RIFLYLOVHUYDQW salary and governPHQWVXEVLGLHVWR¿OO the gap. Pilot scheme to reform the scheme ZLWKRIWKH VDODU\DQG for government DYHUDJHVDODU\86' IURPWKH HPSOR\HHDQG from the employer 3URYLGHUSD\PHQW PHFKDQLVP )ODWFDSLWDWLRQ payment to selected SXEOLFIDFLOLWLHV NLSSHUVRQ \HDU86'LQ pilot areas and reimbursement on fee for services in non-piloted areas *HRJUDSKLFDO FRYHUDJH 7KHRUHWLFDOO\ of civil servants in WKHFRXQWU\3LORW only in Vientiane municipality and province 1XPEHURILQVXUHG 'HFHPEHU 7KHRUHWLFDOO\ persons and actually LQVXUHG EHQH¿FLDULHVLQWKH pilot areas ,PSOHPHQWLQJ $JHQF\ 0R/6:WHFKQLFDO support for the pilot IURP,/2

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ȱ Ĝȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ containment. ȱ £ȱ ǰȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ęȱ ¢ȱ ¡ȱ ȱ ȱ ȱ ȱ ȱ ȱ society and where strong governmental involvement is obligatory. As a result, district community-based management under Ministry of Health supervision has been adopted as represented in the CBHI organizational framework scheme in Figure 14. Eventually, one important guiding principle was to design CBHI ȱ ȱ ȱ ę¢ȱ ȱ ȱ ȱ ȱ ȱ district level. Following that approach, it was accepted that supervision and monitoring tasks would be undertaken by Ministry of Ȭȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ levels. Remarkably, all design features; organizational framework and functioning have been described in CBHI national regulations and were adopted by the Ministry of Health at an early stage of CBHI piloting in 2002. Regulation 723 is further detailed in the guidelines and has been revised in 2005 based on lessons learned. ǰȱȱȱ ȱęȱȱȱȱȱȱ consistent with other SHI insurance schemes, i.e. the Social ¢ȱ Ĝǰȱ ȱ ȱ ¢ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ potential merger of the country’s SHI schemes.

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TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 105

Contributions, Health Care Bene ts and the Provider Payment Mechanism

ȱ ȱ ȱȱȱ ȱȱęȱȱȱȱ¢ȱȱ monthly contribution according to the number of persons in their family. As in all CBHI in developing countries, it was not possible to set the contribution rate as a percentage of household income ȱ ȱ ȱ Ĝȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ informal sector. ȱȱȱȱȱȱĚȱȱȱȱȱȱȱěable for households in the informal sector. In that regard, several measures have been adopted to ensure that the contribution is ěǯȱȱ ȱ¡ȱȱȱȱȱȱ¡ȱ more than 3% of household income as in many CBHI in develȱ ǲȱ ȱ ǰȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ȱ ȱ Ĵǯȱ ȱ was also decided that large families should be encouraged to join, ȱ ěȱ ȱ ȱ ȱ ¢ȱ £ȱ ȱ ȱ ȱ and have introduced a cross-subsidization from single to large families (Table 11). It was analysed that the contribution must be ȱȱȱ¢ȱȱȱĴȱȱȱȱȱĚ ȱ of households in the informal sector. In addition, the possibility of being late in contribution payments for 3 months without being excluded has been introduced to take into account households’ irregular and seasonal income. ȱě¢ǰȱȱ ȱȱȱȱȱȱȱĜcient level to ensure CBHI’s sustainability. Contributions were set at a level that covers target utilization of health care at district hospitals, including health centres when of good quality, and

Contributions

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106 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

referral hospitals at current average charges, and with a minimum allocation for administration costs at district level. Currently, the ȂȱĚȱȱȱŜŖȱŖŖŖȱȱǻȱǞȱŜǼȱȱȱȱ¢ȱ since 2005. According to article 14 of CBHI regulations, the contribution rates must be revised every 3 to 5 years to take into account ȱĚȱǯ ȱȱȱ ȱęȱǰȱȱȱ ȱȱ provide a package relevant to the epidemiological context and Ĵȱȱȱȱ ȱȱȱȱȱ ȱ ȱȱȱȱěǯȱ Five main measures have been adopted to ensure that CBHI is ȬĜǱ (1) a gatekeeper mechanism at district hospitals with mandatory referral to higher levels; capitation payment of health care providers; coverage of drugs only from the essential drug list; coverage of promotion and personal preventive services; and standard exclusion treatments. to avoid covering nonessential

ȱȱęȱ and Providers’ Payment Mechanism

(2) (3) (4) (5)

ȱ ȱ ěȱ ȱ ȱ ęȱ ȱ ȱ ȱ access to district hospitals and referral hospital health care services through a mandatory referral system. When sick, CBHIȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ǯȱ ȱ their condition is evaluated as severe and cannot be properly treated at district level, CBHI patients then are referred to a higher level facility, e.g. a provincial hospital or central hospital for CBHI in the capital city. All available services in contracted public health facilities are covered, excluding drugs outside the national essential drug list. Cosmetic surgery, treatment related to fertility, treatments outside ȱ¢ȱȱ ȱȱȱȱȱĜȱȱȱ ȱ ¡ǯȱ ȱ ȱ ȱ Ĝȱ ȱ ȱ ȱ expected to be covered by the compulsory motor vehicle insurance that is so far poorly enforced. ȱȱȱȱ¢ȱĜȱȱȱȱ ȱȱȱȱ social security scheme, health care providers are paid by capitation. In a context of user fees and fee for services, it was critical to be able to pay providers by capitation in order to contain costs and ȱ ȱě¢ȱȱ¢ǯȱ

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 107

Capitation mechanisms have several advantages compared to a reimbursement system based on actual expenditures of insured members. The capitation payment mechanism: (1) provides a cost control mechanism, because providers do not have incentive to prescribe more than the necessary drugs or exams as they will not be remunerated for more; limits administrative costs since it is much simpler to manage than a reimbursement system based on billing per item of service; and

(2)

ǻřǼȱ ȱ ȱ ȱ ȱ ȱ ę¡ȱ ȱ ȱ ȱ ǰȱ ȱȱ ȱȱĴȱȱȱȱȱ improve the quality of care provided to the insured populaǰȱǯǯȱȱȱěȱȱȱȱȱȱȱ of surplus. Nevertheless, capitation payment entails an important risk of ȱȱȱȱȱȱȱ ¢ȱȱȱȱȃȄȱ capitation. In that context, in partnership with contracted hospiǰȱ ȱȱȱȱęȱȱ¢ȱȱȱ insured members’ utilization of care and quality of care received. ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ęȱ management but also for the planning of appropriate services to the target population. ȱȱȱ ȱȱȱȱȱȱȱ¢ȱĜǰȱ i.e. 54 000 kip (about US$ 5.40) per capita per year in CBHI and 65 000 kip (about US$ 6.50) per capita per year in the Social Security Ĝǰȱȱȱ¢ȱȱȱȱȱȱȱ¢ǰȱǯǯȱ 40 000 kip (about US$ 4) per capita per year. In CBHI, capitation payment is made in a lump sum on a monthly basis that is split between the primary and referral providers once 10% has been deducted for administrative expenditures.

Management

As CBHI is district-based, its day-to-day management is ensured ¢ȱ ȱ ȱ ȱ Ĵȱ ǻǼǯȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ members. DMC includes representatives from the district administration, contracted health facilities, mass organizations, e.g. Lao Women’s Union, and representatives from insured members. DMCs are responsible for registering families, collecting monthly contributions, contracting hospitals, paying capitation fees monthly, addressing insured members’ complaints and liaising between insured members and hospitals. DMCs are also in charge of monitoring quality of care provided to CBHI-insured members. For each CBHI, DMC is expected to conduct a monthly meeting to ȱȱȱȱȱęȱǰȱȱ ȱȱ to address problems.

108 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

ȱȱȱęȱȱȱǰȱȱȱȱȱȱ manager who oversees CBHI accounting and daily management. ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĝȱ ȱ ȱ district hospital. The account manager works under the DMC’s direct supervision and control. CBHI forms and procedures are ¢ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ manager can refer. CBHI’s accounting system is paper-based at the district level. Each month the account manager is responsible for preparing a report for the DMC monthly meeting with updated information on CBHI membership, contributions, expenditures and member complaints. Monthly reports are sent to the CBHI regional and central teams. DMCs also appoint village collectors to ensure contribution collecȱȱȱȱ ȱ¢ȱǯȱȱȱȱĜȱȱ the population to accept that someone outside their village may collect the contribution, one CBHI village collector is selected in each village with the authorization of the head of village. This constraint currently limits the possibility of generating economies of scale. Village collectors collect contributions from insured families every month and bring them to the CBHI account manager in the district hospital. Account managers and village collectors receive monthly incentives according to performances. Initially based on number of families and new families registered, the incentive system is now focusing on the number of insured families paying on time, with a minimum of insured families per village required for the appointment of a village collector. Both account managers’ and village collectors’ incentives are part of CBHI administrative costs and are deducted from collected contributions each month. As management capacity is limited locally and the scheme is using the capitation mechanism, no reserves are accumulated at district ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ bank account for CBHI. Once 10% administrative costs are deducted, contributions are transferred to contracted hospitals each month as capitation. Usually, district hospitals are receiving 70% of the capitation and referral hospitals 30%, as stipulated in the contract established between the DMC and the selected public hospital(s). All DMCs are expected to be monitored and audited by CBHI provincial teams appointed by the secretary of CBHI provincial ȱĴǯȱȱȱĴȱȱ designed on the same model as DMCs with representatives from provincial authorities, including health authorities, health providers as well as mass organizations. According to article 7 of

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 109

CBHI regulations, CBHI provincial and regional teams are responsible for: (1) conducting research and planning CBHI development in their responsible area and reporting to their superior or ȱĴȱȱǲ

ǻŘǼȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ implement, monitor, supervise and evaluate CBHI schemes; (3) monitoring, supervising and evaluating contractual hospitals in accordance with the trilateral agreement, e.g. clarifying and solving problems with related organizations; and acting as the focal point for CBHI integration between inferior and superior bodies both in vertical and horizontal approaches.

(4)

ȱ ȱ ǰȱ ǯǯȱ ęȱ ȱ ȱ ǰȱ ȱ usually appointed among civil servants from the provincial health Ĝȱ ȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ expected that provincial teams will become the leading force in rolling out CBHI with donors’ continuous support. At the central level, CBHI is supervised by a CBHI central manageȱ Ĵȱ ȱ ȱ ¢ȱ ȱ ǯȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ ěȱ ¢ȱ ȱ ȱ departments, various ministries involved in social health protection as well as representatives from mass organizations. The Ĵȱȱ ȱ¢ȱȱȱȱȱȱ proposed improvements in CBHI regulations. It also has the critical role in ensuring that CBHI is developed uniformly across the country according to the regulations. Within the Ministry of Health, CBHI development is under the responsibility of the Budget and Planning Department, Health ȱǰȱ ȱȱȱěȱȱȱȱ ȱ central team. This team is the leading technical unit in charge of general monitoring and analysis of CBHI activities.

Achievements, Issues and Challenges57 ȱ

ȱ ȱ ȱ ȱ ȱ ȱ £ȱ ǰȱ ęȱ CBHI schemes were functioning in December 2006 in the Lao People’s Democratic Republic, covering 3372 families for a total of 17 988 persons. See Figure 15 for the schemes’ locations. Eleven per cent of the families in CBHI target area are currently protected.

WHO/WPRO (January 2007) Project Substantive Technical Report for UNTFHS.

110 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

As shown in Table 12 below, the number of families protected under CBHI has been multiplied by ten since the start of CBHI in 2002. All existing schemes are following CBHI national regulations. Some changes regarding referral mechanisms, possibilities of yearly premium payments and limited waiting periods have been ȱ¢ȱȱȱȱĴȱȱȱȱȱȱ the scheme developed in cooperation with Luxembourg. Lessons learned are expected to be shared during the regular CBHI central management meeting before revising CBHI regulations at the end of 2007. The present trend in existing CBHI in terms of membership, capitation level for contracted hospitals and utilization of health care ęǱ (1) a positive impact of CBHI on utilization of health care services in public facilities with an annual contact rate in outpatient departments greater than 1 contact per insured person per year compared to 0.7 for the general population; and a positive impact of CBHI in reducing the risk of poverty related to high health expenditures. Expenditures greater than US$ 100 have been averted for 73 insured patients

(2)

7DEOH2YHUYLHZRI&%+,GHYHORSPHQW &%+,7DUJHWSRSXODWLRQDQGPHPEHUVKLS 1EURISURYLQFHVLQYROYHG 1XQEHURI&%+, 1XPEHURIGLVWULFWVFRYHUHG 1EURIYLOODJHVFRYHUHG 1EURIIDPLOLHVLQWDUJHWDUHD 1EURISHUVRQVLQWDUJHWDUHD 1EURILQVXUHGIDPLOLHVLQ&%+, 1EURILQVXUHGSHUVRQVLQ&%+, $YHUDJHQXPEHURISHUVRQVLQVXUHGIDPLO\ RISHUVRQVFRYHUHGLQ&%+,LQWDUJHWDUHD 1EURIKRVSLWDOVFRQWUDFWHGXQGHUFDSLWDWLRQ E\&%+, Provincial hospital District hospital 1 1 2 2 3 3 3 2002 1 1 1 2,028 332 2003 2 2 2 3 3 3 2,022

Data from the scheme supported by Luxembourg were not available in ȱȱȱȱȱǰȱȱȱȱęǯ

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 111

Ĵ58 at referral hospital level from January 2005 to December 2006, and expenditures greater than US$ 200 have ȱ ȱ ȱ ŗřȱ ȱ ȱ Ĵȱ ȱ ȱ hospital level.29 ǰȱ ȱ ȱ ¢ȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ǰȱ ȱ ęȱ Ĵȱȱȱȱȱȱȱǯȱ ȱȱȱęȱȱ ȱȱȱ ǯ (1) Increasing existing schemes’ coverage at the district level to ȱ ȱ Ĝȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĝȱ incentive level to CBHI village collectors and account managers. This can be achieved through the following means: (a) set a minimum pool at village level and at scheme level when starting new CBHI, e.g. 600 families at start and 1500 as a target to have a dynamic scheme; improve understanding of both patients and health providers regarding quality of health care; mobilize donor support for conducting an awareness campaign for geographical extension in the existing schemes to reach a critical mass of insured in all schemes; and link CBHI and HEFs with funds purchasing CBHI cards ȱȱęȱȱȱȱȱǯ

(b) (c)

(d)

(2)

Limiting late payments for premiums is necessary in order to ěȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ ȱ occur by: (a) improving the incentives system for village collectors and account managers with more secure income as well as incentives based on the number of families paying their premium on time and not only based on families registered in the scheme; and limit the possibility of being in late payment, i.e. through a warning period, to 2 months instead of 3 months.

(b)

(3)

Regular monitoring and auditing in each scheme is vital to ensure appropriate management with respect to administrative procedures and regulations as well as to ensure continuing capacity building of management capacity at district level. This can be achieved by:

The average monthly household total expenditure is around US$ 110, according to National Statistics Centre. Lao Expenditure and Consumption Survey 2002/2003. Vientiane, 2004.

112 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

(a)

reinforcing capacity at central, regional and district levels through training and improved administrative procedures; (b) mobilizing sustainable sources of funding for moniȱ ȱ ¢ȱ ȱ ȱ Ğȱ ȱ ȱ period; and ǻǼȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ Ĝȱ ȱ ȱ servant social security, reinforce the current information system to improve its accuracy to monitor clear performance targets.

As in almost all CBHIs in developing countries, the major hindrance to CBHI development is related to quality of care and understanding prepayment and insurance. Besides some necessary improvements in the design to improve the contribution collection, the most serious problem is related to quality of care, both perceived and objective. In capitation payment systems, there is usually concern with underservicing. ¢ǰȱ ȱ ȱ ęǰȱ ¢ȱ ǰȱ ȱ Ěȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ drugs, is a major concern in CBHI. ȱĴȱȱ ȱ¢ȱȱȱȱȱȱȱȱ linked to user fee mechanisms, as well as patient demand. The ȱȱȱȱȱȱȱȱȱȱ ȱęcial barriers and is not used to prepayments. In this context, it is not surprising that patients request services previously out of reach or considered high technology, regardless of the existence of symptoms that might justify the diagnostic tests. If providers want to follow rational treatment protocols as requested in CBHI regulations, then some insured patients might complain that they are discriminated against compared to noninsured patients who ȱ ¢ȱ ȱ ȱ ȱ ¢ȱ ȃȄǯȱ ǰȱ ȱ ȱ the overall weak understanding of SHI, there may be problems with health workers’ capacity and willingness to deal with patient demand in the new situation.60ȱȱǰȱȱȱĴȱȱ ę¢ǰȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ equipped. Due to these mismatches between perceived and objective quality of care, as well as user fees and capitation payment mechanisms, dissatisfaction may push some CBHI-insured members to pay their contributions late and eventually to drop out while discouraging families in their village from joining CBHI.

Limited Quality of Care, Promotion and Membership

Ron A. MR/2004/number

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Even if impacts are not be immediate, conducting appropriate ongoing awareness campaigns to promote CBHI and explain the quality of care concept to families and health care providers is of paramount importance in addressing those issues. Currently, ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĝcient capacity and motivation to convey appropriate messages to ȱ ȱ ȱ ǯȱ ęȱ ȱ ȱ ȱ under review in the three SHI schemes in order to develop common material when possible and to simplify the process of promoting SHI. In addition, local authorities have been sensitized to this issue, and a common answer is so far to encourage village ȱ ȱ ȱ ȱ ȱ ȱ ŘśƖȮśŖƖȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ęȱ ȱ government policy. One critical need is to reinforce the objective quality of care. As this strategy is already part of Ministry of Health guidelines, one way may be to revitalize the concept of primary health care with ĴȱȱȱȱȂȱȱȱȱȱȱ allowing for appointments with specialist doctors regularly sent by provincial hospitals and allowing limiting referrals to severe cases and admissions only. If implemented, such measures could ȱ ȱ Ĵǰȱ ȱ ȱ ȱ ȱ ȱ ȱȱęȱȱȱȱ ȱǰȱ ȱȱȱĴȱ use of capitation for both levels of contracted hospitals.

The Next Steps Forward Expanding and Piloting Operational Linkages between the Schemes

Several donors will support the consequent expansion of CBHI in the Lao People’s Democratic Republic. With UNTFHS support, WHO will continue supporting the launch of CBHI until 2009 in ŗśȱ ȱ ȱ ȱ śȱ ěȱ ǯȱ ȱ ȱ ȱ ȱ development of CBHI in 11 districts in Savannaketh province and ȱ ȱ ŘŖŖŝȮŘŖŗŗǯȱ ȱ ȱ ȱ ȱ ȱ supporting CBHI in southern provinces. With increasing interest from donors, the Lao People’s Democratic Republic will have the challenging task of further developing CBHI according to a uniform design and consistent with all country SHI funds to smoothly move towards its goal of universal coverage. Another important step will be to work on the operational and practical linkages between the three schemes as with AFD on a pilot scale in Savannaketh province.

Linking CBHI and Health Equity Funds

To support and sustain CBHI development, an appropriate linkage must be found between CBHI and HEFs that are currently being piloted in the country. With World Bank’s support, the Lao People’s ȱȱȱĞȱȱȱȱ ȱǯȱ Ğȱ ȱ ȱ ȱ ȱ ȱ ȱ and development partners in social health protection, the current guidelines have been formulated to be consistent with the three ȱȱȱȱȱęȱȱȱ¢ǯȱ

114 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

With universal coverage as a general goal, the next step—with donors’ support and a clear exit strategy—may be to try to develop HEF schemes not only in the poorest districts but in all districts. This may be supplemented by simultaneously allowing CBHI to cover the poorest of poor by purchasing CBHI cards. The main reason for beginning the Lao People’s Democratic Republic’s CBHI scheme was the disproportionate share of household spending on health care, mainly by the informal sector. The scheme was also developed for the health care needs of the poor, which comprises 70% of the country’s population; the Government recognized that the burden of disease, mainly due to catastrophic health expenditures, was a major cause of poverty. Adding to this situation was the irrational use and provision of drugs and medicines, and utilization of outpatient care was minimal in health centres. The Out Patient Department consultation was limited for various reasons. For example, most of the health providers are men; in a patriarchal society like the Lao People’s Democratic Republic, husbands tend not to let their wives be seen by a male health provider. Geographic access, in which additional transport cost limits utilization of the services in facilities, was also a factor. Patient education and outreach activities in a country with a very low literacy rate should be reinforced to create higher demand ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ and voluntary contributions will increase. However, impoverished families may see contributions as additional expenses due to low quality services, while service providers view them as an additional fund source. The Government spent 2.9% of the GDP in 2005 on health, below the standard set by WHO. While allocation of general government expenditure for health was 8.7%, spending coming from SHI was minimal and accounted only for 0.2%. The bulk of the expenditure for health comes from donor assistance at 30%, and 55% is derived ȱ ȱ ǯȱ ȱ ȱ ęǰȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ǯȱ ȱ ȱ also very important to stress the existence of social security, in particular, health security for government employees and the ȱ ȱ ȱ ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ Ğ ȱ without any security or mechanism. The CBHI scheme covers all family members and both inpatient and outpatient care. It is mainly administered by the Ministry of Health. At present, coverage is very minimal and must be improved to achieve its main objective of enhancing health ȱ ȱ ȱ ȱ ǯȱ ȱ ěȱ ȱ also focus on the readiness of the facilities and health providers to provide quality services and information. Choice of expansion areas should be based on the availability of services and goods and on improved access to these facilities both geographic and ęǰȱȱȱȱȱǯ

Comments on the Country Presentation: the Lao people’s democratic republic Discussion

)LJ/RFDWLRQRI&%+,LQWKH/DR 3HRSOH¶V'HPRFUDWLF5HSXEOLF

Xay Nambak Luang Prabang New Planned Scheme Kao Oudom Existing Scheme Viengkham PhonHong

Champone

Saysettha Sisattanak Hatxayfong Pakse Champasak

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 115

With the Ministry of Health are foreign donors that extend technical assistance and additional funding support for the CBHI scheme. The structure also determines levels of care from the central to the village or health centre level. Based on this, how the scheme collects premiums from members is evident. The implementation of CBHI is still in its early stages, although progress is gradually occurring and enhancement based on the past experiences is now being developed. Some progress observed is the following: (1) continued expansion of CBHI, from one CBHI district scheme ȱŘŖŖŘȱȱęȱȱ¢ȱŘŖŖŜǰȱȱȱřřŘȱȱȱȱ December 2002 to 3698 in July 2006; continued partnerships with public health facilities, from two contracted hospitals in 2002 to eight in July 2006; and continued management and supervision capacity building.

(2)

(3)

In meeting these objectives, the country also accomplished increasing membership, safeguards to avoid wastages and leakages, and no scheme has collapsed. The contribution rates seem to ȱ ěǰȱ ȱ ȱ £ȱ ȱ ȱ ȱ ȱ ǰȱ referral ratios reasonable and In Patient Department/person still low. Local conditions and morbidity still must be examined. In comparing the programme’s accomplishments with its objectives, there is a need for a comprehensive evaluation of the scheme to quantify and identify its strengths and weaknesses. Issues on collection, contribution and compulsion are major factors in its sustainability. The strategy of starting small is laudable since this is a new programme. But monitoring and evaluation should occur ȱȱěȱȱȱ£ǯȱȱȱȱȬ earned money of these very poor people, and experimentation should be minimized so that losses are prevented.

Lessons

The country’s experience with CBHI is relatively young—as the programme began in 2002—so the problems it is experiencing are expected. Cambodia is also implementing CBHI to secure health care for the informal sector and vulnerable groups, and the two countries are facing the same key challenges of understanding, health care quality, health providers’ behaviour, local ownership and contribution collection. Both countries could learn from each other and also from neighbouring countries in South-East Asia regarding the implementation of the CBHI. There are documented good practices from other countries in Africa and in Asia, as well. Donors’ technical experts should be tapped to further enhance their programmes, but ownership and continuity should be stressed. As the present CBHI scheme is growing, among the issues and future initiatives that

116 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

may be modelled are expanding existing and new schemes, decentralizing CBHI implementation capacity to the regional level, developing mechanisms to guarantee coverage for the lowestincome and vulnerable population groups, maintaining uniformity in the design of CBHI schemes, and maintaining similarity with ȱȱ¢ȱĜȱȱ ȱȱȱȱĞȱȱlation to PM decree. ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ěȱ with CBHP and the insurance portion of the overall strategy to encourage premium payments, education and other service provisions. Likewise, expansion of itinerant/mobile services for hard-toreach areas should be funded by insurance so that people in these ȱ ȱ ȱ ęǯȱ ȱ ȱ ȱ ȱ ¡ȱ tional research and capacity-building activities at the district level ȱȱęȱȱ¢ȱȱ ȱȱ£ȱȱ ǯȱ CBHI is a very new concept for the Lao People’s Democratic Republic, and assistance is very much needed. These plans not only concern CBHI, but also look deeply into major policy reforms that must be accomplished to successfully meet the programme’s objectives. In the end, sustainability and ȱȱȱȱȱȱȱȱĴȱȱȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵǯȱ ȱ ȱ ¡ǰȱ ȱ Government should support and rationalize donor funding to extend coverage and enhance service delivery. Lastly, the country must decide if it has to continue improving CBHI or establish a national SHI programme, either of which needs strong political will and commitment for health spending. The country needs assistance very badly, and donor support should be provided to bring about reforms. This should also be part of the country’s poverty reduction strategy paper so it can be institutionalized ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ ȱ ȱ development package, and the Ministry of Health can link it to ȱ ȱ ȱ Ĵȱ ȱ ȱ ǯȱ ȱ province is decentralized, and the governor is equal to the minister ȱȱȱ ȱȱǯȱ ȱȱęȱȱȱ care could be another area of concern.

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 117

Viet Nam Health Care Funds for the Poor Health Insurance Department, Ministry of Health

Background Viet Nam, located in South-East Asia, had a population of 83 million in 2006 and an annual growth rate of 1.32%. Its GDP, per capita, is US$ 650, and is among the developing countries that are experiencing rapid economic growth with its remarkable 8.5% growth rate. Life expectancy for both males and females is 71.3 years old. The ratio of physicians per patient is 5.88 per 10 000, while beds in health facilities are 16.5 per 10 000 people. Malnutrition of children under 5 years old is 28%. Viet Nam, like other socialist countries who implemented a mixed policy regarding their economic and political systems, has made ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱ ȱ ęǯȱ Until the 1980s, health care was principally funded by the Government. In 1989, the Government had a major transition and Ğȱȱȱ¢ȱȱȱȱ¢ǯȱȱȱ ȱ framework, user fees were allowed, the private practice of health ȱ ȱĴǰȱȱȱȱȱȱȱ ȱ deregulated and SHI was introduced. Since that time, the Ȃȱ ȱ ȱ ęȱ ěȱ ȱ ȱ ȱ ȱ ȱȱȱȱȱȱęȱȱlish one SHI scheme to provide health protection and more ȱȱȱǰȱę¢ȱȱǯ ȱȂȱȱȱȱęȱ¢ȱȱȱ ȱ characteristics: (1) (2) a public and private mix of providers; a total expenditure on health that is in proportion to GDP at 5.2%;61 Expenditure on health: Private 70%, government 30% government expenditure on health as a proportion of total government expenditure is 6.1%; and Out of Patient in proportion to private expenditure on health is greater than 80%

Health Insurance in Viet Nam

(3) (4)

(5)

The health insurance system is implemented through a single national fund headed by the Ministry of Health, who has the overall statutory responsibility for policy formulation and ȱ ęǯȱ ȱ ȱ ȱ ȱ ¢ȱ ¢ȱ ȱ responsible for the actual implementation of health insurance operations, including contribution collection, card distribution, claims review, provider payment, and quality assurance. It has Ĝȱȱȱȱȱȱǯ

NHA 2003

118 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

The total population covered by the health insurance system numbers about 23.7 million, 28.3% of the entire population in 2005. ȱ ęȱ ȱ ȱ ȱ ŗŚǯśȱ ȱ ȱ ȱ ȱ ȱ servants and the poor in the compulsory programme, and 9.2 ȱȱȱȱǯȱȱęȱȱȱȱ ȱȱ 7.4 million schoolchildren and students and 1.8 million from CBHI. Through the years, there has been a steady increase in coverage. The system covers both inpatient and outpatient care, although it has also imposed a set of exclusions on services already rendered by the Government as well as very costly procedures such as cosmetic surgery, diagnostic treatment for HIV/AIDS, and selfĚȱǯȱȱȱȱȱȱȱǰȱȱ family. For the compulsory programmes, 3% of an individual’s salary is deducted: 2% becomes the employer’s contribution, and ŗƖȱȱ¢Ȃȱȯ¢ȱǞȱŗśȮǞȱŘŖȱȱ¢ǯȱ ȱȱȱȱǰȱȱ¢ȱȱ ǰȱȱǞȱřǯśŖȮǞȱ 4.00 per year. The voluntary scheme for schoolchildren contributes ǞȱřǯŖŖȮǞȱřǯśŖȱȱ¢ǰȱȱ ȱȱȱȱ ǞȱśǯśŖȮǞȱŞǯŖŖȱȱ¢ǯ The scheme also utilizes fee for service, capitation and diagnosticrelated group payment methods. ȱ Ȃȱ ȱ ȱ ęȱ ¢ȱ ȱ ¢ȱ ¡ȱ ȱ role to enhance health status and contribute to the country’s development. Among its important achievements are the establishment of one national SHI system within a broad social security frame ȱ ȱ ȱ Ğȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ redistribution to poor provinces, covering the last-most vulnerable populations such as the poor, the elderly and non-economically handicapped. Furthermore, the transition from the old socialist ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ěȱ ȱ ¢ȱ of the health delivery system and facilitated the design of a new ȱȱęȱȱȱǯȱȱȱȱȱ¢ȱ ¢ȱ ȱȱȱŘŖŖŘȱȱȱȱęȱȱ ȱ ǰȱ ęȱ ȱ ěȱ ȱ ȱ ȱ groups by the Government. The scheme also resulted in gradually increasing coverage in all programmes thanks to additional funding, coverage of the poor and reforms in giving additional ęȱȱȱ¢ȱȱǯ Although Viet Nam has issues with adverse selection, given Ȃȱęǰȱȱȱȱȱ¢ȱȱǯȱȱǰȱ the increased subsidy for the poor through the Health Care Fund for the Poor does not match the increase in the contributions of Ȭȱ ǯȱ ǰȱ ȱ Ȃȱ ęȱ ¢ȱ ȱ ȱ ȱ ǯȱ ěȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ poor and the contributions for the employed should be addressed.

)LJ $GPLQLVWUDWLRQRIWKH9LHW1DP KHDOWKFDUH¿QDQFLQJV\VWHP Vietnam Social Security Agency (VSS)

VSS provinial o ces (64)

Vietnam Social Security Agency (VSS)

VSS district o ces (600)

)LJ 'HYHORSPHQWLQWKHQXPEHURI LQVXUHG± 25.000 Number (thousand) 20.000 10.400 16.400 2003

15.000 7.100

5.000 0

3.790

1993

4.260

1995

1997

1999 Year

10.200

9.540

2001

11.556

10.000

8.630

9.740

13.025

18.390 2005

Comments on the Country Presentation: Viet nam Discussion

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 119

23. 700

ȱȱęȱ ȱȱ Ǳ (1) the absence of a health insurance law, and the weakness of the existing decree to enforce participation;

ǻŘǼȱ Ĝ¢ȱ ȱ ȱ ȱ ęȱ ȱ ȱ menting agenda to achieve universal coverage; ǻřǼȱ ȱ ȱ ȱ ęȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ such as: (a) increased health care costs, (b) low contribution rates, particularly for the poor and ȱǰȱ ȱęȱǰ ȱ ǻǼȱ ȱĜ¢ȱȱȱȱȱȱ¢ǰȱǯǯȱȱ for service, in controlling expenses and the ease in abusing health care services; and (4) limited ability of health care facilities to respond, as physical infrastructure and human resources are poor and limited, especially at local levels and in mountainous areas resulting in low quality of care for the insured.

Viet Nam can successfully overcome these obstacles because the Government fully supports the programme. Also, given the rapid economic and political growth of Viet Nam, the status of living of the people is slowly rising, although it must implement strict ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ ȱ £ȱ economy in a scenario where health care is fully supported by the Government. Participation of the private sector in the SHI scheme is a large factor in the programme’s success. Lastly, listed below ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ universal coverage: (1) (2) (3) (4) (5) (6) (7) (8) development of a health insurance master plan; creation of a health insurance law; the extension of the compulsory scheme to cover everyone; health insurance for children under 6 years old; the study and formulation of a payment mechanism; strengthening the local-level health system; intensifying information and communication; the improvement of health service quality; and

ǻşǼȱ ȱȱȱȱĜ¢ǯ

120 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

The Government’s commitment to increasing support and ȱ ȱ ȱ ȱ ȱ ȱ ȱ ěȱ ȱ £ȱ ȱ ěȱȱȱȱȱȱȱ¢ȱ¢ȱ with the guidance from the Ministry of Health. The Ministry of Health has also enumerated the challenges and issues confronting ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ǯȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ schemes, such as those in the Philippines and Indonesia, although Mongolia and China are more similar to Viet Nam in terms of the transition from a socialist economy to a more capitalistic system. Nevertheless, Viet Nam’s experience is unique in many ways as ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ programme.

Lessons

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Kyrgyzstan Addressing Informal Payments through Health Financing Reform Ninel Kadyrova, Deputy General Director Mandatory Health Insurance Fund, Ministry of Health

Background Kyrgyzstan is a landlocked country in Central Asia that borders Kazakhstan, China and Tajikistan. Seventy per cent of the country is covered by the mountainous region known as Tian Shan. Given ȱ ȱ ęǰȱ ¢ȱ ȱ ȱ ȱ ȱ Ĝȱ ȱ ȱ and isolated. Kyrgyzstan’s population is about 5.1 million, with 70% living in the rural areas and about 80% characterized as poor. Regarding health status, life expectancy at birth is 61 years for males and 68 years for females.62 The total expenditure on health in reference to the GDP is 5.6%.

Health Financing Reform ȱȱȱȱĴȱȱĞȱȱȱȱȱ Soviet Union, Kyrgyzstan ventured into establishing a democratic government and implementing a market economy. But during the transition period, a severe economic recession occurred, greatly ěȱ ȱ ȱ ǯȱ ȱ ȱ ȱ Ĝǰȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ȱ ¢ȱ Ğȱ ¢ȱ ȱ Soviets, the burden of health expenditures falling more on the population, and the growing level of informal payments were ȱȱĚȱȱȱȱȱȱ indicators, especially among low-income households. The duplication and excessive specialization of health services became very evident. Together, these problems brought about reforms in the health sector, and the following reasons served as its policy context: (1) the legacy of the Soviet health system was still evident in fragmentation and poor incentives that led to excess capacity ȱȱę¡ȱǲ through the 1990s, public funding on health was drastically reduced; economic reforms led to rising prices for key inputs such as medicines and energy; there were shortages of key inputs, and an increasing share ȱȱȱȱ ȱȱ¢ȱę¡ȱǲȱ informal payment was growing; and

(2)

(3)

(4)

(5)

ǻŜǼȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ Ĝ¢ȱ ȱ ȱ services. The policy context then became the basis to implement cardinal ȱ ȱ ȱ ¢ǯȱ ȱ ŗşşŚȮŗşşŜǰȱ ȱ ȱ ȱ 62

World Health Statistics 2007

122 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

ȱ ȱ ȱ ȱ ȱ ŗşşŜȮŘŖŖśȱ ȱ ȱ ȱ WHO support. This health care model had a multistructural nature, an infrastructure that corresponded to population needs in ȱ ȱ ȱ ęȱ ǰȱ £ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ¢ȱ ȱ health organizations. The health sector was split into providers and purchasers of health care services. A recognized priority was the development of primary health care, family medicine, free choice of family doctors and ensured access to health services for ȱȱȱȬȱęȱǯ ǰȱ ȱ ȱ ȱ ȱ ęȱ ȱ £ȱ ȱ ¢ȱ ȱ ¢ȱ ȱ ǯȱ ȱ ěȱ ȱ enhance the health system were further strengthened by integrating the issue of health into the overall context of the country’s ȱ¢ǯȱȱ ȱ¡ęȱȱȱȱ Development Framework in Kyrgyz Republic until 2010 and the ȱ ¢ȱ ȱ ¢ȱ ŘŖŖřȮŘŖŖśǯȱ ȱ ȱ was rationalized through SWAp, as through this approach, ¡ȱȱȱȱȱěȱȱĜȱȱȱ role in the country’s health system development. Tax revenues received by the state budget served as the main source of health funding from 1996 to 2004. In 1997, mandatory ȱ ȱ ȱ ȱ ȱ Ĵȱ ȱ ȱ ȱ funding to the health sector and to ensure the social protection of the population. This resulted in the creation of the Mandatory Health Insurance Fund (MHIF), which laid the foundation for the following: (1) the introduction of a contracting strategy;

ǻŘǼȱ ȱȱȱȱȱȱȱęǲ (3) improved accessibility of health services, especially for socially vulnerable categories of the population, e.g. ǰȱȱȱȱȱȱęǲ testing and introduction of progressive payment methods for health services; introduction of a monitoring system based on quality indicators; and mechanisms on population rights protection in the process of receiving health services.

(4)

(5)

(6)

ȱ ŘŖŖŗȮŘŖŖŚǰȱ ȱ ęȱ ȱ ȱ ¢ȱ ȱ ȱȱȱȱȱȱ¢ȱ¢ǯȱȱ ȱȱĞȱ ȱ ęȱ ȱ ¢ȱ ȱ ¢ȱ ȱ ȱ ȱ the pooling of local budget funds at oblast level with inclusion of categorical grants from the country.

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Comments on the Country Presentation: Kyrgyzstan Discussion

)LJ 3UHVHQWV\VWHPRIKHDOWKFDUH ¿QDQFLQJLQ.\UJ\]VWDQ Health nancing reform 1997-2005 Payroll tax, 2% Social Fund of salary fund (total wage bill)

ȱȱȱęȱȱȱ ¢¢£ȱ ȱȱȱ the overall health sector reform programme known as the Manas ȱ ȱȱȱȱȱŗşşŜȮŘŖŖśȱȱ ȱȱ Ȭȱ ȱ ȱ ȱ ȱ ȱ ŘŖŖŜȮŘŖŗŖǯȱ Among the revolutionary changes introduced in the health system were the establishment of a family medicine institute, the restructuring of health care delivery, introduction of mandatory health insurance, implementation of progressive provider payment methods, development of the single-payer system and the institu£ȱ ȱ ȱ ȱ ęȱ ǯȱ ȱ ȱ ȱ favourable changes in the health status of the population and addressed health security for vulnerable groups through additional spending and budget allocation for health by the Government. One major success is that the programme was able to implement the reforms and establish fundamental changes, despite the ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ŚǯŖƖȱ ȱ ȱ ȱ ȱ 1991 to 1.9% in 2002. ȱ ȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ process, an equally important role is played by the introduction of ȱ Ȭȱ ęȱ ȱ ȱ Ȭ¢ȱ ȱ ȱ services. The package is the state social standard in the health ȱȱęȱȱȱȱȱȱȱȱ£ȱ free of charge or on an exemption basis from the budgetary and MHIFs. In parallel with its introduction, co-payments paid by population for certain types of health services were introduced to replace informal charges. On the are of provision for medicines, the system also introduced the scheme of additional drug packages on insured population at the outpatient level, which gained great acceptance among the population. ȱ ȱ ȱ ȱ ȱ ¢ȱ ȱ ȱ ȱ ęȱ mechanisms were developed to address informal payments. They ¡¢ȱ ȱ ȱ ěȱ ȱ ȱ ǰȱ ǯǯȱ general budget and payroll tax, with private sources, e.g. patient Ȭ¢ǰȱ ȱ ȱ ȱ Ȭȱ ęȱ ǯȱ Also, the MHIF as the single payer, purchasing from budgetary ȱ ȱ ǰȱ £ȱ ȱ ęȱ ȱ ¢ȱ ȱ ȱ ȱ ȱ ęȱ ¢ȱ ȱ ȱ ȱ ǰȱ regardless of an individual’s insurance status. This provides more equitable care and fewer administrative costs. Other ways of addressing the informal payments are improvement of accessi¢ȱ ȱ ¢ȱ ȱ ȱ ȱ ěȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ Ĵȱ ȱ ¢ȱ ȱ providers, increasing autonomy to manage locally and increasing the rational use of limited resources like medicines, supplies and utilities. This leads to a reduced need for patients to pay.

MHIF under the MoH

MoF Categorical grants

Oblast level MHIF’s Territorial Departments Rayon level Per capita Per capita Hospitals FMCs FGPs Others

Oblast Finance Dept.

Lessons

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Lessons from the Kyrgyz experience are that the programme had political backing, public acceptance and support from internal and external stakeholders. The programme was also supported by foreign donor agencies, utilized under the guidance of SWAp, ȱ£ȱȱě¢ȱȱ¡ȱǯȱȱ programme was also anchored in the health sector reform programme, Manas and now Manas Taalimi, and the programme is in the context of the country’s overall development programme. It is also very important to note that the additional public budget was present to compensate and achieve the goal of health care ęȱ ǰȱ ȱ ȱ Ȭȱ ęȱ ȱ ȱȱ ǯȱǰȱȱȱȱȱȱ ȱĚ¡ible and used other provider payment methods such as contracting and incentive mechanisms.

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 125

Republic of Moldova Transforming the Role of Public Subsidies for Health Care Ms. Mircea Bulga, First Deputy Director National Health Insurance Company

Background

The Republic of Moldova is a landlocked country located in Eastern Europe, bordered by Romania to the west and Ukraine to the north, east and south. It was part of the former Soviet Republic and gained its independence on 27 August 1991. The country has a total population of 4 206 000 and is ranked as one of the poorest countries in Europe with 710 US$ per capita GDP in 2005. Sixty per cent of its population resides in rural areas. Life expectancy at birth is 57 years for males and 62 years for females. Probability of dying under the age of 5 is 16 per 1000 live births. Probability of dying between 15 and 60 years old is 301 per 1000 population for males and 141 per 1000 population for females. Health spending accounts for 7.4% of the total GDP.

Health System Reform

The need to reform the health system was crucial to address major health problems, as clearly depicted in the population’s low life ¡¢ǯȱ ȱ ȱ ȱ ęȱ ȱ ȱ ȱ reform the health sector as listed below: ǻŗǼȱ ȱ ěȱ ȱ ȱ ȱ ȱ ¢ǰȱ ȱ was based only on scarce budgetary resources and out-ofȱęȱǲ (2) (3) considerable inequity in access to health care; a high burden of OOP payments on households’ budgets; and deterioration of health status, e.g. life expectancy decreased from 69.1 years in 1989 to 66.6 years in 2002 and the incidence of infectious diseases increased.

(4)

ȱ ȱ ȱ ȱ ǰȱ ȱ ȱ ȱ ęȱ ȱ required conditions for health reforms as follows: (1) (2) (3) (4) an appropriate legal framework; political consensus; professional consensus; and support from international organizations.

The reform’s main objective was to enhance health outcomes and £ȱ ȱ ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ȱ ȱ ě¢ȱ ȱ Ĝ¢ȱ ȱ ȱ ȱ system through additional funding for health. Further reform ȱ ȱ ȱ ǻǼȱ ȱ ȱ Ĝ¢ȱ ȱ ȱ ȱ ȱ system, i.e. accessibility, quality and equity; (ii) diversify the sources for health care funding and stability in health care

126 TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION

ęǲȱǻǼȱȱȱȱ ȱȱȱȱȱ medical services; (iv) separate buyers and providers of medical services; and (vi) change its legal status. ȱȱȱ ȱȱȱęȱȱȱ ȱȱ establishment of a compulsory health insurance system. The law on compulsory insurance was adopted by the Government in 1998. In 2001, the Government founded the National Health Insurance Company, and on 1 July 2003, the compulsory programme was piloted in one region. On 1 January 2004, the programme was rolled out to the whole country. Funds are centrally pooled towards a single public fund headed by the ȱ ȱ ȱ ¢ǰȱ Ğȱ ȱ ȱ £ȱ ȱ funds for payment to health care providers and pharmacies. The ȱȱȱȱȱęȱȱȱ ǯ The National Health Insurance Company is governed by basic principles that serve as a guide to enhance the health needs of the Republic of Moldova’s population. These principles then provide the implementation framework and inspire social solidarity and ¢ȱȱȱȱęȱȱȱȱǯȱ The basic principles of the system are as follows: (1) Compulsivity: Health insurance, including premium payments, is compulsory for all categories of citizens and has a penalty system. Solidarity: Individual contributions are established according to the individual’s wealth, but not to individual risks. The Government contributes as other payers. Equity: All insured people obtain the same service package, not dependent on the total amount of their contributions. Autonomy: The insurance fund, health care providers and the National Health Insurance Company are autonomous ǰȱȱęȱ¢ǯ

)LJ )XQGVRXUFHDQGIXQG DOORFDWLRQRIWKH1DWLRQDO +HDOWK,QVXUDQFH&RPSDQ\ Payroll payments (~31%)

Health care providers

Payments from state budget (~66%)

Other revenues (self-insured deposit interests) (~31%)

Pharmacies

Comments on the Country Presentation: republic of Moldova Discussion

(2)

(3)

(4)

ȱ ȱ ȱ ȱ ȱ ȱ ȱ ęȱ ¢ȱ administered by the National Health Insurance Company, a positive impact was evident in the health sector. Allocating a portion of the public budget to health resulted in increased protection against risks to health and accessibility of health care. It also provided an assured income for health care providers. In a short time period, the system had established and institutionalized an ěȱ ȱ ȱ ęȱ ǯȱ ȱ ȱ ȱ ȱ ȱȱȱęȱȱ Ǳȱ (1) strong political support and a high level of consensus;

TECHNICAL BRIEFS FOR ACHIEVING THE MEDIUM-TERM HEALTH CARE FINANCING STRATEGIC TARGETS IN THE WHO WESTERN PACIFIC REGION 127

ǻŘǼȱ ȱ ȱ ȱ ȱ ęȱ ǰȱ ǯǯȱ ȱ ȱ share of budget funds; (3) (4) (5) centralized collection in one public fund; increased protection against risks to health; state guarantees of health care and balancing them with their funding from Community Health Insurance system; increased accessibility of health care; new payment methods for health services;

(6) (7)

ǻŞǼȱ ęȱ¢ȱȱȱȱǰȱǯǯǰȱȱŗȱ¢ǰȱŘŖŖśȱ there was a positive account balance of Lei 53 million; (9) strictly and legally establish the amount and responsibilities of contributors, including the Government;

ǻŗŖǼȱ Ĝȱ ȱ ȱ ȱ £ǰȱ ǯǯȱ WHO, World Bank, UNICEF, and the European Union; and (11) high consistency of declared objectives and outcomes of the reform.

Lessons

The Republic of Moldova’s experience is positive, and the lessons from the scheme are relevant. It had the strong political backing of leaders and the need to instil to the stakeholders the role of health ȱ ęȱ ȱ ȱ ȱ ȱ ȱ ǯȱ ȱ Government’s role in increasing spending for health through the transfer from the state budget system added resources to health ȱ ęǯȱ ȱ ěȱ ȱ ȱ ¢ȱ ȱ ŝǯŚƖȱ ȱ ȱ budget for health from the GDP. Another evident feature of the health insurance programme is its provision on compulsion in all membership categories. This is not easy to implement, especially when applied to the informal sector. With strong political support and management capability, reaching the informal sector will ȱȱ¢ǯȱȱȱȱęȱȱȱȱȱȱȱ of solidarity, equity and autonomy had been realized in the implementation of the scheme. ȱȱǰȱȱȱ¢ǰȱȱȱęȱȱ universal coverage should be carefully addressed in order to continue the development and progression of the health care ęȱ¢ǯȱ

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WHO Western Pacific Region

TECHNICAL DOCUMENT

I Ill

Informations clés

Organisation Organisation mondiale de la santé (OMS)

Type de document Publications

Date d'adoption 31 décembre 2008

Source Organisation mondiale de la santé