“10th Caribbean Conference on National Health Financing Initiatives”

October 28 - 30, 2015Turks and Caicos Islands

Progress and Challenges with Securing Universal Health

Eco. Claudia PescettoAdvisor, Health Financing and Health Economics (PAHO/WHO)

CONTENTS

1.Basic concepts on health financing and universal health2. Recent agreements/ policy guidelines on universal health3. Country experiences on advancing toward universal health4. Some lessons to remember5. PAHO technical support options

Definition: financing for universal health

• Financing systems need to be specifically designed to:– Provide all people with access to health services when

needed (including prevention, promotion, treatment, rehabilitation and palliative care) of sufficient and same quality to be effective;

– Ensure that the use of these services does not expose the user to financial hardship

• Adapted from WHO World Health Report 2010, p.6

1

Does universal health mean universal health insurance?

• Economists are certain that the answer is:• “It depends”

– More specifically depends on what we mean by “health insurance”

• The “insurance” function of health systems requires:– Access to needed care– Financial protection– Germans are not “more insured” than the British, just because of the label they

attach to their system or the source of funds used

• Insuring the entire population is an objective of health financing and UH, but insurance as any specific set of institutional arrangements is not.

What do we mean by health financing policy?

• Understand systems in terms of functions, not labels or models.• Labels/models: can be useful as a communication strategy; but

should not restrict thinking about choices that need to be made regarding collection, pooling, purchasing, benefit package, etc.

Universal Access to Health and Universal Health Coverage

Imply that all people and communities have access, without any kind of discrimination, to comprehensive, quality health services, without exposing users to financial difficulties.

Require implementing policies and actions with a multisectoral approach to address the social determinants of health and promote a society-wide commitment to fostering health and well-being.

Values

Right to Health Equity Solidarity

2The Regional mandate (CD53.R14)

•Increase public financing of health (6% of GDP as useful reference).

•Direct resources, prioritizing the first level of care. Adequate resource allocation aimed to improve equity

•Improve efficiency of financing and health services organization in the health system:

Transparent and consolidated payment mechanisms Changes in the model of care giving priority to prevention and promotion

and quality of health services.

•Advance toward the elimination of direct payments that constitutes a barrier to access, and replacing them with pooling mechanisms based on solidarity.

Health financing and universal health (SL3)

Service delivery

Stew

ards

hip/

Gov

erna

nce/

Acco

unta

bilit

y

Resource generation (investment, HR, technology, etc.)

Health Financing

Revenue collection

Pooling/Financial Protection

BenefitsW

HICH

guaranteed, integral, integrated, quality services?

Source: adapted from Kutzin, 2014

Purchasing/ Payment

Mechanisms

Immediate Results

Intermediate Results

Impact Results

Health and

Well-being

Access to quality health

services

Governance

& Stewardshi

p

Financimg

Social Determina

nts

E q u i t y

Universal Health

Results Chain

HOW to align objectives,

incentives and organize

delivery?

HOW to advance toward pooling w/ solidarity vs

OOP

HOW & WHICH sources of financing

9

Investing in health: where are we?

Source: WHO global Health Expenditure Database (visited on Oct 2015, data 2013)

N=4

Public and private health expenditure as % GDP

Source: WHO Global Health Expenditure Database (visited on Oct 2015, data 2013)

Investing in health: where are we?

Financial protection: where are we?

N=17

N=8

Economic growth in past years boosted social spending, including health

Creating fiscal space for health: to transform the health system toward UH

• Concept: fiscal space for health refers to the ability of governments to provide additional budgetary resources to the health system, without affecting the financial position of the public sector or move to other socially necessary expenses. It tries to identify the prospects for increased spending on health in the short and medium term, with the aim of responding to health needs.

• The fiscal space for health can potentially be generated from a variety of sources:– An increase in the efficiency of existing public health spending – The creation of favorable macroeconomic conditions to economic growth, resulting in

increases in overall revenues of the government.– A re-prioritization of health in the government budget.– An increase in the specific health resources (e.g. through earmarked taxes).– Borrowing (both internal and external) and specific donations.– An increase in collection efficiency (elusion and evasion)

Fiscal priority for health to sustain gains is important…even during economic crises

Change (%) in public spending on health by function, 2007–2011, EU27 and selected European countries

Change (in percentage points) in public spending on health as a share of total public (government) spending, 2007–2011, European Region

Source: European Observatory (2015). Economic crisis health systems and health in Europe: impact and implications for policy

The “fiscal sustainability” of public spending on health depends in part on “choice”: it’s not merely

an external constraint

The private health insurance conundrum: willingness to pay / adverse selection

Type of PHI Positive implications on UH Negative implications on UH

Primary (principal or substitutive)

Reduced OOP expenditure, if otherwise only access to services with (higher) user charges More financial resources for the whole health system (if PHI contributions higher) If substitutive: Cross-subsidisation if integration/overlap between public & PHI systems at provider level Can increase uptake of new technologies

Less money available in the public system with sicker & poorer patients Two-class health care provision Health care system fragmentation If unregulated and sole form of cover for certain population groups, there might be access challenges (risk selection by insurers)

Complementary Reduced OOP expenditure

Inequity in access Two-class health care provision Increased use of unnecessary healthcare (due to moral hazard, supplier-induced demand) and thus hinders efforts to control public systems’ health expenditure

Supplementary Coverage of a larger benefit package Reduced OOP expenditure In total, more money across the whole health system Cross-subsidization if integration/overlap between systems at provider level Can increase uptake of new technologies

Potentially coverage of unnecessary services (therefore not covered in the public insurance system) Inequity in access Two-class health care provision Increased use of unnecessary healthcare (e.g. moral hazard, supplier-induced demand) Risk selection by insurers, if they also provide public insurance and if not regulated

Duplicative More money pooled for those (without duplicative coverage) in public scheme Potential cross-subsidization if integration/overlap between public and PHI systems at provider level Coverage of a larger benefit package Can increase uptake of new technologies

Inequity in access Two-class health care provision Increased use of unnecessary healthcare (e.g. moral hazard, supplier induced demand) Health care system fragmentation

1

If aim is equity and covering and protect ALL

with the same quality, then ALL (rich, poor, healthy,

sick) should participate in the pooling.

Compulsion is key

Source: WHO (2014) Private health insurance in the Americas (draft)

The gains and challenges in the US - ACA

2013

2014

10

20

30%

-1.3 -4.2 -0.1

Age1 18 65+

Average change in three age brackets, in percentage points

Drop in UninsuredPercentage of Americans who are uninsured, by age. Nationwide, the average dropped to 10.4 percent in 2014.

Source: US Census Bureau Elaborated by The New York Times

Coverage and Health Care Expenditure in the US

NOTE: Health spending total does not include administrative spending. Source: Health insurance coverage: KCMU/Urban Institute Presented by: Jason Ormsby, Senior Vice-President, Atlas Research

The number of uninsured has diminished but segmentation is high, making the system inefficient…

3

…and access and quality challenges persist

• Poor access: over 70 percent of US adults have difficulty getting timely access

• Potentially unnecessary: over 40% of services could be deemed unnecessary, when considering the impact on patient health/outcomes; 25% of Medicare $ are spent on 5% of beneficiaries in last year of life (mostly last two months).

• Hospital costs are 85% higher than other countries and quality is average• Limited transparency for public/payers regarding provider quality • Potential $100B in Medicare/Medicaid fraud; $200B in private insurance

fraud• Over 100,000 die annually from medical errors in the hospital setting alone;

outpatient/physician-related deaths could be as high as 280,000 per year • Huge geographic, practice pattern and payment-driven differences

Adapted from: Jason Ormsby, Senior Vice President, Atlas Research Presented at PAHO, October 5, 2015

Experiences of increasing insurance in LA: the bottom-up approach

• Some countries implemented programs aiming certain segments of the population –poor, vulnerable, informal workers.

COUNTRY PROGRAM YEAR Coverage Pop. (%)

Objective

Argentina Plan Nacer 2003 4% MCH

Brasil Programa Saude da Familia 1994 51% PHC municipal

Colombia Régimen subsidiado 1993 47% Pobre, vulnerable

Chile FONASA 1981 78% Universal

Costa Rica CCSS 1984 91% Universal

México Seguro Popular 2004 43% Not insured

Perú Seguro Integral de Salud 2002 42% Poor, vulnerable

Adapted from Cotlear, et.al., World Bank, 2015

Funding sources are diverse

Adapted from Cotlear, et.al., World Bank, 2015

Funding sources, insurance programs: 2011ExternalSources

General government

COUNTRY

Beneficiaries

Other

…but let’s remember that

• Health financing systems for universal health should be for all people having access to health services with the same quality…..

• Therefore there is still room for improvement.• Some efforts in this direction have also been

taken (e.g. Uruguay, Costa Rica, Cuba)

Uruguay: Coverage FONASA 2007-2014

jul-0

7

ene-0

8

abr-0

9

ene-1

0

dic-1

0

jul-1

1

feb-1

2

jul-1

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t-12

jul-1

3

abr-1

4

0

500000

1000000

1500000

2000000

2500000

Private sector Public sector Independent professionals Children Retired Partners

2.3M

600K

Uruguay- Schedule of additions to FONASA: 2011 - 16

PASSIVESIAMC

170.000

SPOUSES2 children43.000 – 46.000

12/2011

07/2012

PASSIVESASSE> 74

< 3 BPC32.000 – 33.000

 

SPOUSES1 Child

53.000 – 58.000

12/2012

07/2013

 

PASSIVESASSE> 70

< 4 BPC33.000 – 34.000

 

SPOUSESNo children

81.000 – 93.000

 

12/2013

  PASSIVESASSE> 65

< 5 BPC31.000 – 34.000

  

07/2016 

PASSIVESASSE> 60

< 10 BPC25.000 – 30.000

   

07/2015

  PASSIVESASSE

OTHERS53.000 – 55.000

   

SPOUSESOF PASSIVES

46.000 – 53.000ASSE: passives with public coverageIAMC: private coverageBPC: reference unit to compare income (base of benefits and contributions)

…but progressively

23

Health reform process in Peru 1997: General Health Law 2002: National Agreement 2005: Process of building consensus

among 16 political parties, which resulted in the health policy agenda 2006-2010, including:

– Maternal child health– Infectious diseases– Health sector descentralization– Universal health insurance– Financing and targeting– Social participation

• 2007: Concerted National Health Plan 2009: Approval of Framework Law on

Universal Insurance and Essential Health Insurance Plan (PEAS)

2013: 22 Legislative decrees were issued….still pending regulation

Political consensus and social dialogue are also important

Some results

Adapted from Cotlear, et.al., World Bank, 2015

Insurance in Peru: 2004-2014

Source: Prieto and Matus, OPS, 2015

Some recent developments

• Chile: Reform initiated in 2000.• Legal Framework: between 2003 and 2005: Ley Nº 19.888 (financing), Ley Nº 19.937

(health authority and management), Ley Nº 19.966 (Regimen of Explicit Health Guarantees, GES), Ley Nº 20.015 (on health financing institutions); in 2012, Ley Nº 20.584 (on rights and duties of patients); 2015 Ley 20.850 (access to high cost medicines) and bill on ISAPREs reform.

• Bill on ISAPREs Reform”– Establishment of a unique and universal Social Security Plan ( PSS ) , ie , which can be accessed

by all .– Creating a Universal Pooled Fund between FONASA and ISAPREs to break segmentation,

introducing solidarity inter – systems and allow funding of universal benefits .– Establishment of an inter-ISAPREs risk compensation fund to allow mobility, to end captivity

and pre-existent conditions,introducing greater solidarity to the ISAPREs system.– Creating an institution to administer a Disability Employment Subsidy Fund (SIL ) with social

security and tri - partite ( Government, employers and workers) to end the problems for workers to obtain medical leave and allowance .

…

• Colombia: Reform initiated in 1993.• Legal framework: Ley 100 of 1993 (establishes the General System of Social

Security in Health). It was amended by several regulations, among the most important: Ley 1122 in 2007; Ley 1438 in 2011 y Ley Estatutaria 210 (2013).

• Proposals in Ley Estatutaria (June 2013):– Right to health is defined as a fundamental right.– Funding for health are public resources– Establishes Salud-Mía, whose functions , among others, will be to collect , pay and recruit .– Creates a defined benefits plan Mi-Plan broader than the previous Plan Obligatorio de

Salud - POS, with a gradual inclusion of health services and technologies, previously excluded.

– Creates Health Managers ( GES ), who will accompany people on their way through the health system , but will not handle funds. –former EPS could become GES.

– The GES will establish provider networks, to be evaluated by health outcomes.– Strengthens the monitoring and oversight functions of the Superintendency of Health

reinforcing .

Summary of principles to guide health financing reforms toward universal health

• Explicit complementarity of different funding sources.• Focus on reducing segmentation and expanding pool size (more

prepayment, not more prepayment schemes!)• Recognize that real progress toward UH will requires an explicit role

(and often increased levels) for general revenues (i.e. fiscal space).• Create unified information platform across all schemes to lay

foundation for universal financing system.• MoH stewardship role, including in financing, is fundamental.• More money and larger pools are not enough: need to move

toward strategic purchasing to tackle inefficiencies and make progress on defined, measurable objectives, by linking payments to benefits.

4

1. Public financing/mandatory is key to increase financial protection.

Public health expenditure as % GDP

OO

P as

% T

otal

hea

lth e

xpen

ditu

re

2. Segmentation is an obstacle to overcome in order to advance toward UH

• A system is “segmented” when there are barriers to the redistribution of prepaid funds.

• Segmentation of pooling limits the ability to cross-subsidize (solidarity)

⁻ Can only cross-subsidize within pools, not between pools (unless there is a central re-distribution mechanism)

• Segmentation is a concern in virtually all health financing⁻ Especially when you divide the population into different schemes with different benefits and

funding levels per capita

• So while we want more pre-payment, we don’t want more pre-payment schemes if this means more segmentation.

• Each country moves toward universal health according to context• No country gets it relying principally on voluntary health

insurance.– Some who can afford it won’t join, and some can’t afford it– Compulsion or automatic entitlement is essential– Issue is compulsory vs voluntary, not public vs private

• Because there are always some who can’t contribute directly; countries with universal population coverage rely on general budget revenues (in whole or in part)⁻ And the larger the informal sector, the greater the need for using general

revenues (caveat: “sources” are not systems!)

• To sustain progress, need to ensure efficiency and accountability. -“Strategic purchasing” is critical for that

Theory and evidence have taught us some lessons

Some challenges

• The reforms should be made using a comprehensive approach : financing is only one aspect .

• Reforms take time and require political consensus as well as broad stakeholders participation

• Public insurance includes both financing through general revenues (i.e. taxes) and contributions

• Creatingfiscal space for health is key: funding will inevitably have a component via government revenues to cover the poor and most vulnerable.

PAHO’s technical support offerings

• M&E framework for universal health - pilot applications: CHI, CUB, PAN, PER…and soon JAM, TRT.

• Productive Management Methodology for Health Services -PMMHS (recent applications: BRA, CHI, ECU, ELS )

• LoA with UWI for technical cooperation in the Caribbean (e.g. health accounts SHA2011, PMMHS, OECD health financing review, etc)

• Universal health roadmaps (COR, ELS, HON, PAN…, soon BAR, JAM)

• Institutionalization of health accounts production (SHA2011)• Capacity building - virtual and face-to-face courses (IHSDNs, Benefits

Package, PMMHS, ..incoming 2016: Health economics & financing, SHA2011).• South-south cooperation activities: study tours (JAM); FLACSO; CIESS• High level meeting on fiscal space for health (Dec.7th, 2015)

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Thank you!