Health Financing Strategies

for Universal Health

Coverage

Outline:

Universal Health Coverage: What? Historical Perspectives?

Health System Financing in India. Health Financing Strategies:

Where we are? Status of Heath Financing Globally More Money For Health: How to generate more

resources More Health to Money: How to Utilize the resources

and prevent wastages. Health financing strategies in India

As proposed by the HLEG on UHC As proposed in Proposed Draft 12th Plan

Existing Health Insurance schemes in India Critical Review of Existing Schemes Proposed

plan in India

CASE OF MY NEIGHBOUR ROSHAN & HIS FAMILY

Thailand: Thunyalak Boonsumlit

China: Story of Dou Huhai

Universal Health Coverage:

“Ensuring that all people have access to needed Promotive, preventive, curative and rehabilitative health services, of sufficient quality to be effective, while also ensuring that the use of these services does not expose the user to financial hardship”.

World Health Organization

“Ensuring equitable access for all Indian citizens, resident in any part of the country, regardless of income level, social status, gender, caste or religion, to affordable, accountable, appropriate health services of assured quality ( Promotive, preventive, curative and rehabilitative) as well as public health services addressing the wider determinants of health delivered to individuals and populations, with the government being the guarantor and enabler, although not necessarily the only provider, of health and related services”. HLEG on UHC, Planning Commission

Historical Perspectives:

1883 Health Insurance Bill, Germany became the first country to make nationwide health insurance mandatory.

In U. K. Enactment of the National Insurance Act in 1911 and the National Health Service (NHS) in 1948.

Article 25.1 of the 1948 Universal Declaration of Human Rights states right to health as an important fundamental right.

1966, The International Convention on Economic, Social and Cultural Rights recognized "the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.

1978: Alma-Ata declaration & the vision of "health for all”

World Health Assembly resolution 58.33 adopted 'Universal Health Coverage' in 2005,

Health System Financing in India:

• State Subject• Predominantly catered by Private Sector• Private 78.05% vs. Public 19.05% vs. 2.28% External flow. Table 1: Health Expenditure in India (2004-05)

Source: National Health Account 2004 – 05, MOHFW, GOI

Type of Expenditure

Distribution of total health Expenditure (%)

Share of GDP (%)

Public Expenditure

19.67 0.84

Private Expenditure

78.05 3.32

External Flow 2.28 0.10

Total Expenditure

100 4.25

Source: National Health Account 2004 – 05, MOHFW, GOI

Distribution of Public & Private Spending in States

O Source:

Health Expenditure in India: International Comparison:

Private Insurance Coverage: India

Why Universal Coverage? Promoting and protecting health is essential to human

welfare and sustained economic and social development.

30 years: the Alma-Ata Declaration

Many ways to promote and sustain health : Education,

housing, food and Employment.

Redressing inequalities

Timely access to health services – a mix of promotion,

prevention, treatment and rehabilitation – is also very

critical

Well-functioning health financing system – essential.

It determines use of health services when people need

them. It determines if the services exist.

Three Dimensions of Universal Health Coverage:

A theory of change due to health insurance

Source: Impact of national health insurance for the poor and the informal sectorin low- and middle-income countries: Systematic Review

Three fundamental questions ?

1. How is such a health system to be financed?

2. How can they protect people from the financial

consequences of ill-health and paying for health

services?

3. How can they encourage the optimum use of

available resources?

- Also Equity and Monitoring and Evaluation.

Where we are?

Where we are? …..

Where we are? …..Direct Payments:

High proportion of the world’s 1.3 billion poor no access

to health services simply because they cannot afford to

pay at the time they need them.

Even if covered with insurance: Uncovered Cost is

burden.

Pooled funds:

Raising adequate funds from a sufficiently large pool of

individuals,

Supplemented with donor support and general

government revenues,

Spending these funds on the services a population

needs.

Countries are at different points on the path to universal

coverage and at different stages of developing financing

systems

Financing for Universal Health Coverage:

Specifically designed Financing systems to:

Provide all people access needed health services.

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

What are the problems? 3 Fundamental Problems:

Availability of Resources. Over reliance on direct payments. In Efficient and Inequitable distribution of resources

Three critical areas of health financing: Raise sufficient money for health;

Remove financial barriers to access and reduce financial risks

of illness;

Make better use of the available resources.

What a health financing system does?

Revenue collection:

General or specific taxation, Compulsory or Voluntary health

insurance contributions & Direct out-of-pocket (User Fee or

Donations)

Pooling:

Accumulation and management of financial resources. an

element of pooling funded by prepayment, combined with direct

payments (Cost Sharing)

Purchasing:

The process of paying for health services.

Purchasing:

Three main ways to do this. (Either single of

combinations)

O First, the government to provide budgets directly to its

own health service providers (integration of purchasing

and provision) using general government revenues and,

sometimes, insurance contributions.

O Second, An institutionally separate purchasing agency

(e.g. a health insurance fund or government authority) to

purchase services on behalf of a population (a purchaser-

provider split).

O Third, Individuals to pay a provider directly.

On the path to universal coverage: Country Examples China:

In April 2009: safe, effective, convenient and affordable” health services to all urban and rural residents by 2020.

The New Cooperative Medical Schemes, initiated in

USA:The recent health financing reforms extend insurance coverage to projected 32 million previously uninsured people by 2019.

DPR Korea:

Ghana

The health financing decision process:

More Money for Health:

No magic bullet to achieve Universal Health Coverage. New medicines and diagnostic and curative technologies

become available much faster than new financial resources.

Raise more Funds for Health:

Broadly, three ways to raise additional funds or diversify sources of funding:

Higher priority in existing spending, particularly in government’s budget;

Find new or diversified sources of domestic funding; and / or To increase external financial support.

Ensuring a fair share of total government spending on health:Table: Government expenditure on health as a percentage of total government expenditures by WHO region, 2000–2007a

Table: The share of total government expenditure allocated to health in the WHO European Region, 2007

Diversifying Domestic Sources of Revenue:Two main ways:1. To allocate more of the existing financial resources to

health,2. To find new methods to raise funds or to diversify the

sources.

Examples:Indonesia: Increases tax revenues by encouraging complianceGhana: 70–75% of f its National Health Insurance Scheme with general tax funding, 2.5% national health insurance levy on VAT.Germany: Gesundheitsfond: New fund to inject more money in SHI from General taxation. France: Contribution sociale généralisée, Special fund for NHI form tax on real estates and other traditional.

Diversifying Domestic Sources of Revenue: Some Options

Options Fund Raising Potentials

Examples

Special levy on large and profitable companies

$$–$$$ Australia has recently imposed a levy on mining companies; Pakistan has a long-standing tax on pharmaceutical companies

Levy on currency transactions

$$–$$$ Some middle-income countries with important currency transaction

Diaspora bonds

$$ Used in India, Israel and Sri Lanka, although not necessarily for health

Financial transaction tax

$$ Initially in Brazil in the 1990s subsequently replaced by a tax on capital flows to/from the country

Options Fund Raising Potentials

Examples

Mobile phoneVoluntary solidarity contribution

$$ Taking 1% of bill would raise a lot of money; relevant to low-, middle- and high-income countries

Tobacco excise tax Alcohol excise tax

$$ These excise taxes on tobacco and alcohol exist in most countries

Excise tax on unhealthy food (sugar, salt)

$–$$ Romania: Proposing to implement a 20% levy on foods high in fat, salt, additives and sugar.

Selling franchised products or services

$ Selling franchised products or services from which a percentage of the profits goes to health

Tourism tax $ Airport departure taxes are already widely accepted; a component for health could be added, or levies found

External financial assistance:

Direct Payment: Why is it so widespread?

Direct payments are the least equitable form of health funding. Governmental not willing to spend more. No capacity or will to generate POOL. Taps into new areas. Attractive option during Economic

Recessions.

Out-of-pocket payments as a function of gross domestic product (GDP) per capita, 2007

Source: National Health Accounts [online database]. Geneva, World Health Organization (http://www.who.int/nha,) 

The effect of out-of-pocket spending on financial catastrophe and impoverishment

Source: Xu K et al. Exploring the thresholds of health expenditure for protection against financial risk.

Strength in numbers: O Cost SharingMost effective way for financial risk of paying for health services is to share it, and the more people who share, the better the protection.

Three interrelated options:O Replace direct payments with forms of prepayment,

most commonly a combination of taxes and insurance contributions.

O To consolidate existing pooled funds into larger pools, and

O To improve the efficiency with which funds are used.Examples:O A total of 49 health-related community schemes operate

in Bangladesh, India and Nepal, with the Indian schemes

More health for the Money: Using resources wisely

Pricewaterhouse Coopers’ Health Research

Institute:

More than half of US$ 2 trillion-plus that the

United States of America spends on health

each year is wasted

The European Health care Fraud and

Corruption Network:

Little less than 6%, lost to mistakes or

corruption.

Ten Leading Causes of Inefficiency:

1. Medicines: underuse of generics and higher than necessary prices for medicines

2. Medicines: use of substandard and counterfeit medicines 3. Medicines: inappropriate and ineffective use.4. Health-care products and services: Overuse or supply of

equipment, investigations and procedures 5. Health workers: Inappropriate or costly staff mix,

unmotivated workers 6. Health-care services: Inappropriate hospital admissions

and length of stay7. Health-care services: Inappropriate hospital size (low use

of infrastructure) 8. Health-care services: Medical errors and suboptimal

quality of care 9. Health system leakages: waste, corruption and fraud 10. Health interventions: Inefficient mix/ inappropriate level of

strategies

Table: Median price ratios of public-sector procurement prices for generic medicines, by WHO region:

How can this in- efficiency be tackled? WHO-CHOICE (Choosing Interventions that are Cost Effective) Strategy Eliminate Unnecessary Spending on Medicine

Improve quality control of Medicine

Use Medicine appropriately

Get Most out of technologies and services

Motivate people

Improve hospital Efficiency – Size and Length of stay

Get care right the first time

Eliminate waste and corruption

Critically assess the service needed:

Tackling Inefficiency: Lebanon’s Example

1998: 12.4% of GDP on health, Highest in the Eastern Mediterranean Region

60% Out-of-pocket payments among the highest in the region.

Series of reforms implemented to improve equity and efficiency.O Revamping of the public-sector primary-care network;O Improving quality in public hospitals; and O Improving the rational use of medical technologies and

medicines Including use of quality-assured generic medicines

GDP on health from 12.4% to 8.4%. Out-of-pocket spending as a share of total health spending from 60% to 44%

Indian Scenario:

O First concrete step:

During planning process of 12th Five Year Plan:

widely termed as Health Plan.

O Planning commission constituted a High level Expert

Group on Universal Health coverage 2010.

O Mandate: Developing a framework for providing easily

accessible and affordable health care to all Indians.

O HLEG also recommended Appropriate Health Care

Financing as key strategy to achieve Universal Health

Coverage.

The new architecture for UHC: 6 Critical Areas:

1. Health Financing and Financial Protection

2. Health Service Norms

3. Human Resources for Health

4. Community Participation and Citizen

Engagement

5. Access to Medicines, Vaccines and

Technology

6. Management and Institutional Reforms

Current Scenario in India: Low Priority to Public Health Spending. Low Per Capita Expenditure on Health:  High Burden of Private Out of Pocket Expenditure. Wide Variation in Public Health Expenditure across

states. Large share on State Government Expenditure

(Nearly 2/3rd). States with low public expenditure on health

typically find themselves fiscally constrained by two factors: Centre’s Allotment of Revenue is not uniform. Less scope for extra development allocation by

the poorer states. Many state governments do not accord high

priority to health. Financial protection against medical expenditures is

far from universal. Expenditure on social insurance 1.13% of total health spending in 2004-05.

Vision for UHC:

Three core objectives need to be tackled: Ensure an adequacy of financial resources for the

provision of universal access to essential health care. Provide financial protection and health security

against impoverishment to the entire population of the country; and

Put in place financing mechanisms that is consistent in the long-run.

Basic Principles: A predominant role for public financing; Related to this, coverage is compulsory (where linked

to contribution) or automatic (where based on certain characteristics such as residence or citizenship); and

Universal entitlement without exclusion. Requires: Compulsion & Subsidization

Key Recommendations: Government Spending on Health: 2.5% of GDP by

2012 & 3% by 2022. Ensure availability of free essential medicines. Use general taxation as the principal source of

health care financing. Do not levy sector-specific taxes for financing Do not levy fees of any kind for use of health care

services Introduce specific purpose transfers to equalize the

levels of per capita public spending on health across different states.

Accept flexible and differential norms for allocating finances

Expenditures on primary health care account for at least 70% of all health care expenditures.

Do not use insurance companies or any other independent agents to purchase health care services.

O Three Provisions can be considered:O Direct provisionO Direct provision plus contracted-in servicesO Purchase by an independent agency.

Purchases of all health care services under the UHC system directly by the Central and state governments.

All government funded insurance schemes should, over time, be integrated with the UHC system. National Health Entitlement Cards. RSBY transferred to MOHFW and Used as technical base.

Finally, two determinants for the Success of UHC system: Clear Cut guideline for contracting in and service provision. A common IT enabled information, gathering, networking

and monitoring system.

Health Insurance Schemes being implemented by GOI and States Govt.

Scheme Coverage Features

Universal Health InsuranceScheme (launched in 2003)

Mostly benefits(≤INR30 000) for admission to hospital for a family on a floater basis, including compensation (INR25 000) for death of earning head of the family;compensation at the rate of INR50 per day for a maximum of 15 days to the earning head or spouse of the family; one maternity benefit with 1 year waiting period with INR2500 for normal andINR5000 for caesarean sections

Only for families below the poverty line and for individuals younger than 70 years;Yearly rate of INR300 for an individual; INR450 for a familyof five; INR600 for a family of seven members with a government subsidy ofINR200, INR300, and INR400, respectively

Rashtriya Swasthya Bima Yojna(launched in 2008)

Cashless coverage of all health servicesSmart-card-based system; Only hospital admission and day-care diseases; total of INR30 000 insured per family below poverty line per year.Pre-existing illnesses also covered;Reasonable expenses for before and after hospital admission for 1 day before and 5 days after;Transport allowance (actual with limit of INR100 per visit) subject to a yearly limit of INR1000

Only BPL FamilyUp to five members for 1 year; renewal yearly; registration fee for a family is INR30; Central governmentcontribution 75% & stategovernment 25% of the premium

Yeshasvini Scheme in Karnataka(launched in 2003)

Covers risk of INR100 000 for one surgery and INR200 000 for several surgeries in a year with a Premium of INR120; Pre-existing diseases arecovered; Cashless surgery at fixed tariff

Member of Registered Rural Cooperative Society of Karnataka for aminimum of 6 months; All members of the family are eligible; Upper age limit 75 years

Kudumbasree in Kerala (launchedin 2006)

INR30 000 a year For a family of five; Up to INR60 000 a year for treatment at home, if required; Up to INR15 000 ayear for maternity need; Subsistence allowance of INR50 a day if breadwinner is hospitalized; coverage of all existing illnesses, and cashlessmedical treatment;An accident insurance benefit of INR100 000 for deathor full disability and INR50 000 for partial disability

Families below the poverty line;Beneficiary’s contribution is INR33;Premiumfor a typical family with five members below the poverty line is INR399 a year;a central government subsidy of INR300 from the Universal Health InsuranceScheme and an additional subsidy of INR33 each from the state governmentand the local organization; implemented through a neighborhood group

Arogyashree in Andhra Pradesh(launched in 2007)

INR 200 000 insured per family; covers hospital admission for surgeries and treatment of diseases such as heart, cancer, neurosurgery, renal, burns, andpolytrauma cases

Families below the poverty line; beneficiaries identifiedthrough health camps; INR330 per year per family are paid by the state government; Validity for 1 year or up to the time when the overall claim ratioreaches 120% of the premium