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Financing Universal Health Coverage in the Western Pacific Region

Ke Xu

World Health Organization Western Pacific Region

March 7, ADB

Disclaimer: The views expressed in this paper/presentation are the views of the author and do not

necessarily reflect the views or policies of the Asian Development Bank (ADB), or its Board of

Governors, or the governments they represent. ADB does not guarantee the accuracy of the data

included in this paper and accepts no responsibility for any consequence of their use. Terminology

used may not necessarily be consistent with ADB official terms.

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Outline

• Overview of the region

• Universal health coverage (UHC) as a vision of health system development

• Health financing situation in the region

• The way forward

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WHO in the Western Pacific Region

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OVERVIEW OF THE REGION

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Overview

• Unfinished agenda and communicable diseases

• Aging population and high non-communicable disease (NCD) prevalence

• Reliance on out-of-pocket payments

6 |

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Demographic shifts

Percentage of Men and Women age 60 and over by Countries, WPRO, 2010

31.6

19.9

19

16.1

15.9

15

12.7

8.9

8.8

8

7.9

7.4

6.8

6.4

6.1

5.7

5.2

4.8

4.5

4.2

0 5 10 15 20 25 30 35

Japan

Australia

New Zealand

Hong Kong

R. Korea

Singapore

China

Tonga

Viet Nam

Malaysia

Fiji

Samoa

Philippines

Mongolia

Cambodia

Lao PDR

Vanuatu

Brunei

Solomon Is

Papua NG

Women

Men

Source: United Nations Dept of Economic and Social Affairs, Population Division, World Population Prospects: The 2008 Revision, 2008.

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Burden of Disease

by broad cause group and region, 2004

Source: WHO Global Infobase, 2011

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Out-of-pocket payments as % of total health expenditure

1995-2011

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UHC AS A VISION FOR HEALTH

SYSTEM DEVELOPMENT

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Universal health coverage

• Access to good quality of needed services

– Prevention, promotion, treatment, rehabilitation and palliative care

• Financial protection

– No one faces financial hardship or impoverishment by paying for the needed services.

• Equity

– Everyone, universality

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Guiding

principles Functions of Health Systems UHC

Financing (collecting, pooling

& purchasing)

Quality

Financial protection

Creating resources (HR, medicines &

infrastructure)

Delivering services (people centred &

integrated)

Available, accessible and

affordable

Governance (institution & information)

Equitable

Efficient

Sustainabl

e

UHC relies on a functioning health system

Health Systems Financing

Expanding the package of services and improving

quality and efficiency

Early stage

Intermediate stages

Advanced stage

Public funding

The Journey to Universal Health Coverage

Diversified public

funding sources

Making essential medicines and basic

services available to all

Maintain comprehensive service package and adjust to

meet increased demand

Sustaining an adequate

level of public funding

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HEALTH FINANCING SITUATION

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Health financing functions

Revenue

collection

Pooling

Purchasing

Contributions to be collected efficiently and according to capacity to pay

Risk sharing between the healthy and the ill; cross-subsidy from the rich to the poor

Making the best use of available resources

Equity, efficiency, and sustainability

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Health financing mechanisms

Health care

services

Tax-based

financing

Social health

insurance

Other

prepayment

schemes

Out-of-pocket

payments

1. General tax or

other revenue

2. Payroll tax

3. Contribution or

premium

4. Direct payment

Household

External resource

Financing mechanisms Financing sources

Natural resource revenue

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Government spending on health

• Government spending less than 2% of GDP (Lao PDR, Cambodia, Philippines)

– Lacking of services in rural areas

• Lacking of public investment in public health and primary level of services (most developing countries in the region)

– Government spending concentrated in urban and big hospitals

– Overcrowded in tertiary hospitals and underuse of primary level facilities (China, Vietnam)

• Fiscal decentralization poses challenges in securing the health budget

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Health expenditure as a % of GDP (2011)

0

2

4

6

8

10

12

NZL JPN AUS KOR PNG MNG CHN VNM BRN MYS SGP LAO PHL KHM

GGHE as % of GDP PvtHE as % of GDP

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Alternatives in funding health services

(social health insurance)

• Many countries have established national (social) health insurance by a combination of payroll and general taxation (Mongolia, Vietnam, China, Philippines)

– Technical and managerial capacity

– Mechanism to hold different stakeholders accountable

– Institutional arrangement

– Enrolment of informal sector

– Effective coverage (the services and the cost)

– Equity in access to services and actual benefit

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Structure of total health expenditure (2011)

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

JPN

KOR

CHN

KHM

VNM

SGP

PHL

MNG

LAO

MYS

AUS

NZL

PNG

BRN

Government line ministries Social Security Funds Private Insurance Other Prepaid Private Out-of-Pocket

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Alternatives in funding health services

(equity funds and community-based insurance)

• Cambodia – Equity funds: funded by differ donors and government with

varying benefit packages

– Community-based insurance: small and not sustainable

• Lao PDR – Equity funds and community-based insurance are small and

not sustainable.

– “Free” MCH packages (vary by donor funded provinces)

– Availability of services is a big issue in rural areas.

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Various funding channels

• Donor funding (Cambodia, Lao PDR)

• Vertical programs (Cambodia, Lao PDR, Vietnam)

• Different levels of government (Lao PDR, Philippines)

• Government direct budget and insurance fund(s) (China, Mongolia, Philippines, Vietnam)

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External resources as % of THE, 2011

2.17

3.01

3.09

4.85

6.30

7.75

15.84

19.29

22.57

23.00

23.49

25.25

31.95

36.83

38.95

44.84

53.34

68.66

0 10 20 30 40 50 60 70 80

PHL

KIR

VNM

MNG

COK

FJI

KHM

PNG

WSM

VUT

LAO

TON

MHL

PLW

NRU

SOL

NIU

FSM

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Service delivery

• Availability (Cambodia, Lao PDR, Philippines)

• Quality of services at primary level (China, Vietnam)

• Increasing autonomy for public hospitals

• Increasing numbers of private service providers

• Vertical programs

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Paying for providers

• Fee-for-service dominating

• Lack of mechanism to control cost

• Over-service and over-prescription (China, Vietnam)

• Lack of coordination among different provider payment mechanisms and funding channels

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Fragmentations

• Different forms

– Donor funding and vertical programs

– National programs

– Service provision system

– Medicines, and supplies procurement and delivery system

– Health information systems

– Routine reporting systems

• Reduce system efficiency

– Prevention of the redistribution of prepaid funds

– Limitation in the ability to cross-subsidize

– Skewing of national priorities

– Skewing of the distribution of health human resource

– Duplication of tasks

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Governance

• From command-and-control to steer-and-negotiate – Decentralization – Hospital autonomy – Private sector

• Regulatory capacity and law enforcement

– Medicines and insurance

• Information system – Timely and reliable information – Sharing information

• Accountability mechanism

– Measures for performance – Consequences of good and bad performances

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Innovation and e-Health

• Smart design and implementation – Use of health data standards to promote data exchange

– Unique identifiers for patients, providers, facilities

• Core systems integration – Tracking patients and managing providers, claims,

reimbursements across multiple systems over time

• Monitoring UHC with effective performance measures – Country specific suite of indicators, analyses, and

dashboards

• Collaboration through Peer Networks and Regional Initiatives

– Asia eHealth Information Network, Joint Learning Network (ICT Working Group), and IT for UHC Initiative

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The way forward (1)

• Increase government investment on health – For public health and primary level facilities – To subsidize the informal sector to be included in social health

protection schemes

• Establish mechanisms for good governance in health

• Strengthen regulatory capacity and enforcement

• Improve information systems: leverage ICT infrastructure

investments for eHealth solutions

• Strengthen NHA network in the Pacific and institutionalize NHA in countries to produce reliable and timely NHA data

• Monitor and evaluate UHC and system performance

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• Strengthen the service delivery system – Capacity of primary level facility and public health institutions

– Coordination and integration of different level of services and different disease programs

– Quality and safety of health services (medicines, HR, etc.)

• Improve system efficiency – Payment mechanisms to service providers and health workers

– Medicines (pricing, procurement, reimbursement, and usage)

• Cross border and regional initiatives.

The way forward (2)

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Thank you!