Owen Smith – World BankWashington DC – February 1st, 2011
Health care financing in Georgia
Ultimately two main objectives for a health financing system
To improve health outcomes: Reduce mortality and morbidity – especially for
the poorTo protect against high out-of-pocket payments
(OOP):People should be not forced into poverty by ill
health
How can Georgia use the health financing system to improve its performance vis-à-vis these two goals?
Objective #1: Improving health outcomes Life expectancy gap with US has widened since 1970
6264666870727476788082
1970
-197
5
1975
-198
0
1980
-198
5
1985
-199
0
1990
-199
5
1995
-200
0
2000
-200
5
2005
-201
0
Life
exp
ecta
ncy
at b
irth
US
Georgia
Source: UN
How have US & Europe accomplished these life expectancy gains since 1960s?
Major factors:Decline in smoking ratesPharmaceuticals for cardiovascular diseases:
ACE-inhibitors, beta-blockers, statins, etc.Cardiac surgery: bypass, angioplastyEarly detection and treatment of certain
types of cancer (e.g., breast, colon)Neo-natal intensive care units
Very low coverage of these interventions in Georgia
Health financing to improve health outcomes: Key messagesNeed for additional funding for health
Very low budget allocation to health by international standards
Making progress against non-communicable diseases is typically more expensive than maternal & child health, infectious diseases
Aim to extend a larger benefit package to more peopleSince it cannot be afforded all at once, need to
prioritize:Target expansions to the poorer segment of the
population first (e.g., by expanding Medical Insurance Program (MIP) for poor)
Offer coverage of most cost-effective services firstMeasure health outcomes – both nationally and within
health facilities – and hold insurers/hospitals/doctors accountable for their performance
Objective #2: Prevent poverty due to ill healthPoverty headcount in Georgia rises by
about 3 percentage points – from about 24% to 27% – due to out-of-pocket spending on health
This is one of the largest impacts on poverty due to OOP in the world (e.g., compare Georgia with Montenegro…)
0
100
200
300
400
500
600
700
800
900
1000
1 51 101 151 201 251 301 351 401 451 501 551 601 651 701 751 801 851 901 951 1001 1051 1101 1151
Pre
-an
d p
ost
-OO
P m
on
thly
co
nsu
mp
tio
n
Households ranked in ascending order of total consumption (per adult equivalent)Source: HBS 2008
Largest share of OOP is for drugs:
Compare Georgia’s retail drug prices to EU
Brand drugs generally cost more in Georgia…
…and most generics cost less
EU price source: OBIG/PPRI
Strong relationship between size of government health budget and level of OOP
Albania
Armenia
Austria
Azerbaijan
BelarusBelgium
Bosnia
Bulgaria
Croatia
Cyprus
Czech Rep Denmark
EstoniaFinland
France
Georgia
Germany
Greece
Hungary
Ireland
Italy
Kazakhstan
Kyrgyzstan
Latvia
Lithuania
Luxembourg
MaltaMontenegro
Netherlands
Norway
Poland Portugal
Moldova
Romania
Russia
Serbia
Slovakia
Slovenia
Spain
Sweden
Switzerland
Tajikistan
Macedonia
Turkey
Turkmenistan
Ukraine
United Kingdom
Uzbekistan
02
04
06
08
0O
ut o
f po
cke
t sp
en
din
g a
s sh
are
of to
tal
0 2 4 6 8Government spending on health as share of GDP
Two major ways to lower OOP in Georgia
Lower OOP without more spending:-- reforms to promote affordability of drugs
Lower OOP with more spending-- expand publicly-subsidized insurance programs
Health financing to lower out-of-pocket payments: Key messagesAdditional government spending will be required
Almost all countries spend ~4-8% of GDP on health (public + private), and Georgia is no different (~6%)
The share that is not covered by budget will be left to OOP
No low or middle-income country has found a way to finance a significant share of OOP through private, voluntary insurance
Expand Medical Insurance Program (MIP) to more people Promote lower drug prices
Recent steps to relax rules for importing New measures to oblige doctors to prescribe generic
medicationsUse government purchasing power to buy and promote
lower-price generics
Thank you
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