Transcript Financing - behdasht.gov.ir

Overview of
“ Health Care Financing”
Dr Kambiz Monazzam
Khoramabad – Lorestan
May 18-21, 2005
1
Goals of Financing Module




Provide more in-depth knowledge of the
financing control knob
Study the five methods of financing and
compare their strengths and weaknesses
Provide tools—NHA and strategic
framework for national financing
Work for a financing strategy for Iran
2
Financing Affects What
Goals?
Average and Distribution
Access to
health care
Health
Status
Quality of
Services
Prevention
Financing
Risk
Protection
Cost
Equity in distributing
costs and benefits
Public
Satisfaction
3
Health Policy and Financing Policy are
Inseparable Because; Financing Policy
Determines:




How much is available
Who controls the funds and how
they are used
Who allocates the resources and
their uses
What financial incentives are given
to patients and providers
4
Financing Policy determines:

Who has access to basic health care

How many people fall into poverty

Whether health care cost inflation
can be controlled
5
The Golden Rule:
“Those who have the Gold
make the Rules.”
Alfredo Bengzon, M.D.
Secretary of Health
Philippines
6
Financing Method Alters:


Incentives on both consumers and
insurers (e.g. adverse selection, risk selection)
Incentives on patients and providers
(e.g.
moral hazard, induced demand)

Organizational structure and relations
between key players
7
Narrow Concept:
Financing Defined as:
Mobilizing Financial
Resources
8
Financing, Allocation and
Payment:
The Three Key Questions
Financing
Allocation
Payment
9
Financing

Collecting

Pooling

Purchasing
10
Financing Options





Self pay (include user fees)
General tax revenue financing
Insurance:
– Social insurance: Compulsory; Public or
private management
– Private: Voluntary
Community Financing
Individual Savings Account
11
What are General Tax Revenues?


Earnings from government enterprises (e.g. oil)
Direct taxes
–
–
–
–

personal income taxes
corporate profit taxes
property taxes
wealth taxes
Indirect taxes
–
–
–
–
–
sales taxes
value added taxes
excise taxes (Tobacco and alcohol)
import duties
export taxes
12
Insurance Features:

Health risks are highly skewed; 10% of population

Risk Aversion; Individuals pay predictable amounts
when healthy to cover unpredictable costs when
usually consume 60% of the total health expenditure;
30% has no expenditure
sick/injured


Risk Pooling; Health insurance agencies pool many risks
together and generate resources to pay unpredictable
large health bills
cross-subsidy; Equity objectives served when more
healthy/wealthier people cross-subsidize less
healthy/poorer people through risk pooling
13
What Is Social Insurance?





Law compels employers to deduct a % of each employees
monthly wage for health to be paid into a “social insurance
fund”
Law compels employee to pay a % of his/her monthly
wage, (deducted by the employer) to “social insurance
fund”
Social insurance funds can be managed publicly or privately;
they can be monopolies or competitive
The employer/employee deductions are earmarked for
health, and cannot be used for any other purpose
Applicable largely to formal sector employers and
14
employees; evasion is severe among self-employed
What is Private Insurance?

Emerges from voluntary actions in a market
where buyers are willing to pay premium to
insurance companies that;
-- pools the risks and insure them for health
expenses
– Contract and pay providers who provide
treatment for members


Motivated by the prospect of earning a profit
Private insurance companies compete for clients
on the basis of “price” and quality
15
What Is The Successful Community
Financing Method?





Community-based funds where members prepaid a set
amount each year for specified services. Government
subsidizes the poor.
Organize and operate primary care clinic at village level
to gain efficiency and quality
Contract and pay secondary services
Managed by community members, not the government,
accountable back to members
Governmental role--initiate, train, support monitor and
regulate CF schemes
16
Potential Improvement in Efficiency &
Quality Under Community Financing




Efficiency Gains: Organized primary care with
salaried practitioner at the village level; Bulk purchasing
drugs; Contracting for secondary services
Lower Costs: Bulk purchasing and distribution of
drugs; Remove incentive to induce demand
Improve efficiency and accountability: Manage by
Community Members for their own benefits with
external monitoring and regulation
Improve responsiveness and quality: Monitored
and managed by Community Members
17
User Fees:


Introduce in 1980,s in developing
countries
Direct payments for health services,
and cover part of or full expenses of
the health services
18
User Fees:

The idea of changing user fees
promoted by World Bank and IMF, and
is a condition for new loans and debt
relief.
19
User Fees:


Charges is seen as a breach of the
principles which ensures equal
access to the health care system
without regards to the ability to pay
(Badgley, 1979,p31).
One of the reasons is to increase
revenue.
20
User Fees:

Advantages:
– Limitation of over all cost
– Curtailment of abuses
– Deterrent to over serving
– Increased sense of responsibility
21
User Fees:

Disadvantages:
– Participant culpability
– Non-selectivity of user fees
– Control of prices
– Rebound effect
– Difficulty of collection ,non-payment, a
loss of participants, the nonadherence to this practice by staff
– Regressive impacts
22
23
A Summary of Ranking of Different
Financing Methods (I)
Equity
Risk
Pooling
Reduce Risk
Selection
Efficiency*
General Rev
General
Rev
General Rev
User Fee (Sometimes
Hard to collect)
Social Ins
Social Ins
Social Ins
Social Ins
Comm Fin.
Comm Fin
Comm.Fin
Comm. Fin.
Private Ins
User Fees
Private Ins
Private Ins (High
Administrative Cost)
User Fee
User Fee
---------------
General Rev/ Direct
Provision (Inefficient)
BEST
WORST
*Efficiency factors include technical efficiency and administrative costs.
24
Where do you want to go?
25
Evolution of Health Care Financing and Provision
Systems at Various Stages of Economic
Development
Stage I
(three-tiered system)
General
Revenue
Financed
+ Donor
Social
Insurance
Poor
Low
(less than $1,800)*
($1,800-$4,800)*
Public health, prevention
Public health services
(clinics, hospitals)
(50-60%)
(40-50%)
For civil servants
only
(10-20%)
Stage II
(segmented Fin and
Prov)
Stage III
(universal coverage**)
($5,000-$12,000)*
(greater than $12,000)*
Public Health Service
NHS (UK, N.Z.)
Medisave + Cat.
(Singapore)
(20-40%)
Social
insurance
(
Direct Prov.
Indirect Prov.
)
(30-60%)
Private
Insurance
Self-pay
Negligible
(5-10%)
Private hospitals & clinics
Pharmacists
Indigenous providers
Private Insurance
(15-40%)
NHI (Canada,
Australia)
Bismarckian Social
Insurance
(Germany,
Japan)
Managed Care +
Medicare (USA)
Self-pay
Self-pay
(15-25%)
(35-45%)
(20-40%)
(15-25%)
Mali, Nigeria,
Tanzania, Kenya,
Yemen,
Bangladesh, India
China, Egypt,
Peru, Ecuador,
Philippines,
Indonesia
Turkey, Chile, Mexico,
Argentina, Brazil,
Lebanon, Venezuela,
Thailand, Malaysia
* GDP per capita, 1997 PPP $
26 Kong
** Except USA & Hong
Financing Options for Formal
Sector Workers and Families




All of them can be funded by: Social
Insurance ( Payroll Contribution)
High Income: Private Insurance; User Fees
Middle Income: Modest Private Insurance
and some User Fees
Low Income: Modest User Fees
27
Financing Options for Workers in
Informal Sector or Self Employed



High Income: Private Insurance, User
Fee
Middle Income: Modest Private
Insurance, some user fees
Low Income: Modest user fees
28
Financing Options for Farmers and
Other Self-Employed Rural Residents




For all residents: Community
Financing
High Income: Private Insurance, User
fees
Middle Income: Modest private
insurance, some user fees
Low Income: Modest User Fees
29
What goals does a society
want to achieve?






Equity in health status and equal access to health care
Equitable Risk protection
Public satisfaction
Efficiency
Quality
Sustainability (including public’s satisfaction for the
amount they have to pay and the benefit received)
What trade-offs are a society willing to make among the
goals?
30
Best Practices Around the
World
Government Finances:
 Public Health and Prevention
 Subsidize the Poor and Low-Income People
for Health Services
 Subsidize Risk Pooling Schemes for Insuring
Against Catastrophic Health Expenditures
 Training
 Research and Development
31
Modern practices in health care financing





For equity reasons, government has to finance a
significant part of total health expenditures,
especially subsidize the poor
Government has to establish means to reduce
adverse selection by the healthy people and to
regulate risk selection in private insurance industry
Money needs to follow the patient to generate
competition in the delivery of health services
Effective competition requires organized
intermediary for consumers
Rational pricing policy to coordinate public/private
sector providers
32
“Think it over...”
33
Equity and Efficiency In
Health Care Financing
34
Goals:
Equity: Do citizens have equal access?
Are financial burdens shared fairly?
Risk Pooling: Are risks properly pooled?
Efficiency: Are resources allocated most effectively
to produce better health and risk protection?
Are health services being produced in an
efficient way?
How much administrative paperwork?
Quality: How to assure patients’ satisfaction and
technical quality?
Sustainability: Financial, political, public support
35
The Difficult Balance of Goals
Health
Status
Risk
Protection
Public
Satisfaction
Level
Distribution
36
Is Equitable Health Care
Affordable and Attainable?
WHAT IS EQUITY?
37
Equity

Who bears the burden?
– Statutory and economic incidence
– Vertical and horizontal equity in financing

Who reaps the benefits?
– Benefit incidence: what to measure?
 Financial value, access, use, outcomes?
38
Equity is an ethical and moral concept
Equity is about justice and fairness
Many definitions of equity
39
Horizontal and Vertical
Representation of a Society

Financing (Burden)
– Income or ability to pay

Delivery (Benefits)
– Health Need
40
Horizontal and Vertical
Representation of a Society
VERTICAL DIMENSION
HORIZONTAL DIMENSION










GROUP 1










GROUP 2



 





GROUP 3

        
GROUP N
41
Equity in Financing
In General:
A Financing system is considered to be
Vertically Equitable if those with a greater
ability to pay contribute a greater share of
their income to pay for health care
42
Equity in Delivery

HORIZONTAL EQUITY
“EQUAL TREATMENT OF EQUALS”

VERTICAL EQUITY
“MORE HEALTH CARE FOR THOSE WITH
MORE NEED”
NOTICE: A DELIVERY SYSTEM CAN BE HORIZONTALLY
EQUITABLE WHILE AT THE SAME TIME BEING
VERTICALLY INEQUITABLE
43
Equity in Financing and
Delivery of Health Care


Many Think an Equitable Health
System Would be One Where:
People with equal need can obtain equal
care; and
People contribute to the financing of
health care according to their ability to
pay
44
EQUITY and
Ways of Finance
 Progressive
 Proportional
 Regressive
45
Financing Equity: Progressive (2)
Hhld.
$$$
Progressive
Spent
On
Proportional
Health
0
H1
H2
H3
Total Household $$$ minus Subsistence
46
Financing Equity:
Proportional
Hhld.
$$$
Spent
On
--------------------------------------------------------------------Proportional
Health
0
H1
H2
H3
Total Household $$$ minus Subsistence
47
Financing Equity: Regressive
Hhld.
$$$
Regressive
Spent
On
Proportional
Health
0
H1
H2
H3
Total Household $$$ minus Subsistence
48
Comparison of Burden Under
Different Financing Methods
Household
Income
H1 = $200
H2 =
$2000
H3 =
$20000
SHI
3% rate
($)
Income
Tax
($)
User
Fee
($)
6
0 20/visit
60
200 20/visit
600
5000 20/visit
49
Worst Case Scenario for
the Poor


Poor households contribute more to health
relative to their incomes than do the rich
Resources for health spent by MOH tend to
benefit the rich more than the poor
50
Financial Risk Protection and
Equity


Achieved by pooling revenue for
health so that the relatively rich and
healthy cross-subsidize the relatively
poor and sick
A means of protecting the relatively
poor from catastrophic financial loss at
times of serious illness or injury
51
Motivation for Financial
Risk Protection



Individuals are risk averse
Attractive to pre-pay when funds are available
and people are healthy
Out-of-pocket payments leaves people
vulnerable to borrowing and indebtedness at
times of serious illness or injury (or not
seeking health services at all)
52
The Magic Revenue Mix?
53
Conclusions



There is no perfect, magic revenue mix
Each component source of revenue will have
different equity implications, resulting in
positive and negative tradeoffs for equity
A mix of revenue sources can become
entrenched. Changes will take place not only
in view of equity considerations but
efficiency considerations, administrative
realities, and political considerations as well.
54
Conclusions cont’d



The public sector isn’t the only actor; the
size of the private sector is immensely
important as well.
Maximum impact of the public sector on
equity can only occur if public revenues
are raised as equitably as possible and
then spent as equitably as possible.
A long-run goal of any health system is to
increase financial risk pooling and
prepayment, while reducing out-of-pocket
payments
55
56
END
57
“Think it over...”
58
Functions of the
Health system
Stewardship
(oversight)
Control
Knobs
Intermediate
Goals
Finance
EQUITY
Payment
Organization
Creating
resources
Delivering
services
(investment
and training)
(Provision)
ACCESS
Ultimate
Goals
Responsiveness
(to non-medical
expectations)
EFFICIENCY
Health
Regulation
FISCAL
IMPACT
Behavior
Fair Financial
Contribution
Financing
(collecting, pooling
and purchasing)
QUALITY
59
Thailand country profile
60
Population = 61.9 millions (2000)
Growth rate = 1.05%
GDP/cap = US$1,958; US$6,000 (ppp.)
Literacy rate = 93.1%,
HDI = 0.757, Rank = 66
95% Buddhism and Thai
61
1999
2000
0
Year
12.3
10.6
11.0
10.9
12.2
10.7
10.3
12.75
15.66
16.18
27.5
28.1
28.3
28.8
29.4
31.2
32.0
25.84
27.16
23.88
Industrial
Agriculture
Others
1996
1990
1984
26.68
24.5
19.68
20.0
21.51 23.24
21.32
18.55
22.91
17.57
27.01
19.15
20
1978
1972
10
15.95
18.14
30
1966
40
13.98
13.72
14.99
50
60.2
61.3
60.7
60.3
58.4
58.1
57.7
60.09
59.52
60.46
57.98
55.25
60.13
55.5
53.84
53.64
39.79 47.72
37.13 48.77
33.49
52.53
36.5
49.78
53.5
31.51
58.16
25.89
25.36
56.23
60
12.52
14.1
70
1960
Percent of GDP
Proportion of Economic Sector, 1960-2000
62
Thailand Basic Information
(2000)

Life expectancy at birth = 71.7 years

IMR = 26.0 per 1,000 live births

MMR = 13.2 per 100,000 live births

MD./ population = 1:2,800;

Bed / population = 1:450
63
Major Causes of Death among Thai People, 1967-2001
Heart diseaes
Cancer
AIDS (estimated)
Diarrhoea
80
70
60
Accidents
AIDS (reported)
Pneumonia
79.5
72.1
62.5
50
49.5
42.7 44.5
40.6
41.8
40
19.2
23.1
22.4
21.9
16.5
10
12.6
33.5
32.2
27.6
26.2
20
33
19.3
26.1
37.4 33.5
31.5
27.9
36.8
35.1
30.2
12.9
63.9
58.61
52.5
49.85
49.7 48.47
49.7
43.8
40.92
39.56 36.54
37.73
33.53
33.33 35.55
32.97
31.9
30.29
13.5
14
15.9
18.98
9.6
1982
0
1977
51.7
63.47
27.17
15.2
6.7
1972
52.7
48.5
50.9
45.6 45 48.9
41.9 43.5
41.2
39.3
14.9
13.1
64.3
61.5
58.5 61.6
11 11.5 11.3312.29
9 10.6
9.9
11.88
10.01
10.07
8.16
9.3
9
8.5
3 2.6 2.5 2.4 2.7 2.5 1.93
4.9
0.66 0.53 0.35 0.32
4
3.7
2.5
0.33
0.58
0.1 0.23 0.76 2.4
0.03 0.07 0.23 0.9
6.3 6.7 6.3
7 6.8
7 7.2
5.7
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
30
30.3
54.7
51.3
68.44
69.2
56
1967
Death rate per 100,000 population
90
Year
64
Health Care Financing (HF) 2001
Year 2001
Other
10.7%
Central Gov.
33.4%
Household
33.1%
THE 170,203 Mil.Baht
3.5%
CSMBS
12.8%
Social security
6.6%
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
44.5%
33.1%
30.5%
1994 1995 1996 1997 1998 1999 2000 2001
Central Gov.
Social security
Local Gov.
Household
year
CSMBS
Other
65
Chronological development of
health insurance in Thailand












1929 Private insurance business
1954 first Social security Act (but not implemented)
1974 Workmen compensation fund
1975 free medical care for the poor
1978 1st private health insurance company
1980 Royal Decree on CSMBS
1981 1st issuing of low income card
1983 Maternal and child health fund (phase 1)
1984 health card project (phase 2)
1990 Social Security Act covered enterprised >= 20
employees
1991 Health Card Project –insurance based (phase 3)
1992 Free medical care for elderly
66
Public Health Security Scheme Coverage
Source: Health and Welfare Survey 1991, 1996, 2001 and 2003 which was conducted by National Statistic Office, Thailand
80
Reform
100
70
0.9
Percent
90
60
31.5
50
40
30
2012.8
1.4
10
15.3
0
1991
UC
PA
75
Health Card
Priv Emp
12.6
Gov Emp
15.3
20.8
5.6
10.2
7.2
8.5
10
1996
2001
2003
Social Security Act
9
Year
National Health Security Act
67
Ratio of members in each scheme
by household income quintile
100%
80%
7%
13%
39%
43%
20%
60%
40%
30%
34%
26%
20%
15%
18%
0%
7%
6%
34%
8%
2%
CSMBS
SSS
Q1 (poorest)
Q2
Q3
UC
Q4
Q5 (the richest)
Source: Derived from Tangcharoensathien V et al: Researcher analyzed data of Health and
Welfare Survey 2003 which was conducted by NSO Thailand.
Remark: 61.3 million population
68
Ratio of members in each scheme
by household income quintile
100%
80%
7%
43%
39%
13%
49%
26%
40%
34%
20%
15%
18%
18%
7%
6%
8%
2%
6%
4%
CSMBS
SSS
PHI
0%
Q1 (poorest)
23%
Q2
17%
20%
60%
30%
14%
25%
34%
27%
19%
17%
22%
17%
27%
15%
UC
Q3
Q4
Uninsured
All schemes
Q5 (the richest)
Source: Researcher analyzed data of Health and Welfare Survey 2003 which was conducted
by NSO Thailand.
Remark: 61.3 million population
69
Equity in Receiving
Health Care
percentage
9
8.17
8
7
6
4.82
5
3.74
4
3
2
2.77
2.59
1
2.14
3.65
2.87
2.2
1.9
2.57
1.98
2.45
1.74
1.99
1.92
1.64
1.83
1.27
1.71
0
1
2
3
4
5
6
7
8
9
10
Decile
1992
1994
1996
1998
2000
2002
Source: Data in 1992-2000 came from Thailand Health Profile 1999-2000.
Data in 2002 came from analysis of Socio-Economic Survey 2002 conducted by NSO.
Remark: Health expenditure of household was percentage out of income.
70
The
that moves the mountain
Political linkage
Social
movement
Knowledge
generation
71
72