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IMPORTANCE OF HEALTH INSURANCE IN PAKISTAN
EXECUTIVE SUMMARY
.
The topic of this research paper makes it quite special in the wake of scenario
experienced by almost entire population of this country. Right from the common
citizen up to the upper class, people are facing consequences related to their health
in one way or the other.
We know the number of people in Pakistan living below the poverty line, living
without potable water, without health care, without education, without basic
sanitation facilities and without much more. It shows that our country is a very poor
country and it has not been provided with even the bare necessities of life.
Health Insurance in law and economics is a form of risk management and can be
defined as the equitable transfer of the risk of a loss from one entity to another in
exchange of a premium.
Whatever insurance industry we have experienced in Pakistan, can be described
as a business rather than an industry meant for the welfare of the in affordable poor
people of Pakistan.
Unlike United States of America and India, where the government and the
NGOs are playing their due role in making the health insurance policy flourish in
their respective countries, Pakistan is lacking in both the financially strong
government to bear the cost of such scheme as well as the willing NGOs and
philanthropists.
Hence what is required is some serious efforts on part of the government not to
let anyone exploit and fleece the handicapped population of the country; instead
play its long awaited role of giving immediate and cost effective relief to its citizens
at large through efficient and corruption free public health sector; Government on
one hand can make judicious use of public funds, and simultaneously work on
improving the affordability of the poor masses.
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ACRONYMS
FD Finance Department
OPD Out Patient Department
SENWA Sindh Employees New Welfare Association
EFU Eastern Federal Union
LP Local Purchase
GOS Government of Sindh
ICU Intensive Care Unit
CT Computed Tomography
MRI Magnetic Resonance Image
SGA & CD Services General Administration & coordination
Department
HMO Health Maintenance Organization
SLIC State Life Insurance Corporation
HELP Health Expenditure & livelihood Protection for Poor
OASDHI Old Age Survivors, Disability and Health Insurance
IRDA Insurance Regulatory Development Authority
CGHS Central Government Health Scheme
ESIS Employee State Insurance Scheme
GIC Government Insurance Corporation
SCHIP State Children Health Insurance Programme
ERISA Employee Retirement Income Security Act
PSDP Public Sector Development Programme
MDG Millennium Development Goals
BISP Benazir Income Support Programme
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INTRODUCTION
Health insurance is defined as the coverage of expenditure incurred on the
medical or surgical treatment of a citizen of a country against some premium paid
by the citizen or state promoted social security plan. Implementation of health
insurance policy is long overdue in Pakistan especially in the prevalent deteriorating
health conditions of the population at large.
In Pakistan almost half of the population is low income and 99% of this
population is uninsured and 97% of their health care expenses are out of their own
pockets. It is high time that government should come up with some implementable
policy to give umbrella protection of health insurance to all the masses of Pakistan
rather than the prevalent policy of insurance cover at individual or institutional
level. In Pakistan, public healthcare provision has not been successful in creating
health security for the poor. The sector remains grossly under-funded, with public
expenditure on health counting for barely 0.5 per cent of the GDP of which close to
75 per cent is spent on salaries. There are only two countries in the world
Nigeria and Sudan that spend less than this proportion on health. It is around one
per cent for India, two per cent for Bangladesh and Nepal and three per cent for
China, while for most developed countries it ranges from five to seven percent.
More than 80 per cent of the total healthcare expenditure is spent by the
private sector and almost all of this represents private out-of-pocket expenditure on
curative care consultations and in-patient diagnostic care, laboratory tests and
medicines.
The health sector has acquired a notorious reputation for inefficiency and
corruption at all levels. Most of the government-operated outlets for primary
healthcare, except perhaps in Punjab, are on the verge of total collapse. There aresome forms of social welfare protection instruments in many countries like
unemployment benefits or social security for the needy, driven by the belief that it
is the primary responsibility of the state to look after its citizens. Free or subsidized
healthcare is also one such instrument. Poverty reduction and health outcomes are
integrally linked as improved health outcomes contribute to reduction in poverty
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and vice versa. Several studies have shown that expenditure on healthcare is more
effective in reducing poverty than expenditure on poverty alleviation programmes.
Those hardest hit by lack of health coverage are the poor, who suffer from higher
levels of mortality and malnutrition than the rich.
The point is that low levels of expenditure, poor quality of services, and
inefficiencies have failed to provide decent health cover for the poor. This has
raised the need for alternative financing mechanisms and instruments to achieve this
objective, that is health insurance to improve the access of the poor to health
services an instrument now being developed by insurance companies in the
private sector for the more affluent households and for employees of corporate
entities. The poor can also make small, periodic contributions that could go towards
meeting their healthcare needs. Hence, the need for setting up a health insurance
scheme for low-income groups. The government of India introduced the Universal
Health Insurance scheme targeting the poor in 2003. The premium was set at Rs365
per annum for an individual and Rs548 for a family of five. The government gives a
subsidy of Rs100 per family below the poverty line. The benefits include
reimbursement of expenditure of up to Rs30,000 and illness compensation of Rs50
per day for the period of hospitalization of the earning head of the family. There is a
provision of coverage for Rs 25,000 in case of death of an earning head of family in
an accident.
The problem with the scheme is that the premium is too low for the insurance
companies to offer good coverage and too high for the poor to pay upfront. Thus so
far only two per cent of the policies have been sold to the people living below the
poverty line. Pakistan, by learning from the experiences of India and other
developing countries, can introduce its own scheme that addresses the kind of
weaknesses identified here.
To make the scheme financially viable, the transaction costs for the insurance
companies can be lowered by educating the people to buy insurance as a group
contract (important characteristics for which would be age and sex of members) so
that risks and contributions are pooled more effectively, while flexibility in
payment of premium and the system of certifying claims and healthcare provision
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can be improved by the introduction of an agency that acts as an intermediary
between the target community and the insurer.
For the poorest of the poor who cannot make any contribution, health
insurance will not be relevant. For them there would be continuing need to provide
free access to public health facilities or subsidized healthcare in private facilities.
Health insurance as a financing mechanism would be appropriate only when part of
the cost is recovered from the beneficiaries. It would make sense only when the
beneficiaries are in a position to contribute something, provided, of course, this
offers a means for the low-income groups to meet their priority health needs in a
cost-efficient manner
Problem Statement
As Pakistans public health care sector is under resourced and overwhelmed,
the will of the government to adopt health insurance as a public policy remains
doubtful. Low income families are conceptually entitled to free health care through
government hospitals but in practical terms they end up paying the related costs.
Insurance companies have focused on the top of the pyramidthe corporate elite
rather than the base which represents much larger population of low income
families whose biggest issue is affordability; hence there is a dire need to customize
a micro insurance scheme for the poor focusing on enhanced affordability and
reducing costs. Health insurance is beyond doubt a remedial solution as it plays a
key role in economic growth and human welfare provided it is handled with utmost
care and managed with highest professional standards with special emphasis on
how to include those not formally employed.
Hypothesis
Since health insurance policy cannot be implemented in Pakistan keeping in
view the affordability by the poor masses with under-funded, inefficient and
reluctant public sector, attention needs to be diverted towards much more improved
health services through government/charity hospitals and regulation of private
health sector.
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Scope of the Study
The scope/objectives of the study are:
To locate any such prevalent facility from public and private sector which can satisfy the
people ofPakistans medical requirements.
To examine the attempts made by the government to implement the policy of health
insurance at federal and provincial level.
To assess the medical needs of the citizen of Pakistan and governments capability to meet
their requirements.
To analyze the affordability of masses to take advantage of this policy of health insurance
and the potential and intention of the government to make it functional.
And lastly to identify important areas which require urgent reforms to make Health
insurance policy workable and subsequently to recommend the probable solution for
resolving the dilemma in a most befitting manner.
Research Methodology
The research paper is mainly based on the secondary data which was gathered
from various sources like books, reports, newspaper articles, internet and research
conducted in the past.
The primary data is also gathered through interviews from the concerned
officials of public sector like secretary finance GOS, health insurance agents and
general perception of the public as well as personal observation.
On the basis of the primary and secondary data, the qualitative research will
be conducted to address the problems relating to the hypothetical problem.
Literature Review
For writing this research paper, in depth study of various books, reports,
newspaper articles and net search was carried out. The literature that was reviewed
on the subject reflected not only the views and analysis of the authors, who in their
own right are authority on the subject, but also incorporating the views and
soliciting the ideas of othe stakeholders and finally the experience of those who are
somehow involved in the subject of Health Insurance.
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The material that I have gone through during writing of this research paper
also included deliberations by government officials to examine the pros and cons of
the health insurance scheme in Pakistan.
To properly analyze and assess the extent of success and failure of
implementation of Health Insurance Policy in the province of Sindh, assistance has
also been sought from the officials of Finance Department GOS right up to the level
of secretary and special secretary.
The websites have also been frequently visited to go through various
researches already taken on the subject.
Studies undertaken by Karim Khan Qamar in Pakistan, Finance Department
GOS in Sindh province and David Bickelhaupt in USA are very useful reading on
the given subject.
The close relationship of insurance to the environment within which it
operates is being examined more now than ever before. Although some experts
warn that the social insurance area is growing too fast in competition with the
voluntary health insurance system, most agree that the application of insurance
techniques to individual, social, and combined individual-social problems will all
be important in the future. (David L.Bickelhaupt,1983)
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SECTION-1
NEED FOR HEALTH INSURANCE IN PAKISTAN
1.1 Prevalent Conditions of Health Care in Pakistan
Healthcare in Pakistan is administered mainly in the private sector which
accounts for approximately 80% of all outpatient visits. The public sector was until
recently led by the Ministry of Health, however the Ministry was abolished in June
2011 and all health responsibilities (mainly planning and fund allocation) were
devolved to provincial Health Departments which had until now been the main
implementers of public sector health programs. Like other South Asian countries,
health and sanitation infrastructure is adequate in urban areas but is generally poor
in rural areas. About 19% of the population and 30% of children under age of five
are malnourished.
Ministry of Health of Pakistan states that health expenditure of period 2007-
08 was 3.791 billion Pakistani rupees while that spent on development was 14.272
billion.1
Basic health indicators
Indicators of the functioning of health system are equally important as
indicators of health status of a population of a country. The most prominent amongthem are the governance, stewardship, delivery of service, health financing and
other inputs into the health sector at all levels of human resources i.e. doctors,
paramedics and availability of medicines.2
Although some indicators on health financing have been included herewith,
the list is not complete due to data gaps. The health financing indicators show that
although allocations have increased, Pakistan still spends 0.67% of its GDP on
health with a percentage of the budget going unutilized. In addition, some allocation
disparities are evident, and alternate mechanisms of financing health have not been
mainstreamed into the delivery of care. Therefore, in addition to the need for greater
increments in allocation, there is a need to address allocation disparities, improve
1en.wikipedia.org/wiki/Health_care_in_Pakistanaccessed on 15/3/20122www.heartfile.org/pdf/GWP-II.pdfaccessed on 20/3/2012
http://www.heartfile.org/pdf/GWP-II.pdfhttp://www.heartfile.org/pdf/GWP-II.pdfhttp://www.heartfile.org/pdf/GWP-II.pdfhttp://www.heartfile.org/pdf/GWP-II.pdf7/31/2019 Importance of Health Insurance in Pakistan
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utilization and develop alternative approaches to heath financing, albeit with
safeguards against creating access and affordability issues for the poor.3
Primary Health Care is defined as "essential health care based on practical,
scientifically sound and socially acceptable methods and technology made
universally accessible to individuals and families in the community through their
full participation and at a cost that the community and the country can afford to
maintain at every stage of their development in the spirit of self-determination"
Primary Health Care delivery is considered the most effective and cost
efficient method of improving health for its citizens. In this article, we examine the
multifactorial reasons for its failure in Pakistan.4
Looking at Primary Health Care in isolation from other services that impact
the standard of living in a given community is a mistake. However, this is a vast
subject and beyond the scope of this article. By necessity, we will keep our focus on
Basic Health Unit (BHU) which is one of the programs that is considered vital in
providing primary health care in rural areas.5
In order to understand the complexity of the problem, we will first summarize
how Pakistans overarching Federal Health Policy & Planning impacts the delivery
of Primary Health Care at the BHU level.6
Pakistan's health indicators, health funding, and health and sanitation
infrastructure are generally poor, particularly in rural areas. About 19 percent of the
population is malnourisheda higher rate than the 17 percent average for
developing countriesand 30 percent of children under age five are malnourished.
Leading causes of sickness and death include gastroenteritis, respiratory infections,
congenital abnormalities, tuberculosis, malaria, and typhoid fever.7
Hepatitis B and C are also rampant, with approximately 3 million cases of each in
the country. The cost of curing or treating these illnesses is many times more than
preventing them.
3 www.heartfile.org/pdf/GWP-II.pdf4 insaf.pk/Portals/.../FAILURE%20ANALYSIS%20%20%206-28-09.p...5 insaf.pk/Portals/.../FAILURE%20ANALYSIS%20%20%206-28-09.p...66 insaf.pk/Portals/.../FAILURE%20ANALYSIS%20%20%206-28-09.p...7 britishpakistanfoundation.com/healthcare
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In 2007 there were 85 physicians for every 100,000 persons in Pakistan. There are
only 62,651 nurses all over the nation, which highlights the problem of nurse-to
doctor ratio. Delivery of health in rural areas is designed to be met by a strong force
of 100,000 Lady Health Workers (primary health care providers).
According to the World Health Organization, Pakistan's total health expenditures
amounted to 2.0 percent of gross domestic product (GDP) in 2006, (but according
to Economic survey of 2005-6, Pakistan spent 0.75% of GDP on health sector). Per
capita health expenditures were US$51 (2006). The government provided 24.4
percent of total health expenditure, with the remainder 75% being entirely private,
out-of pocket expenses.
Failure Analysis of Primary Health Care in Pakistan & Recommendations for change M. Asad Khan, MD Insaf Research
Wing 2009
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1.2 Hostile Factors for Implementation of Health Insurance Policy
There is a host of causes for losses in health insurance business. The
companies are forces into unwarranted and negative premium rate cutting due to
unavoidable market competition. This practice results in underwriting policies with
lower than required premiums. There is no appropriate actuarial database for health
insurance in Pakistan to assess premiums for underwriting the policies which results
in the Non-Tariff nature of this business. The nature of this business forces heavy
management and administrative expenses.
There is a general lack of understanding and education in customers due to
the nature of health insurance, which requires a rather higher education and literacy
rate. It is difficult to control compliance due to nature of hospitals available in the
country. Generally the patient/customer prefers to choose few state of the art
hospitals having higher treatment cost.
At present there is lack of coordination among various stake holders like
users, hospitals and operational personals of the insurance companies which also
result in absence of mutual understanding and appropriate controls.
It is also found that number of health insured individuals with various
insurance companies is still not adequate to make it a profitable business as
normally expected according to laws of large numbers which is essential for anybusiness to prosper.
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ISSUES IN HEALTH INSURANCE
Need for a variety of products micro insurance to international coverage birth
to old age
Clarity in policy terms, conditions, exclusions
Need for Services Cashless, toll free nos., quick response
Curtailment of Costs
State life is in existence since 1972 and it controls 97% of the market share of life
premia. But unfortunately SLIC did not venture in the field of health insurance
whole heartedly. Normally in all developed countries i.e. USA, Canada, UK,
Europe and Japan all life insurers sell health insurance, and in abundance. Why they
sell sickness insurance is because they have huge funds to invest, not only to earn
profit but also to fulfill their socioeconomic responsibilities.
But who has prevented life insurers in Pakistan to write this class of business?
They can also take the lead; but unfortunately their hands have been tied by our
government.
The Insurance Act, 1938 does not permit life insurers in Pakistan to write
health insurance as a separate class of business but they can write it as a rider of life
policy.
Hence a Pakistani citizen has to take life policy whether he can afford it ornot, or does he need it or not, he must take a life policy, otherwise he cannot take
health insurance. What an irony!
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SECTION-2
RESOURCES
2.1 Role of private insurance companies.8
The majority of general insurance companies have started to market Health
Insurance product in Pakistan and the market trend confirms that it is getting
popular. There is a steady growth of the premium rate for this product. Presently, in
Pakistan, the cumulative health insurance premium lies in the range of rupees 500
to 750 million. The companies have very cautiously adopted this product due to the
highly technical nature of this business with a lack of experienced manpower due to
the fact that this is a low profit business at least in the initial phases.
The larger insurance companies have maintained the health insurance product
for a considerable time with the rest of market is in the process of adding this
product in their business portfolios. A whole lot of new insurance companies are
being launched with the plans to include Health Insurance as its product.
New Jubilee Insurance is the most experienced company offering health
insurance in Pakistan. They have excellent expertise of this product with a
significant share of health premium.
EFU Insurance has formed a joint venture with the German Allianz as majorstake holder to create the first health insurance company of Pakistan known as
Allianz -EFU Health. EFU Insurance has been successful in gaining access to
corporate and individual clientele after executing this product on its own. They have
been successful in gaining access in the market with a respectable share in business
yet there is still a wait to the question of profitability. The company has also started
the novel product of individual health insurance but on a limited basis.
Adamjee Insurance being the largest general insurance company in the
country was the first to initiate the health insurance policy decades earlier but till
recently had kept this product dormant. They have earned a considerable premium
8gis.emro.who.int/HealthSystemObservatory/.../Pakistan/...Similar
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under the product health premium yet it is negligible in comparison to its overall
premium.
The older insurance companies American Life and Commercial Union have
been offering corporate or group health insurance but their market acceptability was
not high. The Commercial Union transferred its insurance business to New Jubilee
insurance in Pakistan.
Askari General Insurance Company is relatively a new insurance company
but in terms of premium, it has progressed to be among the first ten insurance
companies of Pakistan. Askari since its inception has offered health insurance.
With one of the best available manpower running health insurance in the country,
they have the second highest premium collection from Health insurance in their
overall premium collection.
PICIC Insurance Limited writes all classes of general insurance business.
PICIC Insurance provides quality medical insurance facility to its clients. Their
special feature is cashless facility which can be availed by using Health Insurance
Credit Card. This facility is available at all network hospitals which are spread all
over country. Expert medical advice and support is provided to clients.
The public sector company, State Life Insurance is largest insurance
company of Pakistan but it is not offering health insurance business currently.
2.2 Role of NGOs and charity hospitals.9
With 70 per cent of population in India living in rural areas and 95 per cent of
work-force working in unorganized sectors, and disproportionately large percentage
of these populations living below poverty line, there is strong need to develop social
security mechanisms for this segment of population. This need for security is
further increased because the poor are the most vulnerable for ill health, accidents,
death, desertion, social disruptions such as riots, loss of housing, job and othermeans of livelihood. There are some efforts in this direction of providing social
security to the poor by a few NGOs. The most prominent among them is that of Self
Employed Women's Association (SEWA). The other scheme by government
9books.google.com.pk/books?isbn=8178357828...
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insurance companies developed to focus on poor is called Jan Arogya Bima Policy
which was introduced in 1995 and covers expenditure up to Rs. 5000 for a premium
of Rs. 70 per annum.
It is estimated that about 5 million people are covered under various NGO
insurance schemes. The experience from other countries suggest that in developed
countries such as USA, UK, the health insurance have grown out of small non-
profit schemes. A large share of health insurance market in USA is in not-for-profit
sector. There is need in India to promote these schemes as they address the needs of
the poor. Over the last few years in India small and big NGO's like Tribhuvandas,
SEW A, ACCORD etc. have implemented the insurance schemes. Many of these
schemes are designed to meet the needs of the poorer segments of the community.
They have developed several innovations such as
Mechanism of monitoring the performance,
Pricing of various services,
Integration of various risks in one single product,
Linking of insurance schemes with savings,
Coverage of many services not included in market based schemes such as
maternity services, transportation, coverage of risks such as from riots, floods
etc.Some NGOs have developed special linkages with public health systems, private
facilities and also accessed resources through insurance companies
2.3 Social Security Organizations.10
Social Security Punjab has approximately 28,000 industrial units registered
with it. The number of secured/registered workers is about 530,000, with
dependents about 320,000. It has a network of dispensaries and hospitals in major
cities of Punjab, which are mostly situated near industries. It provides medical care
facilities to the secured workers and their families. These include
OPD and Indoor in its own Hospitals and Dispensaries,
Dental Care,
10gis.emro.who.int/.../Health%20care%20financing%20and%20expend...Similar
http://www.google.com.pk/search?hl=en&biw=1280&bih=907&q=related:gis.emro.who.int/HealthSystemObservatory/PDF/Pakistan/Health%2520care%2520financing%2520and%2520expenditure.pdf+Social+Security+Punjab+has+approximately+28,000+industrial+units+registered+with+it.+The+number+of+secured/registered+workers+is+about+530,000,+with+dependents+about+320,000.+It+has+a+network+of+dispensaries+and+hospitals+in+major+cities+of+Punjab,+which+are+mostly+situated+near+industries.+It+provides+medical+care+facilities+to+the+secured+workers+and+their+families.+These+include&tbo=1&sa=X&ei=5pvFT5G8EIri4QTaqPHEBQ&ved=0CAsQHzAAhttp://www.google.com.pk/search?hl=en&biw=1280&bih=907&q=related:gis.emro.who.int/HealthSystemObservatory/PDF/Pakistan/Health%2520care%2520financing%2520and%2520expenditure.pdf+Social+Security+Punjab+has+approximately+28,000+industrial+units+registered+with+it.+The+number+of+secured/registered+workers+is+about+530,000,+with+dependents+about+320,000.+It+has+a+network+of+dispensaries+and+hospitals+in+major+cities+of+Punjab,+which+are+mostly+situated+near+industries.+It+provides+medical+care+facilities+to+the+secured+workers+and+their+families.+These+include&tbo=1&sa=X&ei=5pvFT5G8EIri4QTaqPHEBQ&ved=0CAsQHzAAhttp://www.google.com.pk/search?hl=en&biw=1280&bih=907&q=related:gis.emro.who.int/HealthSystemObservatory/PDF/Pakistan/Health%2520care%2520financing%2520and%2520expenditure.pdf+Social+Security+Punjab+has+approximately+28,000+industrial+units+registered+with+it.+The+number+of+secured/registered+workers+is+about+530,000,+with+dependents+about+320,000.+It+has+a+network+of+dispensaries+and+hospitals+in+major+cities+of+Punjab,+which+are+mostly+situated+near+industries.+It+provides+medical+care+facilities+to+the+secured+workers+and+their+families.+These+include&tbo=1&sa=X&ei=5pvFT5G8EIri4QTaqPHEBQ&ved=0CAsQHzAAhttp://www.google.com.pk/search?hl=en&biw=1280&bih=907&q=related:gis.emro.who.int/HealthSystemObservatory/PDF/Pakistan/Health%2520care%2520financing%2520and%2520expenditure.pdf+Social+Security+Punjab+has+approximately+28,000+industrial+units+registered+with+it.+The+number+of+secured/registered+workers+is+about+530,000,+with+dependents+about+320,000.+It+has+a+network+of+dispensaries+and+hospitals+in+major+cities+of+Punjab,+which+are+mostly+situated+near+industries.+It+provides+medical+care+facilities+to+the+secured+workers+and+their+families.+These+include&tbo=1&sa=X&ei=5pvFT5G8EIri4QTaqPHEBQ&ved=0CAsQHzAA7/31/2019 Importance of Health Insurance in Pakistan
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Surgeries (including Cardiac Surgery at Lahore Hospital),
Physiotherapy,
Diagnostics,
Haemodialysis unit in Islamabad hospital,
Full Maternity Care services (in hospitals only),
Provision of ambulance,
Blood transfusion,
Provision of spectacles, artificial aids and dentures,
Payment of diet charges on admission of workers and their dependents at the
rate of Rs.40/day and to the T.B and Cancer Patients at the rate of Rs.50/day.
Medical care to survivors of deceased workers for one year, and to seasonal
workers for six months.
Reimbursements of expenses of Government Hospitals.
In addition, cash benefits (wages) during sickness, injury and disability and
Pension to survivor of deceased (due to employment injury).
The financial figures for the year 2001-02 show that this department had a total
income from all sources of Rs.1262 Millions, for this year. After all the expenses,
there was a net surplus of Rs.343 Millions. Applying the Law of Economy of
Scales, it would mean that increasing the number of contributors should increase
this surplus more, as the purchase of inputs in large-scale, will cost less and there
will be more effect of risk-spreading. But following factors also need to be
considered:
Contributions to Social Security are authorized and enforced by the laws and are
mandatory.
Secondly, it is the employer who is paying for the workers and not the workers
themselves. Thirdly the utilization-pattern of these health services is not been analyzed and
there is no information available about their current utilization rate and whether
there is any capacity to handle an increase in the demand of services.
This prepaid public insurance system is still efficient than the individual out-of-
pocket payments as it takes into account a few, large, economical transactions in the
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purchase of health interventions, instead of many single transactions occurring at
the private health outlets in the province.
Employees social security benefit organization:
Employees social security benefit organization provides health cover to
industrial workers and families allover the country. In Punjab alone it covers
544,800 workers and their 3228600 dependents. It has a network of 14 hospitals and
other health facilities in the province and has about 1300 indoor beds. Mainly
curative services are provided to the secured workers and their families.
Pakistan Bait-ul-Mal: Pakistan Bait-ul-Mal comes under the jurisdiction of
ministry of social welfare and special education and has a wide network in all the
provinces and districts with its head office in Islamabad. It is running a number of
projects in the health, education and social sectors, on behalf of the government of
Pakistan, in partnership with various donors and organizations. Tawana Pakistan
is a social sector project aiming at improving the nutritional status of the girl child
in 29 high poverty districts of Pakistan. It also helps in improving school enrolment
and retention of girls in the schools and is covering around half a million children in
the targeted districts at primary level. Bait-ul-Mal provides individual financial
assistance (IFA) to the poor, destitute women, orphans and disabled persons for
medical treatment and rehabilitation
Others: A number of organizations in public sector are performing a commendable
job in provision of healthcare at various segments. These include Pakistan
Telecommunication organization, Fauji Foundation, Armed Forces Institutions and
others.TP
2.4 Role of Public Sector:
Since we have entered into a scenario of post 18 th Amendment, the provincial
governments are free to make their own policies as the relevant ministries have
been devolved to the respective provinces.
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Now the onus is on the provinces now to formulate a policy for providing health
care to the people either through a Health Insurance Scheme or improving its
present health care system.
Here we can study an effort already made by the Sindh Government to provide
health insurance cover, at the beginning to its employees, as a pilot project and its
further extension if results are fruitful.
A meeting of the provincial cabinet was held on July 30 th,2005 under the
chairmanship of Chief Minister, Sindh wherein it was decided to provide health
insurance cover to all employees of Sindh Government.*
Finance Department, as a test case initiated a pilot project whereby health insurance
cover was provided to all government employees of Sindh working at the Sindh
secretariat only. The intent was to weigh benefits and costs and if successful the
facility may be extended to all employees of the Sindh Government. Since july
2006 several annual contracts were awarded to private insurance firms for providing
health cover to approximately 22000 lives which included around 2400 employees
and their families. Every year an approximate amount of Rs100 million is spent.
Over the five years of this initiative, the Finance Department has continuously tried
to make improvements in the facilities being extended to insured employees, but the
insurance companies failed to come up to the expectations of the employees.
Moreover the incidents of fake and forged reimbursement claims by the government
employees have increased multifold. Over the said period of time neither the
insurance companies nor the people insured had achieved the stage of maturity to
provide and avail the world class health cover benefits. Thus it is felt that if the
Government now tries to expand the cover to other non-secretariat employees, it
will not yield desired results.
A summary was moved for Chief Minister Sindh in November,2010 by Finance
Department to discontinue this facility as it was discriminatory to other employees
of Sindh Government and on the basis of enhancement of Medical Allowance of the
7/31/2019 Importance of Health Insurance in Pakistan
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non-gazetted staff and 15% medical allowance to gazetted officers. In addition the
fake medical claims with the collaboration of insurance companies was another
reason. Hence the scheme was discontinued from 2010 and the tenders floated for
the period from 2010-2013 were also cancelled.
One can see here that at the first instance, the General Insurance companies who
were contacted by the government, expressed their inability to provide health
insurance to all the employees of Sindh Government due to capacity and financial
constraints. However MS/ Allianz EFU Health Insurance Limited agreed to insure
7000 employees including both secretariat (4000) and non-secretariat(3000)
employees along with the spouse, children and dependent parents at the annual
premium of Rs 4276.00 per person.
Secondly it was no doubt a scheme which was discriminatory in nature that Sindh
Government is only catering Sindh secretariat employees; instead this policy should
have been extended across the board for all Sindh Government employees.
Thirdly there was a financial constraint on part of the Government also as they were
required to pay Rs 9.733 billion annual premium to insurance companies to give
health cover to 540740 provincial as well as dist. Government employees (BPS 1 to
BPS 22) at the premium of Rs 3000 per life. If we take an average of 6 per family,
the total number of lives to be insured comes to 3,244,440.
And lastly there was an element of corruption which was detected on the basis of
false and fake insurance claims of employees in collaboration of insurance
companies as both are the beneficiaries in this business. It is because of the inherent
culture prevailing in the society. Since there was no bonus for the employees who
do not claim for the entire policy period, they can go for forged claims to get the
benefit.
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SECTION-3
NEED FOR DESIGNING HEALTH INSURANCE IN
PAKISTAN
3.1 Health Card Scheme.
Pakistan needs to bring reform strategy to its much neglected health sector;
For this a Health card scheme can be introduced which will cover the essential
primary health care services as well as Hospital care at a secondary level. To make
it a successful scheme, private sector, especially NGOs can play its due leading
role. A voluntary insurance scheme can also be managed by regional Health Boards
to be formed as suggested from time to time. Way back in 1997 the then Finance
Minister declared at a seminar that the National Health card Scheme would be
launched very soon to provide health facilities to the poor and the middle class.
Under this scheme the government was planning to lease out its medical facilities to
doctors who will be paid a lump sum per person registered per year to provide
health care to the public.
Knowing the limited scope of the existing scheme, it is not clear what
facilities a health card bearer, who would pay a meager premium per year, would
get. If he can only get the professional services of a doctor, this would hardly be
sufficient Diagnostic services like X-rays, laboratory tests etc would be needed in
many cases as an aid to treatment. These are very costly besides, medicines would
be required whose prices are soaring every day. If diagnostic services and
medicines would not be available under this scheme, then the purpose of this very
scheme would be defeated. Therefore the facilities should be clearly defined.
This scheme also envisages that the government was considering to launch it
as a pilot project in some rural areas. Rural operations in respect of health care had
never been a successful venture. Hence its launching would also be plagued with
lots of ifs and buts.
Lastly who would control the funds collected from individuals against each
health card? This part of scheme is to be elaborated too. It is also true that the
government would not like to abandon its role in expanding primary health
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facilities, if health care is to be made available to everyone. At present only 55% of
the population has access to health services i.e. over 60 million people do not have
any health services. They are uncared for and cannot afford the health care.
Although the government is sincere in eradicating the social evils in order to
provide the masses with a healthy and prosperous life, but the government cannot
do this herculean task alone because it needs billions and billions of rupees.
Unfortunately the government is already short of funds.
Therefore the remedy lies in approaching the Private sector to come forward
and shoulder the responsibility of the government in such altruistic ventures. But we
also know that the private sector has the reputation of investing in those projects
where there is profit.
3.2 Factors affecting premium.
So far the bulk of health insurance business premium comprises of largely
corporate clients. Personal / Individual health insurance has a huge potential but
most of the insurance companies are not fully prepared to market this product due
to lack of expertise and exposure to this aspect of insurance. Health Insurance has
however gained substantial business momentum in the past couple of years in the
Pakistan insurance market. This being a new product with excellent customer
acceptability gave insurance industry another opening for their premium generation.
However being in the early stages of its life cycle, this product has produced some
difficulty in creating profitability for the insurance companies in Pakistan. This fact
is evident by making a comparative study of companies who are marketing
insurance business.
In Pakistan today most of its general insurance companies are marketing the
product of Health Insurance. It is evident from the market trend that this product is
gaining popularity. The growth rate of premium of this product is steadily growing.The cumulative health insurance premium in Pakistan presently lies between rupees
500 to 750 million. The highly technical nature of this business and lack of
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manpower expertise in this market together with the fact that its a low profit
business at least in the initial phases the trend to adopt this product is cautious.11
Cost Drivers in Health Insurance
Technology / Specialization
Prescription Drugs
Medical Inflation
Moral Hazard / Adverse Selection
Usage Increase
New treatments
Unnecessary treatments
3.3 Hospital networks associated with Health insurance.
12
There are some 75-100 hospitals all over the country that is on approved
panel list and contract of all the insurance companies doing health insurance
business. Most of these hospitals in Pakistan are not fully aware with the concept
and working of health insurance. This is an added factor in hindering the pace of
progress for health insurance to grow in the country. The basic infrastructure of
insurance oriented hospital appears to be an important organ in establishing health
insurance business. Except for few most of them are below any good standards
worthy of insurance business. It will be obvious that the best amongst these are
attracting the largest share of insurance patients. Agha Khan University Hospital
Karachi and Shifa Intl. Hospital Islamabad are leading hospitals in this respect.
The concept of building up some hospitals by the insurance companies to
provide services to its customer is vaguely present in some minds. This may be a
good idea in order to curtail losses of the insurer but this appears to be a little
premature. Some sort of collaboration between the insurance company and hospital
may become possible in future especially in area of executing Personal / Individual
Health Insurance.
11gis.emro.who.int/HealthSystemObservatory/.../Pakistan/...Similar
12gis.emro.who.int/HealthSystemObservatory/.../Pakistan/...Similar
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SECTION-4
COMPARATIVE STUDY OF HEALTH INSURANCE POLICY
WITH OTHER COUNTRIES
4.1 India and other developing countries13
Over the last 50 years India has achieved a lot in terms of health
improvement. But still India is way behind many fast developing countries such as
China, Vietnam and Sri Lanka in health indicators (Satia et al 1999). In case of
government funded health care system, the quality and access of services has
always remained major concern. A very rapidly growing private health market has
developed in India. This private sector bridges most of the gaps between what
government offers and what people need. However, with proliferation of various
health care technologies and general price rise, the cost of care has also become
very expensive and unaffordable to large segment of population. The government
and people have started exploring various health financing options to manage
problems arising out of growing set of complexities of private sector growth,
increasing cost of care and changing epidemiological pattern of diseases.
The new economic policy and liberalization process followed by the
Government of India since 1991 paved the way for privatization of insurance sector
in the country. Health insurance, which remained highly underdeveloped and a less
significant segment of the product portfolios of the nationalized insurance
companies in India, is now poised for a fundamental change in its approach and
management. The Insurance Regulatory and Development Authority (IRDA) Bill,
recently passed in the Indian Parliament, is important beginning of changes having
significant implications for the health sector.
The privatization of insurance and constitution IRDA envisage to improve theperformance of the state insurance sector in the country by increasing benefits from
competition in terms of lowered costs and increased level of consumer satisfaction.
However, the implications of the entry of private insurance companies in health
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sector are not very clear. The recent policy changes will have been far reaching and
would have major implications for the growth and development of the health
sector. There are several contentious issues pertaining to development in this sector
and these need critical examination. These also highlight the critical need for
policy formulation and assessment. Unless privatization and development of health
insurance is managed well it may have negative impact of health care especially to
a large segment of population in the country.
During the last 50 years India has developed a large government health
infrastructure with more than 150 medical colleges, 450 district hospitals, 3000
Community Health Centers, 20,000 Primary Health Care centers and 130,000 Sub-
Health Centers. On top of this there are large number of private and NGO health
facilities and practitioners scatters though out the country.
Over the past 50 years India has made considerable progress in improving its
health status. Death rate has reduced from 40 to 9 per thousand, infant mortality rate
reduced from 161 to 71 per thousand live births and life expectancy increased from
31 to 63 years.
India spends about 6% of GDP on health expenditure. Private health care
expenditure is 75% or 4.25% of GDP and most of the rest (1.75%) is government
funding. At present, the insurance coverage is negligible. Most of the public
funding is for preventive, promotive and primary care programmes while private
expenditure is largely for curative care. Over the period the private health care
expenditure has grown at the rate of 12.84% per annum and for each one percent
increase in per capital income the private health care expenditure has increased by
1.47%. Number of private doctors and private clinical facilities are also expanding
exponentially. Indian health financing scene raises number of challenges, which
are:
increasing health care costs,
high financial burden on poor eroding their incomes,
increasing burden of new diseases and health risks and
neglect of preventive and primary care and public health functions due to
underfunding of the government health care.
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Given the above scenario exploring health-financing options becomes critical.
Health Insurance is considered one of the financing mechanisms to overcome some
of the problems of our system.
Health insurance is very well established in many countries. But in India it is
a new concept except for the organized sector employees. In India only about 2 per
cent of total health expenditure is funded by public/social health insurance while 18
per cent is funded by government budget. In many other low and middle income
countries contribution of social health insurance is much higher
It is estimated that the Indian health care industry is now worth of Rs. 96,000
crore and expected to surge by 10,000 crore annually. The share of insurance
market in above figure is insignificant. Out of one billion population of India 315
million people are estimated to be insurable and have capacity to spend Rs. 1000 as
premium per annum. Many global insurance companies have plans to get into
insurance business in India. Market research, detailed planning and effective
insurance importance. Given the health financing and demand scenario, health
insurance has a wider scope in present day situations in India. However, it requires
careful and significant effort to tap Indian health insurance market with proper
understanding and training.
There are various types of health coverage in India. Based on ownership the
existing health insurance schemes can be broadly divided into categories such as:
Government or state-based systems
Market-based systems (private and voluntary)
Employer provided insurance schemes
Member organization (NGO or cooperative)-based systems
Government or state-based systems include Central Government Health Scheme
(CGHS) and Employees State Insurance Scheme (ESIS). It is estimated that
employer managed systems cover about 20-30 million of population. The schemes
run by member-based organizations cover about 5 per cent of population in various
ways. Market-based systems (voluntary and private) have Mediclaim scheme which
covers about 2 million of population. There are many employers who reimburse
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costs of medical expenses of the employees with or without contribution from the
employee. It is estimated that about 20 million employees may be covered by such
reimbursement arrangements. There are several government and private employers
such as Railway and Armed forces and public sector enterprises that run their own
health services for employees and families. It is estimated that about 30 million
employees may be covered under such employer managed health services .
General Insurance Corporation (GIC) and its four subsidiary companies and
Life Insurance Corporation (LIC) of India have various health insurance products.
Health insurance in a narrow sense would be an individual or group
purchasing health care coverage in advance by paying a fee called premium. In its
broader sense, it would be any arrangement that helps to defer, delay, reduce or
altogether avoid payment for health care incurred by individuals and households.
Given the appropriateness of this definition in the Indian context, this is the
definition, we would adopt. The health insurance market in India is very limited
covering about 10% of the total population. The existing schemes can be
categorized as:
1) Voluntary health insurance schemes or private-for-profit schemes;
2) Employer-based schemes;
3) Insurance offered by NGOs / community based health insurance, and
4) Mandatory health insurance schemes or government run schemes (namely ESIS, CGHS).
Voluntary health insurance schemes or private-for-profit schemes14
In private insurance, buyers are willing to pay premium to an insurance
company that pools people with similar risks and insures them for health expenses.
The key distinction is that the premiums are set at a level, which provides a profit to
third party and provider institutions. Premiums are based on an assessment of the
risk status of the consumer (or of the group of employees) and the level of benefits
provided, rather than as a proportion ofthe consumers income.
In the public sector, the General Insurance Corporation (GIC) and its four
subsidiary companies (National Insurance Corporation, New India Assurance
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http://webcache.googleusercontent.com/search?q=cache:GLN9A8hLdxkJ:iph-partnership.org/index.php%3Ftitle%3DTopics_and_questions_for_the_talkshow+In+private+insurance,+buyers+are+willing+to+pay+premium+to+an+insurance+company+that+pools+people+with+similar+risks+and+insures+them+for+health+expenses.+The+key+distinction+is+that+the+premiums+are+set+at+a+level,+which+provides+a+profit+to+third+party+and+provider+institutions.+Premiums+are+based+on+an+assessment+of+the+risk+status+of+the+consumer+(or+of+the+group+of+employees)+and+the+level+of+benefits+provided,+rather+than+as+a+proportion+of+the+consumer%E2%80%99s+income.&cd=1&hl=en&ct=clnk&gl=pkhttp://webcache.googleusercontent.com/search?q=cache:GLN9A8hLdxkJ:iph-partnership.org/index.php%3Ftitle%3DTopics_and_questions_for_the_talkshow+In+private+insurance,+buyers+are+willing+to+pay+premium+to+an+insurance+company+that+pools+people+with+similar+risks+and+insures+them+for+health+expenses.+The+key+distinction+is+that+the+premiums+are+set+at+a+level,+which+provides+a+profit+to+third+party+and+provider+institutions.+Premiums+are+based+on+an+assessment+of+the+risk+status+of+the+consumer+(or+of+the+group+of+employees)+and+the+level+of+benefits+provided,+rather+than+as+a+proportion+of+the+consumer%E2%80%99s+income.&cd=1&hl=en&ct=clnk&gl=pkhttp://webcache.googleusercontent.com/search?q=cache:GLN9A8hLdxkJ:iph-partnership.org/index.php%3Ftitle%3DTopics_and_questions_for_the_talkshow+In+private+insurance,+buyers+are+willing+to+pay+premium+to+an+insurance+company+that+pools+people+with+similar+risks+and+insures+them+for+health+expenses.+The+key+distinction+is+that+the+premiums+are+set+at+a+level,+which+provides+a+profit+to+third+party+and+provider+institutions.+Premiums+are+based+on+an+assessment+of+the+risk+status+of+the+consumer+(or+of+the+group+of+employees)+and+the+level+of+benefits+provided,+rather+than+as+a+proportion+of+the+consumer%E2%80%99s+income.&cd=1&hl=en&ct=clnk&gl=pkhttp://webcache.googleusercontent.com/search?q=cache:GLN9A8hLdxkJ:iph-partnership.org/index.php%3Ftitle%3DTopics_and_questions_for_the_talkshow+In+private+insurance,+buyers+are+willing+to+pay+premium+to+an+insurance+company+that+pools+people+with+similar+risks+and+insures+them+for+health+expenses.+The+key+distinction+is+that+the+premiums+are+set+at+a+level,+which+provides+a+profit+to+third+party+and+provider+institutions.+Premiums+are+based+on+an+assessment+of+the+risk+status+of+the+consumer+(or+of+the+group+of+employees)+and+the+level+of+benefits+provided,+rather+than+as+a+proportion+of+the+consumer%E2%80%99s+income.&cd=1&hl=en&ct=clnk&gl=pk7/31/2019 Importance of Health Insurance in Pakistan
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Company, Oriental Insurance Company and United Insurance Company) and the
Life Insurance Corporation (LIC) of India provide voluntary insurance schemes.
Of the various schemes offered, Mediclaim is the main product of the GIC.
The Medical Insurance Scheme or Mediclaim was introduced in November 1986
and it covers individuals and groups with persons aged 580 yrs.
The year 1999 marked the beginning of a new era for health insurance in the
Indian context. With the passing of the Insurance Regulatory Development
Authority Bill (IRDA) the insurance sector was opened to private and foreign
participation, thereby paving the way for the entry of private health insurance
companies. The Bill also facilitated the establishment of an authority to protect the
interests of the insurance holders by regulating, promoting and ensuring orderly
growth of the insurance industry.
ICICI Lombard: ICICI Lombard offers Group Health Insurance Policy. This
policy is available to those aged 5 80 years, (with children being covered with
their parents) and is given to corporate bodies, institutions, and associations. The
sum insured is minimum Rs 15 000/- and a maximum of Rs 500 000/-. The
premium chargeable depends upon the age of the person and the sum insured
selected.
. Royal Sundaram Group: The Shakthi Health Shield policy offered by the
Royal Sundaram group can be availed by members of the womens group, their
spouses and dependent children. No age limits apply. The premium for adults aged
up to 45 years is Rs 125 per year, for those aged more than 45 years is Rs 175 per
year. Children are covered at Rs 65 per year. Under this policy, hospital benefits up
to Rs 7 000 per annum can be availed, with a limit per claim of Rs 5 000. Other
benefits include maternity benefit of Rs 3.
Insurance offered by NGOs / community-based health insurance Community-
based funds refer to schemes where members prepay a set amount each year for
specified services. The premia are usually flat rate (not income-related) and
therefore not progressive. Making profit is not the purpose of these funds, but rather
improving access to services. Often there is a problem with adverse selection
because of a large number of high-risk members, since premiums are not based on
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assessment of individual risk status. Exemptions may be adopted as a means of
assisting the poor, but this will also have adverse effect on the ability of the
insurance fund to meet the cost of benefits. Community-based schemes are typically
targeted at poorer populations living in communities
Central Government Health Scheme (CGHS) Since 1954, all employees of the
Central Government (present and retired); some autonomous and semi-government
organizations, MPs, judges, freedom fighters and journalists are covered under the
Central Government Health Scheme (CGHS). This scheme was designed to replace
the cumbersome and expensive system of reimbursements (GOI, 1994). It aims at
providing comprehensive medical care to the Central Government employees and
the benefits offered include all outpatient facilities, and preventive and promotive
care in dispensaries. Inpatient facilities in government hospitals and approved
private hospitals are also covered. This scheme is mainly funded through Central
Government funds, with premiums ranging from Rs 15 to Rs 150 per month based
on salary scales. The coverage of this scheme has grown substantially with
provision for the non-allopathic systems of medicine as well as for allopathy.
Beneficiaries at this moment are around 432 000, spread across 22 cities.
Employee and State Insurance Scheme (ESIS) The enactment of the Employees
State Insurance Act in 1948 led to formulation of the Employees State Insurance
Scheme. This scheme provides protection to employees against loss of wages due to
inability to work due to sickness, maternity, disability and death due to employment
injury.
4.2 United States of America
The regulation and administration of the Health Care Finance in United States
of America is incoherent as reflected by its Financing. Although it is termed as a
Free Market System yet the government pays for more than two-third of all care.The government programs directly insure one third of the population and for those
who obtain private coverage one-third of the bill is paid through tax subsidy. And
about 15 percent of Americans lack any health insurance at all.
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The variant coverage arrangements add to the complexity. Several Americans
covered under traditional Medicare, still have conventional insurance where they
can consult any provider they wish without the need for prior approval.
A managed care system is adopted by majority of the private polices in which
the insurer oversees coverage, but there is an assortment of managed care
arrangements which span from restrictive HMOs to flexible point-of-service plans.
American health insurance has a complex structure. The three foremost of
interest are the link between employment and coverage, the effect of financing
mechanisms on the business side of health care, and the intertwined roles of
government and the private sector. It is imperative to understand that financing is
central to the overall health care system as it is in every other industry because any
business is shaped by the flow of money.
In todays practice the employment-insurance link produces several
disagreeable effects which consist of the inaccessibility of insurance for those
without regular employment at companies that offer health benefits and crushing
financial burden on firms that do insure their workers.
To need to create an alternative universal system is created based on the
discussion of the disadvantages of employment-based insurance. This universal
system would cover everyone regardless of employment status.
Primary care physicians tend to favor a single payer national system while
specialists tend to oppose the idea. Large employers increasingly favor a national
system which would take the burden of coverage off of their shoulders, while
smaller companies tend to fear the possible tax effects of a new government
program. Hospitals generally favor a national system that would reimburse them for
the uncompensated emergency room care that they must provide. A hidden and
important force is insurance brokers, who exert significant political influence in
support of the present employment-based system because it is the basis for their
business.
The universal coverage necessarily means a single-payer, government-run
system. However, this is only one kind of approach. The Clinton proposal of the
1990s called for multiple private players under federal coordination. A prominent
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current proposal would mandate that individuals purchase coverage for themselves
in the private market. By presenting the many different ways in which universal
coverage could be achieved and the advantages and disadvantages of each, students
can see the complexities that reform presents.
The balance between the government and private roles in health care finance
is particularly complex. The single most important government role is the
administration of Medicare. An important topic for student discussion is the
pervasive influence of Medicare on American health care beyond its insurance for
the elderly. After the successful implementation of DRG reimbursement in the
1980s, many private insurers followed suit. The business dynamics of DRGs have
altered hospital-physician relations, with many institutions structuring their medical
staffs based on utilization efficiency and profitability in addition to quality. Today,
Medicare is piloting programs to rank hospitals according to quality criteria
and to base physician reimbursement on performance measures. If successful, these
innovations are certain to spread to private payers.
Medicaid is the ultimate example of a complex federal-state relationship.
Understanding the complicated arrangements through which the states administer
Medicaid benefits under federal oversight is a daunting task. Medicaid is now
supplemented by state Childrens Health Insurance Programs (SCHIP). It can be
used to explore the balance between state-level flexibility and federally-imposed
consistency that pervades much health policy.
Regulation of the private insurance market best demonstrates the
interconnectedness of disparate regulatory roles in this sphere. In theory, private
insurance is regulated by the states. However, in health care, the situation is far
from straightforward. The federal Employee Retirement Income Security Act of
1974 (ERISA) exempts many aspects of coverage from state jurisdiction in a
convoluted manner that defies clear legal analysis. Federal mandates through
COBRA and HIPAA govern key aspects of the initiation and termination of
employment coverage. Perhaps most importantly of all, federal and state tax
exemptions for premiums paid by employers and employees fund almost one-third
of all premiums. A taste of this complexity will help students to appreciate the
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difficulties that all parties, providers and patients alike, have in navigating the
system.
Antitrust enforcement highlights most starkly the differences between health
care and the traditional business model. The roles of buyers and sellers are reversed
from the situation that the architects of antitrust law envisioned. The federal
Sherman Act was passed in 1890 to protect small purchasers from large monopolies
that fixed prices, limited supply, and engaged in predatory practices. In many
aspects of health care, however, the actual buyers are not the patients but rather
large insurance companies, which often have monopoly power in their markets. The
sellers are often small providers, such as physician practices. The potential for
abuse is mostly on the buyer side, yet the Sherman Act mostly restricts the sellers.
For this reason, physicians are limited in their ability to collectively bargain with
HMOs over reimbursement rates and health systems are limited in the amount of
market share they can acquire to gain bargaining leverage.
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SECTION-5:
ANALYSIS
5.1 Government intentions and capability.
Government intentions and capability are very much evident from the latest
example of announcement of Health insurance scheme launched. State Life
Insurance Corporation Chairman Shahid Aziz Siddiqui and BISP Secretary recently
signed an agreement for the health insurance scheme. But this was done at the
expense of 1.78 million beneficiaries of Benazir Income Support Programme which
were removed from the list of beneficiaries because of budgetary constraints.
Currently about six million families registered with the BISP receive the stipend.
It was announced by BISP chief that under the programme a health insurance
scheme had been launched which will provide free medical treatment to 75000
needy and deserving families.
This scheme had been started in Faisalabad where Rs 25000 would be given
to each deserving family to get treatment from six private hospitals on panel. Once
this scheme is spread across the country, about six million more people will be
benefited during the current financial year.
Government has also consulted private insurance companies before launchingthe scheme. They are planning to open the counters of the State Life Insurance
Corporation in hospitals where the charges will be deducted from the card presented
by the beneficiaries (card holders) after getting the treatment. The money would be
recouped every year to the cards as per ceiling that can only be used for the
treatment of in-house / admitted patients.
This insurance scheme is being financed and technically supported by World
Bank and German company, GIZ. Health scheme is actually one of the four
components of BISP which was announced but yet to be proved successful after its
implementation and operation.
It is quite imperative from the above mentioned scheme that Government has
initiated this scheme on a very small scale as compared to the total population and
that too on a localized basis. Resultantly it is presumed that it is not intended by the
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Government as a general policy to cover the masses at large so the benefit should
reach every corner of the country.
It is probably a smart political move to gain short term favours of the public
and to win their votes for the coming elections.
Another important factor is that the scheme is launched at the cost of another
scheme which was already benefitting other group of people, thus bringing sad
news for them.
What was needed is altogether a new and well designed scheme at a national
level or to be adopted at a provincial level specially in the backdrop of 18 th
amendment, wherein the provinces can take the initiative and lead from the front to
alleviate the basic health requirements of the poor and needy citizens.
5.2 Availability of funds and health financing.
The Government of Pakistan has been spending 0.6 to 1.19% of its GDP and
5.1 to 11.6% of its development expenditure on health over the last 10 years.
However, these figures reflect spending by the Ministry of Health and the
departments of health and do not take into account other public sector health
services, which are delivered by the Employees Social Security institutions, military
sources, the Ministry of Population Welfare and other semiautonomous government
agencies. These estimates are also not inclusive of the expenses incurred on treating
government employees, who are entitled to free treatment in government hospitals
costs that are not clearly visible. The actual level of total public sector expenditure
on the health sector is, therefore, difficult to calculate; however, estimates place this
figure at 3.5% of the GDP.
Even this is meager by many standards. It has been reported that the total
health expenditure doubled in the period 1991/92 to 1997/98; significant increases
in budgetary allocations for health have also been achieved more recently with a100% increase observed over the last five years. However, these figures are not
adjusted for inflation and population increase and thus the real per-capita growth in
health expenditure is never reported. This needs to be determined in order to make a
compelling argument for further increases. Enhanced allocations must also
favourably impact the ratio between development and non-development budgets. A
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comparison of the 2003/04 federal and provincial development and non-
development budgets shows a major dominance of non-development budget in the
provinces? See Figure 6. This gap reflective of a worrying trend appears to have
widened over the last 10 years whereas at the federal level, trends have been
favourable.
Health is a national issue in which federation, provinces, districts and other
partners have important stakes. The existing resource allocation and budgeting
system is based upon budgetary demands covering both the development and
revenue side of the expenses. Budget submissions are supposed to be proposed by
those who manage andhold the budgets.
It is on record that averagely speaking about 80% of the health budget over
the last decade has been provided by government of Pakistan through its federal and
provincial health ministries and ministry of population welfare. The remaining
amount comes from the donor contributions which is approximately 21% and
mostly spent on preventive programmes and also used for technical assistance,
community development and consultancies; This donor share has been fluctuating
from 4-16% in the federal PSDP for the last 5 years but this contribution has
significantly increased as a result of the global changes in political scenario.
The public sector is spending Rs 375.00 (US$ 6.4) per head on health of
Pakistani population in 2004-5, as per our analysis. The share of donors and
international agencies is Rs 80.00 (US$ 1.3) per person out of the total amount. The
reported per capita health spending (THE) in Pakistan is estimated as US$ 18 of
which only one third is spent by the public sector resources. This estimate is
comparable with our analysis.
The minimum level of financing needed to cover essential interventions by
the public sector health care systems amounts to US$ 30-40 per capita. By this
account Pakistan needs to increase its current health sector spending significantly.
In many ways Pakistans resource gap is huge- both local and donor- which is
required to provide health care to all Pakistanis by a certain target date. Pakistan is
already lagging behind in achieving MDG targets in the two important areas of
maternal and child health. At the pace shown in the last about 15 years it will not be
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possible to meet the required reduction in infant and maternal mortality in the next
10 years i.e. by the year 2015.
Achieving the MDG targets for Pakistan will not be a likelihood unless
investment is increased substantially in these two areas of mother and child health
in the public sector by the government and donors alike. A large amount of money
spent in pu