Health Financing Strategies

for

Universal Health Coverage

Presented by:

Moderator

Vikash R. Keshri Dr. Chetna

Maliye

Outline: Universal Health Coverage:

What is Universal Health Coverage?

Historical Perspectives?

Health System Financing in India.

Health Financing Strategies:

Where we are? Status of Heath Financing Globally

More Money For Health: How to generate more resources

More Health to Money: How to Utilize the resources and prevent wastages.

Health financing strategies in India

As proposed by the HLEG on UHC

As proposed in Proposed Draft 12th Plan

Existing Health Insurance schemes in India

Critical Review of Existing Schemes Proposed plan in India

Thailand: Thunyalak Boonsumlit

China: Story of Dou Huhai

Universal Health Coverage:

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

World Health Organization

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

HLEG on UHC, Planning Commission

Universal Health Coverage:

Three related objectives:

Equity:

Equity in access to health services

Quality:

Quality of health services good enough to improve the health

of those receiving services; and

Financial-risk protection:

Cost of care does not risk financial hardship.

Historical Perspectives:

1883 Health Insurance Bill, Germany became the first country to

make nationwide health insurance mandatory.

In U. K. Enactment of the National Insurance Act in 1911 and the

National Health Service (NHS) in 1948.

Article 25.1 of the 1948 Universal Declaration of Human Rights

states right to health as an important fundamental right.

1966, The International Convention on Economic, Social and

Cultural Rights recognized "the right of everyone to the

enjoyment of the highest attainable standard of physical and

mental health.

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

World Health Assembly resolution 58.33 adopted 'Universal

Health Coverage' in 2005,

Health System Financing in India:

• State Subject

• Predominantly catered by Private Sector

• Private 78.05% vs. Public 19.05% vs. 2.28% External flow.

Table 1: Health Expenditure in India (2004-05)

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

Type of

Expenditure

Distribution of

total health

Expenditure (%)

Share of GDP

(%)

Public

Expenditure

19.67 0.84

Private

Expenditure

78.05 3.32

External Flow 2.28 0.10

Total

Expenditure

100 4.25

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

Distribution of Public & Private Health Spending

in States

• Source:

Case of Tamil Nadu & M. P.

Health Expenditure in India: International

Comparison:

Source: A. K. Shiva Kumar, L. C. C., Mita Choudhury, Shiban Ganju, Vijay Mahajan, Amarjeet Sinha, Abhijit Sen (2011).

"India: Towards Universal Health Coverage 6: Financing health care for all: challenges and opportunities." Lancet 377:

678-689.

Private Insurance Coverage: India

Why Universal Coverage?

Promoting and protecting health essential for human welfare

and sustained economic and social development.

30 years: the Alma-Ata Declaration

Health: One of most Important priorities of people

Many ways to promote and sustain health : Education, housing,

food and Employment.

Redressing inequalities

Timely access to health services – a mix of promotion,

prevention, treatment and rehabilitation – Very critical

Well-functioning health financing system – Essential.

It determines use of health services when people need them. It

determines if the services exist.

Three Dimensions of Universal Health

Coverage:

Three fundamental questions ?

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

2. How can they protect people from the financial

consequences of ill-health and paying for health

services?

3. How can they encourage the optimum use of available

resources?

- Also Equity and Monitoring and Evaluation.

A theory of change due to health insurance

Source: Impact of national health insurance for the poor and the informal sector

in low- and middle-income countries: Systematic Review

Where we are?

Savedoff W. D. Political and economic aspects of the transition to universal health coverage.

Lancet 2012; 380: 924–32

Where we are? …..

Savedoff W. D. Political and economic aspects of the transition to universal health

coverage. Lancet 2012; 380: 924–32

Where we are? …..

Direct Payments:

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

services simply because they cannot afford to pay at the time they

need them.

Even if covered with insurance: Uncovered Cost is burden.

Pooled funds:

Raising adequate funds from a sufficiently large pool of individuals.

Supplemented with donor support and general government

revenues.

Spending these funds on the services a population needs.

Countries are at different points on the path to universal coverage

and at different stages of developing financing systems

Financing for Universal Health

Coverage:

Specifically designed Financing systems to:

Provide all people access needed health services.

Ensure, use of these services does not expose the user

to financial hardship

What are the problems?

3 Fundamental Problems:

Availability of Resources.

Over reliance on direct payments.

In Efficient and Inequitable distribution of resources

Three critical areas of health financing:

Raise sufficient money for health.

Remove financial barriers to access and reduce financial risks of

illness.

Make better use of the available resources.

What a health financing system does?

Revenue collection:

General or specific taxation, Compulsory or Voluntary health

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

Donations)

Pooling:

Accumulation and management of financial resources. an element of

pooling funded by prepayment, combined with direct payments (Cost

Sharing)

Purchasing:

Purchasing:

Three main ways to do this. (Either single of

combinations)

First, the government to provide budgets directly to its own

health service providers (integration of purchasing and

provision) using general government revenues and,

sometimes, insurance contributions.

Second, An institutionally separate purchasing agency

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

purchase services on behalf of a population (a purchaser-

provider split).

Third, Individuals to pay a provider directly.

On the path to Universal Coverage:

Country Examples

China:

In April 2009: safe, effective, convenient and

affordable” health services to all urban and rural

residents by 2020.

The New Cooperative Medical Schemes, initiated in

2003

USA:

The recent health financing reforms extend insurance

coverage to projected 32 million previously uninsured

people by 2019.

Republic of Korea:

Since 1989 all are covered

Rwanda:

The health financing decision process:

More Money for Health:

No magic bullet to achieve Universal Health Coverage.

New medicines and diagnostic and curative technologies

become available much faster than new financial

resources.

Raise more Funds for Health:

Broadly, three ways to raise additional funds or diversify

sources of funding:

Higher priority in existing spending, particularly in

government’s budget;

Find new or diversified sources of domestic funding; and /

or

To increase external financial support.

Ensuring a fair share of total government

spending on health:

Table: Government expenditure on health as a percentage of total

government expenditures by WHO region, 2000–2007a

Table: The share of total government expenditure allocated

to health in the WHO European Region, 2007

Diversifying Domestic Sources of

Revenue:

Two main ways:

1. To allocate more of the existing financial resources to health,

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

Examples:

Indonesia: Increases tax revenues by encouraging compliance

Ghana: 70–75% of f its National Health Insurance Scheme with general tax funding, 2.5% national health insurance levy on VAT.

Germany: Gesundheitsfond: New fund to inject more money in SHI from General taxation.

France: Contribution sociale généralisée, Special fund for NHI form tax on real estates and other traditional.

Diversifying Domestic Sources of

Revenue: Some Options

Options Fund

Raising

Potentials

Examples

Special levy on

large and

profitable

companies

$$–$$$ Australia has recently imposed a

levy on mining companies;

Pakistan has a long-standing tax on

pharmaceutical companies

Levy on currency

transactions

$$–$$$ Some middle-income countries with

important currency transaction

Diaspora bonds $$ Used in India, Israel and Sri Lanka,

although not necessarily for health

Financial

transaction tax

$$ Initially in Brazil in the 1990s

subsequently replaced by a tax on

capital flows to/from the country

Options Fund

Raising

Potentials

Examples

Mobile phone

Voluntary

solidarity

contribution

$$ Taking 1% of bill would raise a lot of

money; relevant to low-, middle- and

high-income countries

Tobacco excise

tax

Alcohol excise

tax

$$ These excise taxes on tobacco and

alcohol exist in most countries

Excise tax on

unhealthy food

(sugar, salt)

$–$$ Romania: Proposing to implement a

20% levy on foods high in fat, salt,

additives and sugar.

Selling

franchised

products or

services

$ Selling franchised products or services

from which a percentage of the profits

goes to health

Tourism tax $ Airport departure taxes are already

widely accepted; a component for

health could be added, or levies found

External financial Assistance:

Direct Payment: Why is it so

widespread?

Direct payments are the least equitable form of health

funding.

Governmental not willing to spend more.

No capacity or will to generate POOL.

Taps into new areas.

Attractive option during Economic Recessions.

Out-of-pocket payments as a function of gross

domestic product (GDP) per capita, 2007

Source: National Health Accounts [online database]. Geneva, World Health

Organization (http://www.who.int/nha,)

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

impoverishment

Source: Xu K et al. Exploring the thresholds of health

expenditure for protection against financial risk.

Strength in Numbers:

• Cost Sharing

Most effective way for financial risk of paying for health services

is to share it, and the more people who share, the better the

protection.

Three interrelated options:

• Replace direct payments with forms of prepayment, most

commonly a combination of taxes and insurance

contributions.

• To consolidate existing pooled funds into larger pools, and

• To improve the efficiency with which funds are used.

Examples:

• A total of 49 health-related community schemes operate in

Bangladesh, India and Nepal.

More health for the Money: Using

resources wisely

Pricewaterhouse Coopers’ Health Research Institute:

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

States of America spends on health each year is wasted

The European Health care Fraud and Corruption

Network:

Little less than 6%, lost to mistakes or corruption.

Ten Leading Causes of Inefficiency:

1. Medicines: underuse of generics and higher than necessary

prices for medicines

2. Medicines: use of substandard and counterfeit medicines

3. Medicines: inappropriate and ineffective use.

4. Health-care products and services: Overuse or supply of

equipment, investigations and procedures

5. Health workers: Inappropriate or costly staff mix, unmotivated

workers

6. Health-care services: Inappropriate hospital admissions and

length of stay

7. Health-care services: Inappropriate hospital size (low use of

infrastructure)

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

care

9. Health system leakages: waste, corruption and fraud

10. Health interventions: Inefficient mix/ inappropriate level of

strategies

Table: Median price ratios of public-sector procurement

prices for generic medicines, by WHO region:

How can this in- efficiency be

tackled?

WHO-CHOICE (Choosing Interventions that are

Cost Effective) Strategy Eliminate Unnecessary Spending on Medicine

Improve quality control of Medicine

Use Medicine appropriately

Get Most out of technologies and services

Motivate people

Improve hospital Efficiency – Size and Length of stay

Get care right the first time

Eliminate waste and corruption

Critically assess the service needed:

Tackling Inefficiency: Lebanon’s Example

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

Mediterranean Region

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

Series of reforms implemented to improve equity and efficiency.

• Revamping of the public-sector primary-care network;

• Improving quality in public hospitals; and

• Improving the rational use of medical technologies and

medicines Including use of quality-assured generic

medicines

GDP on health from 12.4% to 8.4%. Out-of-pocket spending as

a share of total health spending from 60% to 44%

Indian Scenario:

• First concrete step:

During planning process of 12th Five Year Plan: widely

termed as Health Plan.

• Planning commission constituted a High level Expert Group

on Universal Health coverage 2010.

• Mandate: Developing a framework for providing easily

accessible and affordable health care to all Indians.

• HLEG also recommended Appropriate Health Care Financing

as key strategy to achieve Universal Health Coverage.

Current Scenario in India:

Low Priority to Public Health Spending.

Low Per Capita Expenditure on Health:

High Burden of Private Out of Pocket Expenditure.

Wide Variation in Public Health Expenditure across states.

Large share on State Government Expenditure (Nearly 2/3rd).

States with low public expenditure on health typically find

themselves fiscally constrained by two factors:

Centre’s Allotment of Revenue is not uniform.

Less scope for extra development allocation by the poorer

states.

Many state governments do not accord high priority to health.

Financial protection against medical expenditures is far from

universal. Expenditure on social insurance 1.13% of total health

spending in 2004-05.

The new architecture for UHC: 6 Critical Areas:

1. Health Financing and Financial Protection

2. Health Service Norms

3. Human Resources for Health

4. Community Participation and Citizen

Engagement

5. Access to Medicines, Vaccines and

Technology

6. Management and Institutional Reforms

Vision for UHC:

Three core objectives need to be tackled:

Ensure an adequacy of financial resources for the provision of

universal access to essential health care.

Provide financial protection and health security against

impoverishment to the entire population of the country; and

Put in place financing mechanisms that is consistent in the

long-run.

Basic Principles:

A predominant role for public financing;

Related to this, coverage is compulsory (where linked to

contribution) or automatic (where based on certain

characteristics such as residence or citizenship); and

Universal entitlement without exclusion.

Requires: Compulsion & Subsidization

Key Recommendations:

Government Spending on Health: 2.5% of GDP by 2012 &

3% by 2022. (Table)

Ensure availability of free essential medicines.

Use general taxation as the principal source of health care

financing.

Do not levy sector-specific taxes for financing

Do not levy fees of any kind for use of health care services

Introduce specific purpose transfers to equalize the levels

of per capita public spending on health across different

states.

Accept flexible and differential norms for allocating

finances

Expenditures on primary health care account for at least

70% of all health care expenditures.

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

• Three Provisions can be considered:

• Direct provision

• Direct provision plus contracted-in services

• Purchase by an independent agency.

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

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

Finally, two determinants for the Success of UHC system:

Clear Cut guideline for contracting in and service provision.

A common IT enabled information, gathering, networking and monitoring system.

Actual draft 12th plan: Proposed

Comprehensive health care strategies to achieve UHC during

plan period. But can take 3 Plan periods to fully implement

this.

Public sector health care system requires substantial

expansion and strengthening.

Increased expenditure by the centre and states.

Cooperation between the public and private sectors through

contracting-in of services and PPP.

Expansion and increase access od RSBY.

Effective regulation of medical practice, public health, food

and drugs, etc. needs to be pursued.

Prescription drugs reforms, promotion of essential generic

medicines making these universally available to all patients

as part of the Essential Health Package.

Innovative models of financing:

Health included for “viability gap funding” up to a ceiling of

20% of total project costs under a PPP scheme.

Towards Universal Health Coverage:

Public health care including preventive interventions will be

both funded and universally provided by the government;

Government will finance but not necessarily directly provide

other clinical services at different levels, defined in an

Essential Health Package (EHP), built separately for out-

patient (ambulatory) and in-patient care

Towards Universal Health Coverage…..

Full and free access to essential generic medicines, through Government pharmacies (for public providers) and Jan Aushadhi stores (private provider/facility).

RSBY system used in terms of beneficiary coverage, facility enrollment and prevention of fraud.

Package of services under RSBY, it is proposed, can be expanded into EHP.

States partially fund UHC pilots in high focus districts using “Incentive Pool” under the NHM.

Provision of EHP through public autonomous, empowered and accountable facility networks.

Empanelled public and private provider integrated care networks, with citizen choice.

Health Insurance Schemes being implemented by GOI

and States Govt.

Scheme Coverage Features

Universal Health

Insurance

Scheme

(launched in

2003)

Mostly benefits(≤INR30 000)

for admission to hospital for a

family on a floater basis,

including compensation

(INR25 000) for death of

earning head of the family;

compensation at the rate of

INR50 per day for a maximum

of 15 days to the earning head

or spouse of the family; one

maternity benefit with 1 year

waiting period with INR2500

for normal and

INR5000 for caesarean

sections

Only for families below

the poverty line and

for individuals younger

than 70 years;

Yearly rate of INR300 for

an individual; INR450 for

a family

of five; INR600 for a

family of seven

members with a

government subsidy of

INR200, INR300, and

INR400, respectively

Rashtriya Swasthya

Bima Yojna

(launched in 2008)

Cashless coverage of all health

services

Smart-card-based system;

Only hospital admission and day-

care diseases;

total of INR30 000 insured per

family below poverty line per year.

Pre-existing illnesses also covered;

Reasonable expenses for before

and after hospital admission for 1

day before and 5 days after;

Transport allowance (actual with

limit of INR100 per visit) subject to

a yearly limit of INR1000

Only BPL Family

Up to five members for 1

year;

renewal yearly; registration

fee for a family is INR30;

Central government

contribution 75% & state

government 25% of the

premium

Yeshasvini Scheme

in Karnataka

(launched in 2003)

Covers risk of INR100 000 for one

surgery and INR200 000 for several

surgeries in a year with a Premium

of INR120;

Pre-existing diseases are

covered;

Cashless surgery at fixed tariff

Member of Registered

Rural Cooperative Society

of Karnataka for a

minimum of 6 months;

All members of the family

are eligible;

Upper age limit 75 years

Kudumbas

ree in

Kerala

(launched

in 2006)

INR30 000 a year

For a family of five;

Up to INR60 000 a year for

treatment at home, if required;

Up to INR15 000 a

year for maternity need;

Subsistence allowance of INR50 a

day if bread

winner is hospitalized; coverage of

all existing illnesses, and cashless

medical treatment;

An accident insurance benefit of

INR100 000 for death

or full disability and INR50 000 for

partial disability

Families below the poverty

line;

Beneficiary’s contribution is

INR33;

Premium

for a typical family with five

members below the poverty

line is INR399 a year;

a central government

subsidy of INR300 from the

Universal Health Insurance

Scheme and an additional

subsidy of INR33 each from

the state government

and the local organization;

implemented through a

neighborhood group

Arogyashr

ee in

Andhra

Pradesh

(launched

in 2007)

INR 200 000 insured per family;

covers hospital admission for

surgeries and treatment of

diseases such as heart, cancer,

neurosurgery, renal, burns, and

polytrauma cases

Families below the poverty

line;

beneficiaries identified

through health camps;

INR330 per year per family

are paid by the state

government; Validity for 1

year or up to the time when

the overall claim ratio

reaches 120% of the

premium

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Coverage. Geneva, World Health Organizations

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India. New Delhi, Planning Commision of India.

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Unit, Institute of Education, University of London.

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5-6.

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88: 84-85.

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coverage: health insurance reforms in nine developing countries in Africa and Asia."

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Sinha, Abhijit Sen (2011). "India: Towards Universal Health Coverage 6: Financing

health care for all: challenges and opportunities." Lancet 377: 678-689.