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Health financing strategies uhc 27 09 12

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Health financing strategies uhc 27 09 12

  1. 1. Health Financing Strategies for Universal Health Coverage Presented by: Moderator Vikash R. Keshri Dr. Chetna Maliye
  2. 2. 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
  3. 3. Thailand: Thunyalak Boonsumlit
  4. 4. China: Story of Dou Huhai
  5. 5. 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
  6. 6. 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.
  7. 7. 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,
  8. 8. 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
  9. 9. Source: National HealthAccount 2004 – 05, MOHFW, GOI
  10. 10. Distribution of Public & Private Health Spending in States • Source:
  11. 11. Case of Tamil Nadu & M. P.
  12. 12. 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.
  13. 13. Private Insurance Coverage: India
  14. 14. 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.
  15. 15. Three Dimensions of Universal Health Coverage:
  16. 16. 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.
  17. 17. 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
  18. 18. Where we are? Savedoff W. D. Political and economic aspects of the transition to universal health coverage. Lancet 2012; 380: 924–32
  19. 19. Where we are? ….. Savedoff W. D. Political and economic aspects of the transition to universal health coverage. Lancet 2012; 380: 924–32
  20. 20. 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
  21. 21. 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
  22. 22. 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)
  23. 23. 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.
  24. 24. 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
  25. 25. The health financing decision process:
  26. 26. 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.
  27. 27. Ensuring a fair share of total government spending on health: Table: Government expenditure on health as a percentageof total government expenditures by WHO region, 2000–2007a
  28. 28. Table:The share of total government expenditure allocated to health in the WHO European Region, 2007
  29. 29. 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.
  30. 30. 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
  31. 31. 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
  32. 32. External financial Assistance:
  33. 33. 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.
  34. 34. 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 (,)
  35. 35. 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.
  36. 36. 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.
  37. 37. 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.
  38. 38. 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
  39. 39. Table: Medianprice ratios of public-sector procurement prices for generic medicines, by WHO region:
  40. 40. 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:
  41. 41. 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%
  42. 42. 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.
  43. 43. 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.
  44. 44. The new architecture for UHC: 6 CriticalAreas: 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
  45. 45. Vision for UHC:
  46. 46. 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
  47. 47. 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.
  48. 48.  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.
  49. 49. 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.
  50. 50. 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
  51. 51. 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.
  52. 52. 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
  53. 53. 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
  54. 54. 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
  55. 55. References: 1. (2010). World Health Report 2010. Health System Financing: The Path to Universal Coverage. Geneva, World Health Organizations 2. (2011). Report of High Level Expert Group Report on Universal Health Coverage for India. New Delhi, Planning Commision of India. 3. (2009). National Health Account, India: 2004 - 05. New Delhi, National Health Account Cell, MOHFW, GOI in Colloboration with WHO Country Office for India: 1 - 8. 4. Acharya, A. V., S. Taylor, F. Masset, E. Satija, A. Burke, M. Ebrahim, S. (2012). Impact of national health insurance for the poor and the informal sector in low- and middle- income countries: Systematic Review. London, EPPI-Centre, Social Science Research Unit, Institute of Education, University of London. 5. (2011). Faster, Sustainable and More Inclusive Growth: An Approach to The 12th Five Year Plan. P. Commision. New Delhi, Planning Commision: 114 -124. 6. WHO (2011). World Health Assembly 64. Sustainable health financing structures and universal coverage. Geneva. 7. Weiyuan, C. (2010). "China’s new health plan targets vulnerable." Bulletein of WHO 88: 5-6. 8. Treerutkuarkul, A. (2010). "Thailand: health care for all, at a price." Bulletein of WHO 88: 84-85. 9. Lagomarsino, G., A. Garabrant, et al. (2012). "Moving towards universal health coverage: health insurance reforms in nine developing countries in Africa and Asia." Lancet 380(9845): 933-943. 10. Balarajan, Y., S. Selvaraj, et al. (2011). "Health care and equity in India." Lancet 377(9764): 505-515. 11. (2008). RASHTRIYA SWASTHYA BIMA YOJANA GUIDELINE. New Delhi, Ministry of Labour, GOI. 12. 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