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Health Financing Strategies for Universal Health Coverage. Outline:. Universal Health Coverage: What? Historical Perspectives? Health System Financing in India. Health Financing Strategies: Where we are? Status of Heath Financing Globally
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Outline: • Universal Health Coverage: • What? • 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
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
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
Distribution of Public & Private Spending in States • Source:
Why Universal Coverage? • Promoting and protecting health is essential to human welfare and sustained economic and social development. • 30 years: the Alma-Ata Declaration • 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 – is also very critical • Well-functioning health financing system– essential. • It determines use of health services when people need them. It determines if the services exist.
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
Three fundamental questions ? • How is such a health system to be financed? • How can they protect people from the financial consequences of ill-health and paying for health services? • How can they encourage the optimum use of available resources? - Also Equity and Monitoring and Evaluation.
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: • The process of paying for health services.
Purchasing: Three mainways 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 USA: The recent health financing reforms extend insurance coverage to projected 32 million previously uninsured people by 2019. DPR Korea: Ghana
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: • To allocate more of the existing financial resources to health, • 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.
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, with the Indian schemes
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: • Medicines: underuse of generics and higher than necessary prices for medicines • Medicines: use of substandard and counterfeit medicines • Medicines: inappropriate and ineffective use. • Health-care products and services: Overuse or supply of equipment, investigations and procedures • Health workers: Inappropriate or costly staff mix, unmotivated workers • Health-care services: Inappropriate hospital admissions and length of stay • Health-care services: Inappropriate hospital size (low use of infrastructure) • Health-care services: Medical errors and suboptimal quality of care • Health system leakages: waste, corruption and fraud • 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.
The new architecture for UHC: 6 Critical Areas: • Health Financing and Financial Protection • Health Service Norms • Human Resources for Health • Community Participation and Citizen Engagement • Access to Medicines, Vaccines and Technology • Management and Institutional Reforms
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.
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. • 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.
Health Insurance Schemes being implemented by GOI and States Govt.
