Transcript Health Financing Revisited

Overview of Health
Financing
EAP Regional Seminar on Health Financing
Bangkok, Thailand, February 2008
Fadia Saadah, World Bank
1
Outline of Presentation
• Demographic and epidemiological trends
• Health spending patterns
• Health financing functions
• Challenges/lessons
2
Demographic and
Epidemiological Trends
3
Demographic Transition Underway: Working Age
and Elderly Populations Will Grow Rapidly
Ages
MALES
FEMALES
2020
2000
100000 80000
60000 40000
20000
0
20000
40000 60000
80000 100000
4
Source: World Bank
Future GDP Growth in EAP Looks Robust
5
Source: World Bank 2007.
NCDs and Injuries Represent a Major
Share of BOD
(Disease Burden Distributionby Select World Bank Region, 2001)
Percent
100
87
76
66
65
59
53
50
22
12
9
14
22
37
27
13
14
6
11
8
0
E. Asia/
Pacific
Europe/
Central Asia
Latin
America/
Caribbean
M. East/
N. Africa
High-income
countries
World
Communicable, maternal, perinatal, and nutritional conditions
Noncommunicable diseases
Injuries
Note: Numbers are rounded.
Source: Disease Control Priorities in Developing Countries, second edition, 2006, Table 4.1
6
Most EAP Countries Do Well on Child Mortality
Given Their Income and Health Spending Levels
Below average
Cambodia
Samoa Lao PDR
China
Thailand
Indonesia Philippines
Malaysia
Above average
-3
-2
-1
0
1
2
3
Child mortality relative to income & health spending, 2005
Vietnam
Above average
-3
-2
Below average
-1
0
1
Performance relative to income
2
3
Source: WDI
7
But Maternal Mortality Results are More Mixed
1000
1500
2000
Maternal mortality rate vs income, 2000
500
Lao PDR
Cambodia
Indonesia
Vietnam
0
China
250
Philippines
Samoa
Thailand Malaysia
1000
5000
GDP per capita, US$
25000
Source: WDI
8
Health Spending Patterns
9
Health Expenditures Across Regions,
by Source of Financing, 2005
100%
90%
% of total health spending
80%
70%
60%
50%
40%
30%
20%
10%
0%
East Asia and
Pacific
Eastern Europe
and Central Asia
General revenues
Latin America
and the
Caribbean
Middle East and
North Africa
Social insurance
OOP
South Asia
Sub-Saharan
Africa
Other
10
Public Health Expenditures by
Source of Financing
11
Total Health Expenditures by Source of
Financing
8
7.4
100%
6.7
7
5.5
5.0
5.0
5.0
5.3
6
5
3.4
4
3.4
50%
3.7
4.2
60%
3.5
40%
2.7
% of total spending on health
70%
5.7
5.9
80%
3
30%
2
)%( Health expenditure as a share of GDP
90%
20%
1
10%
am
N
Vi
et
ep
al
N
la
de
sh
an
g
B
on
es
ia
In
d
hi
na
C
in
es
Ph
ili
pp
K
yr
gy
zs
ta
n
La
nk
a
Sr
i
or
ea
K
M
al
ay
si
a
ng
a
To
R
H
on
g
K
on
g
SA
ai
la
nd
Th
M
on
go
lia
0
Ja
pa
n
0%
)%( Public share
)%( Private share
Health as % of GDP
Source: Database of the Asia-Pacific National Health Accounts Network; data for recent years
12
Public Share of Total Health Spending is
Generally Low
80
100
Government health spending vs income, 2005
Samoa
60
Thailand
40
Malaysia
Philippines
20
Cambodia
China
Indonesia
Vietnam
Lao PDR
250
1000
5000
GDP per capita, US$
25000
Source: WDI
Note: log scale
13
Out-of-pocket health spending vs income, 2005
Lao PDR
Cambodia
Vietnam
China
Indonesia Philippines
40
100
60 80
Out of Pocket Spending as a Share of Total Health Spending
is High Relative to Other Comparable Income Countries
Malaysia
20
Thailand
Samoa
250
1000
5000
GDP per capita, US$
25000
Source: WDI
Note: log scale
14
Catastrophic impact of health spending
% households with medical spending greater than 15% of household consumption
BANGLADESH
VIETNAM
CHINA
KOREA
INDIA
NEPAL
HONG KONG
TAIWAN
PHILIPPINES
INDONESIA
THAILAND
SRI LANKA
MALAYSIA
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
Source: EQUITAP study
15
Large OOP Share is Related to High
Incidence of Catastrophic Health Spending
12.00%
Ban
10.00%
OOP/Total exp > 15%
Viet
8.00%
Chin
Kor
Indi
6.00%
4.00%
Taiw
Nep
HK
Phil
Indo
Thai
SLK
2.00%
0.00%
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
OOP share of financing
Source: Equitap study
16
Health Financing
Functions
17
Health Financing Functions and Objectives
Functions
Objectives
Revenue collection
raise sufficient and sustainable
revenues in an efficient and equitable
manner to provide individuals with a
basic package of essential services
which improves health outcomes and
provides financial protection and
consumer satisfaction
Pooling
manage these revenues to equitably and
efficiently create insurance pools
Purchasing
assure the purchase of health services in
an allocatively and technically efficient
manner
18
Source: Gottret and Schieber, Health Financing Revisited, World Bank 2006
Equity – Remains an Challenge in EAP (1)
Poorest quintiles' shares public health subsidy
50%
household expenditure
public health subsidy
40%
30%
20%
10%
H
am
ie
tn
V
ai
la
nd
ka
Th
Sr
iL
an
on
es
ia
N
ep
al
ia
In
d
ei
lo
In
d
(C
ng
h
jia ina
)
ng
(C
hi
H
on na)
g
K
on
g
Source: Equitap study
an
su
G
B
an
g
la
de
sh
0%
19
Equity – Remains an Challenge in EAP
Richest quintiles' shares public health subsidy
household expenditure
50%
public health subsidy
40%
30%
20%
10%
In
di
a
In
do
ne
si
a
N
ep
al
Sr
iL
an
ka
Th
ai
la
nd
V
ie
tn
am
B
an
gl
ad
G
es
an
h
H
su
ei
(C
lo
h
ng
jia ina
)
ng
(C
hi
H
na
on
)
g
K
on
g
0%
20
250
200
150
Th ou s an d Rp.
Indonesia - Wide Variation in Per Capita
Health Spending Across Provinces
350
300
100
50
0
Kalimantan Timur
Gorontalo
Papua
Kalimantan Tenga
Sumatra Barat
Sulawesi Tengah
Bali
Nusa Tenggara Ti
Maluku
Riau
Kalimantan Selat
Jambi
Sumatra Utara
Nanggroe Aceh Da
Sulawesi Selatan
Bangka Belitung
Yogyakarta
Bengkulu
Kalimantan Barat
Jawa Tengah
Sumatra Selatan
Jawa Timur
Nusa Tenggara Ba
Sulawesi Utara
Jawa Barat
Sulawesi Tenggar
Lampung
Banten
Maluku Utara
Mean
Minimum
Maximum
Source: World Bank 2006
21
What do We Mean by Risk Pooling?
Cross-subsidy from
low-risk to high-risk
Cross-subsidy from
rich to poor
(risk subsidy)
(equity subsidy)
Low
risk
High
risk
Poor
Health risk
Rich
Income
Cross subsidy from
productive to non-productive
part of the life cycle
Produ
ctive
Nonproduc
tive
Age
23
Fragmentation in Health Financing
• In many countries in the region, health financing is fragmented
• Different financing mechanisms for different groups or sectors of the
economy
– Thailand: Civil Service Medical Scheme and Social Security Scheme for
formal sector; UC scheme for informal sector
– China: Basic Medical Insurance (BMI) for urban formal sector; New
Cooperative Medical Scheme (NCMS) for rural sector
– Laos: Civil Service and Social Security Schemes for formal sector; CBHI
and other schemes for informal sector
• Fragmentation can also be geographic
– China: Both BMI and NCMS are based on city- or county-wide risk pools
• Several countries considering health financing reforms introducing
new sources of financing and management mechanisms
– fragmentation issue needs to be considered early in design phase
24
Universal HI : Thailand
2001
>50 yrs.
UC
CSMBS
48 mil.
NHSO
Capitation
DRG
7 mil.
1990
SSS
Contribution
7 mil.
MOF Comptroller
SSO
FFS
Capitation
DRG
Public
Private Providers
TAX
Services
Insurees,
Right
holders
25
Why is Fragmentation a Problem?
• Administrative inefficiency
– Duplication of tasks and dispersion of scarce capacity
• Lack of portability  reduced labor market
mobility
• Difficult to implement cross-subsidization and
achieve equity goals
• Reduced ‘purchasing power’ and difficult to
create coherent incentives for providers
– E.g. different payment systems / rates for different
schemes
26
What can be done about fragmentation
• Joint / coordinated management systems and
provider payment arrangements
– On the agenda in many countries, but institutional and
political barriers
• Unification of schemes
– E.g. integration of health insurance funds in South
Korea in 2000
– Politically challenging
• Risk-pooling at higher geographic level
– Trend towards risk pooling at provincial level for
pensions in China; not yet for health
27
Financing Challenges/Lessons
• There is no one ‘right’ financing model.
• System financing must be sustainable
• LICs face difficult tradeoffs between financing
essential services and providing financial risk
protection -- prioritization is critical.
• Important to address absorptive capacity and
ability to finance from domestic resources future
recurrent and capital costs.
30
Financing Challenges/Lessons
• Many countries trying to achieve universal coverage,
reduce fragmentation, and improve efficiency. However,
key is the impact; specific model is of secondary
importance.
• Health Financing models need to take into account the
level of income, rate of growth and institutional and
administrative capacity.
• Health Financing reforms need to pay great attention to
political economy dimension also key.
• Again, models need to be tailored to individual countries
31
Financing Decisions Involve Difficult Tradeoffs
Political Criteria
Efficiency
Health Outcomes
Affordability
Financial Protection
Consumer Satisfaction
Equity
Sustainability
33
Key Messages
• Macroeconomic situation provides good
opportunity to increase financial protection and
think about health financing reforms
• Increasing role of private sector; models need to
take that into account; ensure coordination and
governance
• Need to increase efficiency in spending in the
region/Address fragmentation
34