Transcript World Bank presentation - Pablo Gottret.

Regulation and the Role of
Government in SHI and VHI
Dr. Pablo Gottret
Senior Economist
Health, Nutrition and Population
April 2004
The Millennium Development Goals
(MDGs)
In the 1990s
The Global Community
Made a Pledge to Help
Developing Countries Achieve
the MDGs
Millennium Development Goals
(MDG)
Extreme Poverty:
•Halve, between 1990 and 2015,
the proportion of people whose
income is less than $1 a day.
•Halve, between 1990 and 2015,
the proportion of people who suffer
from hunger.
Safe Water & Sanitation:
•Halve by 2015 the proportion of people without
sustainable access to safe drinking water.
•By 2020, achieve significant improvement in the
proportion of people with access to sanitation.
Child & Maternal Health:
•Reduce by two thirds, between 1990 and 2015,
the under-five mortality rate.
Primary & Girls' Education:
•By 2015, boys and girls
everywhere complete a full course
of primary schooling.
•Eliminate gender disparity in
primary and secondary education,
preferably by 2005, and in all levels
of education no later than 2015.
•Reduce by three quarters, between 1990 and
2015, the maternal mortality ratio.
Communicable Diseases
By 2015, halt and begin to reverse
the spread of:
•HIV/AIDS
•Malaria &
•Other major diseases.
Millennium Development Goals
Global Aggregates
Improve Maternal Health
Reduce child
mortality
Reduce
Child Mortality
Under Five Mortality
Births attended by skilled health personnel
(% total)
(per 1,000 live births)
100
100
90
86
80
80
60
60
78
51
47
40
40
29
20
20
0
1988
2015
0
1990
1999
2015
Children of Poor Families
Are Worse Off
Stunting prevalence (%)
Under-five mortality
250
60
200
50
150
100
50
0
Poorest
20%
40
Richest
20%
20
Poorest
20%
30
Richest
20%
10
Burkina
Faso
Brazil
Bolivia
Benin
Bangladesh
Burkina
Faso
Brazil
Bolivia
Benin
Bangladesh
0
Financing Policies with
Good Governance and
Local Capacity
Allow Countries to Leverage Outcomes
Capacity
Governance
Financing
Outcomes
When Good Policies and
Capacity are Missing
Things Break Down:
Outcomes
• Policy
• Information/M&E
• Capacity
• Household Behaviors
• Institutional Incentives
• Financing
Weak Policies
& Corruption
Lack of Community
Involvement
Problems with Supply
Money Alone
Lack of Demand
Outcomes
Let us Look at a Few Numbers
• Global GDP
– US$31 Trillion (3 - 4 percent Growth Rate)
• Global Health Spending
– US$2.6 Trillion (8 percent of Global GDP)
• Spending In Developing Countries
– US$280 Billion (11 percent of total spending)
Only 11 Percent of Global Spending for
90 Percent of the World’s Population
Global Health Expenditure 2000 = US$2.6 Trillion
Africa 0.4%
Middle East and N Africa 1.5%
Europe 2.4%
Americas 3.2
Asia 3.5%
Developed Countries 88.9%
What are Good Health Financing Policies?
Revenue
Collection
Public
Taxes
Pooling
Resource Allocation
or Purchasing (RAP)
Government
Agency
Public Charges
Mandates
Grants
Social Insurance or
Sickness Funds
Private Insurance
Organizations
Loans
Private
Service
Provision
Private
Insurance
Communities
Out-of-Pocket
Employers
Individuals
And Households
Public
Providers
Private
Providers
Understanding Rich Poor
Differences in Health Care Financing
• Revenue Collection
– Difficulties reaching rural & informal sectors
– Weak Taxation Capacity
• Pooling
– Incomplete and fragmented revenue pool
– Incomplete and fragmented sharing of risks
• Resource Allocation and Purchasing
– Public subsidies often have pro-rich bias
– The poor often bypass formal sector providers


Governments in many
countries often raise less
than 20% of GDP in public
revenues; and
The tax structure in many
low-income countries is
often regressive.
Total Government Revenues as % GDP
Low-Income Countries Have
Weak Capacity to Raise Public Revenues
100
80
60
40
20
0
100
1,000
10,000
100,000
Per capita GDP (Log scale)
What do We Mean by Pooling?
Cross-subsidy from
low-risk to high-risk
Low
risk
Cross-subsidy from
rich to poor
High
risk
Poor
Health risk
Rich
Income
Cross subsidy from
productive to non-productive
part of the life cycle
Produ
ctive
Nonproduc
tive
Age
Low Income Countries Have
Less Pooling of Revenues
Share of world’s 1.3 billion living on
less than US$1 day indicated by
size of blue bubbles
Subsidies (%)
Government health expenditure)
Low-Income Countries Have
Pro-Rich Bias of Public Subsidies
30
25
20
Africa
East Europe
Asia
15
10
5
0
Poorest Quintile
Richest Quintile
What is a Typical Financing
Scheme in a Developing Country
• Segmented Financing System
– Limited public health and concentration of expenditures in supply side
subsidies to curative care (large public hospitals)
– Social Insurance with low coverage usually concentrated in middle and
upper class urban population (salaried workers)
– Communities have responded with community risk pooling mechanisms.
– Limited supplementary insurance for those who can afford it
•
•
•
•
There is no package to supplement
Unclear rules of the game
Little development of Capital markets and prohibition to invest abroad
Mandatory requirements to be a fully complying insurance company in the
country.
– Large out of pocket payments for curative care, usually paid by lower
income families.
Domestic Financed Gov. Expenditures (Central Gv. + SHI)
varies across countries for any level of GDP
8
Domestically Financed Government Health Spending as % of GDP
Croatia
7
Czech Republic
6
Tunisia
Colombia
Panama
5
Lesotho
Belarus
Solomon IslandsTurkmenistan
Bolivia
4
2
1
0
Macedonia, Fyr
Estonia
Namibia
El Salvador
Turkey
Samoa
Lebanon
Armenia
Algeria Tonga
Kyrgyz Republic
Paraguay
Papua New Guinea
Peru
Zambia
Moldova Zimbabwe Jamaica
Bulgaria
The
BurkinaGambia,
Faso
Guatemala
China
Djibouti
Ghana
Egypt,
Arab Rep.
Mali
Guinea
Philippines
Rwanda
Vanuatu
Morocco
Vietnam
EritreaTogo
Ecuador
Chad Sudan
Pakistan
Cote
Cameroon
D'Ivoire
Haiti
Georgia
Burundi
Malawi
Indonesia
Nigeria
Uganda
0
2,000
Costa Rica
Dominica
Jordan
Honduras
Mongolia
3
Slovak Republic
Hungary
Uruguay
4,000
Fi
Botswana
Latvia
Brazil
6,000
Chile
St. Kitts And Nevis
Mexico
Oman
Mauritius
Malaysia
8,000
Per capita income PPP
PPPPPP PPP
Saudi Arabia
Poland
South Africa
Thailand
Gabon
Dominican Republic
Argentina
10,000
12,000
14,000
Private Expenditure in Health is More Important,
specially in Low Income Settings
Region/income group
East Asia & Pacific
Europe & Central Asia
Latin America & Caribbean
Middle East & North Africa
South Asia
Sub-Saharan Africa
World
High income
Middle income
Low income
Population,
millions (2002)
Per capita
GDP (2002
$US)
1,838
476
527
306
1,401
688
6,201
965
2,742
2,495
980
2,384
3,176
2,265
467
463
5,201
26,942
1,870
453
Public health
Health
expenditures
expenditures (% of total
per capita,
health exp.,
(2000)
2000)
44
108
262
171
21
29
482
2735
115
21
38
73
47
62
20
43
58
59
51
25
Aid as a % of
GNI (2001)
0.5
1
0.3
0.7
1
4.6
0.2
N/A
0.4
2.4
Source: WDI, 2002
Notes: Regional aggregates exclude high-income countries (GNI per capita > $9,206); MENA health expenditures include Saudi
Arabia and Oman, which are both considered upper middle-income countries according to World Bank specifications.
Some Illustrative Numbers (in %, data
for year 2001)
THE / GDP
Public H. Exp. / THE
Social H. Exp THE
Coverage / Population
Private H. Exp / THE
OOP / Private H. Exp
THE = Total Health Expenditure
OOP = Out of Pocket Expenditures
N.A. = Not Available
Source: WHO
India
5.1
17.9
N.A.
1.0
82.1
99.0
Bolivia
5.3
66.3
35.0
21.0
33.7
82.0
Rwanda
5.5
55.5
0.4
1.4
44.5
N.A.
Thailand
3.7
57.1
14.9
N.A.
42.9
85.0
MODELS – FLOW OF FUNDS
CLASSIC FRAGMENTED MODEL of SHI
Gral. Gov.
MOH
P3
EXAMPLES
Mexico, Bolivia, Peru,
Ecuador
Pmoh
P2
Indiv./firms
1
Indiv./Firms
2
SIF 1
SIF 2
Psif1
Psif2
Typical Problems:
Inefficiency, duplication of infrastructure, duplication of
Coverage, low coverage breadth MOH, low coverage depth,
Equity, supply side subsidies, subsidies to middle/upper class
MODELS – FLOW OF FUNDS
SINGLE PAYER
Gral. Gov
Indiv./ Firms
Social Insurance Fund
P1
P2
EXAMPLES:
Costa Rica, Canada, Taiwan, Korea,
Estonia, Hungary
P3
P4
TYPICAL PROBLEMS:
Cost containment, deficits, transparency/accountability,
possible lack of competition
MODELS – FLOW OF FUNDS
Managed Care -- Argentina
Indiv. /Firms
High Complexity
Fund
Collector
OS 1
P3
P1
OS 2
P5
P2
P3
Solidarity
Fund
OS 3
P4 P2
P3
PROBLEMS:
Risk selection, double coverage, transparency/accountability, supervision/control, high administrative costs
MODELS – FLOW OF FUNDS
Managed Care -- Colombia
Gral. Gov.
Indiv./Firms
Social Ins. Fund
EPS 1
P1
P5
P3
EPS 2
P4
P2
PROBLEMS:
Administrative costs, targeting, equity, risk selection.
ARS 1
P1
ARS 2
P3
P2
P2
MODELS – FLOW OF FUNDS
Managed Care -- Chile
Indiv./ Firms
Lower Income
FONASA
P1
P2
Indiv./ Firms
Higher Income
ISAPRE 1
P5
P4
P3
ISAPRE 2
P1
P2
P5
ISAPRE 3
P3
PROBLEMS:
Equity, risk selection, perverse incentives from opting out, high administrative costs, subsidies to upper income
P4
RISK TRANSFERS
Regulation will Vary Depending
on Assumed Risk Among Others
•
•
•
•
Entitlement, Enrollment and portability
Degree of Mobility of insured population
Minimum entry requirements to industry
Solvency margins and prudential regulation (reserves, investment of
reserves, financial disclosure actuarial studies, corporate governance,
others)
• Consumer protection and disclosure (complaints and periodic and
public information requirements)
• Exit mechanisms (intervention, liquidation, others)
• Regulation related to market failures (adverse selection, risk selection
and moral hazard)
Will More Money Alone Help
Achieve the MDG?
• There are estimates that to achieve MDG there is a
need of additional funding for health expenditures
in the range of US$ 30 to 80 billion.
• It is unlikely that this money will come from
donor financing alone and if it did it would be
non-sustainable.
• Donor financing must leverage structural change.
What is it Needed in Financing to
Achieve MDG?
• A sustainable Financing Strategy per Country
• Understanding Health as a System
• Clear and complementary roles for Public Sector,
Social Insurance, Community Risk Pooling
Mechanisms, Private Insurance and Out of Pocket
Payments.
• Clear and sustaining rules of the game all across.
No Single Actor Can do it Alone
Private
Sector
Public
Sector
Better
Financial
Protection
Individuals
In Health
and
Households
Insurers
NGOs
and
International
Partners