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Health Financing Strategies for Universal Health Coverage


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									Health Financing Strategies
Universal Health Coverage
   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
      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
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
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)

      Type of              Distribution of total Share of GDP (%)
      Expenditure          health Expenditure
      Public Expenditure   19.67                 0.84
      Private              78.05                 3.32
      External Flow        2.28                  0.10
      Total Expenditure    100                   4.25
           Source: National Health Account 2004 – 05, MOHFW, GOI
Source: National Health Account 2004 – 05, MOHFW, GOI
  Distribution of Public & Private Spending in States

O Source:
Health Expenditure in India: International
Private Insurance Coverage: India
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


 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.
Three Dimensions of Universal Health Coverage:
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 ?

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


 - Also Equity and Monitoring and Evaluation.
Where we are?
Where we are? …..
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.
Three main ways to do this. (Either single of combinations)

O 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.

O 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).

O   Third, Individuals to pay a provider directly.
On the path to universal coverage: Country
    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

The recent health financing reforms extend insurance coverage to
projected 32 million previously uninsured people by 2019.

  DPR Korea:

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

 Higher priority in existing spending, particularly in government’s
 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

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   Examples
Special levy on    $$–$$$         Australia has recently imposed a
large and                         levy on mining companies;
profitable                        Pakistan has a long-standing tax on
companies                         pharmaceutical companies
Levy on currency   $$–$$$         Some middle-income countries with
transactions                      important currency transaction

Diaspora bonds     $$             Used in India, Israel and Sri Lanka,
                                  although not necessarily for health

Financial          $$             Initially in Brazil in the 1990s
transaction tax                   subsequently replaced by a tax on
                                  capital flows to/from the country
Options                Fund        Examples
Mobile phone           $$          Taking 1% of bill would raise a lot of
Voluntary solidarity               money; relevant to low-, middle- and high-
contribution                       income countries
Tobacco excise tax     $$          These excise taxes on tobacco and alcohol
Alcohol excise tax                 exist in most countries
Excise tax on          $–$$        Romania: Proposing to implement a 20%
unhealthy food                     levy on foods high in fat, salt, additives
(sugar, salt)                      and sugar.
Selling franchised     $           Selling franchised products or services from
products or services               which a percentage of the profits goes to
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
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:
O 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

Three interrelated options:
O Replace direct payments with forms of prepayment, most
  commonly a combination of taxes and insurance contributions.
O To consolidate existing pooled funds into larger pools, and
O To improve the efficiency with which funds are used.
O 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

 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


  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
6. Health-care services: Inappropriate hospital admissions and length
    of stay
7. Health-care services: Inappropriate hospital size (low use of
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
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
 Series of reforms implemented to improve equity and
   O Revamping of the public-sector primary-care network;
   O Improving quality in public hospitals; and
   O 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
Indian Scenario:
O First concrete step:

         During planning process of 12th Five Year Plan: widely
         termed as Health Plan.

O Planning commission constituted a High level Expert Group on

  Universal Health coverage 2010.

O Mandate:     Developing a framework for providing easily
  accessible and affordable health care to all Indians.

O HLEG also recommended Appropriate Health Care Financing as

  key strategy to achieve Universal Health Coverage.
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
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
 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.
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.
   Ensure availability of free essential medicines.
   Use general taxation as the principal source of health care
   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.
O   Three Provisions can be considered:
     O Direct provision
     O Direct provision plus contracted-in services
     O 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.

Scheme             Coverage                          Features

Universal Health   Mostly benefits(≤INR30 000)       Only for families below
Insurance          for admission to hospital for a   the poverty line and
Scheme (launched   family on a floater basis,        for individuals younger
in 2003)           including compensation (INR25     than 70 years;
                   000) for death of earning head    Yearly rate of INR300
                   of the family;                    for an individual; INR450
                   compensation at the rate of       for a family
                   INR50 per day for a maximum       of five; INR600 for a
                   of 15 days to the earning head    family of seven members
                   or spouse of the family; one      with a government
                   maternity benefit with 1 year     subsidy of
                   waiting period with INR2500       INR200, INR300, and
                   for normal and                    INR400, respectively
                   INR5000 for caesarean sections
Rashtriya Swasthya     Cashless coverage of all health          Only BPL Family
Bima Yojna             services                                 Up to five members for 1
(launched in 2008)     Smart-card-based system;                 year;
                       Only hospital admission and day-care     renewal yearly; registration
                       diseases;                                fee for a family is INR30;
                       total of INR30 000 insured per family    Central government
                       below poverty line per year.             contribution 75% & state
                       Pre-existing illnesses also covered;     government 25% of the
                       Reasonable expenses for before and       premium
                       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

Yeshasvini Scheme in   Covers risk of INR100 000 for one        Member of Registered Rural
Karnataka              surgery and INR200 000 for several       Cooperative Society of
(launched in 2003)     surgeries in a year with a Premium of    Karnataka for a
                       INR120;                                  minimum of 6 months;
                       Pre-existing diseases are                All members of the family
                       covered;                                 are eligible;
                       Cashless surgery at fixed tariff         Upper age limit 75 years
Kudumbasre     INR30 000 a year                          Families below the poverty line;
               For a family of five;                     Beneficiary’s contribution is
e in Kerala    Up to INR60 000 a year for treatment at   INR33;
(launched      home, if required;                        Premium
in 2006)       Up to INR15 000 a                         for a typical family with five
               year for maternity need;                  members below the poverty line
               Subsistence allowance of INR50 a day if   is INR399 a year;
               bread                                     a central government subsidy of
               winner is hospitalized; coverage of all   INR300 from the Universal
               existing illnesses, and cashless          Health Insurance
               medical treatment;                        Scheme and an additional
               An accident insurance benefit of INR100   subsidy of INR33 each from the
               000 for death                             state government
               or full disability and INR50 000 for      and the local organization;
               partial disability                        implemented through a
                                                         neighborhood group
Arogyashree    INR 200 000 insured per family; covers    Families below the poverty line;
               hospital admission for surgeries and      beneficiaries identified
in Andhra      treatment of diseases such as heart,      through health camps; INR330
Pradesh        cancer, neurosurgery, renal, burns, and   per year per family are paid by
(launched in   polytrauma cases                          the state government; Validity
2007)                                                    for 1 year or up to the time
                                                         when the overall claim ratio
                                                         reaches 120% of the premium

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