International Labour Office Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH World Health Organization Extending Social Protection in Health People all over the world depend on having access to health services for maintaining their health Developing Countries’ Experiences, or for their survival. It is crucial therefore that they are able to afford the treatment they need. Payments for health care push an estimated 100 million people into poverty every year. Functioning Lessons Learnt and Recommendations social health protection systems could prevent this. They entitle people to access the health services needed, they ensure that no one is impoverished by health bills, and they set prices and contributions according to what people are able to pay. This book represents the combined insight into social health protection from over 200 academics, policy makers and politicians, who gathered at the International Conference on Social Health Insurance in Developing Countries in Berlin in December 2005. The book tackles issues as diverse as universal coverage, social dialogue, poverty reduction or mixed financing systems and draws on experiences spanning four continents. GTZ / GTZ ILO/ WHO in Health Protection Extending Social
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SHI_Umschlag.pmd 1 29.03.2007, 14:45 Extending Social Protection in Health
Developing Countries’ Experiences, Lessons Learnt and Recommendations International Labour Office Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) GmbH World Health Organization
Extending Social Protection in Health
Developing Countries’ Experiences, Lessons Learnt and Recommendations This conference reader was compiled and edited by Jens Holst and Assia Brandrup-Lukanow on behalf of the German Agency for Technical Cooperation and the Federal Ministry for Economic Co-operation and Development (BMZ). The conceptual planning and preparation of the conference was done by a team of the WHO/ILO/GTZ consortium: Guy Carrin, Ole Doetinchem, David Evans and Timothy Evans from the World Health Organization; Xenia Scheil-Adlung and Michael Cichon from the International Labour Office; Bernd Schramm, Rüdiger Krech, Nicola Wiebe, Katja Bender, Jens Holst, Assia Brandrup-Lukanow and Stefan Helming from the Deutsche Gesellschaft für Technische Zusammenarbeit. The technical organisation of the Berlin Conference was coordinated by Lukardis von Studnitz with the support of Manique Abayasekara, Marion Baak, Birgit Roehrig, Sabina Schnell, Aline Oloff, Christine Meyer, Heike Volkmer, Jens Marquardt, Stephan von Bothmer, and Raphael Pfautsch. The conference was hosted by the GTZ House Berlin, under the gracious hospitality of Franziska Donner and Jörg Schindler; and facilitated by Michael Gabrisiak, Andrea Fischer, Assia Brandrup Lukanow, Timothy Evans, Michael Cichon, and David Evans. The organisers would also like to thank Mr. Uwe Gehlen, Director of the Department for Social protection, BMZ, and Dr. Frank Schwarzbeck for their support and conceptual input into the conference; to Mr. Udo Scholten and the team from the Division of European and International Health Policy of the Federal Ministry for Health and Social Security (BMGS) for their contribution to the conference preparations; to Ms. Simone König and the team from the Foreign Office for their advice and support; and to Ms. Marion Stark and Ms. Nicola Liebert for public relations and media support. Finally, the organisers of the conference and the editors wish to thank all facilitators, presenters, authors, and participants for their contributions to the conference and to the publication, and especially Mr. Anver Versi for his excellent work on language editing.
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Foreword
The provision of social protection systems in health which adequately respond to the needs of citizens while keeping within the bounds of available resources is a chal- lenge for every country and every government. Resource-poor nations are in a par- ticularly difficult situation as the scarce resources available have to be shared among many priority areas of development.
At the same time, this is the area where the needs are greatest, often exacerbated by high population growth rates and epidemics such as AIDS, Tuberculosis and Malaria affecting large segments of the populations. Chronically high maternal and infant mortality rates, and the growing burden of non-communicable diseases place an ad- ditional strain on health care systems. Many countries, along with their development partners, have worked on different na- tional or regional models of sustainable health care financing. The International Con- ference on Social Health Insurance in Developing Countries, held in Berlin 5-7 De- cember 2005, provided a forum in which the experiences from different countries and regions could be shared and discussed. The organisers of the Berlin Conference decided to collect and preserve the many valuable contributions which emerged and to make them available to a broader group of scientists, politicians and decision-makers. This book comprises a revised version of most of the presentations made in Berlin as well as background information on social protection in health. The editors hope this compilation will help to enrich the ongoing debate on how best to protect people in developing countries against the financial risks of ill health. It was a pleasure and honour to host this conference on behalf of the GTZ-ILO-WHO- Consortium, and we sincerely hope that you will find this reader useful for your work. We look forward to continuing the dialogue and cooperation with those who were present in Berlin, as well as with other interested partners.
Dr. Assia Brandrup-Lukanow Dr. Rüdiger Krech Senior Adviser on Health, Education, and Head of Section Social Protection Social Protection Extending Social Protection in Health
Table of contents
1. Setting the Scene 1.1. Social Health Insurance in Development Cooperation 1 Heidemarie Wieczorek-Zeul 1.2. ILO’s Decent Work Agenda: Goal for Fair Globalisation 3 Assane Diop 1.3. Universal coverage: from concept to implementation 7 Timothy Evans 1.4. The Role of Social Protection in Health in achieving the Millennium Develop- 13 ment Goals Stefan Helming 1.5. Social health insurance: Economic development and poverty reduction 16 David Fuentes-Montero 1.6. Poverty, health and social protection 22 Julio Frenk, Felicia Knaul, Eduardo González-Pier, Mariana Barraza-Lloréns
2. Advancing the Socio-Economic Development Agenda: The concern for Equity, Solidarity and Poverty Reduction 2.1. Developing Urban Social Health Insurance in a Rapidly Changing Economy of 32 China: Problems and Challenges Shenglan Tang, Xiaoming Cheng, Ling Xu 2.2. From Universal Coverage of Healthcare in Thailand to SHI in China: What Les- 42 sons can be drawn? Pongpisut Jongudomsuk 2.3. Equity and solidarity in social health insurance: Chances and risks of the Costa 45 Rican way towards universal coverage Alberto Sáenz Pacheco, Jens Holst 2.4. Advances in Implementing Social Security: Lessons from Tunisia 52 Hedi Achouri 2.5. Social health insurance in French-speaking sub-Saharan Africa: situation and 57 current reform Oumar Ouattara, Werner Soors 2.6. The Inclusion of the Poor in a Social Health Insurance Framework: The Strate- 63 gies Applied in Viet Nam Tran Van Tien 2.7. Insuring the Very Poor against Health Risks in the Philippines 71 Claude Bodart, Matthew Jowett 2.8. Reaching the Poor in Ghana with National Health Insurance – An Experience 73 from the Districts of the Eastern Region of Ghana Ebenezer Appiah-Denkyira, Alex Preker 2.9. The Impact of Global Health Initiatives on Fair Financing and Health Systems 82 Development: the case of Cambodia Maryam Bigdeli Contents
3. Current Reforms Aiming at the Extension of Social Protection in Health: Linking up Mixed Health Financing Sub-systems 3.1. Myths, instruments, and objectives in health financing and insurance 87 Joseph Kutzin 3.2. Implications of Enrolment Criteria for Social Health Insurance 96 William D. Savedoff, Jens Holst 3.3. The Importance of Social Dialogue in the Extension of Coverage 100 Youssoufa Wade 3.4. The German perspective on the Importance of social dialogue in the extension of 104 coverage: Lessons learnt from Senegal Ursula Engelen-Kefer 3.5. Working with Community-based Groups: The Experience of the Philippine Health 106 Insurance Corporation Ruben John Basa 3.6. Health Coverage for All: Strategies and Choices for India 111 Indrani Gupta 3.7. Universal Coverage in Thailand: the Respective Roles of Social Health Insurance 121 and Tax-Based Financing Viroj Tangcharoensathien, Phusit Prakongsai, Walaiporn Patcharanarumol, Pongpisut Jongudomsuk
4. Implementing Social Health Insurance: Learning from Evidence 4.1. Impact of social health protection on access to health care, health expenditure 132 and impoverishment - A comparative analysis of three African countries Xenia Scheil-Adlung,Guy Carrin, Johannes Jütting, Ke Xu 4.2. Social Health Insurance Development as an Integral Part of the National Health 146 Policy: Recent Reform in the Indonesian Health Insurance System Adang Setiana 4.3. Achieving Universal Coverage through Social Health Insurance in Asia 155 Dorsjuren Bayarsaikhan 4.4. Implementation of Health Insurance in Developing Countries: Experience from 158 Selected Asian Countries Bong-min Yang, Jens Holst 5. Berlin Recommendations for Action 168 6. Annex 6.1. Contributors 176 6.2. Program 180 6.3. Participants 183 6.4. Bibliography for further reading 191 6.5. Abbreviations 218 6.6. Social protection in health: Links to Important Websites 223 6.7. The Consortium 225
Extending Social Protection in Health 1
1. Setting the Scene 1.1. Social Health Insurance in Development Cooperation
Heidemarie Wieczorek-Zeul1
The Berlin Conference on Social Protection in Health has addressed an issue of vital importance, particularly for people in developing countries. We are living at the beginning of the 21st century – and yet we must acknowledge, to our shame, a series of deplorable situations: Four out of five people in the world have no form of social security whatsoever, and over 1.3 billion people have no access to adequate or affordable health care. Health coverage is particularly bad for families living in rural areas; health posts are sparsely scattered and the lack of doctors and nurses is severe. Ten million infants die every year of preventable diseases – these deaths would not happen in rich countries operating social health insurance systems. And 500,000 women die during pregnancy and childbirth because adequate medical care is either not available or because they are unable to pay for it. Currently, 40.3 million people are infected with HIV. In 2005, there have been 4.9 million new infections and 3.1 million deaths. That is the situation we are faced with at the beginning of the 21st century. It is a shameful state of affairs. We must do something about it. We can do something about it. And that is why we are here. Across the world, the challenge of fighting diseases and epidemics has been taken up with growing vigour. Malaria, HIV/AIDS and tuberculosis have become the focus of attention. But other, more "ordinary" diseases are also a threat to people in develop- ing countries. When we talk about social health insurance, we are in fact talking about the lives of millions, indeed billions, of people across the world. We are talking about enabling everyone to have a fair share of the opportunities offered by globalisation. That is why social health insurance systems – whatever specific shape they may take – are more than simply technical answers to the complex questions of how to organise the health sectors. Social health insurance systems are a reflection of certain values: They represent a value system resting on the bedrock of a cohesive community and based on the solidarity of the strong with the weak, the healthy with the sick. While social health insurance systems can take different forms in specific cases, the one thing they must all have in common is to be an expression of solidarity and equity. Only if they are transparent and accountable and only if they facilitate a sense of responsibility will they be successful. Then they will be embraced by the people concerned. What are the real issues we can hope to tackle through social health insurance systems? The WHO estimates that each year 178 million people are unable to pay for what they need to restore their health. Of those who are able to find the money to pay for the care they need, every year, over 100 million people are plunged into extreme poverty because they have been forced to sell all they own to pay for medical treatment. Often, whole families get into debt in order to pay for the medical treatment for one member of the family. When one family member takes ill, it blights the future of the entire family. The lack of health insurance turns into a poverty trap. In many societies, it is particularly hard for women to access basic medi- cal care. They are at increased risk. That is why the high levels of child and maternal mortal- ity are being addressed by the Millennium Development Goals. Poor women have long been the worst hit by the AIDS pandemic. 93 % of illness across the planet hits the poorest 84 % of the world population and the poor- est 84 % of people benefit from only 11 % of worldwide expenditure on health. This is one striking example of the global inequities that the World Bank rightly highlights in its latest World Development Report. We are meeting here because we cannot allow good health to depend on where someone is born or how much money they have. We are here because we
1 Federal Minister for Economic Cooperation and Development of Germany since 1998.
2 H. Wieczorek-Zeul: Social Health Insurance in Development Co-operation know of ways out of this plight: We know that social health insurance systems can offer the poor access to health care. We know that social health insurance models can protect people from crippling health care costs and a loss of income. Social health insurance systems increase productivity and boost economic growth: The WHO and the World Bank estimate that a 10% increase in life expectancy leads to up to a 0.4 % increase in economic growth. If a developing country's per capita income increases by 10 %, child mortality rates fall by over 3 %. We know that social health insurance systems are vital if economic growth is to actually contribute to poverty reduction and an equitable sharing out of resources rather than aggravating disparities. Social health insurance systems are a sure recipe for poverty reduction; they are a driving force for development. That is why it is encouraging to see that successful anchor countries and newly industrialising countries have now recognised the importance of social health in- surance. Some municipalities in China, for example, have already introduced social security systems and Brazil has begun creating a uniform health system. I could mention many other examples. All of them have one thing in common: They are united in the knowledge that social health insurance is the only way of making globalisation successful in both eco- nomic and social terms. That is what we want and that is why we are here. This conference has been the culmination so far of the work of a consortium made up of the GTZ, the WHO and the ILO. The consortium was established just over a year ago and has taken on the task of helping interested partner countries establish social health insurance systems by offering them expert advice. The key focus will initially be the exchange of experiences between the partner countries involved and other donors. Through its work, the consortium provides us with a general over- view of all donor activities in the field of health insurance. Health insurance has emerged as a decisive strategic factor for success in the health sector. Many different paths lead to the ultimate goal of improved health care. The consortium therefore responds to requests from developing countries and arranges for them to receive concrete advice on their health sector. This conference now offers us the opportunity to take stock. We see social health insurance within the context of efforts to achieve the MDGs by 2015. With our eyes fixed on that aim, we know that we have to further refine the standards for de- veloping social health insurance systems. That is why it is important to achieve even greater donor harmonisation in this key sector of development cooperation. Access to health care is, at the same time, a decisive factor in economic development. That is one of the reasons why a large proportion of the funds freed up by the Poverty Reduction Strategy Process (PRSP) is to be invested in health. A successful system of social health insurance is not an obstacle to, but rather the precondition for, economically successful, peaceful development. Germany and Europe's experience of social security can be drawn on in many ways to help build up social security systems in Africa, Asia and Latin America and ensure that economic success and social equity complement each other. I hope that this conference will go some way to ensuring that, through social security systems funded on the basis of solidarity, poor people will have a better chance of becoming healthier, staying healthier and better able to take care of themselves and their families.
Extending Social Protection in Health 3
1.2. ILO’s Decent Work Agenda: Goal for Fair Globalisation Assane Diop2
Introduction Access to social health insurance is a key component of the ILO's strategic objective to en- hance the coverage and effectiveness of social protection for all. It is one of the cornerstones of the ILO's Decent Work Agenda. The urgency of the issues addressed by ILO is clear. Four out of five people today do not have adequate social security, and in some regions 90 % are excluded from health protection schemes. But statistics do not tell the whole story. We have to think of what it means to people's daily lives. Living without social health protection is living in constant fear. It means that if you fall ill and you can't work - you have no income, you have no food. It means older people living in poverty because they have no pensions. It means people dying because they have no ac- cess to basic health care and medicine.
Access to health care and poverty During a recent mission to Benin, a woman said to me she took a loan to start a small busi- ness activity. Her young son suddenly became ill and she took him to the health centre. The doctor told her that her son needed surgery immediately and she had to pay $ 150.00 in ad- vance for the operation and the medicine. Having no other resources, she used the money she had borrowed. Now she cannot start her business activity, which means she has no means to repay the loan. Unless she can find other resources, she will be unable to escape the poverty cycle. Ample evidence show that while a significant number of people in develop- ing countries are poor, and what pushes them over the edge to destitution is often a crisis linked to health care. Health care is very much at the heart of the Millennium Development Goals aiming at com- bating poverty. These include halving extreme poverty worldwide, reducing child mortality by two-thirds, reducing maternal mortality by three-quarters, and combating the A New York Times article entitled "Neglected Poor spread of HIV/ AIDS, malaria and other in Africa Make Their Own Safety Nets", which was diseases. Progress has been made, and published on August 28th of 2005, recounts the in many countries, social health insur- story of Nogaye Sow, a 40-year-old grandmother, ance is providing the much-needed who struggles daily as a street vendor in Dakar. She safety net. But we also know that for recently became a member of the community health insurance plan, which means that when she, her many developing countries achieving seven children, her granddaughter and two other the MDGs remains a distant goal. There relatives become ill, they receive free consultations is much to be done. This Conference is at a clinic down the road, cut-rate medicine and an important opportunity to examine peace of mind. The chances are lower now that a how social health insurance can contri- bout of illness will bring the family to total ruin. Ms. bute towards paving the way - if not ac- Sow struggles to pay the 200 francs a month - less celerating - the realisation of the MDGs. than half a dollar - that she must come up with for herself and each of the other 10 beneficiaries in her There are, of course, many forms and health insurance card. Before the plan, when her types of social insurance designed to children became sick with malaria, she had to wait meet the needs of different groups and to take them for treatment until she could raise the a range of ways of financing them. A for- money, a delay that allowed the parasites to sap the midable challenge for developing coun- children's strength and endanger their lives. One tries is providing universal access to novelty of the scheme is that beneficiaries can come basic health care, which is of good qual- together and make changes. Soon, Ms. Sow's pre- ity and, at the same time, affordable. But mium will increase 50 francs, about 10 cents, but she can choose from more than two clinics now as the vast majority of the population in available and be covered for more specialised care. many developing countries, including in
2 Executive Director, International Labour Office, Geneva, [email protected].
4 A. Diop: Decent Work: Goal for Fair Globalisation formal economy wage earners and self-employed persons, have no social protection whatso- ever, a major focus must be on the extension of social protection.Workers in small- and mi- cro-enterprises (still excluded from social security coverage in many countries) invariably suffer far greater income insecurity than those in larger firms, which tend to offer better pay, greater security of employment, and possibly, benefits in case of sickness or retirement. The self-employed, especially those in the informal economy, face similar economic insecurity. Both groups tend to be poor and have extremely limited capacity to contribute to social pro- tection schemes. Of course, there is no universal approach to expanding social security coverage. Each coun- try has its own unique situation and requires tailored solutions. The fact remains, however, that no matter how poor people may be, they are often better equipped to cope with certain risks as a group or as a collective rather than as isolated individuals. That is why social health insurance is a powerful weapon to buffer the poor from the vulnerability a heath crisis could trigger. This has been confirmed in many instances in projects carried out under the ILO's Strategies and Tools against social Exclusion and Poverty (STEP) programme.
Improving social protection Equally important is enhancing the effectiveness of social protection. The quality of govern- ance is a critical ingredient for ensuring the viability of and promoting public confidence in social security systems. Governments are aware that neglecting or compromising social pro- tection could aggravate poverty. They realise that poverty is expensive as it impedes devel- opment, hampers growth, lowers productivity, and fuels instability. Many are taking concrete steps to improve the situation but it is also evident more investment in extending quality health care is urgently needed. Let me briefly recount what is happening in Senegal: The World Health Organization stipulated that as a minimum 9 % of the national budget should be allocated to health. Senegal passed this threshold 5 years ago, and the country is rated as the 4th in Africa for best performance in terms of geographic access to health care and operational programmes. The hospital system has been reformed to improve manage- ment and an ambitious policy to use generic drugs was put in place. The health care system was decentralised to make it closer to regions and local communities, community participa- tion in health committees has been organised and sector programmes were developed within the framework of a public health policy. In spite of these initiatives, access to health care for all still remains a slogan. The main rea- son is the lack of social security as it is provided in developed countries and guarantees fi- nancial access to health. The challenge today is to help developing countries, particularly in Africa, to build social health insurance. Again, that is feasible if we have the political vision to look beyond the immediate and the conviction to move forward. This is a real-life challenge that workers and their families all over the world are seeking solutions for. A broad-based campaign is necessary to make it happen although in many developing countries financial constraints limit the possibilities for action. To help overcome this, Senegal has targeted the extension of health care to vulnerable groups, especially to those in the informal economy and in rural areas, as a priority in its Poverty Reduction Strategy Process (PRSP). The primary responsibility for ensuring access to health care obviously lies at the national level. Access to social protection is often linked to jobs, which underscores the importance of sound institutions and policies that encourage employment creation and enterprise develop- ment. People also expect their political and economic systems to give them the opportunity to work out of poverty. This will also minimise the pressure on already stretched health-care budgets. Individuals and families have the right to expect that authorities in the public and private sector will blend economic and social policies within an enabling environment to cre- ate decent work for its citizens. Each country will have to evaluate the choices and adopt an approach the meets its needs and resources. Some countries will be able to achieve this by restructuring their existing so- cial security systems and extend coverage in health. Other countries will need a more plural-
Extending Social Protection in Health 5
istic approach, devising complementary measures that embrace those not covered. This in- cludes working closely with community schemes and groups of workers that have estab- lished their own systems of mutual support to share risks and resources. Such associations make an important contribution and need to be fostered and developed. In most cases social health protection comprises several components, including some proportion of tax-based funding through the national treasury and individuals' out-of-pocket payments to meet their medical needs. However, it is increasingly reco- gnised that different mech- anisms can meet many of the challenges in health financing. There are specific, but quite different roles here for insurance schemes provided through the commercial sector (based on the mutuality principle of risk poo- ling) and for social health insu- rance systems in which the risk sharing is solidarity-based. We will be discussing these different approaches in the course of the Conference. Social health insurance schemes are well-suited to the needs of workers for several reasons: They provide quick and effective access to medical services; in addition, the scope for ‘natu- ral’ contribution systems linked to payrolls and the scope for workers to participate in dia- logue and governance mechanisms through trade unions contributes to a sense of owner- ship and long-term sustainability. Through various initiatives and movements, people are also demanding participation in the decision-making that affects them and their communities. As a result, other actors in the policy-making process, such as governments, health care providers, employers, and international agencies are beginning to rethink and re- conceptualise the role of communities - and those of other actors – in these process.
Challenges in a globalised world But we also live in a competitive global economy, and globalisation triggers changes or re- percussions in national economies. This means, as the Commission on the Social Dimension of Globalisation recommended in its report ‘A Fair Globalisation - Creating Opportunities for All“ that, as a minimum, systems of social protection are required that can stabilise incomes and distribute some of the gains of globalisation to groups, which would otherwise be ex- cluded. In today's global economy a number of issues and trends on the relationship between work and health are in the forefront of the debate between health and protection. These include, for example, the extent to which lack of access to health services has significant impacts on socio-economic development, particularly on economic growth due to lower productivity, high absenteeism, and reduced life expectancy. It touches on the problem of the ‘exclusion’ of significant groups such as the disabled, migrants, the rural population, the self-employed, and the unemployed. Many of those "excluded" are living and working in what is variously entitled the ‘informal economy’ or the ‘unorganised sector’, in any case those outside the embrace of the formal economy. Special attention is being devoted to the issue of gender and the specific needs of women. In many cases women are the main earners of income in large families, they are carers for the sick in their families and they bring up children. This has implications for the provision of adequate health services and maternity health care. Another important factor in the interna- tional debate about health and protection is the implications of an ageing population. In many
6 A. Diop: Decent Work: Goal for Fair Globalisation countries the elderly have no income, they cannot work any more and they have no pension. They have, however, deteriorating health conditions and they have to look after their grand- children and often after orphans. When it comes to financing, the costs of adequate health care providing for people's ‘reasonable’ expectations are currently not matched with sufficient funds. Often the poor are required to pay high direct payments. Solidarity mechanisms such as social health insurance have the potential to reduce the financial and social burden of disease mainly of the worse-off. To many countries all over the world, the ILO has provided technical assistance and contrib- uted to capacity building, exchange of experience and research in order to support the de- velopment of social health insurance. Our goal is to provide countries with a crucial contribu- tion to alleviate health-related poverty and build the social dimension for globalisation, through the practical implementation of the Decent Work Agenda. Our assets are our tripar- tite constituency - composed of workers' and employers' organisations, and governments - our experience in social dialogue, our in-depth knowledge of social security, health insurance schemes and policies and our understanding of and insight into informal economies. Our starting points are equity, solidarity and social justice and our strategy is the extension of social protection in health to all. We can draw upon a range of instruments to break the cycles of poverty and ill health through social protection. The ILO has joined forces with the WHO and the German Development Agency (GTZ) and created a global partnership on social health insurance because the three organisations share the same values and strive to achieve a better world for those in need of health care. The International Conference on Social Health Insurance in developing countries was a major result of the GTZ/ILO/WHO partnership based on an Agreement established in 2004. The Agreement covers co-operation in the broad area of social protection, in particular social health insurance. International action and solidarity are necessary. A certain minimum level of protection must be accepted worldwide. The lack of social protection is more often than not the result of decent work deficits in the global economy. The governance of globalisation is a common concern and goal of developing and industrialised countries alike. It is as much a key issue at national and local levels as it is for the global community. After all, as stated in the ILO's Constitution: "poverty anywhere constitutes a danger to prosperity everywhere". The world is waking up. Getting people and ideas together is essential to moving forward. And the work of this Conference, the ideas of all of you to bring to the table - and the connec- tions you make between the economic, the political, the social, the environmental - will help make it happen. A change is coming. But we must continue to think and work together to see it through. Everybody involved in the area of health financing and social protection has an important role to play both intellectually - in conceptualising solutions - but also practically, by generating the necessary action, movement and capacity to organise. That, my friends, is so essential and it is what the world is looking for to advance the Decent Work agenda and build a fair globalisation that creates opportunities for all. Participating in the Berlin Conference reflects our common concern of the need to urgently address the lack of access to social protection, the high levels of vulnerability to risks many people face, and the need to help those trapped in poverty to escape. The Conference pro- vided an excellent forum to share experiences of how different interventions are improving the lives of many.
Extending Social Protection in Health 7
1.3. Universal coverage: from concept to implementation
Timothy Evans3 Health financing in the world Policy-makers in all parts of the world, not only in low-income countries, are continually reviewing the way their health systems are financed – either in the way the funds are collected, how they are pooled to spread risks, what services are pro- vided or purchased, and how providers should be paid. The objectives vary, but common concerns are the need to generate sufficient funds for health, improving efficiency or reduc- ing costs, reducing the financial risks involved in obtaining care, and ensuring that the cost of care does not prevent people from receiving needed services. Universal coverage is defined as access to key promotive, preventive, curative and rehabili- tative health interventions for all at an affordable cost, thereby achieving equity in access. The principle of financial-risk protection ensures that the cost of care does not put people at risk of financial catastrophe. A related objective of health-financing policy is equity regarding the economic burden: households contribute to the health system on the basis of ability to pay. Universal coverage is consistent with WHO’s concepts of health for all and primary health care. Realisation of universal coverage is dependent on organisational mechanisms that make it possible to collect financial contributions for the health system efficiently and equitably from different sources; to pool these contributions so that the risk of having to pay for health ser- vices is shared by all and not borne by each person who is sick; and to use these contribu- tions to provide or purchase effective health interventions. The way in which countries com- bine these functions determines the efficiency and equity of their health-financing systems.
Health financing for universal coverage A great deal is spent on health globally, but this Figure 1.3.1: In 2003, the World spent $ 4.4 trillion on health amount is unevenly dis- (International dollars) tributed and shows a high reliance on out-of-pocket OtherPrivate payments in many coun- 4% tries. Financial contribu- Tax funded Social Insurance tions to the health system 24% are raised in most coun- 32% tries from households and businesses, although external flows such as Private Insurance official assistance are an 17% important source in many settings. Recent increa- Out of pocket ses in the availability of 23% Source: National Health Accounts external funding for health EIP/HSF/CEP, World Health Organization have the potential to stimu late major health improvements in poor countries. On the other hand, multilateral financial institutions and some ministries of finance have expressed concern that these inflows could affect macroeconomic stability. In addition, these funds are sometimes used to finance spe- cific programmes, more or less independent of efforts under way to build long-term sustain- able financing systems and institutions for the health system as a whole. It is important that inflows of external funds for particular activities are managed in a way that is consistent with
3 Assistant Director-General for Evidence and Information in Policy, World Health Organization, [email protected].
8 T. Evans: Universal Coverage – from Concept to Implementation the broader objective of developing sustainable financing systems and institutions and mov- ing towards universal coverage. Although various organisational options exist for achieving universal coverage, a key com- mon characteristic of successful systems is that some part of the financial contributions of households is prepaid and pooled. These contributions typically are the predominant source of domestically generated health expenditure at the national level. Experience shows that in addition there needs to be heavy reliance on compulsory sources of funding, such as taxes of various forms, payroll deductions, or mandatory insurance contributions. Voluntary pre- payment can play a role in certain settings, but universal coverage is unlikely to be achieved on the basis of voluntary contributions alone. Several options for establishing universal coverage exist, which can be classified into two broad strategies. The first is use of general tax revenue as the main source of finance for risk pooling, a system also referred to as tax-funded health financing. The second is introduction of social health insurance, used here to describe the situation where specific contributions for health are collected from workers, self-employed people, enterprises and the government, and are pooled into a single, or multiple, ‘social health insurance fund’. In the first option, all citizens (and sometimes residents) are typically entitled to services - so coverage is automatically universal. With social health insurance, entitlement is linked to a contribution made by, or on behalf of, specific individuals in the population. Universality will be achieved only if contributions are made on behalf of each member of the population. For this reason most social health insurance schemes combine different sources of funds - with government often contributing on behalf of people who cannot afford to pay themselves. So- cial health insurance may be managed in various ways, including through a single govern- ment insurance fund or through multiple nongovernmental or parastatal funds. In a number of countries, mixes of these broad approaches exist: part of the population is covered directly through general taxes, whereas other specific population groups are cov- ered either by compulsory contributions to a social health insurance fund or by various other types of health insurance. In some countries, national agencies organise social health pro- tection: citizens must be covered but have the right to choose private health-insurance funds, which are usually subject to strict regulation. No health system meets the full cost of health services out of the prepaid and pooled funds collected by tax or insurance contributions. Most require some form of co-payment at the time of use. The intention is to restrain demand and/or limit the cost to the government or
Figure 1.3.2: Inequality in health spending and income by WHO Region* 2003 (international dollars) 80 70 60 50
% 40 30 20 10 0 AFR AMR* EMR EUR* SEAR WPR* OECD Population * AMR, EUR and WPR do not contain OECD countries GDP Source: National Health Accounts, Health expenditure EIP/HSF/CEP, World Health Organization
Extending Social Protection in Health 9
insurance fund. However, it is crucial that the relative contribution made by out-of-pocket payments from patients at the time of service provision is not so high that it reduces access to care and fails to pro- Figure 1.3.3: Impact of health expenditure vide protection against the financial risks associ- ated with high individual EMR health-care costs. It is es- impoverishment timated that as many as AFR catastrophic 178 million people could suffer financial catastro- EUR phe as a result of out-of- SEA pocket health payments each year, and that 104 AMR million could be forced in- to poverty simply becau- WPR se of health payments.4
-306090The tendency of govern- Number of people (million) ments to take the lead in ensuring that funds are raised and pooled to pro- vide universal coverage does not mean that they must always provide the health services. All organisational mechanisms for raising funds and pooling them are confronted with the need to use these financial resources in the best possible way, purchasing or providing appropri- ate health services in an active, rather than a passive, way. These health services may be provided by private or by public facilities, or some mix of both. In all cases, governments need to ensure that incentives are in place to encourage providers to supply only the ser- vices that are required, at a high level of quality.
Transition to universal coverage Universality in social protection in health means access to needed personal and non-personal health services for all people at an affordable cost. This is often called equity in access with access interpreted as securing services to everyone, given a specific need. However, universal cover- age is also associated with equity in financing implying that households contribute on the basis of ability to pay. In order to implement universal protection against financial health risks, organisational mechanisms are needed in order to ensure that financial contributions are collected equitably and efficiently; contribution-born resources are pooled in a way that the financial risks associated with the need to pay for care are shared by all; and effective and cost-effective health interventions are purchased or provided with these contributions. Health-financing systems that provide universal coverage have generally evolved over a number of years. For instan- ce, both Japan and the United Kingdom took 36 years bet- ween the first law related to universal health protection and the final law to implement it. Ko- rea, however, achieved universal coverage in only 12 years, and after many years of laying the basis Thailand managed to implement coverage for Thai people not yet covered by SHI in about one year. Population coverage was typically incomplete during this period. In coun-
4 Preliminary global estimates on the population subjected to catastrophic expenditure and impoverishment. WHO, November 2004.
10 T. Evans: Universal Coverage – from Concept to Implementation tries that do not yet have universal coverage, different groups are covered by different mechanisms, for example, tax-based service provision; compulsory SHI-type coverage for particular population groups; community, co-operative, enterprise-based and mutual health insurance; or other forms of nongovernmental or private health insurance. These will con- tinue to coexist for some time during the transition to universal coverage, but the disparate parts will need to be brought together in a way that ensures universal coverage. The most promising and best-suited organisational options have to be chosen from the broad spectrum available that is essentially based on tax-based health financing (TBF), social health insurance (SHI), and mixed health financing systems (MHF). In practically all coun- tries, a variable part of the population is entitled to health care benefits financed by tax reve- nues or various types of health insurance, and some groups are even covered by both mechanisms. Historical and social choices determine which type of system forms the basis, but the most relevant goal is to achieve and guarantee that a high proportion of household financial contributions is prepaid and pooled.
Figure 1.3.4: Prepayment in OECD countries
14 12 10
8 13 6 7 4 4 3 2 2
Number of countries 1 0 40-50% 50-60% 60-70% 70-80% 80-90% > 90%
Prepayment ratio
The transition to universal coverage may take several years, even several decades. A num- ber of factors determine the speed of transition. Essential elements are the relative accep- tance of the value and concept of solidarity in society, the effectiveness of government stew- ardship and the population’s trust in government and its institutions. A critical limiting factor is the ability of governments to mobilise tax revenues or insurance contributions. High eco- nomic growth enhances people’s capacity to contribute to a health-financing scheme. When accompanied by a growing formal sector, it also makes it easier for any health-financing sys- tem to assess incomes and draw contributions from households (i.e. to collect taxes or insur- ance contributions). A further factor is the availability of skilled administrative personnel to facilitate the effective administration of a nationwide system. No specific health-financing mechanism is optimal and recommendable in all settings. In- deed, of the 30 OECD Members, 15 have a system funded predominantly from contributions that are pooled in social health insurance funds, 12 have largely general tax-funded systems, and three have a mixed health-financing system. Virtually all countries that rely on pooled contributions also receive financing from government budget revenues in order to provide coverage for particular population groups, such as the poor. In addition, all have some co- payments for specific types of services or for pharmaceuticals. Little advantage is discernible in one financing system over another in terms of impact on health outcomes, responsiveness to patients, or efficiency.
Extending Social Protection in Health 11
Current challenges across countries However, the impact of a health-financing system depends on the way in which funds not only are raised, but also are pooled and then used to provide or purchase health services. Attention should not focus solely on the question of revenue collection, which lies sometimes outside the control of the ministry of health. Improvements in efficiency and equity can also be made by examining the way in which revenues are pooled, then used to purchase and provide health services and interventions. Organisations that are part of the health-financing system – whether ministry of health, other ministries, health insurance funds, or private pro- viders – require appropriate incentives in order to reach the objective of universal coverage through adequate revenue collection, and suitable arrangements for pooling and purchasing. At some point various constraints and possibilities of a social, economic and/or political na- ture will entail specific choices in the transit of a health-financing system towards universal coverage. An initial crucial factor is the organisational context: the possibility of building upon successful existing institutions. Second, government stewardship and notably a strong politi- cal will to engage in a particular health-financing reform are essential. Third, the state of the economy is important, in terms of both overall growth and the extent of formalisation of em- ployment; economic growth and a growing formal sector facilitate the ability of governments to mobilise compulsory funding for universal coverage. Lastly, a concern common to all health-financing options is whether skilled administrative staff is available in sufficient num- bers to undertake all the financing functions. Ultimately, a country’s decision on how to modify its health-fi- nancing system should be gui- ded by decisions on collection, pooling, and purchasing, and the associated organisational arran- gements that are most likely to lead to universal coverage in the context of that particular country, taking account of its society’s values and collective objectives. Methods of prepayment and pooling of resources and risks are basic principles in financial protection that require special attention in cases where these mechanisms are not well developed. The way to purchase or provide services using the pooled funds also needs careful consideration so that the needs of the population and the question of equity are optimally addressed. When reforming a health-financing system, governments need to retain their important stew- ardship role in order to steer implementation while maintaining a certain degree of pragma- tism, since societies and economies are dynamic, and the transition to universal coverage is likely to spread over several years. Therefore, it is crucial that general design features are analysed adequately and regulations are adequate with respect to the compliance with the law. The allocation of revenues and the provider payment methods have to be well defined. In addition, the proper definition of the benefit package or packages is as important as the implementation of effective financial control mechanisms.
Conclusion For implementing viable and sustainable health financing systems that enable a society to reach universal coverage, the context of the country is preponderant and has to be closely analysed and taken in account. Whichever the choice is regarding the mechanisms and schemes to be implemented, prepayment and risk pooling are overriding principles that pre- vent households as well as the system as such from serious financial constraints and col-
12 T. Evans: Universal Coverage – from Concept to Implementation lapse. International empirical evidence shows that government stewardship is indispensable for steering the process during the implementation and transition period, for maintaining a certain level of pragmatism and for achieving a more conducive international support to poli- cies oriented towards universal coverage. On the more specific country level, universal social protection in health requires a certain structural, professional and organisational capacity. Strong institutions are a must for imple- menting effective and reliable health financing mechanisms, and the need of a sufficient number and qualification of skilled workforce is often underestimated. Besides the existing ‘fiscal space’ and the socio-historical options of sustainability, a series of instruments have to accompany the implementation of universal coverage at the country level - mainly budget support, medium term expenditure framework (MTEF), poverty reduction strategies (PRS), sector-wide approaches (SWAPs), etc. The international community has the potential to in- fluence the socio-political processes in developing countries by putting adequate incentives through the modalities to access resources available for development and especially for health, like the global funds, loans and other forms of donor support.
References Akal, Afsar; Harvey, Roy (2001). The Role of Health Insurance and Community Financing in Funding Immunization in Developing Countries. WHO, Geneva (http://www.who.int/immunization_financing/options/en/role_chf.pdf). Carrin, Guy (2002). Social health insurance in developing countries: a continuing challenge. Interna- tional Social Security Review 55, 57-69, ISSN: 0020-871X. Carrin, Guy; James, Chris (2004). Reaching Universal Coverage via Social Health Insurance: Key Design Features in the Transition Period. WHO, Department of Health Systems Financing and Re- source Allocation. Geneva (http://www.issa.int/engl/initiative/projects/2carrin-james.pdf). Carrin, Guy (2004). Linking health and economic policy to speed up increased household welfare. Bulletin World Health Organization 82 (12), p.12 (http://www.who.int/bulletin/volumes/82/12/947.pdf). Gesellschaft für Technische Zusammenarbeit (GTZ) (2003). Social Health Insurance: Systems of Soli- darity. Experiences from German development cooperation. Bonn/Eschborn (http://www.gtz.de/de/dokumente/en-social-health-insurance.pdf). World Health Organization (2000). World Health Report 2000 - Health Systems: Improving Perform- ance. WHO, Geneva (http://www.who.int/whr/2000/en/). World Health Organization (2003a). World Health Report 2003. Shaping the Future. WHO, Geneva (http://www.who.int/whr/2003/en/). World Health Organization (2003b). Millennium Development Goals: The health indicators: scope, definitions and measurement methods. WHO, Geneva (http://www.who.int/mip/2003/other_documents/en/MDG_Indicators_HFS032.pdf). World Health Organization (2004). Social Health Insurance. Report by the Secretariat. Geneva. World Health Organization (2005a). Fifty-Eighth World Health Assembly A58/20, Provisional agenda item 13.16. WHO, Geneva (http://www.who.int/gb/ebwha/pdf_files/WHA58/A58_20-en.pdf). WHO (2005b). Sustainable health financing, universal coverage and social health insurance, World Health Assembly Resolution WHA58.33. WHO, Geneva (http://www.who.int/health_financing/HF%20Resolution%20en.pdf). World Health Organization (2005c). Designing Health Financing Systems to Reduce Catastrophic Health Expenditure. Technical Briefs for Policy Makers No. 2 – 2005, WHO, Geneva (http://www.who.int/health_financing/pb_2.pdf). World Health Organization (2006). Working together for health. World Health Report 2006. WHO, Ge- neva (http://www.who.int/whr/2006/whr06_en.pdf). Xu, Ke (2005). Distribution of health payments and catastrophic expenditures Methodology. Discus- sion Paper No. 2 – 2005, Department "Health System Financing" (HSF), Cluster "Evidence and Infor- mation for Policy" (EIP), WHO, Geneva (http://www.who.int/about/iag2005/distribution_of_health_pay_dp_05_2.pdf).
Extending Social Protection in Health 13
1.4. The Role of Social Protection in Health in achieving the Millennium Development Goals
Stefan Helming5 Background It is high time to place this issue on the political agenda. Worldwide, 1.3 billion people in de- veloping and countries in transition do not have access to adequate and affordable health care. Apart from the poor coverage and low quality of health provision in rural areas, a par- ticular problem is the high cost of using medical services. There is nothing abstract about this topic. It is interwoven with human destinies. In Rwanda recently a young man was brought into the clinic in excruciating pain. His family had hesitated for far too long before deciding to sell their only cow, so as to have enough money to for to pay the hospital fees. Then of course, because they were selling in haste, at the market they only got a fraction of the cow’s real value. By the time the patient reached the operating theatre, his appendix had ruptured. The operation came too late to save him. In the end, not only did the young family lose their father, the main breadwinner, but also their cow, their productive capital, which had safe- guarded them from poverty until then.
Social health insurance as an instrument for poverty reduction (MDG 1) Every year, 100 million people are reduced to poverty because they are unable to afford the costs of medical care. Social protection – which includes insurance against the risks of ill health – is an important element of poverty prevention and reduction. Social health insurance for all is thus a step towards achieving the first of the Millennium Development Goals. Setting up a health insurance scheme is a matter of some technical complexity, and the con- ference has been engaging with these issues in depth. But what it calls for above all else, is a firm and united political will. The reduction of world-wide poverty by half over the next 10 years, the Programme of Action 2015 and Germany’s contribution towards achieving these goals may be ambitious, but are not utopian. In Berlin, about 125 years ago, one Robert Koch used to work just a few kilometres from the conference location, at the old Institute for Infectious Diseases that now bears his name. There he discovered the tuberculosis bacterium and the correspon- ding vaccine. But there is some- thing else which not so many people know of: he was also very concerned about the social causes of tuberculosis and strongly supported the introduc- tion of state health insurance for all. This first took shape in 1883 with the Bismarckian Reich Insurance Code; since then it has contributed to better social protection for people in countries all over the world. Many called it utopian at the time, and after all, it did take another 80 years for Germany to achieve health insurance coverage for all. And even today, it remains an ambitious project. The current debate and reform efforts surrounding the German health system make it clear
5 Director General, Department of Planning and Development, Gesellschaft für Technische Zusammenarbeit (GTZ), Eschborn, Germany, [email protected].
14 St. Helming: The Role of Social Protection in Health Towards Achieving the MDG that our system is far from perfect. This is why the purpose of the work at GTZ is certainly not to transfer the German health insurance system to other countries. Within the framework of German development cooperation, GTZ aims to be a supportive partner to countries wishing to set up sustainable financing structures, based on solidarity and on the pooling of risks, which are geared towards universal access to health services and thus contribute to poverty reduction.
Social health insurance as an instrument for achieving MDG 4 and 5 When introducing and implementing a health insurance scheme, it is crucial that poor popu- lation groups have some say in the framing of necessary reforms, and in their implementa- tion. In this respect, so far women and girls have been at a disadvantage. Although many countries now have good programmes for reproductive health, generally the costs are not fully covered and often have to be met unofficially from people’s own pockets. As a conse- quence, families are often confronted with even tougher decisions than the Rwandan family mentioned above. The decision to pay for the main breadwinner’s medical treatment by sell- ing the family’s means of production is a very difficult one to take indeed. But when the family members in question are female, which means being at a disadvantage to males in many cultures, the decision is even less likely to go in their favour. In many countries, this results in unacceptable rates of child and maternal mortality. Here again, health insurance can make a considerable contribution to improving national health. Therefore efforts to set up sustainable systems for financing health care in our partner coun- tries should always be gender-specific. This would bring considerably more progress towards Millennium Development Goals 4 and 5, reducing child and maternal mortality by three- quarters by the year 2015.
Restoring a sound basis for health care financing - working towards MDG 6 To meet the global challenges of HIV/AIDS, tuberculosis, malaria and the escalating risk of infectious diseases, global funds were established in the 1990s to tackle the individual dis- eases, with support from the German government and many others. This is undoubtedly good and important work, and GTZ is supporting it actively on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ). However, these funds were set up on the assumption that medical care and financial cover- age would be available to populations through the existing channels and structures of the countries’ own systems of health care. But this is not always the case, because these struc- tures tend to be unstable and are not sustainably financed. As a result of inadequate financ- ing, the quality of services is poor. This gives rise to inefficiencies, not only in primary care but also in the treatment of HIV patients, as well as malaria and tuberculosis prevention and treatment. Both systems of social health insurance and workplace policies can contribute to the sustainable financing of health care systems. Meanwhile, we should not forget that international donors are already investing large amounts of money in health care systems. Yet often there is no coordination of investments from different sources. We should therefore make better use of these existing resources. If one adds up all the money currently being channelled through these funds into the financing of systems, one quickly arrives at a figure in the hundreds of millions. If these funds were coordinated, they would be sufficient to cover at least part of the necessary infrastructure now.
A key element for success: clear governance structures But even if existing funds were put to better use and sustainable insurance systems were set up, the current resources are not sufficient to permit comprehensive coverage for all citizens in all countries. The huge challenge the international community is facing can be expressed in three figures: 90, 80, 10. This is what they stand for: 90 % of the burden of ill health is borne by the poorest 80 % of the world’s population. But only 10 % of global health funding is
Extending Social Protection in Health 15
spent on this group. This is a big scandal. Making provision for the poorest of the poor is the role of the state, in Germany and in most other countries that have built up a solidarity-based health insurance system. On the other hand, there are people who are in a financial position to afford more than the minimum package of health benefits. For these people there should be additional products on offer, and naturally this is a good market for private providers. Health is an inalienable human right, but it also happens to be the largest sector in the world economy. These two sides of the same coin prompt the state to take on a role. Our experience shows that clear and binding agreements are needed on the different roles of stakeholders. These roles must be defined and scrutinised by the state. It should give individual actors – including the private sector – sufficient flexibility to allow them to dev- elop within the clearly defined framework.
Promoting international technical co-operation from a single source – the GTZ-WHO- ILO consortium Clear structures should also be created for the international actors in health development work. In many ways the scene is redolent of a chaotic marketplace, with a huge number of actors clamouring from every side to appeal to the customer. Multiply this by the number of donors supporting these initiatives and substantial transaction costs result. The purpose of coordinated multilateral work in this field is to provide advisory expertise from a single source. And indeed, this is the purpose of the consortium that GTZ, at the request of BMZ, has formed together with WHO and ILO. The structure makes exemplary use of the different roles of the United Nations organisations and the executing agencies. A number of other donor countries, international organisations and civil society partners have joined the consortium during the conference. Social health insurance schemes are certainly no panacea. They are unable to achieve by themselves, four of the eight Millennium Goals closely related to health. However, they have an important part to play. This is why the German technical cooperation is keen to ensure that countries that require expertise and technical support in this field will also be able to count on it in future.
References Federal Ministry of Economic Cooperation and Development (BMZ) (2001). Poverty Reduction A Global Responsibilty. Program of Action 2015. The German Government’s Contribution towards Halv- ing Extreme Poverty Worldwide. Information Materials No. 108, BMZ, Bonn (http://www.bmz.de/en/service/infothek/fach/materialien/materialie108.pdf). Federal Ministry of Economic Cooperation and Development (BMZ) (2005). Germany's Contribution to Achieving the Millennium Development Goals, Information Materials No. 141, BMZ, Bonn (http://www.bmz.de/en/service/infothek/fach/materialien/materialie141.pdf). German Technical Co-operation (GTZ) ed.) (2005). Social Health Insurance . A contribution to the international development policy debate on universal systems of social protection. Discussion paper. Eschborn (http://www.gtz.de/de/dokumente/en-contribution-international-policy-debate.pdf).
D. Fuentes M.: Social health insurance: Economic development and poverty reduction 16
1.5. Social health insurance: Economic development and poverty reduction
David Fuentes-Montero6
Economic development in Costa Rica and Central America Over a period of time, Costa Rica has tested out different development strategies the results of which are shown today by the living standard of the ‘ticos’, the nickname used to identify Costa Ricans. According to the 11th Report on the Country Situation on Human Sustainable Development, measured for the year 2004, the quality of life and living conditions of ‘ticos’ is fairly high. With a Human Development Index of 0.838 the Central American country is in position 47, while the Gender Empowerment Index of 0.664 puts Costa Rica in the 19th place (UNDP 2005, pp. 219ff). Life expectancy at birth is 75.0 years for males and 80.0 years for females; child mortality rate is 9.25 per 1,000 live births; 28.95 % of the 4.25 million popula- tion are younger than 15, and 5.65 % older than 64 years (WHO 2006). The official unem- ployment rate is 6.5 %; 97.6 % of the population has access to water pipelines; 40 % are currently served by sewer systems and in 5 years this ratio will rise to 65 % (Nets@lud 2005). 89 % of Costa Rican children have access to primary schools, 90.5 % have approved pri- mary and secondary education and 80 % have a high school or another diversified schooling degree. The per capita gross domestic product is €3,461.28, and 78.3 % of the population is living above the poverty line. However, our situation has not always been like that. Let us briefly review the road that has leaded us up to this point.
National productive and commercial strategies Until the end of the decade of 1950, the Costa Rican economy was underpinned by the agri- cultural sector which was the driver of economic and social development. The agrarian sec- tor absorbed most of the manpower, around 55 % of the economically active population. Two principal commodities – coffee and bananas – contributed more than 40 % of the GDP and constituted almost 90% of exports. The agricultural sector was also the main generator of fiscal revenues. However, the almost exclusive dependence on these two primary products made the national economy very vulnerable to external pressures. A substantial change in the country’s development strategy began at the end of the 1950s. An Import Substitution Model, involving a wide-based industrialisation and economic integra- tion process and which had been previously applied in other Latin American countries, was adopted. This new development strategy sought, in first place, to achieve high economic growth rates in order to increase employment, to enhance productivity and, consequently, to raise salary levels and population incomes. A higher income level would improve living condi- tions and standards, reduce poverty and lead to better income distribution. This model contributed towards the transition from a dominantly rural economy to a more modern one, where secondary and tertiary activities were given more support. At the end of the1970s, various programs to fight poverty and to support the weakest groups in society were promoted by government institutions. Through the intervention of the State in the social area, Costa Rica joined the best-ranked countries in Latin America in terms of education and health. This progress was achieved in an environment of peace and democracy. The removal of the army by constitutional order in 1949, the creation of the Supreme Elec- tions Court and the establishment of the Civil Service in 1953 are examples of political insti- tutionalisation that served as a framework to the socioeconomic measures applied during the three decades between the early 1950´s and the end of the 1970´s.
6 Minister of Finance of the Republic of Costa Rica, Central America, 2005 – 2006, [email protected], [email protected]. Please compare Chapter 2.5: A. Sáenz Pacheco, J. Holst: The role of equity and solidarity within social health insurance: Chances and risks of the Costa Rican way towards universal coverage (pp. 55-61).
Extending Social Protection in Health 17
In spite of the positive results, some aspects of the Costa Rican development turned out to be unsustainable and even contributed to deepening dependency on and increasing vulner- ability on external forces. At the end of the 1970s, a combination of internal and external phenomena produced the worst crisis the Costa Rican economy had ever gone through. Be- tween 1980 and 1982, GDP decreased almost 10 % and the national income fell by 22 % - which led to over 25 % contraction in per capita income in this period. The next stabilisation program, applied from May 1982 and whose positive results became palpable in less than three years, was successful because of the support that the Costa Ri- can Government obtained from international organisations. Through several loans and dona- tions, the country obtained the resources required for fulfilling its external commitments and maintain its balance of payments equilibrium. The measures applied from 1982 were inti- mately linked to a ‘new development model of exports promotion’ and established changes in order to recover medium and long term growth. This new strategy, based on opening up the economy, was the antithesis of the ‘imports substitution’ policy and expressed the necessity of the reinsertion of the Costa Rican economy into international markets. From the politico-economic perspective, the new model required a series of unavoidable conditions, for example the elimination of political influence on the allocation of resources, less participation by the state, attracting external investments and increasing internal savings to finance the growth. Although the new development framework was taking shape through agreements that different Costa Rican governments had signed with international financial organisations, social provisions and benefits that Costa Rican workers had achieved dec- ades ago were not affected – unlike the case in other places and they are in place until to- day. Costa Rica has now become a small-size but large-scale exporting country with excellent social and development indicators comparable, in parts, to those of the developed world. This has been done through a clear historical policy of protecting the wellbeing of its people by consistently investing significant resources on health and education nation-wide. That is the so-called ‘Costa Rican way’ of doing things – which has recently been used in the nego- tiations of the Central American Free Trade Agreement (CAFTA) with the United States of America.
Table 1.5.1: WHO core health indicators
Total expenditure on health as percentage of gross domestic product 7.3 General government expenditure on health as percentage of total expenditure on health 78.8 Private expenditure on health as percentage of total expenditure on health 21.2 General government expenditure on health as % of total government expenditure 22.8 External resources for health as percentage of total expenditure on health 2.7 Social security expenditure on health as % of general government health expenditure 88.6 Out-of-pocket expenditure as percentage of private expenditure on health 88.70 Private prepaid plans as percentage of private expenditure on health 2.1 Per capita total expenditure on health at average exchange rate (US$) 305 Per capita total expenditure on health at international dollar rate 616 Per capita government expenditure on health at average exchange rate (US$) 240 Per capita government expenditure on health at international dollar rate 486
Source: World Health Organization 2006b.
D. Fuentes M.: Social health insurance: Economic development and poverty reduction 18
Costa Rican educational strategy The 78th Article of the Costa Rican Constitution establishes the following: "Pre-school and elementary education are mandatory. These and the diversified education (7th to 9th grade) in the public system are free and financed by the government. According to the law, the public expense will not be lower than 6 % of the yearly gross internal product in public education, including higher education,... The State will facilitate access to higher studies for those who lack pecuniary resources. The award of scholarships and other aids will be in the charge of the Ministry of the field, through the body that the law stipulates." In 1891, during the administration of President Bernardo Soto and thanks to the initiative of his Education minister, Mr. Mauro Fernández, the first educational reform was made within the legal framework of the General Law of Common Education that ratified the mandatory and gratuitous nature of elementary education for all children aged between 7 and 14. It also established ‘kinder gartens’ in the county capitals, adult school in barracks and jails and trav- elling schools for the rural populations. Thanks to the reforms of Mr. Mauro Fernández, the educational system was strengthened in such a way that in 1900, Costa Rica had 362 schools with 21,000 students taught by 870 teachers. At the end of the 19th and the beginning of the 20th centuries, new high schools facilities were created, elementary instruction programs were reformulated and the Escuela Normal of Costa Rica was estab- lished in 1914 that would beco- me the ‘Alma Mater’ of the Costa Rican education. Between 1940 and 1977, the four state universities were founded, including the Instituto Tecnológico and the Universidad Estatal a Distancia, and in 1978 the first private institution of higher education, the Universi- dad Autónoma de Centro Améri- ca was established. Since then, private university facilities have proliferated to the point that 48 private universities were officially authorised in 2000. By the creation of the Public Education Ministry, the current Political Constitution (1949) established that public education should be organised as an integral process, related in its diverse cycles, from elementary through uni- versity education. In 1958, the Fundamental Education Law was enacted, and starting from the analyses car- ried out in 1967 to identify the problems of the educational sector, the National Plan of Edu- cational Development was consolidated and begun in 1972. It was the most important aspect of educational reform that sought to raise the average level of education of the population and bring about the modernisation of the educational system in order to respond to the socio- economic necessities of the country. The overall goal was to enhance the development process by maintaining the percentage proportion of public expenses for education as part of the national budget. As a result, in 1973 the Political Constitution was reformed in such a manner that it has remained un- changed to the present: "The Basic General Education (elementary school) is mandatory, and establishes that the preschool, the elementary and the Diversified Education are free of charge and financed by the State." Finally, since June 23 of 1997, preschool education is also mandatory, and public expenditure on education is not permitted to drop below 6 % of the Gross Internal Product. This guarantees funding of public education until today, with cov- erage from preschool to higher education.
Extending Social Protection in Health 19
Social reforms in Costa Rica and social provisions established A key purpose of this paper is to review the social security system that the country has built up throughout the past decades. Before 1940, the Costa Rican socio-political model was influenced by the political-economic tendencies of the so-called ‘liberals’ of the day led by constant demonstrations and protests by workers demanding better social conditions. The decade between 1940 and 1950 was an equally convulsed time, marked by the Second World War and constant demonstrations for political, economic and social changes, compli- cated by an unfavourable fiscal situation. In Costa Rica, this period ended in the promulga- tion of a new Political Constitution in 1949 and the principles of the Second Republic that are the bases of the contemporary Costa Rican society. With the assumption of President Calderón Guardia (1940-1944), the country began to suffer a transformation as the socio-political model started to move away from the traditional liberal- ism. The new model tried to reconcile elements of the previous model with state intervention- ism and the social doctrine of the Catholic Church. As a result of the Calderón Guardia ad- ministration, the Department of Sanitary Units and Rural Hygiene was created (1940), and the Assistance and Social Protection Law introduced in 1940. The reform process ended with the implementation of the Costa Rican Board of Public Health one year later. Finally, in 1942 the Executive Power announced a project of Social Guarantees and formed a group in charge of writing the Labour Law. Both bills were later on ratified by the Congress and be- came core pillars of the current social security and protection system.
In 1948, the wining side of Recent indicators - social security and health 2004 the civil war took over Population share covered by Health Insurance 99.1% power and constituted the provisional Government of Population covered by primary care programs 87.4% the Eighteen Months pre- Gross birth rate (per 1000 inhabitants) 17,01 sided by José Figueres. The interim legislation ex- Gross mortality rate (per 1000 inhabitants) 3,75 panded the Constitution of Vaccination coverage for children 1949 and a series of inter- Measles (1 year) 88% ventionist economic meas- ures that went beyond Poliomyelitis (younger than 1 year) 90% those implemented by Rate of Diseases with mandatory reporting Calderón. HIV/AIDS (per 100.000 inhabitants) 4,6 The most relevant aspects Measles (per 100.000 inhabitants) 0,0 were to maintain the social Hepatitis (per 100.000 inhabitants) 22,1 and labour legislation of Diarrhoea (per 100.000 inhabitants) (NOT SO GOOD) 2813,6 the 1940s (Labour Law, Social Guarantees and Coverage of Labour Risks Insurance 71.5% Public Health Law); to Consultations to Health Insurance Services raise the wages of coffee Emergency + outpatient consultations (per 100 inhab.) 3,7 and sugar plantation wor- Specialised outpatient care (per 100 inhabitants) 63,7 kers and part of public employees; to transform Total Consultations to Health Insurance Services 15.570 the Mixed Committee of Laboratory tests for hospitalisation (per 100 inhabitants) 29,6 Minimum Wages into the Hospital beds (per 1000 inhabitants) 2,05 nationwide National Coun- cil of Wages (CNS); and to Average number of beds in Health Insurance hospitals 5.830 establish a charity tax.
Source: CCSS 2006 Although the social demo cratic constitutional project presented to the Legislative Congress dominated by a reformist majority was rejected, the social democratic party was able to incorporate important aspects of their concept in the de- velopment of a Welfare State model. As a very first statement of politics, a series of autono-
D. Fuentes M.: Social health insurance: Economic development and poverty reduction 20 mous public institutions were defined, such as the state-run banks and insurance companies, the National Health System, and the railroad company, among others. Building upon the achievements in social security and health insurance during the 1940s, and after a strong negotiation by the Executive Power, in 2000 the Con- gress approved the Workers’ Protection Law (Ley de Protección Obrera). This relatively recent law creates a framework to regulate the new labour capitalisation funds owned by the workers; universalises pension schemes for the elderly living in poverty; broadens cov- erage of the Invalidity, Elderly and Death Scheme as the main solidarity system oriented towards workers protection and establishes a framework for supervising public and private complementary pension schemes. The main changes introduced by the new law were focused on the concept and application of the right to severance benefits in cases of breach of contract, and the implementation of a second pension scheme complementary to the one managed by the Costa Rican Social Se- curity Board. In particular, the law has created a new labour savings system completely owned by the workers, grouped under a Labour Capitalisation Fund; established a compul- sory complementary pension regime and a voluntary saving and complementary pension scheme, and modified deeply the Costa Rican Social Security Law in order to strengthen its autonomy and improve its performance. Although some stakeholders intended to hamper this progress through legal means, the Constitutional Court ratified the full legality of the im- plemented reforms in 2003.
Provision of social health insurance by the central government and other public sector bodies; and social health indicators The Central Government dedicated 17 % of the total budget for 2005 – around US$4 billion – to finance the different pension schemes already in place in Costa Rica, covering 230,780 beneficiaries. 36.7 % of the budget relied on payroll deductions from public employees – the social provisions granted to them by the Costa Rican Government represent an extra disbursement of more than 40 % over the basic salary. Among others, the provisions include: social health insurance (with overall family coverage) – by far the most costly and significant provision; severance, thirteen month pay (Christmas bonus), sickness benefits and School bonus (at the beginning of the academic year). Despite the year per year recurrent fiscal deficits, the strong commitment of the Costa Rican Government in financing these social provisions (and the educational ones as well) has been consistently proven and even further improved by increasing service coverage and mobilising additional re- sources to maintain the social health insurance systems in operation. With regard to the budget allocation in the overall public sector, public entities working within the social security and assistance field spend annually about US$1 billion.7 45 % of the social budget for 2004 went to the different pension schemes, 25 % to the Costa Rican Social Se- curity Board, and 10.5 % to the Fund for Social Development and Family Provisions (FODE- SAF). In the three-year period 2002-2004, the public sector has invested an average of more than 6 % of the annual Gross Domestic Product (GDP) in social security and assistance. The
7 Namely the Costa Rican Social Security Board, the National Insurances Institute, the Institute for Social Assis- tance, the Board for Social Protection in San José, the National Authority for Childhood, and others.
Extending Social Protection in Health 21
policies implemented and sustained since the early 1940’s have contributed to a continuous improvement of social health insurance. Costa Rica has stacked a good deal on the relationship between health insurance, educa- tion, social mobility and poverty reduction. Therefore, the country has oriented its limited re- sources to investment priority areas addressing key health and educational issues. Currently, the most recent decisions are yielding good results manifested by a well-educated and healthy labour force. Due to social protection and adequate education of its population, Costa Rica is competitive on the international market, and multinational companies chose the country to handle their worldwide operations in cutting-edge industries like computer micro- processor manufacturing or specialised software development. Headquarter offices estab- lished in Costa Rica are managing global businesses and international call centres. Various lessons drawn from the Costa Rican experience in social security are worth attention and reproduction. All stakeholders in the field of social protection in health, the international community, and the media are invited to work closely together in order to make a serious effort at exchanging empirical and reliable information that can help to ensure sustainable development of social health insurance in developing countries all over the world.
References Caja Costarricense de Seguridad Social (CCSS) (2006). Anuarios Estadísticos. Departamento de Estadística, Dirección Actuarial y de Planificación Económica, San José (www.ccss.sa.cr). Ministerio de Educación Popular (MEP) (2006). Educación. Homepage of the Ministry of Security, San José, Costa Rica (www.mep.go.cr). República de Costa Rica (1949). Estado de la Nación y la constitución Política. San José, Costa Rica (http://www.constitution.org/cons/costaric.htm). Ministerio de Seguridad (2006). Seguridad. Homepage of the Ministry of Security, San José, Costa Rica (www.msp.go.cr). Ministerio de Salud (2006). Salud. Homepage of the Ministry of Health, San José, Costa Rica (www.netsalud.sa.cr). Ministerio de Trabajo (2006). Trabajo. Homepage of the Ministry of Labour, San José, Costa Rica (www.ministrabajo.go.cr). Rodríguez-Clare, Andrés; Sáenz, Manrique; Trejos, Alberto (2002). Economic Growth in Costa Rica: 1950 – 2000. Interamerican Development Bank (IDB), San José (http://www.econ.psu.edu/~aur10/Papers/EconomicGrowthCR.pdf). United Nations (UNDP) (2005). World Development Report 2005. (http://hdr.undp.org/reports/global/2005/pdf/HDR05_complete.pdf; http://hdr.undp.org/statistics/data/countries.cfm?c=CRI). World Bank (2003). Implementation Completion Report (CPL-36540; SCPD-3654S) on a loan in the Amount of US$22 Million to the Republic of Costa Rica for a Health Sector Reform Project, Report No: 25713, World Bank, Washington DC (http://www- wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2003/06/18/000112742_2003061817 4647/Rendered/PDF/257130CR0ICR.pdf). World Bank (2003). Costa Rica. Social Spending and the Poor. Report No. 24300-CR, World Bank, Washington DC (http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/LACEXT/COSTARICAEXTN/0,,content MDK:20252791~pagePK:141137~piPK:141127~theSitePK:295413,00.html). World Health Organization (2006a). Working together for health. World Health Report 2006. WHO, Geneva (http://www.who.int/whr/2006/whr06_en.pdf). World Health Organization (2006b). National Health Accounts – Costa Rica. Geneva (http://www.who.int/nha/country/cri/en/).
J. Frenk, F. Knaul, E. González P., M. Barraza Ll.: Poverty, health and social protection 22
1.6. Poverty, health and social protection
Julio Frenk8, Felicia Knaul9, Eduardo González-Pier10, Mariana Barraza-Lloréns11
Introduction Fairness in finance is an intrinsic goal of health systems. Achieving fair financing continues to challenge health systems in countries at all levels of economic development. Complex and differentiated healthcare institutions evolved during the 20th century alongside technological breakthroughs, yet effective, fair and sustainable methods to finance these systems are still lacking even in the most economically advanced countries. In most developing countries financial protection for health is partial and segmented. Mexico, a middle-income country characterised by social inequalities and a complex epidemiological transition, fits this description. The health system must still address the unfinished agenda of infectious diseases and reproductive health problems while facing the increasing pressure on health expenditure associated with chronic disease and ageing. In 2000, the WHO health system performance assessment ranked Mexico 51th overall out of 191 countries, yet 144th on financial fairness. The poor performance on fairness of finance reflects the fact that more than half of Mexican households lack health insurance and there- fore financial protection. Lack of universal social protection in Mexico is intertwined with the existing health system segmentation between the formal sector, with access to social secu- rity, and the rest of the population that is excluded from this type of protection. This situation has contributed to the prevailing health inequalities and unfair health financing. Mexico recently devised a structural reform in order to extend social protection in health to families not covered by conventional employment-based social insurance. The reform passed into law in April 2003, and the System for Social Protection in Health started operat- ing on January 1st, 2004. The reform comprises an operational programme called Popular Health Insurance, which offers uninsured Mexicans voluntary access to publicly subsidised coverage for a comprehensive set of services at the primary and secondary levels, as well as a gradually expanding set of costly high-specialty interventions. It is expected that by 2010, at the end of a seven-year transition period, universal coverage will be reached. Through the new System for Social Protection in Health, the reform will reduce economic barriers to timely care and prevent catastrophic expenditures while promoting efficiency, a more equitable resource distribution and better quality care. Thus, universal access to social protection in health should contribute towards avoiding impoverishment due to illness. This paper will focus on the ethical basis of the reform, its financial features, expected benefits, and future challenges. Finally, it will highlight some relevant aspects for other countries that are also striving to promote universal social protection as a means of achieving fairness, im- proving health and reducing risks that all too often generate poverty.
Poverty and health Health has an intrinsic value (it produces well-being) and an instrumental value (it is an im- portant determinant of economic development). The instrumental value is the result of the direct impact of health improvements on labour productivity and the economic burden of ill- nesses; but it also reflects an indirect impact on economic growth through education. Better health during childhood increases the opportunities to benefit from education and thereby to improve future income. Due to its direct and indirect impact, health is one of the important determinants of the incidence of poverty as well as its persistence over time, known as “pov-
8 Minister of Health of Mexico 2000-2006, [email protected]. 9 General Coordinator for Modernisation of Education in the Ministry of Public Education, Mexico and principal economist at the Mexican Health Foundation. 10 Head of the Economic Analysis Unit in the Ministry of Health, Mexico. 11 Assistant Director in the Economic Analysis Unit, Ministry of Health, Mexico, [email protected].
Extending Social Protection in Health 23
erty traps”. Poverty traps that are created by an adverse health shock not only expose nu- merous people to poverty, but also exclude them from contributing productively to the econ- omy. To avoid these consequences, it is important to have an adequate social protection framework that minimises the impact of these shocks on families. Health insurance is one mecha- nism that individuals can use to protect themselves from pos- sible adverse health events. Individuals can protect themsel- ves by acquiring private medi- cal insurance or accessing sta- te-sponsored insurance. Never- theless, access to formal priva- te insurance mechanisms is limited by insufficient informa- tion as well as by practices in which certain private providers of insurance get the most profit- able part of the market. And access to state-sponsored in- surance is often restricted to workers in the so-called formal sectors of the economy. When people cannot insure themselves in the formal mar- ket, they can resort to informal mechanisms. Thus, when ex- posed to an adverse health shock, families can react by selling assets, using credit or finding additional sources of income, which can include child labour, and/or decreasing the consumption of other goods and services. All these methods, depending on their magnitude, can trap a family already in poverty or impoverish a family that was not previously poor. These mechanisms that protect against health risks are actions that reflect the self-protection of individuals, households or communities. Despite the fact that informal markets and self-insurance are widely used by poor households, there is evidence that they are not enough to protect the household against the effects of adverse events on well-being. The lack of formal or informal insurance reduces an individual’s ability to smooth the inter-temporal consumption of health-producing goods. Low-income people who have no access to formal insurance mechanisms are exposed to a vicious cycle of illness and poverty. The money they must set aside to finance medical ex- penses frequently is a considerable burden, and the situation can become catastrophic. Based on existing literature, a family faces catastrophic expenses when it spends more than 30% of its total ‘payment capacity’ to cover health costs. When this occurs, families must adjust expenses for other goods, including perhaps money spent on the health and nutrition of young children. A catastrophic health shock could create a poverty trap for a large number of households. This situation does not affect all the population in the same way. Families are more likely to incur catastrophic health expenses or fall into a poverty trap as the income level decreases. In order to comply simultaneously with the goals of equity and efficiency, the most appropri- ate option to protect the population is via health insurance. The advantages of insurance compared to other financing mechanisms lie in breaking away from accessing services by paying for care on an individual level, and establishing access according to the expected
J. Frenk, F. Knaul, E. González P., M. Barraza Ll.: Poverty, health and social protection 24 cost. Health insurance is also an instrument to subsidise health care financing between in- come groups or health risks. In sum, social protection in health can contribute to alleviate poverty in two ways. First, through reductions in out-of-pocket expenses, and thus in health- related impoverishment. Secondly, lower financial barriers increase access to services thus increasing their potential to improve health status.
Social protection as a strategy to promote fair financing: the recent Mexican reform A fragmented system at the origin of the reform The challenges faced by the Mexican reform of 2003 are rooted in the original design of the modern health system. In 1943, the Ministry of Health was established. The Mexican Social Security Institute (Instituto Mexicano del Seguro Social, IMSS) was created in the same year to attend to formal, private sector, salaried workers and their families. In 1959, the Institute of Social Services and Security for Civil Servants (Instituto de Seguridad y Servicios Sociales de los Trabajadores del Estado, ISSSTE) began to cover government employees and their families. The system was thus segmented -from its inception and through to the reform of 2003 - between the insured, formal, salaried employees and their families with the right to social security, and the rest of the population (the self-employed, the unemployed, non- salaried and informal-sector workers, and those who do not work). All citizens - other than salaried workers - were excluded from formal social insurance schemes, and health care needs of this ‘residual’ group were attended by the Ministry of Health. The benefit package was undefined and funded from a combination of federal funds and, to a lesser degree, state-level contributions, as well as fees paid by families at point of service. When the reform was passed in 2003, about 40 % of the population were covered by IMSS, 7 % by ISSSTE and no more than 2-3 % by private health insurance. As a result, insurance coverage was regressive both between households and across states, there was an over- reliance on out-of-pocket spending to finance the health system and impoverishing health spending was common particularly among the lowest income deciles. The reform addresses these issues by offering subsidised, publicly provided health insurance to the 50 million Mexicans who are not covered by social security and are concentrated among the poor. The reform was passed into law in April 2003, and the new insurance scheme called the Sys- tem for Social Protection in Health (SSPH) went into operation on January 1st, 2004 with the goal of achieving universal health insurance coverage by 2010. The Popular Health Insur- ance is the operational programme of the new system. The affiliation process runs from 2004 to 2010, so that 14.3 % of the approximately 11 million families that make up the uninsured population will be included each year. Preference must be given to families from the lowest income deciles.
Ethical basis and key values behind the reform There are five basic values behind the design of the reform: equal opportunity, social inclu- sion, financial justice, co-responsibility and personal autonomy. Based on these values, the reform seeks to change the Mexican health system from being segmented by population group, to being organised so that each institution fulfils only one of the three major health system functions of stewardship, financing and delivery, yet serves all of the social groups that make up the Mexican population. Mexico is undergoing a profound political transition. As now civil and political rights can be exercised by all citizens, it is necessary to complete the democratic transition by also guaran- teeing the effective exercise of social rights, including the right to health protection. Although this right was formally recognised by the Mexican Constitution two decades ago, in practice, not all persons have been able to exercise it equally. Half of the population, by virtue of their occupational situation, enjoy the protection of social insurance and face fewer barriers to attaining health care than the other half who do not enjoy such protection. For this reason, the guiding concept underlying the structural reform of 2003 is the ‘democra- tisation of health’, meaning the effort to extend democracy to social as well as political and
Extending Social Protection in Health 25
civil rights. The process of democratisation is defined as the application of the norms and procedures of citizenship to those institutions that had been governed by other principles, such as coercive control, social tradition, judgement of specialists or administrative practices. The new system is based on five key values that underlie the democratisation concept: a. Social inclusion, because all persons, regardless of socio-economic or labour market status, have the same right to health protection based on needs, so that the system is universal; b. equal opportunity of all members of the society to the same quality of care and the same set of services defined by an explicit process of prioritisation; c. financial justice, whereby families contribute to the health system according to their finan- cial capacity and at the same time receive health services according to their health needs, services are free at point of delivery, and a large financial pool of resources is generated that permits financial solidarity between the wealthy and the poor, the healthy and the sick, the young and the old; d. co-responsibility between the different levels of government and among citizens; e. personal autonomy based on subsidiarity so that decisions are made as close as possi- ble to the source of needs, and public institutions remain accountable to citizens.
Financial disequilibria in health care The financial structure of the Mexican health system before the 2003 reform was marked by serious imbalances including: low overall budgets, high out-of-pocket spending, inequity in allocations between the insured and the uninsured, inequitable distribution among states, and excessive current versus investment expenditure. First, in 2003 Mexico spent only 6.1 % of GDP (approximately €290 per capita) on health care. This proportion was below the Latin American average and was too low to face the challenges of the epidemiological transition. Second, out-of-pocket spending accounted for more than 50 % of total health spending and was above many Latin American countries in- cluding Brazil, Chile, Colombia and Costa Rica. Third, the distribution of public funds be- tween population groups and states was also inefficient and inequitable. Although the unin- sured accounted for almost half of the population, they received only a third of the federal funding for health. Fourth, the difference in expenditure per capita across states was 5 to 1 in 2003, and the difference in state contributions was much more dramatic. Finally, investment in new facilities and equipment had fallen leading to poor quality. Regressive insurance coverage worsened the situation. While more than 60 % of the wealthiest quintile of the population was insured, the figure was approximately 10 % for the poorest quintile. Further, in the poorest states only one-fifth of households were insured. Each year, between two and four million households either spent 30 % or more of disposable income (total income less spending on food) on health or crossed the poverty line due to health spending. Further, 85 % of these households were uninsured and the majority was from the poorest deciles. As a source of financing for a health system, out-of-pocket payments tend to be inequitable and inefficient. In Mexico, the predominance of this form of payment was both a cause and a result of the imbalances discussed above. Reducing it was thus a target of the reform.
Social Protection in Health: objectives of the reform The structural reform of 2003 aims at assuring that all persons, independent of their labour market or socio-economic status, can exercise their social right to health care as recognised by the Mexican Constitution. There are four main objectives to be achieved by the reform: a. Generate a gradual, predictable, financially sustainable, and fiscally responsible mecha- nism to increase public expenditures in health so as to correct existing disequilibria;
J. Frenk, F. Knaul, E. González P., M. Barraza Ll.: Poverty, health and social protection 26 b. Stimulate greater allocative efficiency by protecting expenditure for public health interven- tions that are cost-effective but tend to be under-funded; c. Protect families from excessive health expenditures by offering a collective mechanism that manages in a fair way the risks associated with paying for personal health services; d. Transform the incentives in the system by moving from supply-side to demand-side sub- sidies in order to promote quality, efficiency and responsiveness to users.
Key features of the reform Organisation of financing according to the classification of health goods The allocation of federal funds in the new health system is divided into four main compo- nents: the stewardship role of the Ministry of Health; community health services; non- catastrophic, personal health services; and catastrophic, high-cost, personal health services. The financial logic of the reform separates funding between personal and community health service by establishing a separate Fund for Community Health Services that is used exclu- sively to finance public health goods. This separation of funding is based on public goods theory and on the lessons learned from reform experiences that have neglected public health programs. Funding for personal health services is based on an insurance logic to deal with uncertainty. The instrument devised by the reform to finance personal health services is a new scheme called Popular Health Insurance (PHI, Seguro Popular de Salud - SPS). For funding pur- poses, personal health services are divided between an essential package of primary and secondary interventions in ambulatory settings and general hospitals, and a package of high- cost tertiary-level care financed through the Fund for Protection Against Catastrophic Expen- ditures. The essential package of interventions is a quality-assurance tool. These services are decentralised to the state level as they are associated with low risk, high probability health events. The package of catastrophic interventions is financed in a fund that aggregates risk at the national level because their low-probability and high cost imply that the state risk pool is too small to finance these interventions. Further, on the supply side, the requirements for highly-specialised interventions imply that it is efficient to aggregate services. The essential package includes comprehensive ambulatory care at the primary level and outpatient consultation and hospitalisation for the basic specialties at the secondary level. The Fund for Protection Against Catastrophic Expenditures covers a package of services that will be updated annually. This constitutes a priority- setting mechanism based on explicit, transparent criteria. The General Health Council is charged with defining the interventions covered by this fund, which currently includes: cancers, cardiovascular problems, cerebrovascular diseases, severe in- jury, long-term rehabilitation, HIV/AIDS, neonatal intensive care, organ transplants and dialy- sis. The criteria to select specific interventions are based on the burden of disease, cost- effectiveness, and resource availability.
Structure of financial contributions The new Popular Health Insurance was designed so its financial structure would be similar to the tripartite logic of the other major social insurers (IMSS and ISSSTE). Thus, there are three public insurers for each of the three major population groups: PHI for previously unin- sured families; IMSS for private sector workers and their families; ISSSTE for public-sector workers and their families.
Extending Social Protection in Health 27
There is a fixed contribution (the social quota) from the federal government that is equal for all families and guarantees solidarity among the three population groups. In January 2004, the federal social quota was set at 15 % of the mandatory minimum wage. This is equivalent to €185 per year per affiliated family. The second source of funding is from the co-responsible contributor and guarantees solidar- ity within each population group and redistribution between states. For IMSS, this is the pri- vate employer and for ISSSTE it is a public employer. In the case of the PHI, since there is no employer, co-responsibility is established between the federal and the state governments in a solidarity scheme that recognises the huge differences in level of development among states. The federal solidarity contribution is on average 1.5 times the social quota, but is in- creased for poorer states at the expense of those that are wealthier. The state solidarity quota is the same in all of the states, set at half of the federal social quota and the source of funding is state-level revenue. The third contribution is a premium paid by beneficiaries. In the case of the IMSS and ISSSTE, the employee contribution is set as a proportion of the wage and deducted from the payroll. The family contribution to the PHI is progressive and designed to promote fairness in finance. The upper limit on the family contribution is 5 % of disposable income, which is defined as total spending less spending on basic needs. Families in the lowest two income deciles do not contribute in monetary terms, but are required to adhere to participation rules associated with health promotion. One contribution level is defined for each of the other income deciles.
Allocation of funding for personal health services The allocation of funding from the reform is divided between federal and state levels. Based on actuarial calculations, the Fund for Protection Against Catastrophic Expenditures receives 8 % of the federal social quota plus the federal and state solidarity contributions. The re- mainder of the social quota and the federal and state solidarity contributions are allocated to the states to fund the essential package of health services included in the PHI. The family contribution is collected and maintained at the state level. The federal solidarity contribution is allocated to the states using a formula that considers a fixed component per family, a health needs-adjusted component, a component aimed at promoting additional state contributions, and a portion based on health system performance. The formula is designed to make up for historical imbalances and inequities, to respond to differential needs across population groups, to provide incentives for performance and affilia- tion, and to promote solidarity, universality and financial justice. For the first few years, the formula is heavily weighted on affiliation to accommodate the transition phase of the reform. The weights and indicators used in the formula are updated annually. This funding model implies a radical change in incentives for state governments and provid- ers. Funding for the states will be largely determined by affiliation to the PHI. Thus, the re- form provides a legal framework to break out of discretionary allocations and move toward a demand-driven funding model that enables the effective use of an expanded health budget. In the past, federally allocated state budgets in health were largely determined by historical inertia and the size of the health sector payroll. Affiliation is voluntary, although states have the budgetary incentive to achieve universal coverage. Families who choose not to affiliate by 2010 will continue to receive health care through public providers, but will have to continue to pay fees for services received at point of delivery. The voluntary nature of the affiliation process is an essential feature of the reform that facilitates the process of replacing supply-side with demand-side subsidies so that money follows people. This process includes incentives for improving the quality and effi- ciency of health service delivery. In order to convince families to enrol the states must pro-
J. Frenk, F. Knaul, E. González P., M. Barraza Ll.: Poverty, health and social protection 28 vide higher quality services than in the past. This process, combined with the focus during the first years on the poorest families, will help to prevent problems of market failure such as adverse selection. Although the financial trigger is a demand-side subsidy, the additional funding mobilised by the reform is channelled to strengthen the supply side in line with the expansion in affiliation. This is changing the inertial aspects of historical budgets that were mostly used to pay for personnel costs. In contrast, the new funds cover drugs, equipment, extended hours at clin- ics, and enhancing or building facilities. Providers may be public or private.
Implementation phase of the reform: results and challenges Implementing the reform presents a series of challenges, yet progress after the first year is positive. In order to achieve the goal of affiliating all uninsured families by 2010, roughly 1.5 million families (about 6 million people) must be enrolled each year. This process is moving ahead. The affiliation goal was achieved in 2004 and is on track in 2005 with an average of 45,000 new families affiliated each week. Affiliation must continue to proceed as rapidly as in 2004 in order to achieve universal coverage by 2010. Another positive result is that the new system is fully operational and gradually expanding coverage in all of the 32 Mexican states. While most states are still at partial coverage, it is expected that five will reach universal cov- erage in 2005 and another seven in 2006. It is important to note that, as stipulated by law, the enrolment process has focused on the poorest families who do not con- tribute financially. Based on data from the affiliation rosters of the Ministry of Health, over 90 % beneficiaries are from the poor- est quintile of the income distri- bution. Further, an important res- ult in promoting equity is that more than 70 % of the affiliated families are female-headed. This reflects the over-representation of single mothers among non- salaried workers. A behavioural indicator of satisfaction is the willingness of families to renew their yearly enrolment. The data are encouraging as 98 % of families that participated in the 2003 pilot phase decided to re-affiliate in 2004. A challenge for the future is to maintain this rate of re-affiliation as the reform proceeds to cover larger numbers of families and those that will be contributing finan- cially. Additional public funding is required for the reform to achieve universal coverage. Initial esti- mates suggest that total public spending should increase by about 1 % of Gross Domestic Product (GDP) to complete the reform in 2010. Again, initial results are encouraging as the reform has generated an increase in funding for the uninsured through the Ministry of Health and the states. In order to be able to accommodate the new entitlements, the authorised budget of the Ministry of Health for 2005 increased by 55 % in real terms over the 2002, pre- reform level, and 37 % as compared to 2004. This has generated a gradual yet continuous trend of improvement in the distribution of public funding between the insured and the unin- sured. In 2001, 33.3 % of all public funds for health were allocated to the uninsured popula- tion and the rest to families with some form of social security. In 2004, the proportion spent on the uninsured and families affiliated to the Popular Health Insurance scheme reached 35 %. The balance should further improve in 2005. The budgetary increase comes from improvements in taxation and reductions in other areas of the federal government. Additional resources to accelerate access to priority, high-cost
Extending Social Protection in Health 29
interventions, such as childhood cancer, come from an earmarked contribution on cigarette sales that supplements the Fund for Protection Against Catastrophic Expenditures. If universal coverage is to be achieved, this process of increasing investment in the health sector, and in particular in the population not covered by social security, must continue. The funding commitment was a particularly important issue in the face of the change of govern- ment that will took place at the end of 2006. Maintaining the pace of enrolment and improving the quality of care were key to garnering the policymaker and patient support that will be necessary to cement the reform in the face of the political transition. Another set of challenges are related to converting the system to being more client-oriented and responsive. The population must have greater confidence in public services to be con- vinced to make a financial contribution and to re-affiliate. This is particularly important in the face of the rising expectations that have been generated by the reform. On-going monitoring of patient satisfaction, affiliation, and re-affiliation, as well as in-depth, regular surveys are being undertaken. An important ingredient for the reform is strengthening provider incentives and developing a more competitive environment on the supply-side. Shifting the focus of incentives to the de- mand side, while also strengthening and making more competitive the supply side, consti- tutes a delicate balance. This is related to the portability of insurance coverage, which in turn depends on establishing compensation mechanisms among states and providers, and on improving the availability and quality of services, particularly in more remote regions. To meet these challenges in the face of rapid organisational and systemic change, specific measures to strengthen the health care system include increasing the number of hospitals and clinics, building up human resources particularly at the management level, and improv- ing drug procurement. This work is part of a national programme launched in 2001 to im- prove technical quality and interpersonal responsiveness throughout the system. The pro- gram includes accreditation of providers and, by law, only certified providers will be able to participate in the new system. It also seeks to empower consumers to demand accountability through a bill of rights for users and a procedure for incorporating complaints and sugges- tions. Evidence and information are important tools for successfully meeting the challenges of im- plementation. Rigorous analysis has been part of the reform since the design phase and a comprehensive regime of monitoring and evaluation accompanies the implementation proc- ess. One example of this is the comparative analysis of performance indicators across states that has been published in annual reports since 2001. Publishing these data promotes institu- tional improvement as they are used for the budgeting formula for states and as public refer- ence points on system performance. A final challenge is to involve in the reform process the diversity of actors in the Mexican health system including the Congress, IMSS, ISSSTE, the states, other government agen- cies and the private sector. It was particularly important for the change of administration in 2006 that the reform must maintain a broad support base among policy makers as well as the population to assure continuity.
Conclusions and relevance to other countries The reform of the Mexican health care system is designed to gradually correct major financial disequilibria. The source of health finance is shifted toward publicly organised insurance. The distribution of finance among population groups and among the states is balanced. To accomplish this, funding for public health services is protected and separated from fund- ing for personal health services. Services at the tertiary level are covered by a national fund to aggregate risks. The package of covered services is based on explicit criteria of cost- effectiveness and social acceptability. The allocation of funds to the states is based on a re- distributive formula to transform budgeting from an inertial, bureaucratic supply-side logic to a performance-based, demand-side subsidy.
J. Frenk, F. Knaul, E. González P., M. Barraza Ll.: Poverty, health and social protection 30
The reform presents a series of challenges that are being met as part of its implementation and others that are evolving with the extension of coverage and changes in the policy cli- mate. Meeting these challenges is producing knowledge on the management of the health reform process. The Mexican reform experience is relevant to other countries in at least three senses. First, the reliance on out-of-pocket spending, inequality in the distribution of health contributions, and catastrophic and impoverishing spending on health are issues that face many societies, particularly middle-income countries. The reorganisation of financing in the Mexican health reform seeks to respond to these issues, and this experience may be of value to other coun- tries. The Mexican reform builds on earlier and on-going experiences in other Latin American countries such as Chile and Colombia, where the expansion of insurance coverage was a driving force. Second, the Mexican reform was designed and is being implemented subject to budgetary restrictions so that incentives, efficiency, consumer satisfaction and accountability aspects are especially important. Again, these lessons are of relevance since improving health systems typically occurs in a context of resource scarcity. Finally, the reform has stressed the role of health in the process of economic transition and thus provides lessons on how to position the health sector in the context of economic development and in the minds of economic policy makers. The Mexican case is relevant to other countries as it also illustrates the importance of simul- taneously building the three pillars of any reform effort: ethical, technical and political. With regards to the first pillar, the Mexican reform was formulated on the basis of ethical delibera- tion that made explicit the values and principles underlying the proposal. The technical pillar was built on the basis of extensive evidence derived from national studies and also from the adaptation of knowledge-based global public goods, such as conceptual frameworks (e.g., the WHO Framework on Health System Performance), standardised meth- ods (e.g., the household income and expenditure surveys) and analytical tools (e.g., national health accounts). In this way, the Mexican case goes beyond the false dilemma between knowledge and action, showing how formal analysis serves to place a hitherto neglected problem at the centre of the policy arena. It also demonstrates the falseness of another common dilemma, between global and local realities, as it adapted global public goods to national decision making that may further build the global pool of knowledge about health system reform. The process of developing the reform benefited from, and seeks to contribute to, the evidence on health sector reform, health system finance, the analysis of the fairness of finance, and health system performance assessment. Finally, the political pillar was developed through a strategy that included bringing the ethical and technical elements to bear on the consensus-building process that eventually yielded a solid legislative majority in favour of the health reform. Perfecting evidence as a global public good implies promoting its use for national policy formulation, as well as intensifying the use of national analysis in developing international evidence. The Mexican reform contributes to this process. International evidence, frameworks and methodologies were extensively used for advocacy, design and implementation. National evidence, such as the information put forward in this paper, should be important for stimulat- ing a process of shared learning among countries that face the common challenge of improv- ing health through equity, quality and financial protection.
References Barraza-Lloréns, Mariana; Bertozzi, Stefano; González-Pier, Eduardo; Gutiérrez, Juan Pablo (2002). Addressing Inequity in Health and Health Care in Mexico. Health Affairs 21 (3), pp. 47-56 (http://content.healthaffairs.org/cgi/reprint/21/3/47). Commission on Macroeconomics and Health (CMH) (2001). Macroeconomics and Health: Investing in Health for Economic Development, Report of the Commission on Macroeconomics and Health, WHO, Gene- va (http://www3.who.int/whosis/cmh/cmh_report/report.cfm?path=whosis,cmh,cmh_report&language=english). Frenk, Julio; Lozano, R; González-Block, Miguel et al. (eds.) (1994). Economía y Salud: Propuestas
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para el avance del sistema de salud en México; Informe final. FUNSALUD, Mexico City (http://www.funsalud.org.mx/casesalud/economia/economia%20y%20salud.htm). Frenk, Julio; Sepúlveda, Jaime, Gómez-Dantés, Octavio, Knaul, Felicia (2003). Evidence-based Health Policy: Three Generations of Reform in Mexico. Lancet 362 (9396): 1667–1671. Frenk, Julio; Knaul, Felicia; Gómez, Octavio (2004). Closing the Relevance-Excellence Gap in Health Research: The Use of Evidence in Mexican Health Reform. In: Matlin, Stephen (ed.). Global Forum Update on Research for Health 2005. Pro-Brook Publishing, London (http://www.globalforumhealth.org/filesupld/global_update1/GlobalUpdate3.pdf). Frenk, Julio et al. (2004). Fair Financing and Universal Social Protection: The Structural Reform of the Mexican Health System. Working Paper Ministry of Health, Mexico City. Frenk, Julio (2006). Bridging the divide: global lessons from evidence-based health policy in Mexico. Lancet 368 (9539), pp. 954-961. Frenk, Julio, Horton, Richard (2006). Evidence for health-system reform: a call to action. Lancet 368 (9529), pp. 3-4. Knaul, Felicia; Frenk, Julio (2005). Health Insurance in Mexico: Achieving Universal Coverage through Structural Reform. Health Affairs 24 (6): 1467-1476 (http://content.healthaffairs.org/cgi/reprint/24/6/1467). Knaul, Felicia; (2005). Research Matters Discussion Note/Policy Brief: The Role of Evidence on Fi- nancial Protection in the Mexican Health Reform of 2003. Mimeo/Draft for comments: policy note summarizing a longer paper being prepared for the IDRC. Knaul, Felicia; et al. (2005). Research Matters Background Paper: The Role of Evidence on Financial Protection in the Mexican Health Reform of 2003. Mimeo/Draft for comments. Knaul, Felicia; Arreola-Ornelas, Héctor; Méndez-Carniado, Oscar; Miranda-Muñoz, Martha (2005). Preventing Impoverishment, Promoting Equity and Protecting Households From Financial Crisis: Uni- versal Health Insurance through institutional Reform in Mexico. Mimeo: draft proposal for submission at the Global Development Network (http://ctool.gdnet.org/conf_docs/Knaul_Paper_Parallel1_Session3.pdf). Mexican Commission on Macroeconomics and Health (MCMH) (2004). Investing in Health for Eco- nomic Development, Executive Summary. Universidad de las Américas, Puebla. Ministry of Health (2005). Comisión Nacional de Protección Social en Salud: Informe de resultados, Segundo semestre de 2005. Ministry of Health, Mexico City (http://www.seguro- popular.gob.mx/files/1.Informe2osemestre2005.pdf) Ministry of Health (2005). Salud: México 2004: Información para la rendición de cuentas. Ministry of Health, Mexico City (http://www.salud.gob.mx/unidades/evaluacion/publicaciones/publicaciones.htm) Ministry of Health (2004). Salud: México 2003: Información para la rendición de cuentas. Ministry of Health, Mexico City (http://www.salud.gob.mx/unidades/evaluacion/publicaciones/publicaciones.htm) Ministry of Health (2003). Salud: México 2002: Información para la rendición de cuentas. Ministry of Health, Mexico City (http://www.salud.gob.mx/unidades/evaluacion/publicaciones/publicaciones.htm). Ministry of Health (2002). Salud: México 2001: Información para la rendición de cuentas. Ministry of Health, Mexico City (http://www.salud.gob.mx/unidades/evaluacion/publicaciones/publicaciones.htm). Ministry of Health (2001). Programa Nacional de Salud 2001–2006: La democratización de la salud en México, hacia un sistema universal de salud. Ministry of Health, Mexico City (http://www.salud.gob.mx/unidades/evaluacion/publicaciones/publicaciones.htm). Organisation for Economic Cooperation and Development (OECD) (2005). Reviews of Health Sys- tems: Mexico. OECD, Paris. Executive Summary provided at background material prior to the confer- ence: check conference website, permission granted by the OECD (http://www1.oecd.org/scripts/publications/bookshop/redirect.asp?pub=812005081P1). Torres, Ana (2001). Análisis del gasto de bolsillo en salud en México. Tesis de licenciatura (doctorial thesis), Instituto Tecnológico Autónomo de México (ITAM), Mexico City. World Health Organization (2000). Health Systems: Improving Performance. World Health Report 2000, WHO, Geneva (http://www.who.int/whr/2000/en/index.html).
Sh. Tang, X. Cheng, L. Xu: Urban Social Health Insurance in China 32
2. Advancing the Socio-Economic Development Agenda: The concern for Equity, Solidarity and Poverty Reduction 2.1. Developing Urban Social Health Insurance in a Rapidly Changing Econ- omy of China: Problems and Challenges
Shenglan Tang12, Xiaoming Cheng, Ling Xu
Introduction13 During the last two decades China has enjoyed impressive and sustained economic growth. Living standards of the vast majority of its population have increased significantly since the early 1980s. More than 100 million people have moved on to above $ 1 per day and another 130 million to $ 2 per day. However, the social agenda in China is incomplete. Inequity in health and health care remain a major concern. Some health indicators, e.g. the under-five mortality rate, have remained stagnant since the mid 1980s (World Bank 1996). The collapse of co-operative medical schemes in most rural areas (Tang et al 1994) and the crippling of the Government Insurance Scheme (GIS) and the Labour Insurance Scheme (LIS) in urban areas (Gu/Tang 1995) have widened inequity in health (Liu et al 1999). In both rural and ur- ban areas, there are many serious problems in the financing of, and access to, health care between the rich and the poor. Out-of-pocket payment by service users in China has in- creased from 20 % in 1978 to around 60 % in the early 2000s (Huong et al. 2005). Until the early 1990s, the GIS and the LIS covered fully or partially more than half of China’s urban population. According to the national household health surveys conducted in 1993, 1998 and 2003, there was only 27.3 % of the urban population not covered by any health insurance or health plan. However, the figure rose to 44.1 % in 1998 and remained un- changed in 2003. The decrease in urban health insurance coverage in the 1990s can be at- tributed to at least three factors. The first is the continuously increasing urbanisation of the past two decades. Many rural counties, where the percentage of the population covered by the GIS and the LIS or other health plans were low, have been upgraded to urban cities. Second, more adults in urban areas are unemployed now compared to the early 1990s. The vast majority of these people lost work-related benefits including health insurance, when they lost their jobs. Third, although there are no official figures reported, a significant number of rural-to-urban migrants are living and working in urban settings. It was estimated that around 120-140 million rural-to-urban migrants were living in urban cities in 2005, according to a study done by the Ministry of Labour and Social Security. Most of them are working in build- ing construction sites, factories, and informal service sectors and their employers do not support them to affiliate either to social or to commercial health insurance schemes. This demographic shift has created a sense of urgency for urban health and health care. Since the late 1980s, the central and some local governments in China have supported a number of experiments with various insurance schemes to increase efficiency and coverage. From 1997, the Ministry of Labour and Social Security of the central government was estab- lished to oversee the development of the urban employee Basic Medical Insurance scheme (BMI) intended to replace the old GIS and the LIS. By 2004, more than 124 million people - 90 million urban employees and 34 million retirees - had been covered by the BMI (MoLSS 2005). It should be noted that while enhanced equity and access were major objectives of these reforms, policy-makers have practical concerns about financing and cost containment. The objective of this paper is to review the experi- ences with reforming urban social health insurance schemes, identify main achievements and problems of the reformed urban social health insurance schemes, and discuss chal- lenges in developing equitable and sustainable social health insurance in urban China.
12 Liverpool School of Tropical Medicine, UK, Fax: +44-151-7053364; Email: [email protected]. 13 The first two sections of this paper has quoted significantly the text from a working paper entitled “Addressing inequity in access to health care in urban China” published by the World Bank (Tang et al 2003).
Extending Social Protection in Health 33
Experiences with reforming urban social health insurance (SHI)14 Before starting to describe the experiences with reforming urban health insurance, it would be useful to understand why these reforms were introduced from the late 1980s to the late 1990s. Both the LIS and the GIS were set up in the early 1950s, immediately after the found- ing of the People’s Republic in 1949. The two schemes provided virtually free health services to the employees in the formal sector in China and partial coverage for their dependents in the case of the LIS. As for the financing of the GIS, a fixed amount of money per person was allocated by the finance department of a local government to the GIS management office that was responsible for managing the use of the fund resources. As for the LIS, individual enter- prises and factories allocated around 11-14 % of the gross salaries/wages from their bene- fit/welfare budgets to cover the full cost of medical care for their employees and partial cost for their dependents (Tang et al 2003). The gravity of the financing and management problems of the GIS and LIS is nothing less than alarming. There was a rapid increase of beneficiaries from 92 millions in 1978 to 153 million in 1997. The total amount of GIS and LIS expenditure rose from 3.2 billion to 77.4 billion Chinese Yuan over the same period. Not surprisingly, both governments (central and local) and enterprises/factories underwent formidable difficulties paying these medical bills. It was quite common that the GIS management offices or enterprises/factories owed lots of money to their so-called designated service providers during that period of time. Several key problems of the GIS and LIS were identified in the 1980s. The regulation of the GIS and LIS required central and local governments and enterprises to pay almost the entire medical care costs incurred by their employees. In other words, they acted as “Third Party Payers”, but they did not have any capacity for monitoring and supervising the provision of services, nor did they have the means to influence the behaviour of service providers. The latter took significant advantages from the existing fee-for-service payment mechanism. Some loss-making enterprises asked their employees to pay for medical care from their own pockets first and delayed in reimbursing the expenses for several years. Employees of profit- able enterprises, on the other hand, received superfluous services from their service provid- ers. The system offered a strange mixture of feast or famine. Another problem was that neither the GIS nor the LIS had sufficient capacity for risk-sharing. Each institution or enterprise was only responsible for its own beneficiaries, and there was no financial pooling or risk sharing either between the various GIS institutions or between enter- prises belonging to the LIS. Therefore, catastrophic health expenses defrayed on a couple of employees could bankrupt the health plan of a small enterprise. These problems pressured the central and local governments into reforming the GIS and LIS with the aim of transforming the two crippled insurance schemes into more equitable, afford- able and sustainable ventures. The reform of the GIS and LIS began in the early 1980s; it consisted of three distinct phases: Phase 1 from early 1980s to 1987, Phase 2 from 1988 to 1997, and Phase 3 from 1998 to the present. During Phase 1, the GIS and LIS reform can best be described as local initiatives. These initiatives included 1) the introduction of cost sharing to the beneficiaries (i.e. 10-20 % of the required co-insurance payment); 2) the establishment of catastrophic disease insurance ar- rangements in several industrial sectors in order to increase risk pooling; and 3) the use of capitation in the management of the GIS in some cities. It is difficult to assess the impact of the reforms undertaken in this period due to the lack of scientific research in this area, since health economics was a new field before the late 1980s in China. The first two approaches mentioned above focussed on the demand-side of health service provision, while the last one tackled problems associated with supply-side behaviour. However, as a whole, few reforms attempted to influence the practice of health care provid-
14 Social health insurance (SHI) is used in this paper to indicate the GIS and LIS, as well as the new BMI for ur- ban employees introduced in the late 1990s.
Sh. Tang, X. Cheng, L. Xu: Urban Social Health Insurance in China 34 ers. This uneven approach may have reduced the demand for services in general rather than those that were unnecessary. Phase 2 began in 1998 when the central government established a group to guide the reform of the GIS and LIS. The team was headed by the Ministry of Health, but it also involved nine ministries including finance, personnel,15 and labour, among others. A draft government document entitled “Considerations on the reform of the employee health insurance system” was issued in 1988 to set out the direction of the reform. Four mid size cities: Dandong, Sip- ing, Huangshi and Zhuzhou were selected to launch an experimental reform in 1989. The main purpose of the experiments was to establish city-wide health insurance systems and introduce cost control mechanisms. Unfortunately, the systems in the four cities did not de- velop as expected, mainly because of the lack of interest of local governments and the fiscal difficulties these cities were facing. In 1992, the ministerial group responsible for the GIS and LIS reform selected two cities as demonstration sites. The experiment carried out in Zhengjiang and Jiujiang played the most important role in shaping new employee BMI in urban China during Phase 3.
The Zhengjiang and Jiujiang Experiment In 1994, a health insurance reform experiments under the auspices of the State Council be- gan in Zhengjiang City in the Province of Jiangsu and in Jiujiang City located in the Province of Jiangxi. The two cities, each of which has about 2.5 million inhabitants, set out to develop new models of urban health insurance. And, in both cities every GIS and LIS scheme was required to participate. Newly established health insurance management centres collected financial contributions from government agencies, public institutions, and enterprises, then committed these funds to individual and social pooling funds according to formulae similar to the one utilised in Hainan. Three tiers of payment were developed using both individual accounts and social co- ordinating funds (Box 2.1.1). The personal accounts and co-payment mechanisms were expected to encourage modera- tion in the demand for medical care in the two cities. In addition, the new health insurance schemes also developed an essential drug list consisting of about 1,400 Western and 500 traditional Chinese medicines. Coverage was strictly limited to the drugs on the list. However, as the social pooling fund in Zhengjiang was in deficits in the first couple of years, in 1999 the health insurance management committee decided to adopt the approach used in the Hainan experiment. There, the fund from the personal accounts could only be used to pay for outpatient services, while the social pooling fund was mainly used to pay for inpatient treatment and specialised outpatient services (Wang/Wang 1999). Such an approach has implications for equity in the financing of and access to health care - these issues will be dis- cussed later. After more than one year of experience in the two cities, the State Council decided to expand the experiment to 57 cities in 1996, using the same principles, but allowing these cities to modify the model according to their local circumstances. About 40 cities actually reformed their GIS and LIS while some of the municipalities modified only the GIS but not the LIS. Poor participation in these schemes was largely due to the inability of enterprises or unwill- ingness of managers to join. While Zhengjiang and Jiujiang were experimenting with new health insurance schemes un- der the leadership of the State Council, many other cities in China launched reforms of the GIS and LIS. It is neither possible nor practical to describe all of these reforms in one report. However, experiments worth mentioning are the ones in Shanghai and Beijing. In order to increase the capacity and scope of social pooling, the Shanghai Municipal Government de- veloped the ‘Hospital Insurance Scheme’ in 1996. This was mainly funded by payments from
15 Ministry of the People’s Republic of Chine dedicated to human resources development and management.
Extending Social Protection in Health 35
employers, initially 4.5 % of the employees’ wages or salaries; the figure was raised to 6.5 % from 1997. In 1995, the Beijing Municipal Government had introduced the ‘Serious Diseases Insurance’. All enterprises were asked to contribute 6 % of the average municipality employ- ees’ income to the fund for all employees and retirees, while employees paid 1 % of their wage/salary to the fund that was mainly used to cover inpatient services.16
Box 2.1.1: Three tiers of payment for medical care in the Zhengjiang and Jiujiang Health Insurance Experiment The first tier – All individuals first used their own personal accounts to pay for medi- cal care. The amount deposited into their personal accounts depended on their wage/salary and age. Approximately 5-7 % of the wage/salary was deposited peri- odically into their personal accounts with some variation by age bracket. The second tier – Once the insured had used up the funds in his/her personal ac- count, medical care was paid out-of-pocket until the payments reached 5 % of an- nual income. Then the social pooling fund was accessed to cover the costs of medical care. The third tier -- After paying out-of-pocket 5 % of their annual wage/salary for medi- cal care, the insured were eligible to use the social pooling fund to pay for medical care. However, the new health insurance schemes in both cities required a co- payment of up to 20 % of medical care expenditure at this tier.
Phase 3 started with the arrival of a new government led by Premier Zhu Rongji in 1997. The new government was restructured in a manner consistent with the new socio-economic order in China. One significant change related to urban health insurance was that the Ministry of Labour and Social Security (MoLSS) was established, building upon the old Ministry of La- bour. The Department of Medical Insurance of the MoLSS was created to oversee the reform of the GIS and LIS. Having learned the lessons and experiences from Phase 2, the objectives of reforming the GIS and LIS in Phase 3 aimed to provide 1) a low level of health service benefit (low depth); 2) a high level of population coverage (width), and 3) variation, which means that different levels and types of health insurance (from basic health care coverage to sophisticated and supplemental insurance) could be developed. The following is an introduction to the Basic Medical Insurance scheme for urban employees (BMI) implemented since 1998.
Population coverage According to the national household health surveys conducted in 1998 and 2003, the per- centage of urban population covered by the GIS and LIS or the new BMI fell from 44.7 % in 1998 to 38.8 % in 2003. According to statistical data of the MoLSS, at the end of 2003 the new BMI had a total beneficiary number of 109 million urban employees and retirees, which accounted for around one quarter of the urban population. This also implied that there was still more than 10 % of the urban population covered by old GIS or LIS and other health in- surance schemes. Among other reasons stated in the introduction, the decline of urban population coverage by social health insurance (GIS and LIS or BMI) between 1998 and 2003 might be attributed to the fact that the dependents are no longer covered by the BMI, and that many private-owned small and middle size enterprises have not yet participated in the BMI, albeit the number of the beneficiaries had been rising steadily over the past years.
16 Quoted from the document entitled “Regulations on Beijing Basic Health Insurance Scheme” issued by Beijing Municipal Government in 1995.
Sh. Tang, X. Cheng, L. Xu: Urban Social Health Insurance in China 36
Sources of finance Official national regulations on BMI development stipulate that all employers have to contrib- ute at least 6 % of the wages/salaries paid to their employees to the BMI fund, while employ- ees contribute 2 % of their earnings. In reality, employees in almost all Chinese cities are asked to pay 2 % of their wages/salaries to the fund, however, in many cities and municipali- ties, the employers have been required to contribute between 6 % and 10 % of the wages and salaries. For example, employers in Shanghai have to contribute 10 % to the social pool- ing fund plus another 2 % to the so-called supplemental medical insurance, while employees are required to pay 2 % of their income to the individual saving account. Retirees do not need to make any financial contribution from their pensions received, nor are the employers asked to make any contribution to the fund, although the elderly enjoy more benefits than active employees.
Allocation and use of the BMI fund The BMI fund is divided into two parts: individual saving account and social pooling fund. Generally speaking, the financial contribution from employee’s salary/wage goes to their in- dividual saving account, while the employer’s contribution is split between the individual sav- ing accounts and the social pooling fund, using different percentages according to the age group of employees. The use of funds from the individual saving accounts and the social pooling fund may vary among cities as shown in Table 2.1.1. Each municipal government has developed its own regulations on the use of the resources of individual saving accounts and social pooling funds. Generally speaking, a majority of cities and municipalities allocate resources from in- dividual saving accounts should be spent for outpatient services. Once the individual savings are used up, beneficiaries have to pay out of pocket for outpatient services, while the social pooling fund is meant to cover inpatient expenditures. Most cities located in the developed areas (i.e. eastern coastal areas) are more likely to stipulate that the social pooling fund should also cover the expenditure of outpatient services, once the fund from the individual saving accounts have been consumed and the beneficiaries have already paid a certain amount of money out of pocket for outpatient services. It is clear that the approach adopted in the most developed areas implies a higher degree of protection for the beneficiaries and particularly those who suffer from chronic illness and, thus, require frequent outpatient visits.
Table 2.1.1: Policies and regulations on the use of funds
Personal account fund Social pooling fund Outpatient and emer- Eligible for the use of the Eligible for the use of the fund in gency services fund some cities under certain conditions Special treatments at Eligible for the use of the Eligible for the use of the fund in outpatient department fund some cities under certain conditions Inpatient services Eligible for the use of the Eligible for the use of the fund, but fund in some cities deductible, co-payment and ceiling arrangements made Sources of data: compiled by the authors.
Provider payment methods and management of the BMI fund Each city or municipality has set up a centre for managing the BMI fund. These centres are responsible for collecting contributions from participating institutions and enterprises and purchasing services from so-called designated service providers. In most cases, the centre also issues an individual IC card for beneficiaries that can be used to pay for outpatient ser- vices or co-insurance payment for inpatient services, or buy drugs from designated pharma- cies.
Extending Social Protection in Health 37
The IC cards with photos in most cities record the amount of money in the individual saving account. The centres also manage the purchasing of inpatient care, and specified outpatients services in some cities, using the social pooling fund. The traditional method used for pro- vider payment was fee-for-service (FFS), however an increasing number of BMI fund man- agement centres have started to use a set of flat rates or fees per case to pay for inpatient services. In addition, centres have increasingly adopted so-called diagnosis related groups (DRGs) of type to purchase inpatient services from designated hospitals.
Measures taken for cost containment Various cities and municipalities have applied a number of mea- sures to control the rapid increa- se of medical costs and expendi- ture. In general, these measures aim rather to reduce the demand for health care services from user-side than to control the provider-induced increase of service demand. For example, the beneficiaries of the BMI are required to make a series of out- of-pocket payments, including deductibles, co-insurance and the additional payments beyond the ceiling level. In addition, most cities and municipalities have developed lists of essential drugs and services that are not covered by the BMI. The fact that the social pooling fund is not allowed to cover, even partially, the expenditure for outpatient care of the beneficiaries is another significant measure for controlling medical costs. Flat rate payment and the application of DRG’s are the only mechanisms applied to influence the behaviour of service providers and to control provider-induced demand. Moreover, not even all municipalities have adopted these measures so far so that actions to influence ac- tively the behaviour of hospitals and other health care providers in urban China is generally insufficient.
Main achievements and problems of the reformed urban social health insurance Over the past decade, the reform of urban social health insurance has brought several major achievements. At the same time many problems have arisen in reshaping the social health insurance. The following section analyses and discusses the main achievements and prob- lems arising from the process of reforming urban social health insurance schemes in China.
Achievements Undoubtedly, the reform of the urban social health insurance in the world’s most populated country has produced a series of relevant achievements over the past years. The number of institutions and enterprises that have participated in the BMI has been increasing steadily, thanks to the efforts made by the BMI fund management centres with the support from the municipal governments and under the auspices of the Ministry of Labour and Social Security. Thus, the number of urban population covered by the BMI reached 124 million by the end of 2004 and over 130 million by the mid 2005, albeit including the old LIS operating in some enterprises and the GIS implemented for VIPs from the governments and honoured veterans and professionals. Pooling financial resources under the new BMI at a municipal/city level, instead of an individ- ual enterprise has significantly strengthened the capacity of risk sharing. The participating institutions with a large proportion of elderly retirees who are most likely to suffer chronic ill- ness are now cross-subsidised by those organisations who have a younger working force.
Sh. Tang, X. Cheng, L. Xu: Urban Social Health Insurance in China 38
Making the healthy subsidise the sick via social health insurance, a core element of social protection in health, has been achieved in this regard. The problem of delay in reimburse- ment of medical care expenses, frequently seen at the period of the former GIS/LIS, has been largely overcome, and the beneficiaries are now satisfied with the reimbursement sys- tem. In the meanwhile, profitable enterprises are making higher wage-related financial con- tributions to the social pooling fund than loss-making enterprises. This is another equity gain and core issue of social health insurance, making the rich (employees with high incomes) subsidise the poor (employees with low incomes). As a progressive step towards improving efficiency of the health care system, various BMI fund management centres have been able to use their growing purchasing power to negoti- ate with service providers for the use of non-retrospective payment methods (such as FFS) in order to reduce perverse incentives that have caused a rapid rise of medical care expendi- ture. As mentioned above, flat rates or DRG have been used to pay for inpatient services and cost containment has been achieved to some extent in many places (Meng et al 2004, Liu et al 2002). In addition, the introduction of deductible and co-insurance payments also helped to reduce the utilisation of health services that may or may not be necessary.
Problems Though the BMI has been partly successful in several areas of action, as discussed above, many problems are still to be solved or mitigated in the near future. First of all, the projected width of population coverage in urban China has not yet been achieved, as almost half the urban population in China is still not covered by any health insurance scheme. An increasing number of rural-to-urban migrants are working in the informal sector (construction sites, pri- vate factories, restaurants, etc.) where they are excluded from social security and especially from health insurance. Moreover, a clear-cut decision on whether or not the central and local
Table 2.1.2: Insurance coverage by income level in urban China
2003 1998 Insurance status Income No. % No. % Very low 1065 10.74 2741 24.58 Low 2711 26.88 5529 43.84
Middle 4562 40.71 6976 53.60 SHI High 4848 54.23 5673 63.94 Very high 6084 63.67 3459 38.94 Very low 7577 76.43 7260 65.11 Low 5595 55.48 5989 47.49
Middle 4656 41.55 4848 37.25 No insurance High 2608 29.18 2390 26.94 Very high 1902 19.91 3586 40.37 Source: National household health surveys conducted by the Centre for Health Statistics and Informa- tion, MoH, China. governments should take a major responsibility in tackling the financial difficulties of money- losing enterprises in paying for health services is lacking. Thus, according to the results from the national household health surveys, people with low income are less likely to be covered by health insurance than those with higher wages (Table 2.1.2). Between 1998 and 2003, the share of urban residents with very low income covered by SHI declined from one quarter to
Extending Social Protection in Health 39
11 %, while the percentage of urban residents with high income levels rose from 39 to 64 %. The statement in a report written by the Development Research Centre of the State Council and published in 2005 is not surprising: The BMI is a club for the rich, not the poor. Furthermore, the old GIS and LIS used to partially cover the expenses of medical care for direct dependents, but the BMI does not. Some cities/municipal governments have organised commercial hospital insurance schemes for school children to offset the problem arising from the transformation from the GIS and LIS to the BMI, but not all the urban municipalities have done so. The regulations developed by almost all BMI fund management centres stipulate that retirees and their former employees are not required to make any financial contribution to the social health insurance, but that retirees are entitled as long as their employers have participated in the BMI to enjoy more favourable service benefit packages or reimbursement policies. This has started to cause a problem of sustainability with regard to the financial resources of the BMI in the long run since the Chinese population is rapidly aging. A growing number of the elderly are consuming a substantial proportion of the social pooling fund for the health care services they need while no financial contributions are made on their behalf either by them- selves or by their former employers. Such a financial arrangement cannot be sustainable in the short and even less in the middle term.
Table 2.1.3: Hospital admission and non-use of inpatient service rates of the SHI beneficiaries by income level
Admission rate % Non-use of inpatient service Income level rate % 1997 2002 1997 2002 Very low 5.29 4.04 29.53 36.36 Low 5.08 3.69 22.85 27.49 Middle 5.71 5.24 19.97 20.99 High 5.89 5.34 23.79 28.64 Very high 6.71 5.75 15.59 18.72 Source of Data: Source of data: National household health surveys conducted by the Centre for Health Statistics and Information, MoH, China. Note: non-use of inpatient service rate indicates that the proportion of the patients who were refe- reed by doctor to hospital admission, but were not hospitalised owing to a variety of reasons.
A majority of the BMI fund management centres have developed a policy that the social pool- ing funds are in principle not allowed to pay, even partially, for emergency and outpatient services. The individual saving accounts should be the only funds to be used for covering the expenses for emergency and outpatient care. Such a policy brings obvious disadvantages for low-income groups and for people with chronic diseases requiring extensive outpatient health services. The idea was to mitigate the financial burden placed on the social pooling fund, but it turned out to induce major equity problems for the sick. Likewise, while the introduction of deductibles and co-insurance by almost all the BMI schemes in urban China, while might have reduced unnecessary use of health care, it has also deterred poor beneficiaries from using services they require. As Table 2.1.3 shows, the poor are less likely to use inpatient services than their rich counterparts.
The situation was worsening over the period of study. About two thirds of the patients re- ferred to inpatient treatment without being hospitalised in 2002 came from the very low in- come group, while only one out of five referred patients from the high income group was not hospitalised. Apparently, the applied cost controlling measures (i.e. deductible and co-
Sh. Tang, X. Cheng, L. Xu: Urban Social Health Insurance in China 40 insurance payments) have prevented many low-income beneficiaries from using necessary and required inpatient services. Another problem existing in the BMI is that in many Chinese cities fee-for-service is still the most common method of provider payment, nonwithstanding if health care services are paid from individual saving accounts or social pooling funds. This is one of the main reasons why medical care costs have rapidly increased in the BMI scheme. It seems that the BMI fund management centres did not have the adequate managerial capacity - including the lack of health insurance expertise - to influence the behaviour of health providers. In many cases they turned out to be unable to take more effective measures to prevent moral hazard on the supplier side due to political and institutional reasons. Furthermore, most BMI schemes allow the beneficiaries to use both outpatient and inpatient services at a number of designated health facilities. They also give the beneficiaries the free choice to use the individual saving accounts for buying drugs from many designated pharmacies. In other words, the beneficiar- ies do not need to be referred by their GPs or family physicians to a specialist or to an outpa- tient department of a tertiary hospital. The lack of guidance through the system has major implications for the development of health care costs.
Developing equitable and sustainable social health insurance: challenges ahead China faced formidable difficulties in developing equitable and sustainable urban social health insurance for the past decade and is also facing large challenges ahead. One of the biggest issues deals with the question how to ensure long-term financial viability of SHI in urban China. The average annual increase of BMI health expenditure was much faster than the average annual rise of employees’ incomes. Furthermore, the proportion of contribution- free insured retirees with greater health care needs than the active and contributing employ- ees has risen significantly. It is vital for the central and local governments in China to mobi- lise more financial resources to sustain the BMI schemes in urban conglomerations. One option is to increase the financial contribution of employees above the current 2 % of their salaries/wages. Pensioners with decent pensions might also be required to contribute a cer- tain percentage of their income to the BMI fund. In terms of the fund allocation and use, it is important to avoid social pooling funds being used only for inpatient services, as it happens in most Chinese cities. The function of this fund is to ensure social protection of unhealthy people after having spent the individual saving accounts. However, the financing of emergency and outpatient services by individual saving accounts and/or out of pocket would deter equity in the financing of health care through SHI. Increasing population coverage by including rural-to-urban migrant workers in the BMI can not only help to protect this vulnerable group, but also provide more financial resources to the fund. The central government may introduce compulsory health insurance and enforce en- terprises/factories or firms/companies with a certain number of employees to join the BMI. Recently, several large municipalities, such as Guangzhou, have started to consider such an approach to increase population coverage and mobilise financial resources. However, the funds mobilised by the BMI alone appear to be insufficient for developing sus- tainable health insurance. Additionally, effective control of rapidly rising SHI expenditures should also be implemented seriously. The cost escalation of the BMI, mainly caused by supply-induced service utilisation, deserves special attention by Chinese policy makers and
Extending Social Protection in Health 41
the BMI managers in developing adequate cost-containment strategies in service purchas- ing. During the last two decades, effective pressure on health care providers in order to achieve more efficient service delivery was lacking. This is a huge issue closely related to price policies on pharmaceutical products and medical devices, financing of hospitals and other health facilities, incentives for health care providers, etc. Moreover, it does not seem very reasonable for the BMI scheme in China to allow their bene- ficiaries to seek care from almost any provider according to personal choice. The BMI has not yet established a functioning referral system using GPs or family physicians in China, as ‘gatekeepers’ or ‘pilots’ in order to rationalise the use of secondary and tertiary services and to increase the efficiency of health care provision. Many municipal governments have devel- oped community-based health centres where general physicians are providing preventive and primary care to the beneficiaries in order to reduce the increase of medical care costs. This approach should be actively pursued and refined in the future to make a referral system more efficient and sustainable. While the design and implementation of the BMI have to be improved for achieving more equity, efficiency and sustainability of health care financing, the Chinese health sector reform including providers and the medical industry (pharmaceutical and medical devices/equip- ment) is also vitally important to ensure that the vast majority of Chinese living in urban set- tings has equitable access to efficient and effective basic health care.
References Gu, Xingyuan; Tang, Shenglan (1995). Reform of the Chinese Health Care Financing System. Health Policy 32 (1-3), pp 181-191. Huong, Dang Boi; Phuong, Nguyen Khanh; Bales, Sarah; Chen, Jiaying; Lucas, Henry; Segall, Mal- colm. Alternative approaches to ensure health care for the rural poor: lessons for Vietnam from the Chinese experience, submitted to Health Policy and Planning. Liu, Yuanli; Hsiao, William; Eggleston, Karen (1999). Equity in Health and Health Care: the Chinese Experience. Soc Sci & Med 49 (10), pp. 1349-1356. Liu, Gordon; Cai, Renhua; Chao, Shumarry; Xiong, Xianjun; Zhao, Zhongyun; Wu, E (2002). China’s urban health insurance reform experiment in Zhengjiang: cost and utilization analysis. In: The-Wei, Hu; Hsieh, C (eds).The Economics of Health Care in Asia-Pacific Countries. Edward Elgar Publishing. Liu, Gordon; Zhao, Zhongyun (2006). Urban employee health insurance reform and the impact on out- of-pocket payment in China. Int J H Plann Mgmt 21 (3), S. 211-228 (http://www3.interscience.wiley.com/cgi-bin/fulltext/112771005/PDFSTART). Ministry of Labour and Social Security (MoLSS) (2005) (http://www.molss.gov.cn/index_tongji.htm). Martineau, Tim; Gong, Youlong; Tang, Shenglan (2004). Changing medical doctor productivity and its affecting factors in rural China. Int J Health Plann Mgmt 19 (2), pp. 101–111 (http://www3.interscience.wiley.com/cgi-bin/fulltext/108568148/PDFSTART). Meng, Qingyue; Rehnberg, Clas; Zhuang, Ning; Bian, Ying; Tomson, Goran; Tang, Shenglan (2004). Impact of urban health insurance reform on hospital charges: A case study from two cities in China. Health Policy 68 (2), pp.197-209 (http://www.journals.elsevierhealth.com/periodicals/heap/article/PIIS0168851003002173/pdf). Saxenian, Hellen; McGreevey, William (1996). China: Issues and Options in Health Financing. World Bank. Report No. 15278-CHA, World Bank, Washington, D.C. (Chinese version: http://www.worldbank.org.cn/chinese/content/343l6160684.shtml).Tang, Shenglan et al. (1994). Fi- nancing Health Services in China: Adapting to Economic Reform. Research Report No. 26, Institute of Development Studies, Brighton. Tang, Shenglan; Liang, Hong, Meng, Qingyue; Baris, Enis (2003). Addressing inequity in access to health care in urban China. Working Paper Series No. 2004-5. The World Bank, Washington DC (http://siteresources.worldbank.org/INTEAPREGTOPHEANUT/Resources/502734- 1129734318233/China-Inequity-Health-Access.pdf). Wang, Y.Q.; Wang, J.H. (1999). Practice and Thoughts on Zhengjiang Health Insurance Reform. Chi- nese Journal of Health Service Administration 12, pp. 629-630 (in Chinese).
P. Jongudomsuk: From Universal Coverage in Thailand to SHI in China: What Lessons can be drawn? 42
2.2. From Universal Coverage of Healthcare in Thailand to SHI in China: What Lessons can be drawn?
Pongpisut Jongudomsuk17 Introduction Regarding social protection in health focussing on urban settings, the country experience from Thailand offers a series of specific experiences that are on the one hand different from those of other Asian societies, and on the other hand allow for some more general conclu- sions for the developing world. In order to elaborate on some broader implications of social health insurance (SHI) for urban populations, it is necessary to start with some basic indica- tors of the two countries in focus, China and Thailand. At the same time, some critical differ- ences between the Chinese and Thai policy approaches need to be discussed in order to understand the historical and socio-economic backgrounds for different system designs and, thus, the results of social policy.
A crucial difference bet- ween the two countries is Table 2.2.1: Some Basic Indicators in 2003 the higher share of GDP that China is spending on China Thailand health, including a high Total population in million 1,311 62.8 proportion of private ex- penditure, while Thailand GDP in US$ 1.6 trillion 143 billion had higher government GNI/capita in US$ 1,100 2,190 health expenditures (17 GDP annual growth (%) 9.3 6.9 % compared to 10 % in China). Urban population (% of total population) 35 40 Thailand has already Life expectancy at birth 71 70 achieved universal cover- Under 5 mortality rate (per 1,000) 37 26 age in health through the THE as % of GDP (2002) 5.8 4.4 three most important pub- lic health insurance sche- Private health exp. as % of THE (2002) 66.3 30.3 mes. However, the social Government expenditure on health (% 10 17.1 security expenditure on total government exp.) in 2002 health accounted only for Health insurance coverage as % of total 21.8 % of total govern- population (year) 22 (2003) 96 (2005) ment expenditure on Number of main public health insurance 2 (SHI, 3 (SSS, health. This is because schemes CMS) CSMBS, UCS) the biggest scheme in Social security exp. on health (% total Thailand, the 30 Baht or 50.8 21.8 UC Scheme, is financed government exp on health) in 2002 by general tax revenue. Source: WHO report (2005) and the World Bank Table 2.2.2 on the follow- SHI = Social Health Insurance CMS = Co-operative Medical Scheme ing page provides an SSS = Social Security Scheme overview on some coun- CSMBS = Civil Servant Medical Benefit Scheme try- and scheme-specific UCS = Universal Coverage Scheme (30 Baht Scheme) facts and characteristics that have to be taken in account for any kind of comparison between social health insurance in China on the one hand, and the SSS- and UC-Schemes in Thailand. The SSS scheme receives contributions from three parties including the national Government, while the UCS applies general tax revenue. Risk pooling of the Chinese system occurs at city level and foresees relatively high cost sharing, whereas the Thai funds pool risks at the national level and apply minimal co-payments. Capitation payment becomes the dominant source of fi-
17 National Health Security Office (NHSO), Thailand, [email protected].
Extending Social Protection in Health 43
nancing for health care providers in Thailand, inducing rather low expenditures per capita. Additionally, the policy of UC Thailand tends to promote clearly the use of primary care facili- ties.
Table 2.2.2: Social policy and protection in China and Thailand
China (SHI) Thailand (SSS) Thailand (UC)
Driving forces Cost escalation Social security Equity
Population covered 110 million (10%) 8.6 million (13.7 %) 47.2 million (75 %) (number and share) Formal sector employee Formal sector employee in both public & private firms >1 employee Source of financing Contribution Tripartite contribution General tax revenue 8% of payroll (employer 4.5 % of payroll (em- 6%+ employee 2%) ployer+ employee+ gov- ernment 1.5 % each Risk pooling City National National
Financing agency SIB (local government) SSO NHSO
Cost sharing Co-payment & deductible None Minimal co-payment (approx. 40 % of med. (0.75US$/visit) expenditure) Provider payment A fixed budget for the Capitation Capitation for OP & PP provision of services and case based pay- (global budget?) ment (DRG)
Choice of provider Any of contracted provid- Contracted hospital and its Contracted primary ers network both public & care unit both public & private private
Per capita budget/ 72.25 US$ (2003) 37.5 US$ (2004) 41.48 US$ (2006) expenditure
Lessons learnt Independent from the specific country context and other conditions in China, the recent so- cial protection reform comprises some outstanding systemic approaches that make the Chi- nese experiences relevant for many other countries. The four wing elements might be char- acterised as the most relevant strengths of the social protection in China. Firstly, the Chinese health care sector is changing fundamentally from a system that provides services almost free of charge to a contributory system with high cost-sharing. At the same time, it is chang- ing from a small risk pooling size (business unit) to a larger risk pooling size at municipal level. Additionally, Medical Saving Accounts (MSA) have recently been implemented for in- creasing households’ resources for ambulatory care. And, last not least, the sector reform includes also strengthening the role of the local authority in financing and managing SHI. The most interesting one seems to be the decision of the Chinese government to change from almost free of charge service provision to a contributory system. This is not easily im- plemented and could create large public resistance. The strength of the Chinese system is also the use of local authorities to manage the system. However, even in a centralised sys- tem like Thailand, we are facing the problem of limited system capacity, including the ade- quate number of competent and trained human resources to maintain and improve the sys- tem. One possible consequence of this situation is a difference of the system performance according to regions and areas that has unavoidable effects on equity, quality and overall efficiency. The recent policy on social protection in health as well as the experiences on SHI in the Peoples Republic of China allow for a series of more general conclusions that are worth to
P. Jongudomsuk: From Universal Coverage in Thailand to SHI in China: What Lessons can be drawn? 44 point out to developing countries and countries in transition. First of all, to define universal coverage of health care as an ultimate goal of health system reforms is not an exclusive privilege of the developed world. However, in developing and transitional countries SHI alone is unlikely to achieve universal access to essential health care for all because of the existing system limitations. Mainly in countries with a huge informal sector, such China and Thailand, tax funded health care financing has proved to be a possible option, complemented to SHI, for ensuring universal access to adequate health care for entire population. Secondly, finan- cial protection should focus on catastrophic health expenditures to prevent impoverishment of households due to medical spending. In many cases this demands reconsidering cover- age and reimbursement ceilings implemented in SHI funds. Thirdly, demand side interventions may not be effective for cost containment and could even create access barriers for the poor who might turn out to be excluded from health care. Effec- tive socio-political interventions should rather focus on the supply side and on provider pay- ment mechanisms that send positive signal towards the efficient and equitable use of re- sources. Thus, the Chinese system should reconsider the effectiveness of high co-payments for containing costs and envisage the deterring effects on access to essential health care. Independent from the specific approach a country chooses for implementing broad social protection in health, governments play a key role for achieving sustainable and financially viable social security systems. It seems to be of utmost importance that the central govern- ment should focus first of all on tasks like ensuring adequate health financing especially in the poorer regions and areas; contributing to the SHI fund in order to decrease the contribu- tion rate of employer and employees and to make the system more attractive for stake- holders; sharing the risk among cities (national risk pooling) by establishing risk equalisation mechanisms and standardising provider payment and fee schedules for referral cases be- yond regions and cities. At the same time the limited management capability of the local governments in purchasing health services should be taken into account during the implementation of SHI. Central and local governments should handle the transfer of responsibility appropriately and create learn- ing mechanism to improve system efficiency and sustainability in the long run.
References Bennett, Sarah; Mills, Anne; Russell, Stephen; Supachutikul, Anuwat; Tangcharoensathien, Viroj (1998). The health sector in Thailand. The Role of Government in Adjusting Economies Research Programme, Paper 31, Development Administration Group, University of Birmingham (http://www.idd.bham.ac.uk/research/Projects/Role_of_gov/workingpapers/paper31.htm). Jongudomsuk, Pongpisut; Thamnatuch-aree, Jadej; Chittinanda, Prae (2003). Pro-Poor Health Fi- nancing Schemes in Thailand: A Review of Country Experience. Working paper series no. 2004-9, World Bank, Washington DC (http://www- wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2004/12/27/000090341_2004122709 5123/Rendered/PDF/310090TH0Pro1p1lth020041901public10.pdf). Jongudomsuk, Pongpisut (2002). Achieving Universal Coverage of Health Care in Thailand through 30 Baht Scheme. Paper prepared for presenting in the SEAMIC Conference 2001 FY14-17 January, the Westin Riverside Plaza Hotel, Chiang Mai, Thailand, Health Care Reform Office, Ministry of Public Health. Tancharoensathien, Viroj; Jongudomsuk, Pongpisut (eds.) (2004). From Policy to Implementation: Historical Events during 2001-2004 of Universal Coverage in Thailand. National Health Security Office, Bangkok. World Bank (2005). World Development Indicators Database. World Bank, Washington DC (http://devdata.worldbank.org/wdi2005/). World Health Organization (2005). The World Health Report 2005: Make Every Mother and Child Count. WHO, Geneva (www.who.int/whr/2005/en/).
Extending Social Protection in Health 45
2.3. Equity and solidarity in social health insurance: Chances and risks of the Costa Rican way towards universal coverage
Alberto Sáenz Pacheco18, Jens Holst19 Background Costa Rica relies traditionally on agricultural exports with a more recent tendency towards diversification and added value by agro-industry.20 Meanwhile, computer parts represent the most important single export product. Costa Ricans tend to look for quality jobs in industry, services and tourism. The latter is one of the main income sources benefiting from the coun- try’s biodiversity, national parks and protected ar- eas representing about one quarter of the national Costa Rica territory. But Costa Rica is also a shining example 2 for successful social policy that has achieved very Territory: 51,100 km important results in social development. The aboli- Population: 4.211.692 tion of the army in 1948 has permitted the country 2 Inhabitants/ km : 77 to invest in health and education to pursue the peo- ple’s social progress and the reduction of poverty Immigrants: 7,8 % of total population that has remained around 20 % during the last few Indigenous: 1,7 % of total population years with approximately 5 % of the population being extremely poor. With regard to social expenditure in the region, the last report of the Eco- nomic Commission for Latin America and the Caribbean (CEPAL 2005) ranks Costa Rica fifth among 21 countries - almost doubling the average expenditure in Latin America. The majority of social spending is dedicated to health. A worrisome fact is that the Gini- Coefficient has moved from 0.433 in 2001 to 0.418 in 2004. The Human Development Index for Costa Rica is 0.838 according to the 2005 Human Development Report of the United Na- tions Development Program.
Table 2.5.1: Costa Rica – Basic data of 20051
Human Development Index 0.834 Unemployment rate (%) 6.5 Position in Latin America 4 Inflation rate 10.2 Position among 177 countries 47 Minimum wage $ 226 Life expectancy at birth (years) 79.0 Poor households 21.1 % Males: 76.52 Investment in Health (% of GNP) 9.5 Females: 81.54 per capita € 185 Birth rate (/1000 inhabitants) 21.4 Investment in Soc. Sec. as % of Fertility rate 2.5 GNP 8 % General mortality rate 4.0 of Public Expenditure 36 % Infant mortality rate (1000 L.B.) 9.25 of Social Expenditure 57 % Gross National Product (per capita) $ 4028
Source: UNDP 2005, ECLAC 2005 Achievements in Health Costa Rica has achieved outstanding results with regard to health care compared to other countries. For instance, the relationship between income and life expectancy at birth places Costa Rica amongst other countries with a much higher GDP. Compared to other countries
18 Executive Director of the Costa Rican Social Insurance Fund (Caja Costarricense de Seguro Social – CCSS) until March 2006, [email protected]. 19 Senior Health Advisor, Berlin, Germany, [email protected]. 20 For further details, additional data and more country information please see Chapter 1.5, D. Fuentes-Montero: Social health insurance: Economic development and poverty reduction (pp. 16-21).
A. Sáenz P., J. Holst: Equity and solidarity in social health insurance: Costa Rica’s way to universal coverage 46 of the region, the structure of expenditure in health is very different, and this has implications for the development of social security systems. This political and cultural component is part of the nationality characteristics that cannot be ignored because they constitute important elements for governance and social stability.
Figure 2.5.1: Deliveries attended by skilled personnel in Latin American and Caribbean
Guatemala Bolivia Honduras Ecuador Per u Nicaragua El Salvador Paraguay Latin America Mexico Panama Colombia Brazil Costa Rica Dom. Republic Venezuela Cuba
0% 20% 40% 60% 80% 100%
Table 2.5.2: Years of Potential Life Lost in Costa Rica 1980 - 2000
1980 1985 1990 1995 2000 Total 1,070.5 911.5 773.4 729.6 625.4 1st group* 996.9 778.4 627.4 624.5 605.5 2nd group* 993.0 876.0 733.9 724.3 632.2 3rd group* 1045.7 875.8 750.2 676.0 574.5 4th group* 1132.5 986.7 824.7 744.5 649.7 5th group* 1294.8 1096.3 994.6 920.2 673.7 GII 320.11 331.85 366.33 263.89 63.69 RII 1.35 1.45 1.62 1.44 1.11 Source: Bortman 2002, pp. 14ff. *: Group of districts (cantons) according to social development index. GII: Gradi- ent inequality index; RII: Relative inequality index.
Since 1999 the Costa Rican Ministry of National Planning and Economic Policy (MPNyPE - Ministerio de Planificación Nacional y Política Económica) has developed the Social Devel- opment Index (SDI) as a synthesis of seven indicators related to the education infrastructure
Extending Social Protection in Health 47
Figure 2.5.2: Regional distribution according and special education to the SDI in Costa Rica programs, infant mortal- ity, child mortality im- pact, growth retardation,
electricity consumption, N and single mothers. Ac- cording to these criteria, the Central American country started to as- sess and catalogue the communities called can- tons (cantones) all over the country. According to the SDI, the cantons were ranked in five groups reflecting the living conditions and standards of the popula- tion.
The inequality index th 5 Group concerning premature 4th Group 3rd Group mortality was almost cut 2nd Group st in half between 1980 1 Group and 2000 (from 1,070 to 625 per 10,000 people). Source: Bortman 2002, p. 11 However, the relation- ship between life years lost and social groups remained evi- Figure 2.5.3: Population share according to socio- dent since this indicator was clearly economic standard of living conditions lower in the better-off cantons com- pared to the poorer living areas. The main progress is to be observed in the second decade between 1990 and 5th group 1st group 2000 when the mortality curves of dif- 14% 15% ferent social groups showed a ten- dency towards flattening (Bortman 2002, p. 14f).
4th group One may think that it is easier to im- 18% plement widespread health services 2nd group under the responsibility of Social Se- 32% curity in countries where public ex- penditure in health represents the lar- 3rd group ger portion, as in Costa Rica. The 21% country started the development of its modern Health Services early in the 19th century, creating the Ministry of Health and the Social Security Bureau in 1922 and 1941 respectively. The in- troduction of Primary Health Care in Source: Bortman 2002, p. 10 1970 and the Health Reform of the mid 1990s are major events. The 1994 reform that transfers all public health services to Social Security is still in process and Costa Rica has resisted the pressure of lending and international organisations to priva- tise and dismantle its public health system administered by the social security fund CCSS. The results of this effort can be seen in the country’s Health and Social Indicators shown
A. Sáenz P., J. Holst: Equity and solidarity in social health insurance: Costa Rica’s way to universal coverage 48 partly in Table 2.5.1 above. One essential question is if the Costa Rican improvements in the last 20 years have induced a reduction of the gap between the better off and the worse off, or if the inequalities have remained or even increased. A sensitive indicator for the overall health status of the Costa Rican population is the continuous reduction of the infant mortality rate between 1980 and 2001 that has been highest in the 5th quintile, but has been relevant also in the lowest income groups:
Table 2.5.3: Reduction of infant mortality, percentage of non-institutional deliveries between 1980 and 2001 Reduction of Reduction of non- Change of Mater- infant mortality institutional deliveries nal mortality 1st group* 36,6 % 65 % - 48,8 % 2nd group* 49,8 % 83 % - 31,1 % 3rd group* 44,7 % 79 % - 28,5 % 4th group* 43,6 % 77 % + 69,5 % 5th group* 46,2 % 85 % + 184,3 % Total 44,5 % + 5,9 %
Source: Bortman 2002, pp. 21ff, and own calculations.
The overall results have been good and show a continuous improvement, in spite of some exceptions that have to be analysed and tackled accordingly. The progress in health is based on the Social Security principles of solidarity, universality and equality. However, the Costa Rican social health insurance system is not free of problems. The current and forthcoming challenges for the institutional sustainability are enormous, and the reasons are both internal and external.
Universal Coverage Social Security started in 1941 as a small Bismarkian type tripartite social insurance for ur- ban low-wage workers. Health insurance coverage has progressively been extended to al- most 90 % of the population. A series of political steps were needed in order to make palpa- ble progress on the ongoing way towards universal coverage. Today, Costa Rica is offering 100 % geographical access to health services, and 87.8 % statistical or administrative cover- age. Access to Primary Health care and attention to emergencies is universal. Relevant steps towards universality About 96 % of deliveries are attended by specialised personnel. Access to good • 1945 Family benefits quality medicines is universal and ex- • 1959 Pensioners, contributory ceeds the WHO recommendations for a • 1974 Pensioners, non contributory basic drug list. This list in our system in- cludes 460 active substances in 608 • 1975 Voluntary insurance presentations. Costa Ricans have access • 1984 Self employed to pharmaceutical products for all types • 1985 Collective insurance agreements of pathologies, including antiretroviral drugs for citizens living with HIV/AIDS. • 2000 Law for the protection of workers Integral access to medication has become possible through a policy of generic drugs and centralised buying by public bidding through a special law for the acquisition of medicines, which provides economies of scale.The system is looking at the possibility of electronic procedures that have produced savings up to 15 % in the expenditure for medicines in other countries. Another strength of the system is the wide- spread network of services that has developed in over 60 years of performance. This net-
Extending Social Protection in Health 49
work is organised by hierarchical levels of health care in regions, areas and sectors in which the whole country is divided and covered.
In primary health care, a very strong empha- sis has been placed on the Basic Integrated Number of Public Health Care Facilities Health Teams (Equipos de Salud Básicos In- at the 1st, 2nd and 3rd Health Care Level tegrados). These teams comprise a medical 7 Regional Managing Offices doctor, a nurse, a pharmaceutical and a pri- mary health technician. They provide integra- 29 Hospitals ted health services to a population of 4,500 to 104 Health Areas 5,000 people. For pharmacy, laboratory, ima- 893 Primary Care Facilities ging, dental care and administrative services 1800 Temporary Health Care De- they depend on a Health Area that supports livery Facilities several basic teams. An important comple- ment to the network has been the inclusion of 7 Mobil Health Care Facilities community participation through the Local 2837 Health Care Facilities Health Board, a voluntary organisation associa ted with each health centre that plays an important role in the social production of health. They have representatives of the workers, the employers and the local NGO organisations.
Demographic challenges for Social Health Insurance in Costa Rica Facing the future of the Social Health Insurance Fund in Costa Rica, a series of demographic factors will influence the further development and demand special attention. From 2010, the population share above 59 years will increase dramatically. In developing countries and in countries in transition, the demographic tendency towards aging populations and progressive urbanisation change the epidemiological pat- terns and thus tend to increase costs. A well known phenomenon is the change from acute • Aging population infectious and environment-related diseases to • Changes in population distribution chronic and high cost illnesses like cardiovascu- • Strong immigration lar diseases and cancer. • Increase in non-traditional family Rising operational costs are especially attribut- settings able to increasing expenditures for pharmaceu- • Changes in nupciality patterns tical products and medical supplies, the intro- duction of new technologies and rising salaries. • Longevity In the case of drugs, the Costa Rican Social • Reduction in family size Insurance Fund has been able to continue the • Reduction in dependency essential medication program for everybody based on the use of generic drugs.21 In our society, the appearance of many control instances is another threat to the financial sustainability of the system. The Constitutional Jury, the Ombudsman Office, the press and a more informed public in general lead in to make large expenses in high cost medications and procedures for the benefit of small populations. This can cause an ethical problem regarding the distribution of resources and the interests of the population at large. The pressure of these external forces is particularly important in the problems we face with long waiting lists and periodic shortage of supplies. There is a high, not well-established number of illegal workers that represent the most impor- tant population segment currently excluded from social protection. The indigenous population accounts for 1.7 % of Costa Rican citizens and represent another group with inequitable ac- cess to health and educational services. Due to fiscal problems, however, the state is facing serious difficulties in co-financing the social security system and especially the contributions
21 The essential drug program will be affected if Costa Rica signs the Central American Free Trade Agreement (CAFTA) as it will include the protection of patents and influence the price and the availability of a series of drugs.
A. Sáenz P., J. Holst: Equity and solidarity in social health insurance: Costa Rica’s way to universal coverage 50 for those who cannot afford them. Immigration in a country with a low fertility rate has a posi- tive potential as long as immigrants are covered by national social protection schemes and therefore participating in solidarity contribution systems. However, in many countries migrant workers are either excluded from existing social protection schemes or rely on social security systems of their home country. New regulations are in view, and probably a general amnesty will be needed in order to le- galise and formalise the status of immigrants in a country whose work force relies partly on foreigners. The participation of immigrants in social security and, especially, their regular payment contributions will be important for the sustainability of health and pension schemes. Changes in family structure have a social impact that makes contributions more difficult to calculate and to raise. The increase of life expectancy in a middle-income country like Costa Rica is associated with a higher prevalence of chronic illnesses and, thus, increased costs. As social and income conditions, supported by scientific and technological progress, have contributed to longer life expectancy, society faces new challenges to provide quality of life to the increasing number of the elderly. The last two aspects have a beneficial effect that needs to be taken advantage of. Costa Rica experienced two ‘baby boom’ periods in the last half of the past century. This is providing the country a ‘Demographic Bonus’ between years 2000 and 2020. This phenome- non that reduces dependency during a period only happens once and has been seized by countries in the Asian Pacific to improve its institutions. Costa Rica needs to take advantage of this opportunity and is determined to do it. While the growing number of economically ac- tive individuals are catering for increased contribution revenues, the Social Insurance Fund has to invest in equipment and human resources in order to be prepared for the increased independency and higher costs of health care and pensions that will gradually appear after 2020. The epidemiological changes during the last decades demand the introduction of care- fully evidence-based diagnostic and treatment protocols and to ascertain if the Costa Rican social health insurance fund can continue offering all kind of services to everybody or if it has to define positive lists of services, procedures, drugs, and supplies to be explicitly covered by the CCSS. The Costa Rican Social Insurance system has evolved from a tripartite Bismarckian model to a mixed one where the contribution of the state is crucial. In addition to the important contri- bution as employer, the government subsidises both the health and pension schemes. In the Central American country, the Human Development Index has evolved similar to other coun- tries whose tributary load (taxes as a percentage of production) is three to four percentage points of the GDP higher. This remains the same when the contributions to Social Security are added. Furthermore, the government makes transfers to cover the one very important factor for the sustainability of the system, the Quality Assurance Program aiming at the three objectives of quality improvement, quality control, and quality design. The strategy used during the last 10 years under the name of Evidence Based Participatory Quality Improvement in Health (EPQI; Mejoramiento Participativo de de la caliudad en salud basada en evidencia) has been ap- plied in different quality projects throughout the Costa Rican health care network. In 2005, for example, the quality projects within this strategy focussed on patient safety. As shown in the following table 2.5.4 it is evident that salaried employees and workers pay contributions that clearly exceed the expenditure related to the services they ask for. This causes a problem because formal sector workers use to have higher salaries, and they tend to under-declare their income. This reduces the intra and inter-generational redistribution and, thus, the solidarity of the system. On the other hand it is also evident that the State is sufficiently paying the monetary transfers for the non-contributory programs he is responsible for.
Extending Social Protection in Health 51
Table 2.5.4: Costs and financing of the health insurance according to affiliation in 2004 324.305 ¢ 172.337 ¢ 1.88 14.634 ¢ 50.082 ¢ 0.29 26.632 ¢ 68.097 ¢ 0.39 2.793 ¢ 117.437 ¢ 0.02 368.364 ¢ 407.953 ¢ 0.90 Source: Análisis Técnicos de Ingresos y Gastos, Dirección Actuarial (in million CRC (¢); 1 € = 521,5 CRC, 1 CRC = 0.0019 € (1.7.2004).
This final conclusion is very important: if the Costa Rican society wants to continue enjoying the results and improving our social health and pension insurance system, the State has to increase the tax load and the transfers to the social security institutions. This should lead us to a stronger public health system with fewer but better institutions. We believe that a good sign of progress is that people use and show satisfaction with its public health system. In that sense I would like to end this presentation quoting Mr. Hans Horst Konkolewsky, ISSA Sec- retary General, who said: “I believe that Social Security is the only way to guarantee the so- cial dimension of globalisation. Therefore, the question is not whether we can have Social Security but rather if we can allow ourselves not to invest in it. Those countries with consoli- dated Social Security Systems are also in the leadership in terms of competitivity and social peace”.
References Bortman, Marcelo (2002). Indicadores de salud. Mejoró la equidad? Ministerio de salud, Organización Panamericana de la Salud, Oficina Regional de la Organización Mundial de la Salud, Representación en Costa Rica. San José (http://www.cor.ops-oms.org/TextoCompleto/documentos/indicadores_salud.pdf). Carrin, Guy; James, Chris (2004). Reaching Universal Coverage via Social Health Insurance: Key Design Features in the Transition Period. WHO, Dep. of Health Systems Financing and Resource Allocation. Geneva (www.who.int/entity/health_financing/issues/en/reaching_universal_dp_04_2.pdf; whqlibdoc.who.int/hq/2004/EIP_FER_FOH_PIP_04.1.pdf; http://www.issa.int/engl/initiative/projects/2carrin- james.pdf). Economic Commission for Latin America and the Caribbean (2005). Social Panorama of Latin America 2005. ECLAC/CEPAL, Santiago (http://www.eclac.cl/cgi- bin/getProd.asp?xml=/publicaciones/xml/4/24054/P24054.xml&xsl=/dds/tpl- i/p9f.xsl&base=/dds/tpl/top-bottom.xsl). Miranda-Gutierrez, Guido (2003). La seguridad socialy el desarrollo en Costa Rica. 3rd Edition, EU- NED, Ed. Universidad Estatal a Distancia. San José. Rosero-Bixby, Luis (2004). La situación demográfica general de Costa Rica. In: Herrera, Reinaldo; López Gretel (eds.). Evolución demográfica de Costa Rica y su impacto en los sistemas de salud y pensiones. Academia de Centroamérica, San José (http://ccp.ucr.ac.cr/bvp/pdf/cambiodemografico/Rosero-demografica-2003.pdf). Molina, Raúl; Pinto, Matilde; Henderson, Pamela; Vieira, César (2000). Gasto y financiamiento en salud: situación y tendencias. Rev Panam Salud Publica/Pan Am J Public Health 8 (1/2), pp. 71-83 (http://www.paho.org/spanish/dbi/es/ARTI--Molina.pdf). Montero, Sary; Barahona, Manuel (2003). La estrategia de lucha contra la pobreza en Costa Rica. Institucionalidad -Financiamiento Políticas - Programas. Serie Políticas Sociales No 77, ECLAC, San- tiago (http://www.eclac.cl/publicaciones/xml/0/13950/lcl2009.pdf). United Nations Program for Development (2005). Human Development Report 2005. International Cooperation and a crossroads. Aid, trade and security in an unequal world. UNPD, New York (http://hdr.undp.org/reports/global/2005/pdf/HDR05_complete.pdf).
H. Achouri: Advances in Implementing Social Security: Lessons from Tunisia 52
2.4. Advances in Implementing Social Security: Lessons from Tunisia Hedi Achouri22
Situation and background
Coverage of illness and health risks in Tunisia has been assured, since the end of the 1950’s, through two parallel systems that offer Social Security for civil servants and workers in public as well as private enterprises. Two social protection schemes managed by different bodies cover two out of three Tunisians: private sector employees are covered by the Social Security Fund (CNSS), and the National Pension and Social Prevision Fund (CNRPS) covers public sector employees. In addition, the government is providing health care services in public facilities run by the Ministry of Health for the poor and low-income population. And, last not least, some private societies or public bodies offer private health insurance for their em- ployees, covering the same package as the public insurance. Health care is free of charge for the poorest population as well as for some socio-professio- nal groups (army, police, health professionals, etc.) while uninsured people of low-income are entitled to get medical services, provided by MoH facilities at reduced tariffs. In the 1990s, the Tunisian health insurance system was facing a series of problems and diffi- culties regarding efficiency, quality, equity, and satisfaction of stakeholders and users. In- creasing inequities were appearing between people enrolled in the two social health insurance institutions. These invol- Figure 2.6.1: Health insurance coverage: Current Situation ved the burden of contri- butions on employers and employees; and at the same time, in terms Private Insurance of benefits, direct care delivery in the MoH facili- ties for CNSS beneficiar- Mutual profes ies and limited access to the private providers for sional bodies some of the CNRPS’s in- sured. On the other hand, among the benefi- ciaries of each social se- Free of charges for curity institution contribu- socio-professionals tion payment was inequi- table between the eco- nomically active and Source: Estimations of the Ministry of Public Health pensioners. Furthermore, the regional distribution of CNSS polyclinics and, thus, access to adequate health care varied clearly from one region to another. In addition of the social coverage by the state or social security bodies, employees of some private enterprises can also benefit from private insurances funded by themselves together with the employers. The same is valid for a group of public sector employees who can affiliate to professional mutualities offering health insurance benefits. Private insurance companies as well as mutual organisations cover the same health risks and benefits as the social security funds. The existing level of information about the coverage and health expenditure of private insurance companies and social health insurance organisa- tions does not allow identification of the share of total health expenditure as they are included in the array of private household spending.
22 Ministry of Public Health, Tunisia; mail: [email protected].
Extending Social Protection in Health 53
A very small share of the population (1 % or less) is not covered by the social health insur- ance systems or any of the government programs (free of charges or reduced fees). In this case, users have to pay all charges to the public or private providers by themselves. Some are entitled to be partially reimbursed by private insurance companies or social health insur- ance organisations according to the contractual arrangements in place; others have to pay the whole charges out of pocket.
Table 2.6.1: Social protection institutions and health care provision
CNSS Public providers of MoH The “health care booklet”23 The CNSS’s polyclinics The particular conventions24 Public & Private Providers CNRPS Mandatory Regime25
26 Option 1- The refund regime Public & Private Providers 23 Option 2 - The “health care booklet” Public providers of MoH 27 Optional Regime (Refund) Public & Private Providers 24 The particular conventions Public & Private Providers
In addition of the coverage through social health insurance, employees might have a private or mutual health insurance policy allowing for access to private providers. Some of these civil servants are also entitled to health care free of charge in the MOH facilities (army, police, health professionals, customs officers). The overlapping of multiple coverage modes induced palpable inefficiencies in the Tunisian health insurance system, while the overall expenditure for health care was continuously in- creasing due to the implementation of high-cost interventions like heart surgery, dialysis, etc., rising prices of drugs and medical devices, and an increasing demand for health care. The quality of services and health care benefits was negatively affected by the long delay of pro- vider payment and low reimbursement rates due to various ceilings and exclusions, and by long waiting periods for some benefits like inpatient care and dialysis. The socio-economic environment and the epidemiological transition associated with the ex- pansion of health care supply and the transformation of demand generated disappointment which illustrated the coverage limits of the existing social security schemes. The continuous under-funding of the public sector and insufficient financing of private health care facilities induced a high degree of dissatisfaction of providers, while the felt quality mainly in public providers, the lack of resources, and increasing out-of-pocket payments were responsible for low satisfaction rates among beneficiaries. One important indicator for the increasing finan- cial burden that health care costs imply currently for private households is the fact that during the last 15 years, household expenses for health have increased continuously and amount to almost 50 % of the total health expenditure.
23 The ‘health care booklet’: access to all health care services in public facilities run by the Ministry of Health. 24 The ‘particular conventions’: in order to promote national abilities in heavy health care and to reduce abroad services and expenditures, social security bodies concluded conventions with public hospitals and private provid- ers to develop local health care in cardiology and cardiac surgery, organ transplantation, dialysis, CT Scan, MRI and lithotripsies. 25 The ‘mandatory regime’: The civil servants newly enrolled have to choose between two options in the manda- tory regime, for the same rates of employers and employees’ contributions. 26 Option 1- The ‘refund regime’: coverage limited to some long-term treatments of chronic diseases and surgical interventions, excluding all common diseases. 27 Optional Regime (Refund): extension of option 1 to common diseases coverage through higher contributions.
H. Achouri: Advances in Implementing Social Security: Lessons from Tunisia 54
Figure 2.6.2: Health Financing in Tunisia
60%
50%
40%
30%
20%
10%
0% 1985 1990 1995 2002 Government Social Security Households
Source: Ministry of Development and Ministry of Health
Social Health Insurance Reform The ongoing health financing reform in Tunisia aims to overcome the shortfalls and problems mentioned before and to prevent some predictable consequences of the demographic, epi- demiological, technological and other transitions affecting health care. As extending social protection in health and, thus, social security coverage is a priority for the Tunisian Government, the health insurance reform pursues three major goals. Firstly, the benefits of the different health insurance regimes currently in place have to be harmonised and a sole mandatory basic regime has to be adopted and managed by one health insurance body, the Caisse Nationale d’Assurance Maladie (CNAM). Secondly, optional complemen- tary regimes will be implemented in order to bear the costs that remain uncovered by the basic regime and have to be paid directly by the patients. With regard to the health system as a whole, all health care providers should be involved, whether they are public or private through contracts that include and determine quality standards and norms of health care de- livery, mechanisms of cost containment, tariffs and provider payment methods. In more specific terms, the Tunisian reform process is battling with a series of technical chal- lenges and proposals that have to be checked and balanced in order to find the most suitable options for the country. A series of important tasks have to be tackled in the near future in order to make relevant steps towards a substantial improvement of the Tunisian health care system. First of all, the content of the basic regime and its financial balance status have to be defined and cost containment mechanisms selected and applied, e.g. organising and implementing a medical reference system (consensus, guidelines), and classifying positive drug lists and reimbursement rates. The implementation of a continuous quality assurance program with regard to standards and procedures has to accompany the sector reform. A major challenge is the definition of the future structure of the National Health Insurance Fund (Caisse Nation- ale d’Assurance de Maladie) to be created and implemented, including the management of the current system of two different social security funds, the mobilisation of additional re- sources and skills, and the promotion of medical control monitoring cost trends and features as well as quality assurance. It will also be essential to prepare public and private providers to manage the regime regard- ing the necessary procedures and technical infrastructure (computerisation, data collection
Extending Social Protection in Health 55
and processing, human resources training, etc.), to define tariffs and modes of provider pay- ment for outpatient care based mainly on fee for services after abandoning capitation, for inpatient care implementing flat rates (DRG) and for future negotiations of fees and tariffs. Therefore - and for administrating the system - the design and implementation of an appro- priate information system (CNAM and providers) will be required; this must include the defini- tion of procedures, the level of computerisation and data transmission and the training of personnel. The definition of necessary regulatory measures like standards and rules of good practices are required, including the substitution of prescribed medicines, standardisation of profes- sional acts, incentives and punishment measures. The implementation of a ‘health care map’ regarding service infrastructure and mainly specialised equipment, and effective marketing mechanisms, public relations and information of providers and beneficiaries have to accom- plish the efforts for implementing a better health care system all over the country. Since the political initiative began in 1996, the health insurance reform is under a national debate that involves all stakeholders in order to achieve the necessary consensus on the content of the basic regime and the package of care to be covered; the financial balance; mechanisms of cost containment including provider payment methods; continuous quality assurance; new management procedures of health insurance and in particular the informa- tion system; and regulation tools and guidelines. Conscious that this important reform of health care financing will deeply modify the national health system, the government and the various stakeholders have to assure and improve equitable access to health care and the efficiency of the health system taking in account the available manage- ment capacities and the public- private mix of the healthcare supply and financing. From 1996 until the end of 2005, several commissions have discussed the strategic ap- proaches and continuously negotiated with the various stakeholders. In 2004, Parliament passed Law 2004-71 and a series of decrees that define the framework and create the new health insurance fund (CNAM). The transition from the existing schemes (CNSS+CNRPS) to the single fund, CNAM, has been initiated through the implementation of facilities, training of human resources and other measures. The next steps will comprise the elaboration and ne- gotiation of contracts and tariffs with private providers. At the same time, the regulatory basis has to be completed and medical and financial control to be implemented. In addition, public sector financing has to be improved and put on a solid basis. The Tunisian Health Insurance Reform has to face a series of short, middle and long-term challenges that include technical as well as managerial and operational aspects. In the short run, the stakeholders involved have to negotiate and find agreements with regard to the fi- nancing of the basic regime, the implementation of cost-sharing mechanisms and the overall goals to achieve equal access to health care. A major challenge will be the definition of methods of provider payment in order to find a balanced relationship between fees for ser- vices and flat rates to enhance efficiency and credibility. Equally, managed care elements and free choice options have to be combined in a way that helps to prevent or even avoid false incentives and misuse. For the voluntary complementary insurance scheme to be im- plemented, information and awareness about experiences and expectations are crucial. In the mid term, the improvement of accessibility to adequate health care, continuous quality assurance and cost containment are priority challenges for the Tunisian Government. The existing Health Insurance Fund requires consequent decentralisation in order to guarantee a
H. Achouri: Advances in Implementing Social Security: Lessons from Tunisia 56 higher proximity of insured people and providers for delivering benefits in time. Additional technical and ad- ministrative support is expected with the introduction of a health care booklet - or even a magnetic membership card - that might improve and rationalise control and data processing of the social security bodies. The introduction of competition among providers will demand a clear-cut distribution of roles between provi- ders including greater autonomy for public hospitals, and especially for a determination of how far the public sector should act as last resort. The satisfaction of both beneficiaries and users has to be monitored through regular surveys, a complaint management system and better information plus communication. At the same time, continuous monitoring of the quality of health care will be necessary. Statistical coverage of both providers’ data on use, output and expenditure and surveillance of morbidity and mortality trends has to be improved in order to allow for current adjustments with regard to organisation, benefits, financing and other relevant aspects of health care.
References Abdesselem, Hichem, Achouri, Hédi (2001). La couverture du risque maladie de la population dému- nie et à revenus limités. La Tunisie Médicale 79 (5), pp.293-297 (http://www.medscape.com/medline/publicationbrowser/9584/79_5/dt_05012001). Achouri, Hédi (2001). Assurance maladie: les questions à débattre. Communication à un séminaire organisé par le ministère de la santé publique sur les modalités de paiement des prestataires de so- ins. Tunis. Achouri, Hédi; Khaled, M. Kheireddine (2001). Assurance maladie: les défis de la réforme. Communi- cation à un séminaire organisé par le ministère de la santé publique sur les modalités de paiement des prestataires de soins. Tunis. Blel, Sayed (2001). L’assurance maladie en Tunisie: contexte actuel et perspectives d’avenir. La Tuni- sie Médicale 79 (5), pp. 278-284 (http://www.medscape.com/medline/publicationbrowser/9584/79_5/dt_05012001). Chaabane, Mohamed (2003). Vers l’universalisation de la sécurité sociale: l’expérience de la Tunisie. Extension de la Sécurité Sociale (ESS), Document no 4 (http://www-ilo- mirror.cornell.edu/public/english/protection/socsec/download/esspaper4french.pdf). Fathallah, Magid; Ben Abbes, Riadh, Chebbi, Faïçal, Kechrid, M. Ridha (2001). Mise en en oeuvre de la réforme de l’assurance maladie. La Tunisie Médicale 79 (5), pp. 285-292 (http://www.medscape.com/medline/publicationbrowser/9584/79_5/dt_05012001). Ministère des Affaires Sociales (1999). Politique Sociale en Tunisie: Les Acquis du Changement. Tu- nis. Kasmi, M.Salah (1996). Sécurité Sociale dans les Secteurs Public et Privé. Editions Internationales, Tunis. Organisation Internationale du Travail (OIT) (1988). L’intervention de la sécurité sociale dans le sec- teur des soins de santé. Le cas de la République de Tunisie. ILO/OIT, Département de la sécurité sociale. Geneva. World Health Organization, Eastern (2001) - Technical Discussions: Health systems development - 48th session of the regional Committee, Riyadh, Saudi Arabia, 30 September - 3 October 2001. Ri- yadh, Saudi Arabia. EM/RC48/Tec. Disc. 1. WHO, Mediterranean Regional Office (http://www.emro.who.int/RC48/Documents/EMRC48TechDisc1.doc). Wouters, Annemarie (1999). Méthodes alternatives de paiement des prestataires: incitations pour l’amélioration de la qualité des soins. Notes à l’intention des décideurs, Partnerships for Health Re- form (PHR). Bethesda (http://www.phrplus.org/Pubs/pps1f.pdf).
Extending Social Protection in Health 57
2.5. Social health insurance in French-speaking sub-Saharan Africa: situation and current reform Oumar Ouattara28, Werner Soors29 Introduction In Africa, since independence, we have seen a multitude of reforms, strategies and alterna- tive systems to guarantee some access to more quality health care for the populations of our developing countries. But we have also seen too many failures, for which we can legitimately ask the questions: have we learned our lessons? In fact, since the failure of free health care and the introduction of cost recovery mechanisms – with its corollary of exclusion and ineq- uity – access to quality health care remains a remote mirage for most of our populations. In Mali, curative utilisation stagnated at 0.23 new contacts per person per year (Audibert, Mar- tine/de Roodenbeke 2005). What about all the sick people? Where are they heading for? Where do they end up? The role of ill health in the creation of poverty at community level has been documented for years now (ILO 2003; OECD 2003; Schultz/Tansel 1997; Whitehead et al. 2001). During our many missions in African villages, how many heads of households told us that they had to sell oxen and the crops of the year to come, just to face the sickness of a family member, and at what price? Most of the time, the money was not even sufficient or came too late, as, for example, in the case of an urgent caesarean section to be performed hundreds of kilome- tres away with no efficient or adequate transport at hand. Faced with this setback, social health insurance is seen as a means to alleviate the suffering of our populations (Waelkens et al. 2005). Social health insurance – be it voluntary like Community Health Insurance (CHI), compulsory and/or universal – is now high on the politi- cal agenda. What has been realised? What are the current reforms? What can we expect in the near future? We try to find an answer to these questions based on information from the following sources: Country reports from 13 out of 14 countries (Benin, Burkina Faso, Burundi, Chad, Gabon, Guinea, Ivory Coast, Mali, Mauritania, Niger, Rwanda, Senegal and Togo, but not Como- ros), presented at the symposium L’amélioration de l’accès aux services de santé en Af- rique francophone: le rôle de l’assurance (Improving access of health services in French- speaking Africa: the role of health insurance), organised by the World Bank Institute and the Institut Multilatéral d’Afrique in Paris, from 26 till 30 April 2004; Reports from the Coordination Network La Concertation entre les acteurs du développe- ment des mutuelles de santé en Afrique, commonly referred to as La Concertation, in particular of the inventories made and of the forums held; Our own investigations in several sub-Saharan countries; The existing literature.
Diagnosis With independence, the French-speaking sub-Saharan African countries inherited a system of free health care at the point of use. For this reason and since the 1960s, their emerging social protection policies barely took in account health insurance. Most social security docu- ments of the time touched only minimal measures regarding health, such as occupational health, with the establishment of infirmary posts, company health centres and inter-company health centres (Centre Médical Inter Entreprise, CMIE). Gradually, laws have been adopted to allow free health care for privileged population groups such as civil servants, the military and students.
28 General Director of Union Technique Mutualité Malienne, [email protected]. 29 Research assistant at the Public Health Department of the Institute of Tropical Medicine, Antwerp, [email protected].
O. Ouattara, W. Soors: Social health insurance in French-speaking sub-Saharan Africa 58
Very soon the young African states faced their first and massive financial problems. Hospi- tals and other health care structures ran short of all basic requirements: drugs, medical con- sumables and surgical items. Thus, the populations’ direct financial contribution to access health care became a fact, first informally, then more formally. In 1987, the Bamako initiative generalised the concept of cost recovery. In order to enable a more equitable access to health care, several mechanisms were ex- plored to reduce unwanted financial barriers. These mechanisms can be grouped in three main categories: prepayment systems, community and other voluntary health insurance schemes, and compulsory and/or universal health insurance.
Community and other voluntary health insurance schemes Set up as a response to failing health care access, community health insurance schemes (CHIs) first appeared in Africa in the mid eighties. Health care providers from faith-based organisations initiated the first two initiatives. These were the CHI scheme of CDI Bwamanda (Moens 1990) in the Democratic Republic of the Congo (DRC, then Zaire) and the Fandène scheme in the Thiés region of Senegal. The Congolese Bwamanda scheme – despite the political and military problems of the DRC – remains statistically the most important one of French-speaking sub-Saharan Africa, with over 114,000 members in 2004 (47,000 in 2002, at the height of the war). The Senegalese Fandène scheme was unable to manage its own growth: it refused membership to a neighbouring village (Ouattara/Colas 2003) and has now about 3,050 beneficiaries. Back in 2003, the Coordination Network La Concertation provided a third inventory of West African CHIs. The inventory included different kinds of health insurance schemes (HIs), both CHIs, strictly speaking, as well as solidarity funds. The inventory was presented at the 2004 Forum of the Coordination Network La Concertation at Bamako:
Table 2.7.1: Health Insurance Coverage in West Africa
Functional / all HIs HIs in this country/ Country All HIs Functional HIs in this country HIs in the region
Benin 54 43 79.6 % 8.7 % Burkina Faso 92 36 39.1 % 14.8 % Cameroon 38 22 57.7 % 6.1 % Chad 7 7 100 % 1.1 % Guinea 11 55 49.5 % 17.8 % Ivory Coast 40 36 90.0 % 6.4 % Mali 80 56 70.0 % 12.9 % Mauritania 7 3 42.9 % 1.1 % Niger 19 12 63.2 % 3.1 % Senegal 149 87 58.4 % 24.0 % Togo 25 9 36.0 % 4.0 % All countries 622 366 58.8 % 100 % Source: Letourmy 2004, slide 3-4
In total, 622 Health Insurance schemes were recorded, among which 58.8 % were opera- tional at the time (2003). Among these health insurance schemes, only 10 % were solidarity funds. The remaining vast majority were community health insurance schemes. What are the features of these CHIs?
Extending Social Protection in Health 59
Generally speaking, the setting up of the CHIs did not respond to a national vision: only in recent years have African countries started to integrate CHI development in their social and health development plans and programmes. Most CHIs are new organisations, only 12 % were set up before 1996. Most CHIs are small-size organisations as 72 % have less than 1,000 beneficiaries (median: 678 beneficiaries). The typical benefit package prioritises drugs, small risks and pregnancy. Most CHIs formalise the relationship with their health care pro- viders in a convention, whereby fee-for-service reimbursement is the standard, fee-for- episode reimbursement is applied in only 18 % of the schemes. Membership seems to be affordable and in 60 % of the cases it is about 500 FCFA (less than € 0.80) per family and per month. In three out of four schemes (76 %), the end-user has to make a co-payment, which is usually around 30 % of the benefit cost. In nearly one out of five schemes (18 %), contributors cross-subsidise the membership of (poorer) non-contributors.
Compulsory and/or universal health insurance In French-speaking sub-Saharan Africa, very few compulsory and/or universal health insur- ance systems have been developed. Instead, waivers were established for the privileged such as civil servants, the military and salaried employees, but also for vulnerable groups like the very poor. The limitations of these waiver policies have nowadays become obvious: all public health care providers expected to deliver these free services have serious financial problems. This is one more reason why health insurance reforms are appearing on the na- tional agendas. Moving away from the waiver policy, some French-speaking sub-Saharan African countries have been developing compulsory health insurance schemes. Such is the case in Senegal (Institutions de Prévoyance Maladie), in Rwanda (Rwandaise d’Assurance Maladie), in Ivory Coast (various occupation-based compulsory schemes), in Guinea and in Gabon. As most of these schemes deal with the formal sector only (or even a part of it), they are still far from universal and might increase inequity.
Current reforms and prospects The ongoing health sector financing reforms in French-speaking African can be grouped in two main categories. On the one hand, the followers of universality (mainly Gabon and Ivory Coast) aim to reach coverage for the whole population. Gabon does so by integrating a health care division in both of the existing social security schemes (one for the private sector, another one for the rest of the population). Ivory Coast works towards the creation of two central schemes, under the umbrella of a National Fund for Health Insurance. On the other hand, the strategy in the other countries includes different approaches for spe- cific population groups: the creation of a compulsory scheme for the formal sector (in the Senegalese variant, this might implicate the merging or reinsuring of the existing health in- surance institutions in one national insurance scheme); the creation of CHIs for the informal sector and the artisans; and the implementation of assistance funds for the very poor. Taking into account the vivid dynamics of these ongoing reforms, the situation in French- speaking sub-Saharan Africa looks promising. In our opinion, however, none of these re- forms will solve the continent-wide problem of access to health care without a series of addi- tional urgent collateral efforts. These include targeted support for the demand side of health care – in particular for the development of social health insurance – in French-speaking sub- Saharan Africa, to counterbalance the support for the supply side that for years was unable to bring about the expected results. Secondly, long-term support for the development of so- cial health insurance in French-speaking sub-Saharan Africa is needed in order to overcome the thousands of short-term small projects that created more problems than solutions. Thirdly, the creation of a human resources training programme for the French-speaking sub- Saharan social health insurance sector is a felt need since a skilled health financing work force is absent at present. Lastly, sufficient guarantees for the financial and managerial autonomy of national and community health insurance schemes, independent from the highly
60 O. Ouattara, W. Soors: Social health insurance in French-speaking sub-Saharan Africa
Table 2.7.2: Overview of health insurance mechanisms in francophone sub-Saharan Africa
Country Public sector Private sector Other sectors Ongoing reforms Non-contributory Contributory scheme accord- CHIs and private-for- Benin scheme, related to ing to the Labour Code. profit insurance com- the Code of Civil Covers work-related injuries panies Service and illnesses, maternity and daily allowances Burkina Non-contributory Contributory scheme accord- CHIs and private-for- Creation of a com- Faso scheme, related to ing to the Labour Code. profit insurance com- pulsory health insur- the Code of Civil Covers work-related injuries panies ance scheme for the Service and illnesses, maternity and formal sector daily allowances Burundi Compulsory contribu- Compulsory scheme created Medical Assistance tory scheme (Mutuel- in 2000, but not functional. Card for independents le de la Fonction Pub- Application presently de- and farmers. Should lique), since 1980, in pendent on the goodwill of cover 20% of the popu- theory for 600,000 the employers lation but faces major beneficiaries, in prac- operational difficulties tice only 10 %. Chad Contributory compul- Contributory scheme accord- CHIs and private-for- Planning of the crea- sory scheme. Covers ing to the Social Security profit insurance com- tion of a broader 75% of ambulatory Code. Covers work-related panies compulsory scheme, care, hospitalisation injuries and illnesses, mater- a pilot committee and referral nity and daily allowances. has been installed Some non-occupational schemes exist National Fund of So- Gabon Non-contributory Health care division of the Creation of universal scheme, about National Social Security cial Guarantee for gov- health insurance, 160,000 beneficiaries. Fund, based on a 4.1 % ernment contractors, provided by a sover- Ambulatory care is salary contribution of the independents and the eign Gabonese fully covered, 10% employers only. Ambulatory very poor; based on a public institution: co-payment applies care is fully covered, co- budgetary contribution, contributory and for hospitalisation, payment applies for hospi- about 300,000 benefi- compulsory for all 20% for referral talisation and referral ciaries. Supplementary workers, non- private insurance contributory for the scheme, 65,000 bene- very poor ficiaries Guinea Non-contributory Health care division of the CHIs, MURIGA (Mu- scheme, related to National Social Security tuele pour la prise en the Code of Civil Fund since 1994, based on charge des Risques Service third party payment + 30% associés à la Grossesse co-payment on behalf of the et aux Accouchements) insured for obstetrical risks and private-for-profit insu- rance companies Ivory Semi-contributory Well developed occupational CHIs and private-for- Creation of universal Coast compulsory scheme medicine, with insurance profit insurance com- health insurance (Mutuelle Générale contracts in some cases panies (Fonds National), des Fonctionnaires et based on two sche- Agents de l´État). mes (Caisse Sociale Civil servants have Agricole and Caisse the option to withdraw Nationale d’Assuran- from the scheme ce Maladie) Mali Non-contributory sche- Contributory scheme accord- CHIs, emergency Creation of a compul- me, related to the Co- ing to the Labour Code. obstetrical funds and sory health insurance de of Civil Service. Covers work-related injuries private-for-profit insur- scheme for the formal Similar schemes for and illnesses, maternity and ance companies sector and of a medi- the elderly and war daily allowances cal assistance fund orphans. for the very poor Maurita- Non-contributory Contributory scheme accord- CHIs, obstetrical fund, nia scheme, related to the ing to the Labour Code. private-for-profit insur- Code of Civil Service. Covers work-related injuries ance companies, fund Similar schemes for and illnesses, maternity and for the very poor the military, students daily allowances
Extending Social Protection in Health 61
Country Public sector Private sector Other sectors Ongoing reforms and the very poor Niger Non-contributory Contributory scheme accord- CHIs and private-for- Creation of an over- scheme, related to ing to the Labour Code. profit insurance com- all HIs for the civil the Code of Civil Covers work-related injuries panies servants Service. Similar and illnesses, maternity and schemes for the mili- daily allowances tary, students and the very poor Rwanda Contributory scheme Contributory compulsory National fund for ge- Restructuring of the of the Rwandaise schemes, diverse benefit nocide victims (Fonds different schemes, d’Assurance Maladie, packages and service level National pour l’Assis- with extension of the based on third-party coverage according to the tance aux Victimes les benefit package payment + 15% co- different employers plus nécessiteuses du payment on behalf of Génocide et des Mas- the insured sacres), about 283,000 beneficiaries CHIs, 7,388,647 bene- ficiaries: probably the biggest African CHI network Senegal Non-contributory Contributory compulsory CHIs and private-for- Planning of the crea- scheme related to the schemes of the Health In- profit insurance com- tion of a National HIs Code of Civil Service. surance Institutions (Institu- panies for the civil servants Similar schemes for tions de Prévoyance Mala- Planning of the crea- the military, students die) with defined benefit tion of a Agricultural and the very poor packages, co-payment per- Social Scheme, in centage according to the the framework of the different schemes existing agricultural Compulsory scheme of the laws Social Insurance Institute Reinforcement of the (Institut de Prévoyance So- legal framework for cial) for the retired CHIs and for the National Solidarity Fund Togo Coverage for civil ser- Contributory scheme accord- CHIs and private.for- Planning of the crea- vants should be assu- ing to the Social Security profit insurance com- tion of a compulsory red in the newly esta- Code. Covers work-related panies scheme blished Lomé hospital. injuries and illnesses and Government shares maternity the medical costs of expatriate civil ser- vants. Government assumes the medical costs of the military. Source: World Bank Institute/Institut Multilatéral d’Afrique 2004.
indebted social security institutions in our failing states, is vital for imple- menting sustainable health insurance mechanisms. Only if these condi- tions can be satisfied will social health insurance in French-speaking sub-Saharan Africa be able to improve access to health care as expected and also to boost the quality of the care offered by giving a voice to our suffering populations.
References Audibert, Martine; de Roodenbeke, Eric (2005). Utilisation des services de san- té de premier niveau au Mali : Analyse de la situation et perspectives. Départe- ment du développement humain, Région Afrique, Banque Mondiale, Washing- ton (http://siteresources.worldbank.org/INTAFRICA/Resources/Mali_sante_final.pdf).
62 O. Ouattara, W. Soors: Social health insurance in French-speaking sub-Saharan Africa
ILO (2003). Working out of poverty: report of the Director-General. International Labour Conference, 91st session. International Labour Office, Geneva. Letourmy, Alain (2004). Premiers résultats de l’inventaire 2003 de la Concertation. Forum de la Con- certation, Bamako (http://www.concertation.org/atelier/forum2004/DocsForum2004.htm). Moens, Freddy (1990). Design, implementations, and evaluation of a community financing scheme for hospital care in developing countries: a pre-paid health plan in the Bwamanda health zone, Zaire. Soc Sc & Med 30 (12), pp. 1319-1327. OECD (2003). Poverty and health DAC guidelines and reference series. Organisation for Economic Co-operation and Development and World Health Organization, Paris. Ouattara, Omar; Colas, Jean-Pierre (2003). Senegal mission report (unpublished). République du Bénin, Ministère de la Santé Publique (2004). Couverture du risque maladie au Bénin. Paris (http://www.ces-asso.org/docs/WBI_IMA_Rapport_Benin.PDF). (No author) (2004). Présentation de l’assurance maladie au Burkina Faso. Paris (http://www.ces- asso.org/docs/WBI_IMA_Rapport_Burkina_Faso.pdf). (No author) (2004). Dispositif de financement de la santé et de couverture du risque maladie au Bu- rundi. Paris (http://www.ces-asso.org/docs/WBI_IMA_Rapport_Burundi.pdf). République de Côte d’Ivoire, Ministère de la Solidarité, de la Sécurité Sociale et des Handicapés, Co- mité de Pilotage de l’Assurance Maladie Universelle (2004). La couverture du risque maladie en Côte d’Ivoire. Paris (http://www.ces-asso.org/docs/WBI_IMA_Rapport_Cote_d_Ivoire.pdf). (No author) (2004). Colloque sur la couverture maladie en Afrique francophone WBI-IMA, Paris, 26-30 avril 2004: assurance maladie au Gabon. Paris (http://www.ces- asso.org/docs/WBI_IMA_Rapport_Gabon.pdf). République de Guinée, Ministère de la Santé Publique (2004). Colloque sur la couverture du risque maladie en Afrique francophone, Paris, 26-30 avril 2004: (no title). Paris (http://www.ces- asso.org/docs/WBI_IMA_Rapport_Guinee.pdf). (No author) (2004). Rapport Mali sur la couverture sociale de la maladie. Paris (http://www.ces- asso.org/docs/WBI_IMA_Rapport_Mali.pdf). République Islamique de Mauritanie, Ministère de la Santé et des Addaires Sociales (2004). La cou- verture du risque maladie en Mauritanie. Paris (http://www.ces- asso.org/docs/WBI_IMA_Rapport_Mauritanie.pdf). République du Niger, Ministère de la Santé Publique et de la Lutte contre les Endemies (2004). Le point sur la couverture du risque maladie au Niger. Paris (http://www.ces- asso.org/docs/WBI_IMA_Rapport_Niger.pdf). (No author) (2004). L’amélioration de l’accès aux services de santé au Rwanda: le role de l’assurance. Paris (http://www.ces-asso.org/docs/WBI_IMA_Rapport_Rwanda.pdf). République du Sénégal, Ministère de la Santé et de la Prévention médicale; Ministère de la Fonction publique, du Travail, de l’Emploi et des Organisations Professionnelles (2004). Document colloque sur la couverture du risque maladie en Afrique francophone, Paris, 26-30 avril 2004, Version II. Paris (http://www.ces-asso.org/docs/WBI_IMA_Rapport_Senegal.pdf). République du Tchad, Ministère de la Santé Publique (2004). Colloque sur l’évolution de la couverture risque-maladie dans les pays de l’Afrique francophone: document de la République du Tchad. Paris (http://www.ces-asso.org/docs/WBI_IMA_Rapport_Tchad.pdf). République Togolaise, Ministère de la Santé, Direction Générale de la Santé (2004). Colloque sur l’assurance maladie: presentation de l’équipe du Togo. Paris (http://www.ces- asso.org/docs/WBI_IMA_Rapport_Togo.pdf). Schultz, Paul; Aysit, Tansel (1997). Wage und labor supply effects of illness in Côte d’Ivoire and Ghana: instrumental variable estimates for days disabled. J Dev Econ 53, pp. 251-286. Waelkens, Maria-Pia; Soors, Werner; Criel, Bart (2005). The role of social health protection in reduc- ing poverty: the case of Africa. Extension of Social Security paper no. 22. Strategies and Tools against social Exclusion and Poverty, International Labour Office, Geneva. Whitehead, Margaret; Dahlgren, Göran; Evans, Timothy (2001). Equity and health sector reforms: can low-income countries escape the medical poverty trap? The Lancet 358, pp. 833-836. World Bank Institute/Institut Multilatéral d’Afrique (2004). Colloquium L’amélioration de l’accès aux services de santé en Afrique francophone: le rôle de l’assurance. Paris (http://www.ces- asso.org/Pages/index.php?redir=http://www.ces-asso.org/Pages/ESPAD-ColloqueWBI-IMA-CES- actes.html).
Extending Social Protection in Health 63
2.6. The Inclusion of the Poor in a Social Health Insurance Framework: The Strategies Applied in Viet Nam Tran Van Tien30 Background By shifting from a centrally planned to a market economy since 1986, Viet Nam has been undergoing a dramatic economic and social transformation. In the last two decades, the ‘doi moi’ (renovation) process led to considerable improvements in overall well being, with more than 7 % GDP per capita annual growth rate. The transition of the health care system con- tributes positively to the health status of the population. Despite being a low-income country, vital health indicators of Viet Nam are comparable to those of middle-income countries. In terms of life expectancy adjusted for years lost to disabilities, Viet Nam ranks 116 among 191 members of the World Health Organization (WHO) - not very different from much wealthier countries such as Greece and Brazil (World Bank 2004).
Although Viet Nam has recently been consid- ered as one of the most successful countries Viet Nam – Basic data of 2005 in poverty reduction, there is still 24 % of its Population: 83 million population living under the poverty line (at the end of 2004), many people still live just above Estimated growth rate: 8.4% the poverty line31 and the risk of falling back Estimated GDP/capita: 620 US$, into poverty remains high. In addition to the PPP: 3000 US$/capita Hunger Eradication and Poverty Reduction Total GDP: 51 billion US$ program and program 13532, a number of Life expectancy: 71 years measures have been applied to ensure health care for the poor. Equity, efficiency and de- Maternal mortality ratio to below 70/ velopment are the objectives that have been 100 000live births identified by the Party and the Government IMR <25/1000 live births for the health care system in the strategies of Under-five MR <32/1000 live births health care of the population into 2010. Reforms in financing health care have been considered as the backbone policy to achieve equity in access to health care. Social Health Insurance (SHI) implementation has been the most important policy among the health financing reforms. Other notable health sector reforms are the introduction of user charges, the public-private mix of provision and the opening up of the pharmaceutical market. There is broad consensus in the country that achievement of universal SHI coverage appears to be the best way towards equity, efficiency and development. But how can SHI cover the poor and the near poor in a developing country like Viet Nam? Why did Viet Nam shift from other protection mechanisms to SHI policy for the poor? What are complementary health policies to health insurance for the poor? Is SHI ap- propriate for the poor in every condition? Those issues will be presented in this paper.
Development of SHI in Viet Nam SHI was introduced quite early in the renovation process in Viet Nam. Being aware of the importance of accessibility to health care services for those who cannot afford to pay user fees at health facilities, the Government has piloted social health insurance schemes since 1989. The first Decree on SHI regulation was promulgated 3 years later, in 1992. At the end of 2004, more than 18 million people were covered by SHI schemes, including 3.9 million
30 Health Strategy and Policy Institute, Hanoi, Viet Nam, [email protected]. 31 Using in both cases the Viet Nam poverty line, which is different for the WB poverty line. 32 The national program HEPR was launched in 1998, providing poor households with a range of benefits, includ- ing exemption of school fees, health care cards, access to subsidised credit, exemption from compulsory public work, exemption from agriculture tax and other contributions and food provision between harvest seasons. Pro- gram 135 provided poor communes with a resource allocation that they most often use to invest in a local infra- structure project, including roads, health centres, schools, irrigation systems, water supply systems, etc.
T. Van Tien: The Inclusion of the Poor in Social Health Insurance Framework in Viet Nam 64 poor citizens. According to the new Decree on SHI in 2005, approximately 20 million poor people are eligible to become SHI beneficiaries.
Current SHI Coverage The new SHI regulation (effective since July 1, 2005) continues applying compulsory cover- age for all active and retired workers in the public and salaried workers in the private sectors, regardless of the size of the private enterprises. In addition, very old age people (90 years and older), foreign students, dioxin victims and especially the poor are newly eligible en- rolees of the compulsory scheme. Other affiliates of mandatory health insurance are the members of socially protected groups, such as revolution merit people, heroes, veteran inva- lids etc (see box 2.3.1).
Box 2.3.1. Eligibility of the SHI compulsory (according to the 2005 regulation)