SOCIAL HEALTH INSURANCE A guidebook for planning CHARLES NORMAND & AXEL WEBER Second Edition Neusatz_gtz.pmd 1 21.09.2009, 14:59 Neusatz_gtz.pmd 2 21.09.2009, 14:59 SOCIAL HEALTH INSURANCE A guidebook for planning Second Edition CHARLES NORMAND1 & AXEL WEBER2 with Guy Carrin,3 Ole Doetinchem,3 Inke Mathauer,3 Xenia Scheil-Adlung,4 Jean-Olivier Schmidt 5 1University of Dublin; 2 Formerly with the Asian Development Bank, since 1st of September 2009 working as an independent consultant, 3World Health Organization, Geneva, 4International Labour Organization, Geneva; 5German Technical Cooperation (GTZ), Eschborn Neusatz_gtz.pmd 3 21.09.2009, 14:59 Bibliographic information published by the Deutsche Nationalbibliothek The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data are available in the Internet at http://dnb.ddb.de. © 2009 VAS – Verlag für Akademische Schriften Cover-Design: AG – Agentur für Gestaltung im VAS-Verlag Cover-Picture: Armin Müller Layout: AG – Agentur für Gestaltung im VAS-Verlag Production: VAS, Ludwigstr. 12 d, 61348 Bad Homburg v.d.H. Distribution: Südost Verlags Service GmbH, Am Steinfeld 4, 94065 Waldkirchen Printed in Germany · ISBN 978-3-88864-491-7 4 Neusatz_gtz.pmd 4 21.09.2009, 14:59 Foreword This second edition of the Guidebook on social health insurance development is a joint initiative of the ADB, ILO, WHO and GTZ (GTZ acting on behalf of the German Federal Ministry for Economic Cooperation and Development, BMZ). The Guidebook has been part of the activities of the GTZ-ILO- WHO Consortium on Social Health Protection in Developing Countries which has now evolved into a new initiative on Social Health Protection - Providing for Health (P4H). P4H is a new partnership between France, Germany, ILO, WHO and World Bank that aims to support developing countries in their development of social health protection systems. Most people in such countries do not have effective access to affordable health care. A principal avenue therefore to overcome the access deficits and the risk associated with catastrophic health expenditure is the creation and extension of sustainable systems of social health protection, based on values of universality, equity and solidarity. This is the principal focus of P4H. Developing countries are working on different national or regional models of sustainable and equitable health care financing to provide affordable access to quality services for all. The International Conference on Social Health Insurance in Developing Countries, held in Berlin on 5–7 December 2005, provided a forum in which the experiences of different countries and regions were shared and discussed. One of the conclusions of this conference was that in implementing viable and sustainable health financing systems the context of the country is preponderant and that there are no ready-made blueprint methods to reach universal coverage. The most suitable financing and organizational options have to be chosen from a broad menu of choices that essentially ranges from tax-based health financing, social health insurance, private financing options and mixed health financing systems. Historical, economic and social choices determine which type of system is most suitable at country level. In fact, most national health financing systems are de facto conceived as mixed systems. The particular organizational mechanisms that form part of such systems are secondary to the primary goal, namely to achieve and guarantee social and financial protection for all households. There are many possible paths towards the goal of universal social health protection, and social health insurance is one of them. This Guidebook is aimed particularly at the needs of countries that choose social health insurance as the main component of their systems, or that are interested in exploring this option, as it details the various prerequisites for a successful implementation. The Guidebook also intends to make clear that the implementation will be accompanied by various challenges of a political, organizational and financial nature. Thus this guidebook is also a companion for policy-makers and their advisers in managing those challenges. We would like to thank the principal authors, Charles Normand and Axel Weber for their endless efforts and patience to have made this joint publication possible. Finally, we would like to extend our thanks to Ralf-Matthias Mohs, Director for Poverty Reduction and Social Protection (BMZ) for his support in this joint project. Jacques Jeugmans Hedwig Petry Michael Cichon David B. Evans Practice Leader Health, Director Director Director ADB Division of Health, Social Security Department Health, Education, Department Systems Financing Social Protection ILO WHO GTZ 5 Neusatz_gtz.pmd 5 21.09.2009, 14:59 6 Neusatz_gtz.pmd 6 21.09.2009, 14:59 Content SECTION I. How to use this guidebook CHAPTER 1. Introduction ........................................................................................................ 11 CHAPTER 2. Health, health systems, financing and insurance.......................................... 14 2.1. Achieving system goals ......................................................................................................... 14 2.2. Mobilizing funds for the health system .................................................................................. 15 2.3. Sharing and managing risk ..................................................................................................... 15 2.4. Purchasing services from providers ...................................................................................... 15 2.5. Design issues ......................................................................................................................... 16 CHAPTER 3. Overview of the guidebook.............................................................................. 18 3.1. Preparation ............................................................................................................................ 18 3.2. Key design issues .................................................................................................................. 19 SECTION II. Preparing and planning for social health insurance CHAPTER 4. How to finance health care services............................................................... 24 4.1. Introduction ............................................................................................................................ 24 4.2. Health financing targets ........................................................................................................ 24 4.3. Market failure of the health sector........................................................................................ 24 4.4. Health care financing alternatives ......................................................................................... 26 4.5. Advantages and disadvantages of social health insurance.................................................... 28 4.6. Pluralistic health financing mechanisms ................................................................................ 29 4.7. Questions raised .................................................................................................................... 30 CHAPTER 5. Health policy....................................................................................................... 30 5.1. Introduction ............................................................................................................................ 30 5.2. Health-policy goals and objectives ........................................................................................ 30 5.3. Social health insurance and social protection ........................................................................ 31 5.4. Universal coverage................................................................................................................ 31 5.5. Equity and fair financing ........................................................................................................ 32 5.6. Economic effects of social health insurance ......................................................................... 33 CHAPTER 6. Desirability of health insurance ....................................................................... 34 6.1. Introduction ............................................................................................................................ 34 6.2. Who wants social health insurance? ..................................................................................... 34 6.3. The contribution of social health insurance to meeting health-policy objectives................... 35 6.4. Social health insurance and interest groups .......................................................................... 35 6.5. Social dialogue, decision-making and building consensus ...................................................... 36 CHAPTER 7. Affordability of social health insurance .......................................................... 38 CHAPTER 8. Feasibility of health insurance ......................................................................... 38 8.1. Introduction ............................................................................................................................ 38 8.2. Options for revenue collection ............................................................................................... 39 8.3. Factors in the labour market