0609342-Reforming GrnCvr.qxd 11/15/05 4:12 PM Page 1 WORKING PAPER SERIES NO. 2005-4 36394 The World Bank Human Development Sector Unit Public Disclosure Authorized Public Disclosure Authorized 1818 H Street, NW East Asia and the Pacific Region Washington, DC 20433 USA The World Bank Telephone: 202-473-1000 Facsimile: 202-477-6391 East Asia and Pacific Region Human Development Sector Unit http://www.worldbank.org Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Reforming Health Social Security Proceedings of an International Seminar Elizabeth King Lynnette de la Cruz Perez Public Disclosure Authorized Public Disclosure Authorized Mario Taguiwalo with Yolanda Quitero June 2005 0609342-Reforming GrnCvr.qxd 11/15/05 4:12 PM Page 1 WORKING PAPER SERIES NO. 2005-4 The World Bank Human Development Sector Unit 1818 H Street, NW East Asia and the Pacific Region Washington, DC 20433 USA The World Bank Telephone: 202-473-1000 Facsimile: 202-477-6391 East Asia and Pacific Region Human Development Sector Unit http://www.worldbank.org Reforming Health Social Security Proceedings of an International Seminar Elizabeth King Lynnette de la Cruz Perez Mario Taguiwalo with Yolanda Quitero June 2005 REFORMING HEALTH SOCIAL SECURITY PROCEEDINGS OF AN INTERNATIONAL SEMINAR Sponsored by the Global Security Institute, Keio University, and the World Bank June 27-29, 2005 Tokyo, Japan Table of Contents Preface i Chapter 1: Choosing to Cover Comprehensive or Basic Medical Services under Universal Social Health Insurance Should Providers Be Allowed to Extra-bill for Uncovered Services? 1 Naoki Ikegami The Billing of Medical Services and the Financial Burden on Patients in Korea 13 Soonman Kwon Summary of the Discussion 24 William Hsiao Chapter 2: Financing Long-Term Care Financing Long-term Care: Lessons from 19 OECD Countries 27 Manfred Huber Long-term Care in Germany 59 Heinz Rothgang Sustaining Long-term Care Insurance in Japan and Beyond 85 John C. Campbell Summary of the Discussion 98 Kotaro Tanaka Chapter 3: Increasing Public Expenditures on Health Care Increasing Investment in the UK-NHS: Some Policy Challenges 100 Alan Maynard Re-casting Canadian Federalism: Health Care Financing in the New Century 112 Joseph Wong Summary of the Discussion 136 Joseph White Chapter 4: Social Security in Rapidly Industrializing Nations Health System Issues, Challenges, and Options: Reflections on China, India, and Kerala 147 Kottilil Mohandas Summary of the Discussion 164 Peter Berman Chapter 5: Summary and Interactions of the Key Points Practical Issues in Priority Setting in Health Care 166 Wendy Edgar Summary of the Discussion 172 Michael R. Reich APPENDICES Appendix 1 – Program 174 Appendix 2 – Biographies of Participants 181 Appendix 3 – Addresses of Participants 188 LIST OF WORKING PAPER SERIES, 2004-2006 192 Preface Reforming Health Social Security: The Proceedings of an International Seminar Sponsored by the Global Security Institute, Keio University, and the World Bank, June 27-29, 2005 Naoki Ikegami Keio University School of Medicine How important is health, and the most visible organized. About twenty experts from ten means to maintain it, health care, important for countries, Canada, China, Germany, India, the security of the society? When Japan Japan, Korea, Malaysia, New Zealand, the legislated its first social insurance program for United Kingdom and the United States, plus manual workers in 1922, it was clearly stated representatives from the World Bank and the that the program had two purposes: to increase OECD, attended the closed seminar. The the wealth of the nation by maintaining the participants were a mix of academics, health of the workers; and to serve as a bureaucrats and one politician, but all stabilizing force to prevent a socialist revolution. participants had practical experiences in making This rationale was identical to that proposed by health policy. Their discipline included Bismarck in nineteenth century Germany. After economics, political science and medicine. The its introduction, the concept of solidarity within seminar consisted of six sessions over a three each social insurance pool, whether by day period. All the sessions except for the last workplace or community, and the financial risk were closed to the public. In the first four protection they provided, turned out to be sessions, the two papers (except for the second popular with the voters which resulted in the session which also included a short summary eventual achievement of universal coverage in from the OECD reports) for each session had 1961. been circulated in advance. Each presenter was asked to use their limited time on the major However, the original arguments for establishing points that he or she would like to emphasize. health care as a social security benefit are now This allowed for two of the three hours in each less compelling. The threat of a socialist session to be spent on questions and answers, revolution has vanished. The externalities and on in-depth exchange. These exchanges arising from treating communicable diseases are were skillfully handled by the chairs who had insignificant compared with the amount spent on been asked to prepare the main discussion points health care. Most diseases now result from life in advance. style, which are more the responsibility of individuals than of society, and their presence is The first session focused on the crux of the less likely than acute illnesses to cause agenda for this seminar. Should the government productivity losses. With the aging of society, be responsible for only a “basic package” of solidarity may also be eroding, as under a pay- health care, leaving the rest to the market for as-you-go system, a significant proportion of the providers to deliver and patients to purchase? premiums or of taxes goes towards paying for The first paper from Japan described how this the care of those who have retired, and not proposal was vigorously promoted by towards the care of those contributing. At the economists and business leaders who opposed same time, advances in medical technology have the regulations prohibiting extra billing for greatly increased the availability and use of uncovered services and balance billing by expensive procedures, leading to cost specialists. However, a political decision was escalations. Thus, the future of health social made to not to go down this path, due in part to security is threatened. the opposition raised by the Health Ministry and organized medicine. In contrast, as described in It was in this context that this international the second paper, Korea did not have these seminar on reforming health social security was regulations from the time the social insurance Reforming Health Social Security: The Proceedings of an International Seminar Sponsored by the Global Security Institute, Keio University, and the World Bank, June 27-29, 2005 was implemented. The survey results appeared were thus perceived to be providing inferior care to show that this had no effect on access to when compared to neighboring countries, providers but there were no data on health continental Europe in the case of the UK, and outcomes. Although it could be argued that the the United States in the case of Canada. Second, services to be covered by the public insurance their expanding economies allowed them to should be based on cost-effective analysis, what increase funding for health care. Third, the actually becomes covered tend to be mostly political configurations that acted as a catalyst to determined by fiscal reasons, as has been the this decision. The main difference between the case in Korea, and by political consideration. two countries lay in the extent to which the Thus, because of the lack of objective evidence, central government had control over how the providers could explain to patients that better extra resources are being used. In the UK, outcomes could result if they were to purchase although the funds are allocated proportionally services not covered. However, this would to local purchasers, there are significant central result in serious equity problems and the risk of directions in the form of requirements to target impoverishment for those who decide to on particular service areas, such as waiting lists, purchase out-of-pocket. and in the form of specific contract provisions for providers. In contrast, in Canada, the way in The second session focused on long-term care which the funds were to be spent was left almost (LTC), in particular, the projected and actual entirely to the provinces, without even common costs of LTC in the two countries that have standards to measure any progress in the areas recently made it a new pillar of social security, that had been prioritized such as waiting lists. Germany and Japan. Aging of society was the However, both countries have singled out common rationale in both countries but this was waiting lists as an area for improvement because not enough to explain why a new program was they are more visible and of greater concern to introduced in the midst of economic stagnation. the general public than improvements in health Pressure on the local government’s public outcomes, which have the further disadvantage assistance program in Germany and the local of having a time-lag between the time of government’s inadequacy in dealing with the investment and the time of improvement. As a rapid increase in the national government’s consequence, politicians tend to favor popular