HEALTH INSURANCE

TASK FORCE REPORT

Objectives of the reviewGather evidence from both local and international experiences on different types of health insurance schemes and their pros and cons and draw some lesson that could be applied in the Malawian context. Specifically, the assignment called for • Review international and local trends–SET UP AND SCALE UP.• Review international and local experience – IMPACT ON HEALTH SYSTEM

PERFORMANCE.• Review evidence of policies and regulatory practices that have been successful

in preserving EQUITY and INCREASING ACCESS, while minimising COST ESCALATION, ADVERSE SELECTION, MORAL HAZARD etc?

• Provide DETAILED CASE STUDIES of how different countries have used health insurance schemes to EXPAND COVERAGE OF HEALTH INSURANCE SCHEME or MOVE TOWARDS UNIVERSAL HEALTH COVERAGE.

What is insurance?

• Refers to risk prevention and management techniques.• Involves a risk-pooling element, i.e. those in the risk pool who

do not suffer a loss during a particular period essentially pay for the losses experienced by others.

• Reduces vulnerability by replacing the uncertain prospect of losses with the certainty of making a premium payment (s).

RISK POOLING = RISK MANAGEMENT STRATEGYRisk management strategies

Proactive strategies Reactive strategies

Reducing theprobability of the risk

Limiting the effects when losses occur

Risk retention

Risk diversification

Risk pooling

Risk reduction or elimination

Risk coping

Limiting the effects when losses occur

Risk sharing

Public socialsecurity

Riskmitigation

•Risk pooling implies the transfer of risks between high and low risk groups.

1. Objectives of a NHI scheme• Can be comprehensive or parsimonious

• Universal Health Coverage [Yemen, Ghana]• Traditional -access to quality services, risk pooling to achieve equity and social

solidarity, service procurement, improving health system performance. [RSA]• service cost containment, efficiency, facilitation of private sector participation,

distribution of services and infrastructure, subsidy, health system financing sustainability etc. [ Ghana, Nigeria]

• Functional or organisational• Protect from catastrophic OOP • Resourcing the public health system or • cost shifting [ note: continuum]

• Taskforce: ACHIEVING UNIVERSAL ACCESS TO HEALTH CARE WITH FINANCIAL RISK PROTECTION AT THE LEAST COST POSSIBLE

USER CHARGES

CONCEPTUAL MODEL based on health system functions.Provision of services

Purchasing of services

Pooling of funds

Collection of fund

Allocation mechanisms

Allocation mechanisms

Allocation mechanisms

IND

IVID

UAL

SHEALTH CARE

COVERAGE

COVERAGE

CONTRIBUTIONS

CHOICE

CHOICE

Kutzin, 2000

1. Financing & Resource allocation(Collection and Pooling)

1. Direct taxation [UK]2. Indirect taxation [Ghana]3. Social Health Insurance (SHI) [Germany, Rwanda]4. Voluntary Health Insurance [USA, RSA]5. User charges

2. FUND ALLOCATION

• Government - central or local government• Based on history of utilisation and or/infrastructure• Need based weighting capitation• Epidemiological profiles• Subsidies for premium payments• Risk equalisation

3. SERVICE PACKAGING & PROVISIONPACKAGE• Single or multiple payers• Competitive or not competitive• Single payer ( Monopoly

/Economies of scale/ Coherent set of incentives)

• Multiple (Diluted incentives /Cost shifting /High administration cost for monitoring).

PROVISION• Competitive or monopolistic?

• Variation between urban and rural areas?

• Dual systems• Differences between public

and private sectors?• Distribution of service

providers• Access and equity?

3. PROVIDER PAYMENT METHODS• Budget

• line item or global, prospective, input based, contracts based on patient volume or capacity etc.

• Under-provision and patient shifting is a problem

• Salaries• Prospective, staff time, contract based• Under-provision and patient shifting is a problem

• Capitation• With or without fundholding• prospective, based on capitated provider or service/patient/period.• Cream skimming – chose health people

• Case based• Fee for service; with or without schedule• Mixed options.

4. Benefit packages• What should be paid from pooled funds

• Package for which paid or EHP? • Comprehensive/ catastrophic or cost effectiveness

• What services require OOP• Minimum package of activities in Rwanda (MPA)

• Benefit entitlement (Residency / membership / Equity / Constitution)• Benefit package and user fees ( Fully covered services / Partially

covered services / Uncovered services)• Complementarity & fit of cover• Benefit maximum or OOP maximum

EQUITY CONSIDERATIONSIn general much literature on process and not outcomes and where done usually subnational.

• Questions raised about Ghana’s NHIS• Rwanda may be a special case??

• Horizontal and vertical equity [Zere et. Al. DHS 1992-2004]

• Perverse widening inequalities favouring the well off• SWAp and EHP has not been pro-poor

• Benefit incidence analysis [Manghan L. 2006]

• Equitable health system attributable to the EHP• However public spending may not be addressing the needs of the poor

• ? Inverse equity hypothesis

SUGGESTED OPTIONS• Private sector insurance

• Historical and pragmatic (decongestion of public sector)

• Payroll based mandatory public or formal sector insurance (National Social health Insurance)

• Benefits principle – if benefit must pay• Low hanging fruit – maximise activities with lowest operational cost

• Community based or mutual health insurance• Pilot??? and scale up• May be more effective if compulsory

????? capacity to pay, governmental social responsibility and community social solidarity.

NHI FROM GENERAL TAXATION?

• EHP = $44.4 / capita, Total annual cost $667.2m. • Health budget: $126.9 million, $8/capita; GAP $36/capita!• Options

• Re-allocation – impossible because of protected expenditure (Wages, debt interest, pensions and gratuities)

• Identify new taxes and non-tax revenue – still not possible if funded from domestic resources without collapsing the economy [revenue structure]

• Innovative financing (airline levy, tobacco levy, other sin taxes) – may contribute but do not cover the shortfall.

• Revise EHP to lower cost

NATIONAL HEALTH INSURANCE

TAX FUNDED CHARITY SYSTEM

MANDATORY SOCIAL HEALTH

INSURANCE

COMMUNITY BASED

INSURANCE

VOLUNTARYPRIVATE HEALTH

INSURANCE