Consultative Investigation into Low-income Medical Scheme Coverage - Literature review -

1
Consultative Investigation into Low-income
Medical Scheme Coverage - Literature review
-

• Presentation to Stakeholder Forum convened by the
  Council for Medical Schemes
• 4 May 2005

2
Introduction

• This is a presentation of the initial overview of
  international experience in this area a full
  report will be available later
• Many of the issues have already been highlighted
  in the ongoing discussions on SHI in South Africa
  
• In the international literature access of low
  income households to health insurance is usually
  part of the discussion on SHI difficult to
  separate this out

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Objectives

• Review literature on low-income participation in
  medical insurance schemes
• Focus on large-scale and formalised schemes
• Focus on demand-side, supply-side and regulatory
  barriers to participation
• Identify key issues to be considered by South
  Africa

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Methods

• Review of published and unpublished literature on
  health insurance (HI) provision for low income
  groups
• Identified key characteristics of HI models in 13
  countries
• Compared outcomes for low income groups
• (coverage, equity, sustainability,
  efficiency)
• Key lessons for South Africa identified (Key
  Themes)

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Types of health insurance

• Commercial health insurance
• Public subsidies to assist low income
• Voluntary health insurance
• Micro insurance
• Community based health insurance
• Social re-insurance
• Mandatory social health insurance
• Varying levels of coverage for low income
  groups

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Voluntary and mandatory financing instruments in
the health sector source Preker (2004)
Subsidies Insurance mechanisms Insurance mechanisms Insurance mechanisms Savings
General revenues Social HI Private HI Community Financing Household saving Donor Aid
Voluntary
Mandatory
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Case Studies

• Eastern Europe
• Czech Republic
• Kyrzkstan
• Latin America
• Chile
• Argentina
• Columbia

• Asia
• Philippines
• Korea
• Vietnam
• Sub Saharan Africa
• Kenya
• Tanzania
• Sudan
• Zimbabwe
• South Africa

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Framework of analysis key characteristics of
health insurance systems

• Revenue collection
• The funding source and entitlements conferred
• Pooling of funds
• The accumulation of prepaid health care revenues
• Purchasing of services
• The transfer of pooled resources to service
  providers on behalf of members
• Provision of services
• Type of providers and whether operate on
  competitive, preferred provider or monopolistic
  basis
• Adapted from McIntyre et al (2003)

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Outcome indicators

• Coverage for low income groups
• Equity
• Contributions based on ability to pay and access
  to health care services based on need (WHO, 2000)
• Sustainability
• Sufficient SHI resources available to cover
  benefits
• Efficiency
• Improvements in technical and allocative capacity
  of purchasers of care and health care providers

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Findings 1 Models of health insurance risk
pooling

• Single National Insurer
• - Kyrgstan, Kenya, Tanzania, Sudan,
  Philippines, Korea
• Restricted choice models
• - Vietnam
• High Risk Pool
• - Chile
• Risk equalisation methods
• - Columbia (risk adj), Czech Republic (60)
  Argentina (10)
• Adapted from Soderlund (1997)

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Findings 2 Coverage of health insurance
Country Public sector Formal sector Informal sector Registered non-waged Universal entitlement
Argentina
Chile
Czech Rep.
Columbia
Kenya
Kyzkstan
Korea
Philippines
Sudan
Tanzania
Vietnam
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Findings 3 Outcomes of HI schemes

• Equity in access to care may be reduced to make
  SHI more acceptable for high income groups
  (Chile, Argentina, Columbia)
• Efficiency is compromised when insufficient focus
  on also restructuring health care delivery
  (Vietnam)
• Sustainability is sacrificed if benefit levels
  are set too high or coverage extended too wide
  with limited tax base (Philippines, Korea, Czech
  Republic, Kyzgstan)
• Outcome may be compromised if attempts to
  increase cover into lower income groups takes
  place outside other reforms in the health sector
  (opt-out NB)

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Case study Vietnam National Health Insurance Case study Vietnam National Health Insurance Case study Vietnam National Health Insurance
Policy objectives To increase revenue and improve quality of services To increase revenue and improve quality of services
Revenue collection Funding source Formal sector Payroll tax Informal sector Flat rate fee
Revenue collection Benefits Inpatient and outpatient free
Pooling mechanism Organisation State Fund at national and provincial levels
Pooling mechanism Allocation mechanism Redistribution of 2 Fund income between provinces
Service Provision Contracts with public sector hospitals Contracts with public sector hospitals
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Outcomes Vietnam

• Coverage
• 4 out of 38 million joined scheme voluntarily
• 90 of population uninsured and pay user fees
• Equity
• Barriers to accessing care in rural areas as HI
  only covers hospitals and not primary care
• Flat fee for informal sector is high
• Redistribution of 2 between Provincial Funds too
  low
• Efficiency
• No efficient costing of health care in public
  sector
• No significant improvement in quality of care in
  public sector
• Sustainability
• Poor purchasing of health care

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Key themes 1 Revenue collection

• Contributions
• Does the scheme receive a subsidy (GT,
  cross-subsidy from high income earners)?
• If yes, what level of income cross subsidy is
  acceptable to high income earners in South
  Africa?
• Should high income earners be able to opt out?
• If no, what is the willingness of low income
  earners to pay for health insurance

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• Benefits
• Pay roll contributions should be adequate to
  improve health care delivery for members
• Public sector services for insured should be
  differentiated to promote buy in amongst
  compulsory and attract voluntary members

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Key themes 2 Risk Pooling

• Integrate low income scheme in to existing
  medical schemes?
• or
• Establish State Fund for low income and high risk
  groups?
• Or
• Other alternatives?

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Key themes 3 Purchasing organisation

• Need for Government regulation and monitoring, eg
  support in fee negotiations
• Need for institutional development to build
  skills in purchasing of care (if state Fund)
• Need to use medical scheme funds to encourage
  greater efficiency in delivery of care by public
  sector, if this is a stated aim of a low income
  scheme

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Key themes 4 Service Provision

• If care for low income HI members is to be
  purchased from public sector then need to
• Strengthen capacity of public sector management
  at facility level to manage medical schemes
  systems
• Use revenue to improve public health care
  services for all users
• Make costing and payment mechanisms as simple as
  possible while maintaining positive incentives
  for care.
• Competition between providers may be of benefit

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Key themes 5 Process

• Policy makers should
• Define policy objectives and benchmark equity
  outcomes at start of process
• Be aware of importance of policy process and not
  just technical design
• Ensure public are informed and educated on
  principles of health insurance
• Consider an incremental approach (?modular)

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Indicators used to compare feasibility of
introducing social health insurance

• Population density
• affects administration costs
• of workforce urbanised
• affects administration cost
• of workforce in industry
• to collect payroll tax
• Per capita income
• size of tax base
• Ensor (1999)

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Feasibility of introducing social health
insurance adapted from Ensor (1999)
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Gaps in knowledge about Low income schemes

• Purchasing capacity or willingness of low income
  groups to pay for insurance
• Needs and preferences of low income groups
• Structure and income levels of work force
• Potential burden on high income groups of
  different SHI models
• Impact of SHI on health outcomes

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Outcomes of HI for low income groups

• In the case studies reviewed, countries from
• SSA have not extended HI to cover low income gps
  
• (Kenya, Sudan, Tanzania)
• Latin America provide inferior benefits to low
  income and allow opt out for high income
  resulting in inequitable access to care (Chile,
  Columbia, Argentina)
• Eastern Europe have extended benefits beyond
  revenue resulting in low quality of care
  (Kzykstan, Czech Republic)
• Asia failed to strengthen public sector skills in
  costing and purchasing of health care (Vietnam)

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Key policy considerations

• Level of cross subsidy acceptable to high
  income group in South Africa
• Need to build skills in public sector to
  manage SHI systems before scheme is launched
• Incentives for voluntary participation in SHI
  by self employed and informal sector

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Constraints to accessing Health Insurance at
low-income levels (SPARE SLIDE)

• Demand side constraints
• Low household income
• Low formal labour market participation
• Low formal sector contribution compliance
• Low social cohesion
• Low public sector utilisation rates
• Adverse selection
• Supply-side constraints
• High commercial insurance premiums
• adapted from Preker, 2004