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Title: Health financing reforms and their implications for sexual and reproductive health services


1
Health financing reforms and their implications
for sexual and reproductive health services
  • TK Sundari Ravindran

2
What is health financing?
  • Health financing includes
  • Mechanisms for raising funds
  • Basis for allocation of resources, i.e.
    priority-setting

3
Health financing
  • Principal mechanisms through which resources are
    raised to meet costs of health care services
  • - Tax revenue
  • - Social health insurance
  • - Private (for-profit) health
    insurance
  • - Out-of-pocket payment
  • - Prepayment schemes
  • - Donor funding

4
Public and private in health financing vs. in
service provision
  • Classification of financing sources as public and
    private is different from the classification of
    service provision into pubic and private.
  • There can be private financing (e.g. user fees)
    for public sector health provision, and public
    financing (e.g. social insurance) for private
    sector health provision.

5
Tax Revenue
  • Money raised through general taxation of the
    population
  • In some countries, taxes on alcohol and tobacco
    are specifically ear-marked for the health sector
  • May be used for supply-side or demand-side
    financing.

6
Insurance
  • Broadly defined as a financial mechanism that
    exists to provide protection to individuals and
    households from expenses incurred as a result of
    unexpected illness or injury.
  • Premium paid regularly entitles payee to a
    specific benefit package.
  • Source Bhat and Reuben. Management of claims and
    reimbursements The case of Mediclaim insurance
    policy. Vikalpa, 27(4), 2002.

7
Social health insurance
  • Autonomous public fund set up by government.
    Standard pay-roll deduction is made from both
    employers and employees. Government also
    contributes
  • Covers all formally employed persons and their
    dependents. Some countries permit voluntary
    participation of those from the informal sector
  • In some countries, only government employees are
    included and private sector employees are not.

8
Private (for-profit) insurance
  • Based on voluntary contributions by individuals
    or by individuals and their employers jointly.
  • Premium to be paid depends on
  • the insured persons risk of ill-health
  • what conditions are covered? What kind of care
    is covered?
  • Meant to cover mainly low-probability, high-cost
    events, in order to be profitable

9
Out-of-pocket payment
  • Payments made by the user of health services to
    the health service provider, at the time of
    receiving the treatment.

10
Pre-payment schemes
  • Includes community financing
  • Fixed sum of money collected from members of a
    community
  • Payment entitles members to access specific
    services or drugs
  • Is meant to increase access to care by not
    requiring people to pay at the time of receiving
    treatment

11
Donor funding
  • Funding by bilateral and multilateral agencies
  • May be grants or loans
  • Predominantly goes to support government
    expenditure (amounts received by NGOs is very
    insignificant as a proportion of national
    expenditure)

12
Exercise
  • Look at the table in pages 78-84 in the book.
    What are the major financing mechanisms in
  • South Asian countries Bangladesh, India, Nepal,
    Pakistan, Maldives, Sri Lanka
  • SE Asian countries Myanmar, Thailand, Indonesia,
    Cambodia, Malaysia, S.Korea

13
Health financing reforms in the 1990s Rationale
  • There is simply not enough resources that
    governments can raise through tax revenue to
    finance health care for all
  • Donor funding cannot meet the gap between health
    care resource requirements and public funds
    available for health care
  • Public funding for health care is targeted
    poorly primary care facilities, and those most
    in need receive less.

14
Resource requirements for Basic health and
basic RH services
  • According to the CMEH report, providing minimum
    essential health care services would require at
    least US 34 per person per year in 2007, in LDCs
  • Providing an essential package of RH services
    FP, prevention and treatment of STIs, prenatal
    and delivery care was estimated to cost between
    US 6.75 and 8.00 in 1994, and probably at least
    twice this amount by now.

15
Health financing reforms in the 1990s Broad
directions
  • The most widespread financing reform introduced
    are
  • Increase in or introduction of user fees
  • Increasing the role of the private sector and
    public-private partnerships

16
Health financing reforms in the 1990s Broad
directions -2
  • Several countries are experimenting with and
    promoting
  • Pre-payment schemes
  • Private health insurance
  • Where social insurance schemes are already in
    existence for a long time e.g. Latin American
    countries, reforms have focused on pooling
    multiple funds and cost-containment

17
Criteria for evaluating financing mechanisms
  • Can this generate enough revenue?
  • How will this affect demand for services? Supply
    of services?
  • How will this affect access to services for
    different groups of people? Who may get left out?

18

  • What do we know about the achievement of some of
    these financing reforms?

19
User Fees
  • User fees have not been able to raise significant
    revenue (WHY?)
  • They have often resulted in decreased access for
    the poor
  • One study of 39 developing countries found that
    the introduction of user fees has increased
    revenue only slightly, while significantly
    reducing access of low-income people to basic
    health services (UNRISD 2000)
  • User fees in urban China led to
  • - increase in non-use of health care among
    the poor from 38 in 1992 to 70 in 1997
  • - increase in the rate of non-use of
    in-patient services from 25 for the lowest
    income group and 15 for the highest income group
    in 1992 to 44 and 23 respectively in 1997.

20
User Fees-2
  • In India, a study of Andhra Pradesh Vaidya
    Vidhana parishad (APVVP) hospitals showed that
    during 2001-04, user fees contributed to between
    1.08 to 4.47 per cent of total expenditure of
    these hospitals. WB appraisal reports of several
    states indicate the same.
  • That while total utilisation increased (IP 26,
    OP 19), share of the poor fell (IP, 92 to 65
    and OP 83 to 68 deliveries 74 to 53
  • Similar findings of declining utilisation by poor
    in Maharashtra.
  • Waivers and exemptions poorly implemented.
  • Source Mahal A in NCMH India report

21
User fees and SRH
  • Costs of SRH services may be unaffordable as it
    is, no scope for increasing costs.
  • Highly price elastic demand for many services
  • Treating one episode of RTI in a government
    facility costs more than the average monthly
    income of a Rajasthan (India) household and
    abortion costs are 2-3 times the monthly income.
  • Delivery services could cost 2-8 times the
    monthly income of the poorest 25 of the
    population in Rajasthan and Dhaka (Bangladesh).

22
Financing reproductive health in Rajasthan,
India (2000)Source Financing reproductive and
child health care in Rajasthan, IIHMR and Policy
project, 2000. p. 18 (50)
23
Issues related to insurance -1
  • Moral Hazard tendency of those insured to make
    frivolous use of health care services
  • Adverse selection A higher probability of those
    at risk of illness enrolling in insurance schemes

24
Issues related to insurance -2
  • Insurance schemes are in general fraught with
    problems related to cost-escalation and quality
    of care.
  • Where fee-for- service system used for paying
    providers, results in unnecessary procedures and
    prescriptions.
  • Where capitation system of payment for providers
    used, quality of care tends to be compromised,
    and high-cost procedures are often postponed.

25
Social Insurance Schemes
  • Social Insurance Schemes great difficulty in
    enrolling private sector and informal sector
    employees where fee-for- service system used for
    paying providers, results in unnecessary
    procedures and prescriptions. Where capitation
    system of payment for providers used, quality of
    care can be compromised, and high-cost procedures
    may be postponed.
  • Social insurance schemes based on payroll
    deductions exclude large numbers of women not in
    formal employment even for women enrolled in
    these, routine contraceptive and delivery care is
    often not included. Can lead to unnecessary
    c-sections and other surgical procedures.

26
Social Insurance Schemes-2
  • ESIS for industrial workers. Coverage beyond
    health care, to include wage compensation against
    sickness and cash payments for partial disability
    and marriages and funerals. Incurring huge
    losses.

27
Private (for-profit) Insurance
  • In India, Mediclaim Insurance and other schemes
    offered by GIC was till recently the only set of
    private insurance schemes. New private sector
    entrants into the insurance market.
  • Private insurance is designed mostly for
    low-probability, high-cost health events, and
    would therefore find it economically unviable to
    provide routine delivery, abortion and
    gynaecological care.

28
Pre-payment schemes
  • Prepayment schemes appear to work where there is
  • - a large number of subscribers
  • - possibility for risk pooling through
    enrolment of poor and non-poor, high and low risk
    populations
  • - co-financing by government and/or donors
  • Scope for including basic SRH services in the
    benefit package

29
Pre-payment schemes-2
  • 52 known CBHI schemes in India, run mostly by
    NGOs, covering 5-6 million people from low-income
    groups
  • Small premiums, from Rs 20 to 120 per person per
    year
  • Very limited benefits packages with one or two
    exceptions, do not cover SRH conditions, even
    delivery
  • The UIS scheme of GoI (one rupee a day scheme)
    has had limited success does not cover
    conditions related to pregnancy and delivery.

30
Donor spending not on country needsSri Lanka
1990 (Rannan Eliya et al 2000)
31
Positive models
  • There are a few examples of prepayment schemes
    which include RH services in their benefits
    package
  • - Health card schemes in China and Thailand
  • - Tax revenue funding for Emergency Obstetric
  • Care in Indonesia
  • - Tax revenue funding for Basic Health
    Insurance package in Bolivia for the poor

32
Health Cards in China -1
  • China Currently experiencing third wave of
    health sector reforms. First during cultural
    revolution, and the second- to counter the
    negative impact of transition to market economy.
  • Since the 1980s, user fees and revenue from drug
    sales were to be used for covering running costs
    of village health stations. Dire consequences in
    1993, 60 of non-compliance was because of
    inability to pay for services, and 30-50 of
    rural hhs BPL had become impoverished due to
    illness and its treatment. Low-income women could
    no longer afford trained attendance at delivery.
  • In 1994-95, 74 of rural women in one province
    with complications related to pregnancy/delivery
    did not seek medical care.

33
Health Cards in China -2
  • Currently, World Bank Assistance for reviving the
    Co-operative Medical Scheme.
  • Introduced in 71 poorest counties
  • A package of priority health interventions
    available at subsidised cost to all residents in
    these counties. Coverage includes maternal care,
    including standard prenatal visits, hygienic
    delivery and postnatal care. A fixed amount
    collected from each household, and co-financed by
    government.
  • The poorest 5 of households covered by the
    Medical Financial Assistance Program funded by
    the government which reimburses providers. No CMS
    premiums for this group.

34
Health Cards in Thailand- 1
  • Introduced a series of pre-payment and public
    insurance schemes since the late 1970s.
  • 1976- free health card schemes for poor
    households, financed by tax revenue. Free care in
    government institutions
  • 1984 500 baht health card scheme for rural
    non-poor hhs, matching subsidy by government.
    Free care in government institutions.
  • All government workers and their dependents, and
    all private firms with 20 or more employees
    compulsorily enrolled in social insurance

35
Health Cards in Thailand- 2
  • 30 Baht health policy (2001) being piloted in
    six provinces.
  • Covers anyone who is not in any other insurance
    scheme.
  • Covers all reproductive health services except
    obstetric services beyond the second pregnancy
    and infertility treatment.
  • Subsidised fee of only 30 Baht per episode of
    illness, provided they use public facilities and
    follow the referral system.
  • For emergencies, any government health service
    can be accessed
  • Clinical Practice Guidelines is also developed to
    assure the same quality of services.

36
Paying for EmOC
  • Indonesia 1997 Safe Motherhood Project
  • Hospitals and other health care facilities were
    to be reimbursed for providing EmOC, for needy
    patients referred by the village midwife BDD.
  • Funds to be available to public as well as
    private providers.
  • Clear definitions of type of conditions to be
    covered, target group, prices and eligible
    providers were set out, while poor and needy
    were defined as per definitions used in family
    enumeration data.
  • Expected to cost less than 0.50 per capita,
    including administrative costs.

37
Overall
  • Financing reforms appear not to have achieved the
    objective of meeting the resource crunch in
    paying for health services.
  • No resources have been freed up because of
    private sector involvement, for channelling
    towards essential care for the poor. Rather, the
    scenario is one of shrinking resources, and
    diminishing access especially for the poorer
    sections of the population. Health care costs
    appear as an important contributor to
    impoverishment in many countries where all health
    services have to be paid for.
  • Some positive initiatives offer hope for the
    future.

38
Overall
  • No to user-fees for priority SRH services.
    Priority SRH services (e.g. delivery and abortion
    services, inpatient gynaecological care) should
    be publicly financed through tax revenue at least
    for low-income groups. Especially inpatient care
  • Examine the feasibility and equity implications
    of demand-side financing mechanisms
  • Donor funding to be channelled to under-resourced
    SRH services of high priority
  • Social Health Insurance to include coverage of
    priority SRH services (including for e.g. cancer
    care)
  • Introduction/expansion of prepayment schemes
    which include priority SRH services(e.g. delivery
    and abortion services, inpatient gynaecological
    care) in the benefit package
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