Developing Social Protection in Lao PDR ILO/WHO Fiona Howell & Aviva Ron

Basic Indicators  Population – 6.2 million  80% rural population  GDP $600 per capita (2006)  GDP growth rate 6% 2005, 7% 2006  Life expectancy 61 (63 female)  IMR 70/1000 live births  U5 MR 90/1000 live births  MMR 405/100,000

MoF National Strategies NGPES NSEDP ASEAN Vientiane Action Plan Health Masterplan MLSW Masterplan Whole of Government Ministry level Current Programs Projects LWU Donors NGOs Commitments Social Protection Roadmap Social Protection Drivers Poverty Sickness Disability Old age Women Children Elderly Disabled Risks Vulnerable Groups Social Protection for All ? ? Current Social Protection Programs 2006 LFTU MDGs SSO CSS CBHI

Health System in Lao PDR Health network now covers 93% of population Includes: 5,242 mid-wives 576 traditional medicine practitioners Ministry of Health 3 Central Hospitals 17 Provincial Hospitals 142 District Hospitals 710 Village Health Care Centres 4,830 Village Drug Kits 3,300 Village health volunteers 473 Village medical staff

Health sector performance  Positive reductions in infant mortality, children under 5, maternal mortality, Malaria, TB 10% in life expectancy 25% reduction in fertility threefold increase in use of contraceptives  Negative decrease in immunization rates slow increase in attended births low utilisation rates (0.7 outpatient consultations per capita; inpatient admission rate of 30 per 1,000 people) irrational drug prescribing

Issues – Funding  health sector critically under-funded  dependent on external support (donor finance)  currently US$11 per person per year (poor = US$5)  break-down 60% household 30% donor sources 10% government tax revenue  2/3 household health expenditure spent privately mostly on drugs  PHs and DHs get 48-83% of recurrent budget from user fees

Legal framework  Labour Law 2006: compulsory social security Initially enterprises with 10+ New = enterprises with < 10 workers All workers with labour contracts 3 months+  Curative Law 2005 Financing through:  User fees  Health insurance  Equity funds  Government budget  Finance Decrees Private insurance (1 private insurance company) Microfinance

MLSW Masterplan Goal 7 - Social Security Long-term  Achieve universal health coverage  Sustainable financial basis for health and income security  Economic stability for people faced with social risks Medium Term  Health care scheme for informal economy  National implementation of SSO for formal sector  Capitation based health insurance implemented nationally for SSO and CSS  SSO and SSD integrated  Quality of health care services improved

Goal 7 - Social Security Short-term  Universal health care strategy  Social security system for informal economy  Compulsory SSO membership  SSO national implementation strategy  Integration strategy for SSO and CSS  National health insurance evaluation mechanism developed Objectives:  SSO scheme covers all enterprises nationwide  Financial sustainability of social security schemes  Optimum combination of health insurance schemes developed for achieving goal of universal coverage  Improved quality of medical care  Improved operations of social security schemes

Health Insurance in Lao PDR HI is offered through 3 contributory and 1 non- contributory schemes and 1 private insurer: SSO - Social Security & HEALTH INSURANCE for employees in companies with 10 and more workers (decree 207/PM/1999)  Civil Servant Social Security & HI scheme (Social Security decrees 178/PM 1995 and 70/PM/2006 )  CBHI Scheme (decree 723/MoH/2005) voluntary schemes, operating in 5 pilot regions  HEF to support the poorest currently in 3 pilot regions  AGL – life, death, disability, hospitalisation

Goals for current social health insurance  Increase utilization rates  Pool resources and risks so that access to health care is not dependent on income levels  Provide safety net for households for serious illnesses, diseases and accidents (prevent households falling into poverty)  Maintain equity between private, community and public social health insurance schemes: (benefit package, capitation system)  Shift high out-of-pocket household expenditure to affordable and regular prepayment  Develop foundation for compulsory universal coverage

Characteristics of social health insurance  pre-payment  risk pooling amongst the scheme’s membership  Members still eligible for the services paid for by government and donors.  capitation payments for providers to encourage provider efficiency and avoid provider induced demand  sustainability – donor funds are used for start-up costs but are not used for direct support of the scheme

Health Insurance & Health Systems Objectives  Provide regular funding to support development of district level health services  Provide incentives to improve quality of care available through district hospitals  Shift out-of-pocket payment from unregulated private care to public health providers  Bring additional and predictable revenues in the public health care system – flow on effects for salaries  Improve quality of information on health care behaviour and needs

CBHI Achievements  Out-patient visits per year = 0.2 national average  National rate for Hospital admissions: 0.03 days/person/year  Hospital deliveries: 10.8% – National average 1.2 CBHI insured persons 0.2 days/person/year in CBHI in days/person/year in CBHI in % – CBHI in % - CBHI in = 750,000,000 Kip (US$ 78,800) paid into the public health system through capitation

SHI Achievements Out-patient visits per year: 0.2 national average 0.74 SSO insured persons in 2006 Hospital admissions: 0.03 days/person/year National rate 0.06 days/person/year in SSO in 2006 Hospital deliveries: 10.8% – National average; 60% – SSO in ,685,500,000 Kip (US$368,500) paid into the public health system through capitation

Issues  coverage  access  utilisation  Funding sustainability  Quality of care  expansion  other

Major issues  Contribution rates  Benefit package  Collection efficiency, local management  Compliance  Quality of care and member satisfaction  Information system – and recording  Capitation payment  Coverage  Understanding and interest in HI – public and providers  Health problems – maternity and health promotion

Issues – Coverage  formal sector vs informal sector  with access to services and without access  poor and non-poor  ethnicity  voluntary vs compulsory Current coverage  statutory schemes cover <15% population  CBHI cover <18,000 people

Issues – Access  availability of service ¼ poor live in villages with a medical practitioner ½ of non-poor live in villages with medical practitioner  proximity of service non-poor live 6.5km from HCC poor who live 11.7km from HCC  affordability of service cost of service – user fees or CBHI contribution cost of transport opportunity cost of time lost

Issues – Low Utilisation  Nationally : difficult access to health care lack of knowledge of need or value of health care low quality of health care financial barriers  utilisation by poor poorest 1/3 of families use more than 1/3 of all self-medication 30% of the services of private and traditional health workers, less than 25% of services from HCC and District hospital systems disadvantaged groups get less treatment non-poor go to hospital twice as often as the poor but poor are more often and more severely sick

Compliance – formal schemes  SSO compliance: Currently operating in Vientiane capital, Savannakhet, Vientiane province, Khammouan Province and Borikhamxay province Only 50% of enterprises based in Vientiane capital have joined, but these enterprises cover 70-75% of workers. New labour law extends coverage to smaller enterprises and therefore more workers

Compliance – voluntary schemes  CBHI Compliance is reflected by late payments – some families wait till end of the warning period (2 months), then pay when they need care Percent late payments in May 2007  Sisathanak69%  Nambak28%  Champasak82%  Hatxayphong65%  Viengkham46% Late payments mean that the amount sent to the hospital is not stable

Provider Behaviours – understanding capitation  Does not replace but adds regular money at the hospital level – government funding now very low  Does not attempt to cover all recurrent costs  Does not require complicated claims review  If care is appropriate, capitation should leave a surplus to be used as bonus/incentives for health workers

Quality of Care  Over-prescribing of drugs Average of 4.5 drugs/prescription Drugs account for 30% to over 100% of “charges” in the CBHI hospital expenditure reports Recorded drug prices are not standard, some at “cost” +50% Most patients get unnecessary:  Antibiotics, Voltaren, Valium, Vitamins  Attitude of health workers who prefer opportunities for under-the- table payments as opposed to “prepayment” Repeated delays for planned surgery in referral hospital

Issues – Financial Sustainability  Heavy reliance on donor funding  Equity funds are not sustainable  Reliance on user fees & cost recovery  Reliance on DRF margin (20-25% up to 40%)

–the link between compliance, coverage and capitation 1. Increased satisfaction of members 2. Serious change in prescribing patterns to reduce drug expenditure 3. Cooperation with Referral Hospitals for efficient referral, diagnosis and treatment 4. Big campaign to explain to all – providers and villagers 5. More efficient contribution collection system to reduce late payments 6. Improved information system (adapting MIS for CSS for CBHI )

Plans to improve capitation use, quality and coverage  Assure incentives for provider staff  Promote understanding of why satisfaction of the insured is important to increase coverage  Increase understanding of the link between coverage and capitation revenue  Increase awareness and campaigns at highest level to increase coverage within districts  Use social marketing approach with competition, awards and rewards

Potential Coverage High income Middle income / Formal sector Near Poor Poor Very poor Private insurance CSS, SSO, CBHI CBHI Equity Funds

Issues - Expansion  SSO = 300,000 people to cover 100% of private sector & SOE employees  small enterprises (< 10 employees)  need to address compliance  Public Sector schemes = 1 million people  CBHI = 4.5 million people roll-out to all Districts – 142 schemes to non-poor voluntary nature  Equity fund = 300,000 roll-out to all Districts to very poor – 5%

Principles for Expansion  Maintain coherence and equity among SHI schemes.  Keep components as similar as possible: Benefits package and exclusions, Provider payment mechanisms Coverage for contributor and dependents Modest household contribution levels First level care provided at District hospitals with referral system Sufficient but modest capitation fees

Options under consideration  Link district based CBHI schemes within a province to pool risks and resources  Compulsory CBHI for non-salaried, informal sectors,  Government subsidies for contributions to cover poor population  Develop measures for rational use and rational prescribing among health workers and the insured  Equity funds to pay contributions for Health Insurance for most vulnerable and poorest  Develop Social Insurance Law during 2008

Plans to improve: Contributions for the very low income population  Negotiate with Health Equity Funds  i) Purchase CBHI cards for poor families in medium-income level districts (Sisathanak, Hatxayphong)  ii) Use Equity Fund to subsidize contributions for all families in very poor areas (over 65% poor) as sliding subsidy

PartnerYear 1- 2 % Year 3-4 % Year 5-6 % Year 6-7 % Years 7-8 % Household HEF/ Fund HEF/ Very Poor - 10% - 7% - 5% - 3% (continued Social assistance for declining number of people) Sliding subsidy approach in districts where over 65% are below the poverty level

Capacity Building InstitutionalLegal framework, policy, regulations Reporting frameworks planning Coordination among Ministries and agencies, Partners Monitoring & Feedback OrganisationalStructures – national, provincial, district, community levels Resources – facilities & staff Financing - government, private and donors Service delivery system Program, project & administrative budget planning Research IndividualStaff Recruitment Health insurance curriculum development Individual Training Human resource development planning Professional skills development