World Health Organization 26 February 2019 Financial protection in the South East Asia region: determinants and policy implications Hui Wang and Lluis Vinyals, WHO SEARO, 11 December 2017

http://www.who.int/health_financing/events/en/ http://www.searo.who.int/about/administration_structure/hsd/measuring-financial-protection/en/

This presentation will discuss The financial protection situation in SEAR at a glance The determinants of out-of-pocket spending What is being done to tackle the main issue: Medicines Elements to consider when dealing with the financial protection challenge

Context (averages): high OOP, low public spending Out of pocket and General Government Health Expenditure, as share to Total Health Expenditure, 2014 SEAR has the highest OOP share of total health expenditure amongst WHO regions Government spending is amongst the lowest

Financial protection is measured in two ways: Catastrophic health expenditure Proportion of the population with large household expenditures on health as a share of total household expenditure or income Impoverishment due to health Proportion of population that falls below the poverty line (increased incidence) due to health related spending What is missing? Further impoverishment: People (poor citizens) already poor cannot be “impoverished” Foregone care: People (poor citizens) not using services are not captured in the picture because they spend “nothing”

Financial protection: Catastrophic health expenditures Incidence of catastrophic health expenditure in six SEAR countries Country Year Threshold of HH expenditure = 10% Threshold of HH expenditure =25% Bhutan 2012 4.00 1.39 India 2011 17.33 3.89 Nepal 2014-15 10.71 2.41 Sri Lanka 5.33 0.91 Thailand 2015 2.01 0.38 Timor-Leste 2014 3.52 0.96

% pop being pushed under Impoverishment due to health: approximately 57 million people are being impoverished in the 6 countries   % pop being pushed under $1.90 $3.10 Bhutan 0.32 0.93 India 4.21 4.56 Nepal 1.67 3.44 Sri Lanka 0.07 0.83 Thailand 0.003 Timor-Leste 1.12 0.84

Impoverishment: equity perspective Percentage of population being pushed under international poverty line due to OOP (2011 PPP international dollar*), by expenditure/consumption quintile Panel A. PL=$1.90 Poorest Poorer Middle Richer Richest Bhutan 1.31 0.28 India 17.61 2.49 0.67 0.25 Nepal 6.90 0.97 0.46 Sri Lanka 0.34 Timor-Leste 5.28 0.22 0.10 0 values amongst the poorest reflect that further impoverishment is not captured here In countries relying on OOP, even the richest can fall into poverty Rural population suffer more except in Timor-Leste Percentage of population being pushed under the international poverty line due to OOP (2011 PPP international dollar), by rural/urban Panel A. PL=$1.90 Rural Urban Bhutan 0.43 0.06 India 5.24 1.61 Nepal 1.98 0.94 Sri Lanka 0.08 Timor-Leste 0.95 1.56

Components of OOP expenditure: Medicines driving financial hardship Share of medicines in out-of-pocket health expenditure in six SEAR countries In four countries, medicines spending drives OOP Sri Lanka OOP is led by payments to outpatient private facilities. Thailand led by inpatient care (ATTENTION: this is in relative terms) National Poorest Poorer Middle Richer Richest Rural Urban Bhutan 76.4 69.2 72.4 77.0 80.8 78.2 69.3 89.4 India 79.9 85.3 81.2 78.5 74.7 72.0 81.5 76.0 Nepal 77.1 85.1 79.3 78.1 71.4 77.3 Sri Lanka 33.6 35.5 31.6 34.7 33.1 32.1 40.7 Thailand 37.2 52.7 43.4 42.5 37.9 32.6 36.9 37.4 Timor- Leste 70.0 66.7 68.8 72.7 70.3 69.6

Existing policies to increase access to medicines seems not working: why? Supply-side policies: free access to a list of essential medicines, usually supplied by public distribution channels (in most countries) Achilles heel: effective use of public facilities and reliability of the procurement and distribution system Demand-side policies: reimbursing patients or facilities for medicines dispensed to users (in few countries) Pre-conditions of success: contracting and reimbursing scheme in place. Inclusion of medicines Market based solutions: regulating prices and markups, to make them affordable Main issue is related to many people (poor) cannot afford them at any price Important additional points: Low levels of public spending in many countries Health financing solutions may not be enough to manage over-consumption of medicines

Fighting financial protection will require more strategic purchasing: What does this mean? Defining what to deliver/ purchase: to cover medicines? All? How? Defining how to pay for services: extra money will not translate into financial protection if paying providers is not “managed” Defining who should provide the services: are users using more private providers? Coverage might depend on engaging with them Thailand includes medicines in the UC scheme, using tax based money, channeled through capitation to districts

Few final messages Globally, the median incidence of CHE (25% threshold) is 1% India and Nepal have higher incidence Financial protection issues in the region mainly linked to medicines (India, Nepal, Bhutan and Timor Leste) Policies in place fall short of intended goals Low spending, narrow scope and passive purchasing Epidemiological transition will require bolder actions, including tackling the medicines

Thank you for your attention Hui WANG and Lluis VINYALS TORRES Health Economics and Planning Unit Department of Health Systems and Development WHO/SEARO HWANG@who.int and LVINALSTORRES@who.int