Extending Health Insurance: How to Make It Work Improving Access to Health Care through Insurance Catherine Connor, MBA Abt Associates Inc. February 2010

What we will do in this session Produce technically sound, responsible policy recommendations regarding insurance for our health ministers Technical and political working together Why health insurance? What type of health insurance? Political promises and technical realities Group discussion of recommendations

How can policy makers and technical experts work together?

Health insurance is primarily a political process 95% political 5% technical

Politicians and technocrats often do not speak the same language Political Leaders Leave a legacy Drive to achieve universal coverage Accountable to voters Fulfil an electoral mandate Enlarge electoral base Sensitive to social groups (poor and vulnerable) or powerful interests Success stories Technocrats Worry the details and complexities Ensure sustainability Control costs Use purchasing power to increase quality and efficiency among providers Learn what works Atim,Chris 2009

Together they can build consensus for health insurance Political Leaders Provide the vision and direction Push diverse stakeholders to compromise Task technocrats to design and implement Technocrats Evidence-based decisions Objective analysis Design must be attuned to political leaders objectives while offering best advice Atim,Chris 2009

Effective technical advocacy for health insurance Before we analyze the political and technical aspects of health insurance, take a minute for personal reflection: What are your countrys political priorities? What are your ministers priority political commitments? How does health insurance link to these priorities?

Why health insurance?

Why Insurance? African countries have 2nd highest level of out-of-pocket (OOP) health expenditures No financial protection! ECSA countries have lower OOP expenditures than the average for SSA Low OOP High OOP

Why insurance? Absence of financial protection leads families to sell assets or borrow A. Leive and K. Xu 2008

Why insurance? Big picture reasons for MoF and Presidents Out-of-pocket health payments increase poverty and inequity Poor cant access services – never reach the MDGs Healthy population and equity are key to economic growth and stability

After presentation – Group Discussion What will be our recommendation to Health Ministers regarding Why health insurance is needed

What type of health insurance?

Types of health insurance Type of schemeFinancingDefined-income or -benefits? Management system Examples Public or national health service General tax revenueIncome defined by national budget Public sectorUK, Canada, Scandinavia, Eastern Europe Social health insurance Earmarked payroll taxes by employers and employees Benefits defined by law Social security agency, health or sickness funds Germany, Belgium, France, Medicare in US Private voluntary schemes Premiums from individuals or employers and employees Defined benefitCommercial for- profit or non-profit insurance co South Africa (Medical Aid Societies), USA (HMOs, Blue +/Blue Shield) CBHI and MHOsPremiums from members /community Neither income nor benefits fixed (in law) Community, members or association Senegal, Mali, India, Cameroon,

Advantages and challenges Scheme typeAdvantagesChallenges Public or national health service Maximum population coverage if funding is available Progressive revenue collection (depends on tax regulations) National budget offers wide resource base Administrative simplicity (lowest admin costs) Funding variable; limited by tax base, MoF Limited provider competition or choice Quality issues Inefficient bureaucracies Social health insurance Mobilizes additional resources from employers Earmarked funding insulates revenue from annual budget round Transparency or visibility of system enhances legitimacy /population support Unemployed, informal sector not covered Taxes usually capped, so less progressive Payroll contributions may adversely affect employment and economy More complex management and legislative systems Private voluntary schemes Financial protection to those who can afford Consumer choice Increases sources of funding for sector Can increase competition for quality and efficiency Supplement public insurance May reinforce inequities in access PVI enroll rich and healthy Cannot provide 100% coverage High admin costs (marketing, enrolment, premium collection)

Advantages and challenges (2) Scheme typeAdvantagesChallenges CBHI and MHOsTargets population groups such as rural and informal sectors May help equity by closing social protection gap with formal sector Facilitate donor and Govt support /subsidies Assist Govt and donors to better target subsidies and extend protection to informal sector Develop tools and techniques used by NHIS Small risk pools result in low revenue and limited benefits which in turn result in limited financial protection Hard to scale-up Hard to sustain (bankruptcies) Cannot cover poorest unless subsidized Less able to affect providers High admin costs (marketing, enrolment and premium collection)

Universal coverage Intermediate stage of coverage Absence of financial protection Carrin, Mathauer, Xu, Evans Dominance of out-of-pocket spending Mixes of community, cooperative, and enterprise-based health insurance, SHI, and limited tax-based financing Mix of tax-based and social health insurance We are here What type of health insurance?

After presentation – Group Discussion Whats our recommendation to Health Ministers regarding Type of health insurance

Political promises and technical realities

Political promises and technical realities Insurance increases funding for health Yes, if : New taxes on companies and workers (social health insurance). Affect on formal economy? Insurance pays providers fee-for-service, utilization and costs rise. Can be good or bad. Insurance attracts new donors funds. Sustainable? Depends, if national health insurance budget is negotiated each year No, if administrative costs are high (Kenyas hospital insurance in 90s)

After presentation – Group Discussion Whats our recommendation to Health Ministers regarding Potential for health insurance to increase funds for health

Yes, if designed to do so Financial contributions based on wealth vertical equity in financing Service utilization based on need horizontal equity in service Political promises and technical realities Insurance will benefit the poor

Yes, if designed to do so Revenue collection General taxes are progressive (the rich pay higher income or property tax rates; no consumption tax on staples such as food) Earmarked taxes for health are progressive (taxes on luxury goods) Poor populations are exempt from user fees or copayments; or fees are based on income Pooling Compulsory universal coverage so the rich cannot opt out Outreach to enroll poor populations Redistribution among multiple fund pools, e.g. rich districts subsidize poor districts Political promises and technical realities Insurance will benefit the poor

Purchasing Exclude high-end, expensive, elective care from the benefit package. Shift from inpatient to outpatient care (Kyrgyz) Adequate supply of health providers and facilities where the poor live (Korea, Thailand) Incentives for providers to serve poor populations Vouchers or other incentives for poor to use priority services Political promises and technical realities Insurance will benefit the poor

Insurance can worsen inequities: US (Filmer 2003), Africa (Gwatkin 2004), China (Wang 2005); Brazil, Sri Lanka (Wagstaff 2007) Insurance can improve equity, if: Design prevents richer groups from gaining more from public spending than poorer groups Target populations where access is limited (rural,urban poor) Adequate supply of health providers and facilities Vouchers Community outreach Provider incentives Political promises and technical realities Insurance will benefit the poor

After presentation – Group Discussion Whats our recommendation to Health Ministers regarding The potential for health insurance to benefit the poor

Yes, if: Benefits package covers priority services (reproductive health, infectious diseases) Target populations with low use of priority services Adequate supply of health providers and facilities for these services Vouchers Community outreach Provider incentives Political promises and technical realities Insurance will increase use of priority services (MDGs)

After presentation – Group Discussion Whats our recommendation to Health Ministers regarding The potential for health insurance to increase use of priority services and contribute to health MDGs

Political promises and technical realities Lets implement universal coverage next year 100 YEARS - UK, Germany, most European countries 25 YEARS - Costa Rica,Thailand, Korea – progress since 1970s 15 YEARS - Columbia, Chile, Brazil – progress in 1980s and still working YEARS Transition getting faster Carrin and James 2005, Mills 2007

Thailand: Expanding Access in Stages Source: Thaworn Sakunphanit, Universal Health Care Coverage Through Pluralistic Approaches: Experience from Thailand, accessed Oct 17, 2009http://

Post- independence experience with social insurance CBHI and mutuelles leading to NHIS Restructuring in late 80s/ 90s Declining revenue bases and increasing crises in 70s/80s Formal sector focus and exclusion of rural and informal sectors Directly imported from and based on European models Economic crises threaten welfare state Collapse or deterioration of services User fees Growth of private sector and civil society Legitimized and validated HI for rural /informal sectors Provided model, tools, skills, etc for renewed state interest and approach to SHI – decentralized, participatory, etc Atim,Chris 2009 Political promises and technical realities Lets implement national health insurance next year

1.The need for health insurance 2.Type of health insurance How insurance can: 3.increase funding for health 4.benefit the poor 5.Increase use of priority services (MDGs) 6.How long it takes to expand health insurance (reach universal coverage) Group Discussion Our recommendations to Health Ministers

Thank you