Regional Experiences in Health Financing Reforms Lessons for Uzbekistan? February 2006

Overview 1. Sources and Levels of Financing 2. Pooling and Allocation of Funds 3. Use of Funds (“Purchasing”) 1. Policy Tools (“Who”, “What”, “From Whom”, “How to Pay”) 2. Organizational Characteristics

Allocation mechanisms Sources/Levels of Funds Budgeting/Purchasing Provision of Care Pooling of Funds Source: Kutzin/WHO, 1999 Focus Focus

(1)Sources and Levels of Financing

Public Health Expenditure as % of GDP Source: HFA database EU-15: 8.9 (2001) Central, South East Europe & Baltics: 5.8 (2001)

Going Up in Eastern Europe; Mixed in CIS

Source and Levels of Funds: Too Little?* * global trends mid 1990s Uzbekistan

EEC/FSU: Use of the Payroll Tax

Why? Increase Funds Stabilize Flows of Funds Year-by-Year Improved Management Greater Transparency

Mixed Funding: Compromise Social Insurance Taxes as Share of Total Labor Cost, mid-1990s

Russia

Health Insurance in Kazakhstan

Use of General Revenues: A Regional Trend Use of General Revenues: A Regional Trend (!) Netherlands, France, Kazakhstan, and Russia Decreasing Payroll and Moving to General Revenues Others, such as Uzbekistan, holding off new payroll taxes

(2) Pooling/Allocation of Funds

Trends to Greater Pooling Increased Pooling Poland, Estonia, Lithuania, Romania Kyrgyz Republic Regional-Level Pooling Russia, Kazakhstan, Uzbekistan Law of Local Self-Governance ??? Does NOT work for Health

Uzbekistan: Per Capita Expenditures for Health by Oblast (2004)

(3) Use of Funds “Strategic Purchasing” Policy Tools For Whom ”, “ What ”, “ From Whom ”, “ How To Pay ” “ For Whom ”, “ What ”, “ From Whom ”, “ How To Pay ”

“ For Whom ” To Buy Universal Coverage, in principal But, social insurance has shut out many: Estonia – 7% Poland and Russia – 10% Albania and Bosnia – 30% ??? Some New Initiatives Armenia: Cover Only Low-Income

For Whom to Buy (2) For Whom to Buy (2) Is the Purchaser Targeting the Poor and Vulnerable? Percentage of Government Subsidy for Health to Income Groups Gwatkin, 2001

“ What ” to Buy Basic Benefits Package Difficult to Implement Main objective – promise only what you can pay for cost of BBP= “ what ” * volume * cost Requires sophisticated data collection and analysis systems First step – Negative List: what is not included !?! Set up a continuous process of review Article #49 in constitution – a specific Ukrainian constraint

“What” To Buy (2) Beyond the Benefits Package Co-Payments Modify utilization (volume) Supplementary income for health providers But … can create equity concerns Many now do it: Eastern Europe and FSU Successful Model: Kyrygzstan Successful Model: Kyrygzstan Copays related to income-level; outpatient drug benefit Copays related to income-level; outpatient drug benefit Supplementary Insurance Cannot develop unless there is a clear and transparent product, i.e., Benefit Package Injects more funding into health sector

A Few Successes …

“From Whom” To Buy and “How” To Pay… Almost every country “ Contracts ” for services Soft, internal relational contracts But … little “ selective contracting ” Still often excludes private sector MIS systems underdeveloped, fragmented, non-standard, not secure Successful Exceptions: Baltics, Czech Republic Successful Exceptions: Baltics, Czech Republic Payment Systems Enormous: almost every country

“How” to Pay (2) Start Point

How to Pay (3) How to Pay (3) Moving to New Performance-Based Payment Systems

Directions West & East: Primary Care Western Europe Capitation for Public Sector FFS for Private England, Norway, Belgium Combination (Denmark, Spain) Eastern Europe /FSU Capitation (17 of 27) FFS for priority services, or Bonuses (NIS) for rural placement (Estonia, Georgia) or meeting targets (Russia)

Some Countries Change…and Change…and Fee for Service 60:40 Mix of Capitation/FFS Capitation Slovakia Why: Policy Objectives Kept Changing

Paying for Inpatient Services – Following the EU

EEC/NIS Convergence with EU … Most EU Countries Global Budget Case-Mix Adjuster

Payment Systems: Remaining Issues No Model Optimal Right Mix of Incentives? Capital Payment: Not Included Providers: No Autonomy/Internal Incentives? Lack of Civil Service Reforms Informal Payments Debt and Arrears MIS and Quality Assurance Systems Necessary

Pre-Paid vs. Out-of-Pocket Payments

Payment Systems Impact ? Don’t Implement Alone, but with... Pooling of Funds Provider Autonomy/ Civil Service Reforms Management and Information Systems Quality Systems

First Steps… New Legal Status to Providers Primary Care Baltics: freestanding practices and independent contractors Hospitals Public, Non-Profits: Czech Rep, Estonia, Latvia, Lithuania, Kazakhstan Autonomy: Hungary, Armenia New Contracts, Civil Service Reforms, Management Strengthening … true decentralization