Health financing strategies uhc 27 09 12

Health Financing Strategies
for
Universal Health Coverage
Presented by:
Moderator
Vikash R. Keshri Dr. Chetna
Maliye

Outline:
 Universal Health Coverage:
 What is Universal Health Coverage?
 Historical Perspectives?
 Health System Financing in India.
 Health Financing Strategies:
 Where we are? Status of Heath Financing
Globally
 More Money For Health: How to generate more
resources
 More Health to Money: How to Utilize the
resources and prevent wastages.
 Health financing strategies in India
 As proposed by the HLEG on UHC
 As proposed in Proposed Draft 12th Plan
 Existing Health Insurance schemes in India
 Critical Review of Existing Schemes Proposed plan
in India

Thailand: Thunyalak Boonsumlit

Universal Health Coverage:
“Ensuring that all people have access to needed Promotive,
preventive, curative and rehabilitative health services, of
sufficient quality to be effective, while also ensuring that the
use of these services does not expose the user to financial
hardship”.
World Health Organization
“Ensuring equitable access for all Indian citizens, resident in
any part of the country, regardless of income level, social
status, gender, caste or religion, to affordable, accountable,
appropriate health services of assured quality ( Promotive,
preventive, curative and rehabilitative) as well as public health
services addressing the wider determinants of health delivered
to individuals and populations, with the government being the
guarantor and enabler, although not necessarily the only
provider, of health and related services”.
HLEG on UHC, Planning

Universal Health Coverage:
Three related objectives:
 Equity:
 Equity in access to health services
 Quality:
 Quality of health services good enough to improve the health
of those receiving services; and
 Financial-risk protection:
 Cost of care does not risk financial hardship.

Historical Perspectives:
 1883 Health Insurance Bill, Germany became the first country to
make nationwide health insurance mandatory.
 In U. K. Enactment of the National Insurance Act in 1911 and the
National Health Service (NHS) in 1948.
 Article 25.1 of the 1948 Universal Declaration of Human Rights
states right to health as an important fundamental right.
 1966, The International Convention on Economic, Social and
Cultural Rights recognized "the right of everyone to the
enjoyment of the highest attainable standard of physical and
mental health.
 1978: Alma-Ata declaration & the vision of "health for all”
 World Health Assembly resolution 58.33 adopted 'Universal
Health Coverage' in 2005,

Health System Financing in India:
• State Subject
• Predominantly catered by Private Sector
• Private 78.05% vs. Public 19.05% vs. 2.28% External flow.
Table 1: Health Expenditure in India (2004-05)
Source: National Health Account 2004 – 05, MOHFW, GOI
Type of
Expenditure
Distribution of
total health
Expenditure (%)
Share of GDP
(%)
Public
Expenditure
19.67 0.84
Private
Expenditure
78.05 3.32
External Flow 2.28 0.10
Total
Expenditure
100 4.25

Source: National HealthAccount 2004 – 05, MOHFW, GOI

Distribution of Public & Private Health Spending
in States
• Source:

Health Expenditure in India: International
Comparison:
Source: A. K. Shiva Kumar, L. C. C., Mita Choudhury, Shiban Ganju, Vijay Mahajan, Amarjeet Sinha, Abhijit Sen (2011).
"India: Towards Universal Health Coverage 6: Financing health care for all: challenges and opportunities." Lancet 377:
678-689.

Private Insurance Coverage: India

Why Universal Coverage?
 Promoting and protecting health essential for human welfare
and sustained economic and social development.
 30 years: the Alma-Ata Declaration
 Health: One of most Important priorities of people
 Many ways to promote and sustain health : Education, housing,
food and Employment.
 Redressing inequalities
 Timely access to health services – a mix of promotion,
prevention, treatment and rehabilitation – Very critical
 Well-functioning health financing system – Essential.
 It determines use of health services when people need them. It
determines if the services exist.

Three Dimensions of Universal Health
Coverage:

Three fundamental questions ?
1. How is such a health system to be financed?
2. How can they protect people from the financial
consequences of ill-health and paying for health
services?
3. How can they encourage the optimum use of available
resources?
- Also Equity and Monitoring and Evaluation.

A theory of change due to health insurance
Source: Impact of national health insurance for the poor and the informal sector
in low- and middle-income countries: Systematic Review

Where we are?
Savedoff W. D. Political and economic aspects of the transition to universal health coverage.
Lancet 2012; 380: 924–32

Where we are? …..
Savedoff W. D. Political and economic aspects of the transition to universal health
coverage. Lancet 2012; 380: 924–32

Where we are? …..
Direct Payments:
 High proportion of the world’s 1.3 billion poor no access to health
services simply because they cannot afford to pay at the time they
need them.
 Even if covered with insurance: Uncovered Cost is burden.
Pooled funds:
 Raising adequate funds from a sufficiently large pool of individuals.
 Supplemented with donor support and general government
revenues.
 Spending these funds on the services a population needs.
 Countries are at different points on the path to universal coverage
and at different stages of developing financing systems

Financing for Universal Health
Coverage:
Specifically designed Financing systems to:
 Provide all people access needed health services.
 Ensure, use of these services does not expose the user
to financial hardship
What are the problems?
 3 Fundamental Problems:
 Availability of Resources.
 Over reliance on direct payments.
 In Efficient and Inequitable distribution of resources

Three critical areas of health financing:
 Raise sufficient money for health.
 Remove financial barriers to access and reduce financial risks of
illness.
 Make better use of the available resources.
What a health financing system does?
 Revenue collection:
General or specific taxation, Compulsory or Voluntary health
insurance contributions & Direct out-of-pocket (User Fee or
Donations)
 Pooling:
Accumulation and management of financial resources. an element of
pooling funded by prepayment, combined with direct payments (Cost
Sharing)

Purchasing:
Three main ways to do this. (Either single of
combinations)
 First, the government to provide budgets directly to its own
health service providers (integration of purchasing and
provision) using general government revenues and,
sometimes, insurance contributions.
 Second, An institutionally separate purchasing agency
(e.g. a health insurance fund or government authority) to
purchase services on behalf of a population (a purchaser-
provider split).
 Third, Individuals to pay a provider directly.

On the path to Universal Coverage:
Country Examples
China:
 In April 2009: safe, effective, convenient and
affordable” health services to all urban and rural
residents by 2020.
 The New Cooperative Medical Schemes, initiated in
2003
USA:
The recent health financing reforms extend insurance
coverage to projected 32 million previously uninsured
people by 2019.
Republic of Korea:
Since 1989 all are covered

The health financing decision process:

More Money for Health:
 No magic bullet to achieve Universal Health Coverage.
 New medicines and diagnostic and curative technologies
become available much faster than new financial
resources.
 Raise more Funds for Health:
Broadly, three ways to raise additional funds or diversify
sources of funding:
 Higher priority in existing spending, particularly in
government’s budget;
 Find new or diversified sources of domestic funding; and /
or
 To increase external financial support.

Ensuring a fair share of total government
spending on health:
Table: Government expenditure on health as a percentageof total
government expenditures by WHO region, 2000–2007a

Table:The share of total government expenditure allocated
to health in the WHO European Region, 2007

Diversifying Domestic Sources of
Revenue:
Two main ways:
1. To allocate more of the existing financial resources to
health,
2. To find new methods to raise funds or to diversify the
sources.
Examples:
Indonesia: Increases tax revenues by encouraging compliance
Ghana: 70–75% of f its National Health Insurance Scheme with
general tax funding, 2.5% national health insurance levy on VAT.
Germany: Gesundheitsfond: New fund to inject more money in
SHI from General taxation.
France: Contribution sociale généralisée, Special fund for NHI
form tax on real estates and other traditional.

Diversifying Domestic Sources of
Revenue: Some Options
Options Fund
Raising
Potentials
Examples
Special levy on
large and
profitable
companies
$$–$$$ Australia has recently imposed a
levy on mining companies;
Pakistan has a long-standing tax on
pharmaceutical companies
Levy on currency
transactions
$$–$$$ Some middle-income countries with
important currency transaction
Diaspora bonds $$ Used in India, Israel and Sri Lanka,
although not necessarily for health
Financial
transaction tax
$$ Initially in Brazil in the 1990s
subsequently replaced by a tax on
capital flows to/from the country

Options Fund
Raising
Potentials
Examples
Mobile phone
Voluntary
solidarity
contribution
$$ Taking 1% of bill would raise a lot of
money; relevant to low-, middle- and
high-income countries
Tobacco excise
tax
Alcohol excise
tax
$$ These excise taxes on tobacco and
alcohol exist in most countries
Excise tax on
unhealthy food
(sugar, salt)
$–$$ Romania: Proposing to implement a
20% levy on foods high in fat, salt,
additives and sugar.
Selling
franchised
products or
services
$ Selling franchised products or services
from which a percentage of the profits
goes to health
Tourism tax $ Airport departure taxes are already
widely accepted; a component for

External financial Assistance:

Direct Payment: Why is it so
widespread?
 Direct payments are the least equitable form of health
funding.
 Governmental not willing to spend more.
 No capacity or will to generate POOL.
 Taps into new areas.
 Attractive option during Economic Recessions.

Out-of-pocket payments as a function of gross
domestic product (GDP) per capita, 2007
Source: National Health Accounts [online database]. Geneva, World Health
Organization (http://www.who.int/nha,)

The effect of out-of-pocket spending on financial catastrophe and
impoverishment
Source: Xu K et al. Exploring the thresholds of health
expenditure for protection against financial risk.

Strength in Numbers:
• Cost Sharing
Most effective way for financial risk of paying for health services
is to share it, and the more people who share, the better the
protection.
Three interrelated options:
• Replace direct payments with forms of prepayment, most
commonly a combination of taxes and insurance
contributions.
• To consolidate existing pooled funds into larger pools, and
• To improve the efficiency with which funds are used.
Examples:
• A total of 49 health-related community schemes operate in
Bangladesh, India and Nepal.

More health for the Money: Using
resources wisely
 Pricewaterhouse Coopers’ Health Research Institute:
More than half of US$ 2 trillion-plus that the United
States of America spends on health each year is wasted
 The European Health care Fraud and Corruption
Network:
Little less than 6%, lost to mistakes or corruption.

Ten Leading Causes of Inefficiency:
1. Medicines: underuse of generics and higher than necessary
prices for medicines
2. Medicines: use of substandard and counterfeit medicines
3. Medicines: inappropriate and ineffective use.
4. Health-care products and services: Overuse or supply of
equipment, investigations and procedures
5. Health workers: Inappropriate or costly staff mix, unmotivated
workers
6. Health-care services: Inappropriate hospital admissions and
length of stay
7. Health-care services: Inappropriate hospital size (low use of
infrastructure)
8. Health-care services: Medical errors and suboptimal quality of
care
9. Health system leakages: waste, corruption and fraud
10. Health interventions: Inefficient mix/ inappropriate level of
strategies

Table: Medianprice ratios of public-sector procurement
prices for generic medicines, by WHO region:

How can this inefficiency be
tackled?
WHO-CHOICE (Choosing Interventions that are
Cost Effective) Strategy Eliminate Unnecessary Spending on Medicine
 Improve quality control of Medicine
 Use Medicine appropriately
 Get Most out of technologies and services
 Motivate people
 Improve hospital Efficiency – Size and Length of stay
 Get care right the first time
 Eliminate waste and corruption
 Critically assess the service needed:

Tackling Inefficiency: Lebanon’s Example
 1998: 12.4% of GDP on health, Highest in the Eastern
Mediterranean Region
 60% Out-of-pocket payments among the highest in the region.
 Series of reforms implemented to improve equity and efficiency.
• Revamping of the public-sector primary-care network;
• Improving quality in public hospitals; and
• Improving the rational use of medical technologies and
medicines Including use of quality-assured generic
medicines
 GDP on health from 12.4% to 8.4%. Out-of-pocket spending as
a share of total health spending from 60% to 44%

Indian Scenario:
• First concrete step:
During planning process of 12th Five Year Plan: widely
termed as Health Plan.
• Planning commission constituted a High level Expert Group
on Universal Health coverage 2010.
• Mandate: Developing a framework for providing easily
accessible and affordable health care to all Indians.
• HLEG also recommended Appropriate Health Care Financing
as key strategy to achieve Universal Health Coverage.

Current Scenario in India:
 Low Priority to Public Health Spending.
 Low Per Capita Expenditure on Health:
 High Burden of Private Out of Pocket Expenditure.
 Wide Variation in Public Health Expenditure across states.
 Large share on State Government Expenditure (Nearly 2/3rd).
 States with low public expenditure on health typically find
themselves fiscally constrained by two factors:
 Centre’s Allotment of Revenue is not uniform.
 Less scope for extra development allocation by the poorer
states.
 Many state governments do not accord high priority to health.
 Financial protection against medical expenditures is far from
universal. Expenditure on social insurance 1.13% of total health
spending in 2004-05.

The new architecture for UHC: 6 CriticalAreas:
1. Health Financing and Financial Protection
2. Health Service Norms
3. Human Resources for Health
4. Community Participation and Citizen
Engagement
5. Access to Medicines, Vaccines and
Technology
6. Management and Institutional Reforms

Three core objectives need to be tackled:
 Ensure an adequacy of financial resources for the provision of
universal access to essential health care.
 Provide financial protection and health security against
impoverishment to the entire population of the country; and
 Put in place financing mechanisms that is consistent in the
long-run.
Basic Principles:
 A predominant role for public financing;
 Related to this, coverage is compulsory (where linked to
contribution) or automatic (where based on certain
characteristics such as residence or citizenship); and
 Universal entitlement without exclusion.
 Requires: Compulsion & Subsidization

Key Recommendations:
 Government Spending on Health: 2.5% of GDP by 2012 &
3% by 2022. (Table)
 Ensure availability of free essential medicines.
 Use general taxation as the principal source of health care
financing.
 Do not levy sector-specific taxes for financing
 Do not levy fees of any kind for use of health care services
 Introduce specific purpose transfers to equalize the levels
of per capita public spending on health across different
states.
 Accept flexible and differential norms for allocating
finances
 Expenditures on primary health care account for at least
70% of all health care expenditures.

 Do not use insurance companies or any other independent
agents to purchase health care services.
• Three Provisions can be considered:
• Direct provision
• Direct provision plus contracted-in services
• Purchase by an independent agency.
 Purchases of all health care services under the UHC system
directly by the Central and state governments.
 All government funded insurance schemes should, over time, be
integrated with the UHC system. National Health Entitlement
Cards. RSBY transferred to MOHFW and Used as technical
base.
 Finally, two determinants for the Success of UHC system:
 Clear Cut guideline for contracting in and service provision.
 A common IT enabled information, gathering, networking and
monitoring system.

Actual draft 12th plan: Proposed
 Comprehensive health care strategies to achieve UHC during
plan period. But can take 3 Plan periods to fully implement
this.
 Public sector health care system requires substantial
expansion and strengthening.
 Increased expenditure by the centre and states.
 Cooperation between the public and private sectors through
contracting-in of services and PPP.
 Expansion and increase access od RSBY.
 Effective regulation of medical practice, public health, food
and drugs, etc. needs to be pursued.
 Prescription drugs reforms, promotion of essential generic
medicines making these universally available to all patients
as part of the Essential Health Package.

Innovative models of financing:
 Health included for “viability gap funding” up to a ceiling of
20% of total project costs under a PPP scheme.
Towards Universal Health Coverage:
 Public health care including preventive interventions will be
both funded and universally provided by the government;
 Government will finance but not necessarily directly provide
other clinical services at different levels, defined in an
Essential Health Package (EHP), built separately for out-
patient (ambulatory) and in-patient care

Towards Universal Health Coverage…..
 Full and free access to essential generic medicines, through
Government pharmacies (for public providers) and Jan Aushadhi
stores (private provider/facility).
 RSBY system used in terms of beneficiary coverage, facility
enrollment and prevention of fraud.
 Package of services under RSBY, it is proposed, can be expanded
into EHP.
 States partially fund UHC pilots in high focus districts using
“Incentive Pool” under the NHM.
 Provision of EHP through public autonomous, empowered and
accountable facility networks.
 Empanelled public and private provider integrated care networks,
with citizen choice.

Health Insurance Schemes being implemented by GOI
and States Govt.
Scheme Coverage Features
Universal Health
Insurance
Scheme
(launched in
2003)
Mostly benefits(≤INR30 000)
for admission to hospital for a
family on a floater basis,
including compensation
(INR25 000) for death of
earning head of the family;
compensation at the rate of
INR50 per day for a maximum
of 15 days to the earning head
or spouse of the family; one
maternity benefit with 1 year
waiting period with INR2500
for normal and
INR5000 for caesarean
sections
Only for families below
the poverty line and
for individuals younger
than 70 years;
Yearly rate of INR300 for
an individual; INR450 for
a family
of five; INR600 for a
family of seven
members with a
government subsidy of
INR200, INR300, and
INR400, respectively

Rashtriya Swasthya
Bima Yojna
(launched in 2008)
Cashless coverage of all health
services
Smart-card-based system;
Only hospital admission and day-
care diseases;
total of INR30 000 insured per
family below poverty line per year.
Pre-existing illnesses also covered;
Reasonable expenses for before
and after hospital admission for 1
day before and 5 days after;
Transport allowance (actual with
limit of INR100 per visit) subject to
a yearly limit of INR1000
Only BPL Family
Up to five members for 1
year;
renewal yearly; registration
fee for a family is INR30;
Central government
contribution 75% & state
government 25% of the
premium
Yeshasvini Scheme
in Karnataka
(launched in 2003)
Covers risk of INR100 000 for one
surgery and INR200 000 for several
surgeries in a year with a Premium
of INR120;
Pre-existing diseases are
covered;
Cashless surgery at fixed tariff
Member of Registered
Rural Cooperative Society
of Karnataka for a
minimum of 6 months;
All members of the family
are eligible;
Upper age limit 75 years

Kudumbas
ree in
Kerala
(launched
in 2006)
INR30 000 a year
For a family of five;
Up to INR60 000 a year for
treatment at home, if required;
Up to INR15 000 a
year for maternity need;
Subsistence allowance of INR50 a
day if bread
winner is hospitalized; coverage of
all existing illnesses, and cashless
medical treatment;
An accident insurance benefit of
INR100 000 for death
or full disability and INR50 000 for
partial disability
Families below the poverty
line;
Beneficiary’s contribution is
INR33;
Premium
for a typical family with five
members below the poverty
line is INR399 a year;
a central government
subsidy of INR300 from the
Universal Health Insurance
Scheme and an additional
subsidy of INR33 each from
the state government
and the local organization;
implemented through a
neighborhood group
Arogyashr
ee in
Andhra
Pradesh
(launched
in 2007)
INR 200 000 insured per family;
covers hospital admission for
surgeries and treatment of
diseases such as heart, cancer,
neurosurgery, renal, burns, and
polytrauma cases
Families below the poverty
line;
beneficiaries identified
through health camps;
INR330 per year per family
are paid by the state
government; Validity for 1
year or up to the time when
the overall claim ratio
reaches 120% of the
premium

References:
1. (2010). World Health Report 2010. Health System Financing: The Path to Universal
Coverage. Geneva, World Health Organizations
2. (2011). Report of High Level Expert Group Report on Universal Health Coverage for
India. New Delhi, Planning Commision of India.
3. (2009). National Health Account, India: 2004 - 05. New Delhi, National Health Account
Cell, MOHFW, GOI in Colloboration with WHO Country Office for India: 1 - 8.
4. Acharya, A. V., S. Taylor, F. Masset, E. Satija, A. Burke, M. Ebrahim, S. (2012). Impact of
national health insurance for the poor and the informal sector in low- and middle-
income countries: Systematic Review. London, EPPI-Centre, Social Science Research
Unit, Institute of Education, University of London.
5. (2011). Faster, Sustainable and More Inclusive Growth: An Approach to The 12th Five
Year Plan. P. Commision. New Delhi, Planning Commision: 114 -124.
6. WHO (2011). World Health Assembly 64. Sustainable health financing structures and
universal coverage. Geneva.
7. Weiyuan, C. (2010). "China’s new health plan targets vulnerable." Bulletein of WHO 88:
5-6.
8. Treerutkuarkul, A. (2010). "Thailand: health care for all, at a price." Bulletein of WHO
88: 84-85.
9. Lagomarsino, G., A. Garabrant, et al. (2012). "Moving towards universal health
coverage: health insurance reforms in nine developing countries in Africa and Asia."
Lancet 380(9845): 933-943.
10. Balarajan, Y., S. Selvaraj, et al. (2011). "Health care and equity in India." Lancet
377(9764): 505-515.
11. (2008). RASHTRIYA SWASTHYA BIMA YOJANA GUIDELINE. New Delhi, Ministry of
Labour, GOI.
12. A. K. Shiva Kumar, L. C. C., Mita Choudhury, Shiban Ganju, Vijay Mahajan, Amarjeet
Sinha, Abhijit Sen (2011). "India: Towards Universal Health Coverage 6: Financing

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