Analysis of current situation and developing a copayment system
in Health Insurance - Khartoum State (HIKS) Sudan. 1
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prepared by: Omer Mukhtar Abdulkhalig Ahmed (M.Sc in Health
Economics- University of Khartoum) 2
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Introduction 3
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Health insurance is defined as a contract between the insured
and the insurer to the effect that in the event of specified events
(determined in the insurance contract) occurring the insurer will
pay compensation either to the insured person or to the health
service provider. There are two major forms of health insurance.
One is private health insurance, with premiums based on individual
or group risks. The other is social security, whereby in principle
societys risks are Introduction 4
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pooled, with contributions usually dependent on their capacity
to pay (Guide to producing national health accounts: with special
applications for low-income and middle-income countries, 2003). New
theory suggests that health insurance provides an economy wide
redistribution of income from those who remain healthy to those who
become ill which is efficient and it increases the welfare of
society (Nyman, 2004). Introduction 5
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One of the problems that facing health insurance plans is a
moral hazard which refers to the additional health care that is
purchased when persons become insured. This is regarded, by health
economists, as inefficient because health care is represented less
than its cost of the production (Nyman, 2004). Introduction 6
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Copayment, which is defined as an amount under a health
insurance scheme for which the insured person is liable. Copayments
take the form of deductibles and/or coinsurance and Coinsurance,
which is defined as a form of copayment in which the consumer pays
a fixed amount or a percentage of the charges for each good or
service rendered, are considered as mechanisms which done by the
insurance companies to contain the cost (Guide to producing
national health accounts: with special applications for low-income
and middle-income countries, 2003). Introduction 7
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It is important for policy makers to understand the expenditure
elasticity, i.e., the ways in which consumer demand for health
services changes in response to differences in out-of-pocket costs
(Duarte, 2012). It is found that, in studies done in different
countries, health expenditure income elasticity is higher at
low-income levels and lower at higher income levels (Matteo, 2003).
Introduction 8
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Because copayment can reduce both necessary and unnecessary
medical utilization, it may cause unintended outcomes in the
treatments of some diseases, because there are certain groups of
patients more sensitive to copayment changes, like non exempt
patients on regular medications, the elderly and those on low
incomes (Chen, Lee, Lin, Lee, Li, & Wu, 2012). Introduction
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Research Problem 10
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Research Problem HIKS faces an increasing manner of the total
cost of the health care services which are provided in two major
groups, pharmaceutical services and medical services. This is may
be due to many factors, like the universal coverage plan, the
increase of prices of health care services, supply-induced demand
etc. But, this increasing cost may influenced by other factors like
moral hazard. 11
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Research Objectives 12
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Research Objectives Because there is already copayment in the
pharmaceutical services, the research aims to analyze the cost of
medical services in 2012 to detect the medical services that cause
80% of the total cost of medical services to introduce copayment
system in these detected medical services, so as to decrease the
cost of medical services which me be influenced by moral hazard.
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Research Methodology 14
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Research Methodology The research methodology is mainly a
retrospective cross sectional study. It is a descriptive study
rather than proving of hypothesis due to the limitation of the
data. It is applied conclusion-oriented study. 15
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Research Methodology The data is analyzed by using Microsoft
Excels tables and charts by using Pareto 80/20 rule to determine
the medical services that cause 80% of the total cost of medical
services. Pareto 80/20 rule is a causal relationship between the
minor factors that cause the majority of the effect. 16
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Also, Pareto 80/20 rule is applied to analyze two medical
services from these selected medical services, which contain many
subservices, to detect sub-medical services that cause 80% of the
total cost of each of these two medical services. This is because,
these sub-medical services are technically and costly different.
Research Methodology (cont.) 17
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Results & Findings 18
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Results & Findings It is found that 8 medical services,
from 34 medical services, after exclusion operations because it was
already involve copayment, caused 79.65% of the total cost of
medical services, which were 23.5% of the total number of medical
services. These 8 medical services were: laboratory investigations,
consultant visits, GP visits, ophthalmic services, ultrasounds,
MRI, X-Rays and CT. 19
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Results & Findings (cont.) 20
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Results & Findings (cont.) As a result of the analysis of
laboratory investigations and ophthalmic services, which they
contain many sub-services, it is found that: 30 laboratory
investigations, which were 10.6% of the total number of laboratory
investigations, were responsible for 80.59% of the laboratory
investigations cost. 21
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Results & Findings (cont.) 22
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Results & Findings (cont.) And 8 ophthalmic services, which
were 9.76% of the total number of ophthalmic services, were
responsible for 79.22% of the ophthalmic services cost. 23
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Results & Findings (cont.) 24
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Conclusions & Recommendations 25
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Conclusions & Recommendations More studies must be done to
determine suitable copayment rate that would be introduced to the
medical services. If copayment system is introduced, it would be
introduced to the detected 8 medical services and to the detected
sub-medical services which include 30 laboratory investigations and
7 ophthalmic services (service no. 1 in the ophthalmic services
table is already involved copayment). 26
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More studies must be done to determine if any groups -
according to specific specifications - of enrollee demand more
services than others. More studies must be done to determine if any
specific groups may be excluded from copayment; like: pregnant
women, patients above 70 years old, children under 5 years old,
etc. Conclusions & Recommendations (cont.) 27
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If any copayment rate is introduced, more studies must be done
to determine the effect of this copayment rate on the demand of
medical services, i.e. the elasticity of demand, and its effect on
the overall cost of the medical services. Conclusions &
Recommendations (cont.) 28
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References 29
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Chen, L.-C., Lee, Y.-Y., Lin, T.-H., Lee, C.-S., Li, C.-J.,
& Wu, D.-C. (2012). How Does Out-of-Pocket Payment Affect
Choices When Accessing. Value in Health Regional Issues, 1 (1),
105-110. Duarte, F. (2012). Price elasticity of expenditure across
health care services. Journal of Health Economics, 31 (6), 824841.
Guide to producing national health accounts: with special
applications for low-income and middle-income countries. (2003).
Geneva: World Health Organization. Matteo, L. D. (2003). The income
elasticity of health care spending. The European Journal of Health
Economics, 4 (1), 20-29. Nyman, J. A. (2004). Is Moral Hazard
Inefficient? The Policy Implications Of A New Theory. Health
Affairs, 23 (5), 194-199. References 30