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Health Insurance
Abdur Razzaque SarkerMHE (Health Economics), MSS (Economics)
Health Economics and Financing Research, icddrband
PhD Fellow in Strathclyde University, UKEmail: [email protected]
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CONTENT
Concept of Universal Health Coverage
Why social and community-Based Health
Insurance?
Definitions
Technical details
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Universal health coverageAccording to World Health Organization,
Universal health coverage means that everyone in the population has access to appropriate promotive, preventive, curative and rehabilitative health care when they need it and at an affordable
price.
Three UHC related objectives
Equity in access to health services - those who need the services should get them, not only those who can pay for them;
The quality of health services is good enough to improve the health of those receiving services; and
Financial-risk protection - ensuring that the cost of using care does not put people at risk of financial hardship.
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UHC Box
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CharacteristicsType ofinsurance
Financingsource
Nature of contribution
Funds earmarked for health
Member-ship
Social health insurance
Employer and/or employee from salary or wage
Mandatory Yes Contributing members and usually their dependents
Community health insurance
Out-of-pocket payments of premium
Voluntary Yes Contributing members and usually their dependents
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Developing nations in different stages of SHI
Country SHI status
Bangladesh Non-existing
Kenya Designing
Ghana Initiation
Philipines Expansion
Colombia Mature
Thailand Full achievement
Source: Hsiao and Shaw, 2007
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Social Health Insurance
Social health insurance is an insurance programme which meets at
least one of the following three conditions:
1. participation in the programme is compulsory either by law or by the conditions of employment,
2. the programme is operated on behalf of a group and restricted to group members,
3. an employer makes a contribution to the programme on behalf of an employee.
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Social Health InsuranceSocial health insurance contributions are not related to risk, are leviedon earned income and collected by a body at arm’s from government – otherwise it amounts to an earmarked payroll tax.
Contributions are usually compulsory and shared between the employees and the employers.
Why SHI Universal coverage Broad base for financing healthcare Preventing adverse selection
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History of SHI SHI established in Germany by
Bismarck in 1883
27 countries have established UHC via SHI
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How long time it takes Germany 127 years Belgium 118 years Austria 79 years Luxembourg 72 years Costa Rica 48 years Japan 36 years Korea 26 yeras
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Factors positively contributing to SHI
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Structural feature Contribution Large formal sector employment Ease of administering mandated
payroll tax on employers and/or employees Ease of locating employers and collecting premiums
High wages and salaries Reduced economic burden of payroll tax Opportunity to finance broader benefit entitlements
Low povert rate Reduced need to subsidize membership of poor households
Small family and/or household size Reduced need for worker contributions to cover large number of dependents
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Structural feature Contribution Efficiently functioning provider networks
Improved access by members to providers Greater choice of providers Possibility of quality based competition among providers
Strong human resource capacities Available skills to manage SHI and monitor and evaluate quality
Strong administrative support Banking, accounting, actuarial and legal support available
Government capacity to regulate Greater capacity to regulate for quality and manage grievance procedures
Design of SHI
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7 group of questions1] Population coverage through contribution2] To include poor (definition and mechanism)3] To include non-poor, self-employed and informal sector
workers 4] Benefit package and cost 5] Fiscal capacity to fund poor and near poor and time
planning6] Governance of SHI (public, quasi-public, non-profit entity)7] Healthcare delivery (contract, payment)
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Design issue Designing Initiating Extending Matured Achieving Kenya Ghana Philippines Colombia Thailand Population covered by SHI (%)
20 20 60 67 100
Population who contribute (%)
20 N.A. 30 30 35
Population poor (%) 50 40 37 50 12Population fully subsidized (%)
Not yet implemented
Elderly, children, few poor
23 33 12
Population non-poor self-employed and informal sector employees (%)
80 N.A. N.A. 30% contri.+4% part subsid
N.A.
Enrolled non-poor self-employed
None N.A. 7 N.A. N.A.
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Design issue Designing Initiating Extending Matured Achieving Kenya Ghana Philippines Colombia Thailand Benefit package (universal or tiered)
Not decided Intended to be universal
Universal Tiered Tiered
Fiscal capacity for universality
Worries due to insufficiency
Plans to enroll 50% in 15 years
Uncovered near poor and informal sector workers yet under observation
Near poor and informal sector workers are uncovered
Achieved universality with a lesser benefit package for those subsidized
Administrative structure
One new independent fund
Competition between community-based organization and private plans
One fund One fund Several funds, trying to merge
Health service delivery improvements
Not yet implemented
Too early to assess
Modest, acts mostly as passive insurer
Managed competition tried without measurable improvements
Providers paid on capitation basis
Community-Based Health Insurance
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What is CBHI?
Any not-for-profit insurance scheme aimed primarily at theinformal sector and formed on the basis of a collective poolingof health risks and in which the members participate in its management.
Common features (NGO driven CBHI)
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Small membership group
Small and affordable premium with limited benefits and coverage
Simple procedures and considerable member participation in management of the program
Why CBHI
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Informal sector – more than 90% population
Reliance on poorly functioning government health facilities or expensive private facilities – barriers to sufficient and quality healthcare
CBHI – prepayment at affordable premium
Target population of CBHI
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Informal sector
Unorganized groups
Poorer section of the community (trial)
Prerequisites for CBHI
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Essential
Problems with healthcare and high out-of-pocket medical payments
An organized group willing to pool risk through insurance mechanism
NGO/CBO etc. willing to organize CBHI and have administrative capacity
Healthcare providers who can provide adequate quality care
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Prerequisites for CBHI
Desirable
Willingness to pay – principle of risk sharing, solidarity, healthcare needs to be managed
Ability to pay – affordable premium
Reliable data – demography, morbidity, costs
Legal aspect – legally functional
Technical and managerial capacity
Main steps in initiating CBHI
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1. Identify need for CBHI2. Identify management and administrative organization3. Identify target community4. Designing CBHI: Provider -/mutual-/linked- model 5. Defining the benefit package6. Fixing the premium7. Identifying the providers8. Who is the insurer9. How does one administer the scheme?10. Processing claims and reimbursements11. Risk management
1. Identify need for CBHI
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Facing financial barrier, prevented from quality and effective care
High medical costs impoverish households into indebtedness or poverty
2. Identify management and administrative organization
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Organization ideally should:
- be a registered body - have good links with community- have technical and managerial capacity- be transparent in its operations, especially accounts
3. Identify target community
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Locality Organized UnorganizedUrban Driver's
association, shopkeeper's association
Vendor, rag pickers, maid
Rural Co-operative societies, self-help groups
Landless laborers, subsistence farmers
4. Designing CBHI
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Provider modelHealthcare provider (hospital) initiates and organizes thehealth insurance program.
Mutual modelNGO/CBO initiates and organizes the health insurance Program.
Linked modelNGO/CBO collects premium from community and passes it on to health insurance company.
Advantages and disadvantages with different models
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Characteristics ModelProvider Mutual Linked
Freedom to suit the local needs
Very free Very free Depends on insurance company's products
Premium Affordability Affordability ActurialBenefit package Comprehensive
and meets local need
Comprehensive and meets local need
Traditional mediclaim policy with its exclusions and limitations
Financial risk With provider With NGO/CBO With insurance company
Quality of care Possibly good Poossibly good No difference between insured and non-insured
Community involvement
Not good Good Good
5. Benefit package (BP)
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Discuss with community- Expectation- Needs- Demands
BP must be linked with premium Community should have idea about cost of BP BP includes gradually hospitalization, out-patient, transport cost, wage loss and so forth.
6. Fixing premium
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- Premium size be determined by benefit package- Keep premium low for not excluding poor- External resources for subsidizing- Income-related premium- Community-rate when income cannot be monitored- Lower premium for people with high indirect costs- Premium in cash and/or kind
7. Identifying the providers
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Success depends on availability of reliable providers.
Quality of care from reception to discharge as well as follow-up i.e. entire benefit package
Criteria for hospitals/providers to be empanelled (example)
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registered with local administration have a resident medical officer round the clock acceptable to local community Need-specific number of care providers (doctors, nurses etc.) Pharmacy and laboratory facilities Wait for a certain time for receiving reimbursement Cooperation with CBHI scheme (data sharing, fraud management etc.)
8. Insurer
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Type of insurer depends on the type of scheme
Provider model – Hospital Mutual model - NGO or CBO Linked model - Insurance Company
Requirements for NGO/CBO
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be a registered body have ability to manage funds and accounts have social skills in marketing the product have auditing history
9. Administering the scheme
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Premium collection Processing claim and reimbursement Insurance awareness in the community – not one time activity, but a regular one for reinforcing the message Negotiating with providers and insurance company (if applicable) Monitoring the scheme Managing risk (prevent moral hazard, adverse selection and cost escalation) Handling complaints Feedback to the community about CBHI performance (at least annually)
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Skill required for NGOs for administration
Social skill – able to discuss with community about MHI and get them involved
Technical skill – Risk management & negotiation with providers
Accounting skill – able to monitor income, expenses, projection and predict premium
10. Processing claims and reimburse-ments
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Providers ensure services and claim reimbursementsfrom insurer
A good management information system
11. Risk management
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Voluntary verses mandatory Enrollment unit Larger risk pool Definite collecting period and waiting period Referral system Co-payment Provider payment mechanism Preventing fraud
Remarks
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Self-participatory
Transparency and accountability
