FUTURE OF HEALTH CARE FINANCING IN MALAYSIA

DR ABD RAHIM MOHAMAD

PLANNING & DEVELOPMENT DIVISION

MINISTRY OF HEALTH

18TH JANUARY 2009

PRESENTATION OUTLINE

Scope of Healthcare Financing Aim Objectives Problem Statements Current Issues Options Principles NHFA Benefit Packages Conclusion

SCOPE OF HEALTHCARE FINANCING

1. Revenue Collection Source of Financing Structure Collection mechanism

2. Pooling of Funds Managed by an intermediary body

3. Purchasing – from health providers

SOURCESSOURCES OF OF FINANCINGFINANCING

e.g. NHI, Govt. e.g. NHI, Govt. budget, etcbudget, etc

INTERMEDIARY INTERMEDIARY BODYBODY

NHFANHFA

GOVERNANCEGOVERNANCE•CORPORATECORPORATE

•CLINICALCLINICAL

PROVIDERPROVIDERPAYMENTPAYMENT

MECHANISMMECHANISM

ESSENTIALHEALTHCARE BENEFITSPACKAGES

HEALTHCARE DELIVERY SYSTEM

NATIONAL HEALTHCARE FINANCING MECHANISM

THE SCOPE / SPECTRUM

PATIENTS /CONSUMERS

CONTRIBUTIONCONTRIBUTION

GOVERNMENT GOVERNMENT BUDGET BUDGET casemixcasemix

global budgetglobal budgetcapitationcapitation

fee-for-fee-for-servicesservices

Aim of Healthcare Financing

Provision of accessible healthcare and peace of mind

Comprehensive healthcare protection Improve health through prevention More choice of service Right mix of financing option to deliver health

care Government will still be main player Complemented by NHI

NHFM

Enhance efficiency & quality

Greater integration in

Health:10 , 20 , 30

Public / privatePrimary care as gatekeeper

Better regulationof health

care providers

Achieve greaterequity & accessibility

Enhance national integration, social solidarity and caring society

NATIONAL HEALTHCARE FINANCING: OBJECTIVES

Mobilize Resources“Risk sharing” &pooling of resources(Community rated NHI System) & manage rateof healthspending

6NOT to change the present system if these goals are not metNOT to change the present system if these goals are not met

WHY DO WE NEED CHANGE

PROBLEM STATEMENTS

Issues raised concerning public medical services Long waiting time Postponed cases Overworked staff in 3rd class wards – impersonal….. Lack of choice Inadequate amenities

Issues raised concerning private sector Exorbitant charges Increasing private insurance premium

adverse selection vs cherry picking Appropriateness of care vs. overservicing

PROBLEM STATEMENTS 2

National Health Account Study 2006 Out-of-pocket (OOP) spending in Malaysia is high (40% of THE)

RM 9805 million OOP spending in developed countries is low <20% Health Expenditure trend in Malaysia

Equity High cost private healthcare– available only to those who can

afford, insured or covered by employer Fairness in financing – high OOP payment (inequitable financing

and can lead to impoverishment due to catastrophic health expenditure)

Economics More efficient use of resources (especially HR)

10

CURRENT ISSUES-1

1. Highly subsidised services & overdependence on government health facilities (also patronised by those who can afford) Heavy workload Long waiting time

2. Inadequate integration in health, especially between public & private sectors “Brain drain” to private sector – non-optimal resource use Need for better regulation of private healthcare providers Fragmented care and clinical record

11

CURRENT ISSUES-2

3. Rising healthcare expenditure • rising demand and expectations• expensive high tech medicine

4. “Gaps” in present healthcare delivery system eg. Equity, efficiency, accessibility, quality of

service. 5. Changing demographic &

epidemiological patterns Increase in the ageing population Increase in chronic diseases

Trend of Total Expenditure on Health (TEH), 1997-2006 (RM, Nominal Value)

8 9

10

12 13

14

19

21 22 24

2.9

3.2 3.2 3.4

3.7 3.8

4.5 4.5

4.2 4.3

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

-

5

10

15

20

25

30

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Y2

(% G

DP

)

Y1

(RM

Bill

ion

)

YearTEH TEH as percentage of GDP

1212Source : MNHA

PUBLIC VS PRIVATE

HEALTH EXPENDITURES

NHFS (1984/85)

MNHA (2002)

MNHA (2006)

PUBLIC

PRIVATE

76 %

24%

56%

44%

45.2%

54.8%

Proportion of Public vs Private Sectors Expenditures

NHFS: National Health Financing StudyMNHA: Malaysian National Health Account

Per Capita Spending on Health, 1997-2006 (RM, Nominal Value)

381 406 432501 529 560

756829 826

917

0

100

200

300

400

500

600

700

800

900

1000

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

RM

Year

Per Capita Spending on Health

1414

Operating and Development Expenditure, MOH 1990-2004

-

1,000.0

2,000.0

3,000.0

4,000.0

5,000.0

6,000.0

7,000.0

8,000.0

9,000.0

10,000.0

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Year

RM

Mill

ion

Operating

Development

Total

Note: Using Current PricesSource: Finance Division, MOH

Source: MNHA Study 2003-2006, Health At A Glance 2007- OECD Indicators

TOTAL HEALTH EXPENDITURE AS PERCENTAGE OF GDP IN SELECTED OECD COUNTIRES AND MALAYSIA,

2005

TOTAL HEALTH EXPENDITURE AS PERCENTAGE OF GDP IN SELECTED OECD COUNTIRES AND MALAYSIA,

2005

16

17

CURRENT ISSUES-3

6. Increasing healthcare charges in private sector Greater inequity & public outcry if not controlled Increasing trend of private health expenditure

(esp. Out-of-pocket expenditure – financial risk upon unexpected health events)

‘Supplier-induced demand’ Equity in access to private sector

Physical : Concentrated in urban areasFinancial : Access to private services is mainly for those who can afford esp. inpatient care

Private Health Expenditure (PHE) (MNHA 2006)

Total PHE: RM 13,393 million OOP: RM 9,804 million (73%)

OOP from 2003 to 2006: rising trend (quantum)

7. Challenges of globalization & liberalization: Cross border flow (human, life-stock, etc)

Transmission of diseases Cross border transactions and practice – ethics,

credentials and quality Foreign workers

Utilizing subsidised services Health insurance coverage not mandated currently

Outsourcing / offshore activities Health tourism – competing with local consumers for

resources

19

CURRENT ISSUES-4

Health Expenditure Trends in Malaysia (MNHA 2006)

Increasing Total Expenditure of Health (TEH)

Plateauing TEH as % of GDP OOP rising Private Expenditure exceeded public

expenditure since 2004

WHERE DO WE GO FROM HERE?

OPTIONS

1. Change present system Introduce NHI through community rating Further integrate public-private health sectors

AND / OR2. Strengthen present system

Improve efficiency and quality of public and private sectors

Further regulate private sector to improve quality and contain cost

Financing Strategy

Introduce a National Health Financing Mechanism & restructuring of MOH hospitals and clinics.

Develop National Health Insurance with government intermediary body (National Health Financing Authority) as a single fund manager.

Superior to existing systemSingle healthcare financing system / single fund manager

(National Health Insurance fund/ Government Revenue)If contribution based (NHI)

Mandatory- those who can afford to pay must pay Government assistance for disadvantaged group.

NHFANot-for-profitGovernment owned accountable to MOH & should not be privatised

Greater equity, access, quality, efficiency & choice Greater integration in healthcare (public-private, primary-secondary) Viable & sustainableViable & sustainable Improvement of health status of populationImprovement of health status of population In line with: In line with:

National solidarity & a caring society Vision for Health & Vision 2020, etc.Vision for Health & Vision 2020, etc.

PROPOSED PRINCIPLES OF HEALTH CARE FINANCING MECHANISM

PROPOSAL:NATIONAL HEALTH FINANCING AUTHORITY (NHFA)

THE GOVERNANCE OF THE NATIONAL HEALTH FUND

NHFA

Government ownedAccountable to MOH

Statutory BodyNot-for-profit

Single fund manager

Not to be privatised

Proposed Functions:1. Policy, research & corporate health planning2. Health benefit packages 3. Assessment of healthcare4. ICT planning & applications5. Utilisation data6. Health financing data 7. Fund

collection/disbursement8. Strategic human resource

planning & training9. Provider

payment/negotiation

PROPOSAL:ESSENTIAL HEALTHCARE PACKAGES (EHP)

SOURCE:NATIONAL

HEALTHINSURANCE

OTHER SOURCES

e.g. PHI, Employer, OOP, etc.

ESSENTIAL HEALTHCARE PACKAGEESSENTIAL HEALTHCARE PACKAGES (EHP)S (EHP) - In line with wellness paradigm- In line with wellness paradigm - Covers - Covers selected selected preventive, promotive, preventive, promotive, curative & rehabilitative servicescurative & rehabilitative services- Available from public & private sectors Available from public & private sectors

NON-ESSENTIAL/ NON-ESSENTIAL/ OPTIONAL HEALTHCARE PACKAGEOPTIONAL HEALTHCARE PACKAGESS- Voluntary/ means tested- Voluntary/ means tested- For optional coverage not covered- For optional coverage not covered in the essential health care packagesin the essential health care packages- Available from public & private sectors- Available from public & private sectors

Taiwan – Wide benefit coverage (includes traditional medicine)Korea – Narrow benefit coverage

NOTE: Need to consider affordability and sustainability in developing EHP

PROPOSAL:- PREMIUM LEVEL & INCENTIVES

AFFORDABLE & ACCEPTABLE PREMIUMAccording to ability to pay (Progressive)

GOVERNMENT ASSISTANCE For the disadvantaged group.

SOURCES OF FINANCING

e.g. NationalHealth Insurance, govt.budget

NATIONALHEALTH

FUND

GOVERNANCEi.e INTER-MEDIARY

BODY(NHFA)

PROVIDERPAYMENT

MECHANISM

ESSENTIALHEALTHCARE BENEFITSPACKAGES

HEALTHCARE DELIVERY SYSTEM

NATIONAL HEALTHCARE FINANCING MECHANISMNATIONAL HEALTHCARE FINANCING MECHANISM

THE SCOPE / SPECTRUMTHE SCOPE / SPECTRUM

FFUUTTUURREE

HHEEAALLTTHH

SSYYSSTTEEMM

Monitoring, Evaluation, Regulation & EnforcementMonitoring, Evaluation, Regulation & Enforcement

PATIENTS /CONSUMERS

MANDATORYCONTRIBUTION

LEVEL &CEILING OF

CONTRIBUTION&

CO-PAYMENT,MEANS TEST

casemixcasemixglobal budgetglobal budget

capitationcapitationfee-for-servicesfee-for-services

Ministry of Health

PROPOSED HEALTHCARE SYSTEM

GovernmentConsolidated Revenue MOHMOH

MANDATORY

VOLUNTARY

National Health Fund

Savings,Out-of-pocket,Private Insurance

NHFA

ESSENTIALHEALTH BENEFITPACKAGES

EXTRACOVERAGE /ADDED VALUE PACKAGES

RESTRUCTU-RED MOHHOSPITALS & CLINICS

PRIVATESECTOR

New New role role

of of MOHMOH

REDUCE

GAPS

Employee Employer,

Self-employed,Foreign-workers

(Those who can afford)

Premium

ROLL-OUT OF NHFM

Recommendations of previous consultants Adopt incremental approach

o E.g. Population coverage (formal vs. Informal sector)o Service coverage (outpatient vs. inpatient)o Accessibility (public vs. private)

Path dependent – while adopting good practices of other countries

Implement certain activities during 9MPo Case-mix

Accuracy of Diagnosis

o Unit costingo Social Advocacy (meeting with stakeholders)

Assurance

Government will still be main source of healthcare fund

Government will subsidise the disadvantaged. MOH will monitor the following:

Access Utilization Quality and safety

Press comments on Proposed Privatisation of IJN by IJN staff

“Hospital staff deny demand for higher pay linked to proposal. Medical consultants at the National Heart Institute (IJN) have reiterated their commitment to serve IJN in its current form”

“However, the perception that the privatisation proposal is in response to demands for higher remunerations by its medical staff is misconceived and must be corrected accordingly to safeguard and preserve the trust placed upon us by our patients”

The Star, 20th December 2008

Press comments by IJN pioneer surgeon

“It (IJN) was never meant to be commercial institute. It was meant to be a centre of research, a premier academic institute.”

“Therefore, I am rather suspicious of the privatisation idea. It is not as if the hospital is not doing well. Ideally, a health institution such as IJN should be physician-led”

Tan Sri Dr. Yahya AwangThe Star, 21st December 2008

CONCLUSION

Implementation of the NHFM should be: Incremental Path Dependent Most appropriate for the country (Creative and

Innovative)

“Innovative thinking in developing the most appropriate financing mechanism (choice and design) best suited for the country”

Diane McIntyre

“Innovative thinking in developing the most appropriate financing mechanism (choice and design) best suited for the country”

Diane McIntyre

If you would like to give input and comments, please visit:

http://malaysianhealthcaresystem.blogspot.com/

If you would like to give input and comments, please visit:

http://malaysianhealthcaresystem.blogspot.com/