Health Financing Experience and LessonsHealth Financing Experience and Lessonsg p

Finding Paths to Universal Coverage

g p

Finding Paths to Universal CoverageFinding Paths to Universal CoverageFinding Paths to Universal Coverage

East Asia and Pacific (EAP) RegionEast Asia and Pacific (EAP) Region

J. J. LangenbrunnerLangenbrunner and A. and A. TandonTandon

OutlineOutline

Framework

Establishing the Baseline: Health Outcomes and Current Establishing the Baseline: Health Outcomes and Current Expenditures

Challenges: Changing Demographics & Disease Profile, Inequality and Poor Financial Protectionand Poor Financial Protection

Sources of Revenues

Pooling and Management of Funds

Resource Allocation and Purchasing• Coverage/Targeting, Benefits Package, Contracting, Payment Methods

2 What is Ahead: Fiscal Space and Universal Coverage

Investing in Health and Thinking about HF

Flow of Funds and Functions for Health Financing

Health services

Provision of services

ance

,

atio

n)

Cost sharing/user fees

Th

e po

Purchasing of servicesCoverage

ing

(g

ove

rna

on

of

info

rma

op

ulatio

n

Purchasing of services

Pooling and M anagem entof funds

Coverage

Choice?

Choice?

ip o

f fi

nan

ci

and

pro

visi

o

C ollection of fundsContributions

Entitlement?

Ste

war

dsh

reg

ula

tio

n a

3

Contributions

Source: WHO, 2006.

A Dynamic RegionAnnual Economic Growth Rates in EAP countries: 2004-15

Cambodia

15

Annual economic growth ratesActual: 2004-2009; Projected: 2010-2015

China

Vietnam Lao PDR

10

wth

rat

e (%

)

Indonesia Philippines

Malaysia

Korea

5ual

GD

P g

row

Malaysia

Thailand

-50

Annu

4

-

2003 2005 2007 2009 2011 2013 2015Year

Source: IMF World Economic Outlook

Outcomes Good Relative toOutcomes Good Relative toOutcomes Good Relative to Outcomes Good Relative to Level of Economic DevelopmentLevel of Economic Development

Performace relative to income and health spendinger

age

Infant Mortality, 2009

erag

e

Under-Five Mortality, 2009

Malaysia

Philippines

SingaporeThailand

Chi

KoreaMongolia

VietnamJapan

Bet

ter th

an a

ve

tive

to in

com

e

Mongolia

Malaysia

Philippines

Singapore

ChinaJapan

Korea

VietnamThailand

Bet

ter th

an a

ve

tive

to in

com

e

IndonesiaLao PDR

PhilippinesChina

Cambodia

an a

vera

ge

Per

form

ance

rel

at

IndonesiaLao PDR

PhilippinesChina

Cambodia

an a

vera

ge

Per

form

ance

rel

atWorse than average Better than average

Wor

se th

aP

P f l ti t h lth di

Worse than average Better than average

Wor

se th

aPP f l ti t h lth di

5

Performance relative to health spending Performance relative to health spending

Source: WBI & WHONote: Plots are residuals of regressions of outcome on income and health spending separately

Maternal Mortality and Life Expectancy

Performace relative to income and health spending

erag

e

Life expectancy, 2008

erag

e

Maternal mortality, 2008

p g

Indonesia

M li

PhilippinesChina

CambodiaSingapore

Vietnam

Lao PDRBet

ter th

an a

ve

tive

to in

com

e

Mongolia

MalaysiaPhilippines

China

Japan

Cambodia

Vietnam

ThailandBet

ter th

an a

ve

tive

to in

com

e

MongoliaThailand

Singapore

an a

vera

ge

Per

form

ance

rel

at

Indonesia

MalaysiaSingapore

CambodiaKorea

Lao PDR

han

aver

age

Per

form

ance

rel

at

Worse than average Better than average

Wor

se th

Performance relative to health spending

Worse than average Better than average

Wor

se th

Performance relative to health spending

6

Performance relative to health spending Performance relative to health spending

Source: WBI & WHONote: Plots are residuals of regressions of outcome on income and health spending separately

Not “Big Spenders” g pExpenditures Modest Relative to Income

Governments: Health Not High Priority (in part due to low revenue base)

Health expenditure vs income, 2009

1520

Total

1015

Public

Japan

Vietnam

10

on h

ealth

GD

P (%

) KoreaThailand

China

Japan

Mongolia

VietnamMalaysia

5

on h

ealth

GD

P (%

)

Philippines SingaporeThailand

China

CambodiaKorea

Lao PDR

MongoliaMalaysia5

Exp

endi

ture

sh

are

of G

Indonesia

SingaporeCambodia

Lao PDR

Philippines

Exp

endi

ture

sh

are

of G

Indonesia

100 250 1000 5000 50000 100 250 1000 5000 50000

7

100 250 1000 5000 50000GDP per capita, US$

100 250 1000 5000 50000GDP per capita, US$

Source: WDI & WHO

Revenue Effort Limited

Revenue share of GDP versus GDP per capita

40

50

60

%)

Revenue share of GDP versus GDP per capita

MalaysiaThailand

Indonesia20

30

e sh

are

of G

DP (%

Sri Lanka

Indonesia

Lao PDR

Philippines

ChinaCambodia10

Reve

nue

100 250 1000 10000 25000GDP per capita (current US$)

Sources: WDI; WHONote: x-axis log scaleData are for latest available year 2000-2007

Expenditures Modest by Global ComparatorsExpenditures Modest by Global ComparatorsGDP per Capita and Health Expenditure per Capita, 2005

8,000

9,000

10,000P

P

250

300

350 Health

Ex

5,000

6,000

7,000

er C

apit

a, P

150

200

250

xpen

ditu

re pcu

rrent U

S

1 000

2,000

3,000

4,000

GD

P p

e

50

100

150 per C

apita,

S$

-

1,000

ECA LAC MNA EAP SAR AFR

-

9

GDP per Capita, PPP

Health Expenditure per Capita, Current US$

Better News: Nominal Elasticity of Health SpendingBetter News: Nominal Elasticity of Health Spending (1989-2004)

10Source: World Bank (2008c), using WHO data 1989-2004.

ChallengesChallengesChallengesChallenges

Aging Population and Changing Disease Profile

Equity

Financial Protection

11

Changing Demographic and Disease ProfileChanging Demographic and Disease Profile ST Demographic Dividend; LT Aging and NCDs

AgesAgesAgesAgesAgesAges

2020

75+

70-74

65-69

60-64

FEMALESMALES

Ages

75+

70-74

65-69

60-64

FEMALESMALES

Ages

20202020

75+

70-74

65-69

60-64

FEMALESMALES

Ages

75+

70-74

65-69

60-64

FEMALESMALES

Ages

200075+

70-74

65-69

60-64

FEMALESMALES

Ages

75+

70-74

65-69

60-64

FEMALESMALES

Ages

55-59

50-54

45-49

40-44

55-59

50-54

45-49

40-44

55-59

50-54

45-49

40-44

55-59

50-54

45-49

40-44

55-59

50-54

45-49

40-44

55-59

50-54

45-49

40-44

200035-39

30-34

25-29

20-24

35-39

30-34

25-29

20-24

35-39

30-34

25-29

20-24

35-39

30-34

25-29

20-24

35-39

30-34

25-29

20-24

35-39

30-34

25-29

20-24

15-19

10-14

5-9

0-4

15-19

10-14

5-9

0-4

15-19

10-14

5-9

0-4

15-19

10-14

5-9

0-4

15-19

10-14

5-9

0-4

15-19

10-14

5-9

0-4

12Source: World Bank

100000 80000 60000 40000 20000 0 20000 40000 60000 80000 100000

Source: World Bank

100000 80000 60000 40000 20000 0 20000 40000 60000 80000 100000

Source: World Bank

100000 80000 60000 40000 20000 0 20000 40000 60000 80000 100000

New Epidemic of Chronic DiseasesNew Epidemic of Chronic DiseasesChina

13

s

High…and Rising…Inequality

UnderUnder FiveFiveRatio Between Ratio Between

LowestLowestCountryCountry YearYear

UnderUnder--Five Five MortalityMortality

RateRate

LowestLowestand Highest and Highest Economic Economic QuintilesQuintiles

RuralRural--Urban Urban RatioRatio

CambodiaCambodia2005 106 3.0 1.5

Indonesia2007 51 2.4 1.6

Philippines2008 37 3 4 1 72008 37 3.4 1.7

Vietnam2007 33 3.3 2.2

14

Source: Demographic and Health Surveys

Philippines: Regional Inequities Are PersistentPhilippines: Regional Inequities Are Persistent Despite Economic Growth

Region VIII

ARMM

60

Infant mortality rate by region

Philippines

Region I

Region IIRegion V

Region VI

Region IX

Region XI

Region XII

Region IIRegion VI

Region VIII

40

50

ality

rate

Philippines

NCR

CAR

Region IVRegion VII

Region X Philippines

Philippines

Philippines

CAR

Region I

Region II

Region III

Region IVBg

Region VII

Region XI

R i XII

30

Infa

nt m

ort a

CARRegion III NCRRegion IRegion III

Region IVARegion V

Region IX

Region X

Region XIICARAGA

10

20

1

1993 1998 2003 2008 Year

Source: NDHS

Thailand:Thailand:Variations in Per Capita Expenditure by Province

C t l t h lth b i

00

200

0 Central govt. health exp. p.c. by province

100

0150

Baht

500

0

0 200 400 600 800 1000GDP per capita ('000)

16

Personnel OperationalSubsidies Other

Distribution of Public Subsidies for Hospital andDistribution of Public Subsidies for Hospital and Non-hospital Care

(Concentration Indices)

0 4

0.6

0.2

0.4

-0.2

0.0

-0.4

Hong Kong,China

Malaysia Thailand Vietnam Gansu,China

Heilongjiang,China

Indonesia

17

Inpatient Outpatient Non-hospital care Total public subsidy

Poor Financial Protection

60

(%)

Out-of-pocket share of health spending, 2009

40

alth

spen

ding

20

Shar

e o

f hea

0

Mon

golia

Japa

n

Thailand

Korea

Indo

nesia

Malay

sia

China

Philip

pine

s

Vietnam

Singa

pore

Lao PDR

Cambo

dia

18

In Ph S CSource: WHO

Government Health Spending and OOPs in Asia

Figu

re 4

Government Health Spending and OOPs in Asia (2007)

19

Investing in Health and Thinking about HF

Flow of Funds and Functions for Health Financing

Health services

Provision of services

ance

,

atio

n)

Cost sharing/user fees

Th

e po

Purchasing of servicesCoverage

ing

(g

ove

rna

on

of

info

rma

op

ulatio

n

Purchasing of services

Pooling and M anagem entof funds

Coverage

Choice?

Choice?

ip o

f fi

nan

ci

and

pro

visi

o

C ollection of fundsContributions

Entitlement?

Ste

war

dsh

reg

ula

tio

n a

20

Contributions

Source: WHO, 2006.

Share of Tax and Donor Financing vs Social InsuranceShare of Tax and Donor Financing vs. Social Insurance in Public Spending on Health

080

hea

lth (%

) Social security share of public spending on health, 2009

Mixed

40

60

c sp

end

ing

on

Tax and donor financedPredominantly

20

har

e o

f publ

ic0Sh

Cambo

dia

Kiriba

ti

ua N

ew G

uine

a

Timor

-Les

te

Tong

a

Tuva

lu

Vanua

tu

Samoa

Malay

sia

Mya

nmar

Thailand

Lao PDR

Mar

shall Isla

nds

Indo

nesia

Philip

pine

s

Mon

golia

Vietnam

China

21

Papua M

a

Source: WHO

Use of HI: Less than Other Regions of World

Social Security and General Government Expenditure on Health- LMIC Regional Averages (2005)

ECA35%

40%

He

alt

h

20%

25%

30%

pe

nd

itu

res

on

o

f T

HE

MNA

LCR

10%

15%

20%

Se

cu

rity

Ex

pa

s %

o

EAP

AFR

MNASAR

0%

5%

0% 10% 20% 30% 40% 50% 60% 70%

So

cia

l

22General Government Expenditure on Health (less Social Security) as % THE

But…Formal Employment = Insurance Coveragep y gWill New premiums Hurt Economic Growth and Discourage

Formalization?100

80

100

40

60

20

40

0

bodi

a

nesi

a

Chi

na

pine

s

aila

nd

aysi

a

Rep

.

ew alan

d

tral

ia

apor

e

Kon

g,na ap

an

23

Cam

Indo

C

Phi

lip Th a

Mal

Kor

ea, N

Zea

Aus

Sin

g a

Hon

g K

Chi J

Formal Share of Employment in IndonesiaFormal Share of Employment in Indonesia,1990-2007

100

Formal sector share of employment in Indonesia, 1990-2007

60

80

tage

040

Perc

ent

020

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008

24

YearSource: WB Staff Estimates

WagstaffWagstaffSocial Insurance Transition Evidence in the OECD 1980-2006

25

Comparison of Smokers (%) and Tobacco Tax Rates in theComparison of Smokers (%) and Tobacco Tax Rates in the EAP Region and EU-15

Country/Region Year % of Smokers % of Tobacco Taxesin the Price of Cigarettes

Cambodia 2004 21.7 9

China 2002 31.4 21

Fiji 2002 15.0 —j

Indonesia 2001 28.7 22

Japan 2006 27.0 5

Korea, Republic of 2005 29.1 10

L PDR 2003 35 7 32Lao PDR 2003 35.7 32

Malaysia 2006 21.2 39

Mongolia 2005 24.2 31

PhilippinesPhilippines 20032003 23.623.6 4141ppppSingapore 2004 12.6 69

Sri Lanka 2003 13.6 54

Thailand 2004 21.1 79

Vi 2003 1 32

26

Vietnam 2003 17.5 32

EU 15 average * 24.2 58

Pooling

Big challenge in the region

Multiple pools• China, Indonesia, Lao, Cambodia,

Thailand, Vietnam, Mongolia required , , g

Lowers Spreading of Risks (Equity)

Lowers Leverage of Purchasers (Effi i )

qhousehold

contribution

lowerrisk

higherrisk

before risk pooling (only OOPS)

(Efficiency)

Increases Administrative Costs (Efficiency) required

household after risk contribution

lowerrisk

higherrisk

pooling (one possibility)

27

Decentralization is a Special ChallengeDecentralization is a Special Challengefor Pooling of Funds

Philippines Viet Nam Indonesia China China …..Thailand …..

In most East Asian and Pacific region countries, decentralization done for other reasons outside of health sector

• Results to date not positive for Health sector• Ambiguity about responsibilities• Inequities and variation in efficiencies• Lack of innovation, not more…

• Way forward:• Decentralization at the service delivery level not financing level

Pooling: Model from South Korea:Pooling: Model from South Korea: 380 to 1: Admin Costs as % of Payments

108 8 8 710

12

8 .8 8 .7

7.1 7

6

8

10

4 .4 5 44

6

0 .9 6 0 .7 0 .4

0

2

19 9 4 19 9 7 19 9 8 19 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 4 2 0 0 5 2 0 0 6

29

19 9 4 19 9 7 19 9 8 19 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 4 2 0 0 5 2 0 0 6

China: Severe Fragmentation of Risk PoolsProvince County

BeijingShang Hai

Guang Zhou

T i W

NCMS(MOH)

34

Province

3229···

Tai Wan

BeijingShang Hai

Province Cities

Citi

Shang HaiGuang Zhou

Tai Wan

···

UEBMI(MHSs)

34

BeijingShang Hai

Guang ZhouURBMI

Province Cities

34··

Tai Wan

Beijing

Province Country

·

BeijingShang Hai

Guang Zhou

Tai Wan

MOCA 343229 + cities

···

30

Strategic Purchasing “Who” Coverage and targeting – how to cover poor households, and the informal sector

• Korea, Japan, Singapore, China Taiwan, Thailand, > 90%• Mongolia < 80%• China > 75%• Indonesia <70%• Viet Nam < 50%Viet Nam 50%

“What” Benefits Package• Great variation across region and within countries• Explicit with SHI programs

Q ti d it id fi i l t ti d it dd th h i b d f di• Question: does it provide financial protection, does it address the changing burden of disease in the country, is it a dynamic instrument used to manage SHI?

“With Whom” Contracting• Every country does it, but “relational” not selectivey y ,• Challenge: bringing in the private sector and creating a level playing field for public and

private sector

“How” Payment rates and incentives for providers• Mostly FFS but reform initiatives in Indonesia Philippines China Vietnam Taiwan• Mostly FFS, but reform initiatives in Indonesia, Philippines, China, Vietnam, Taiwan…• Do payment systems encourage quality, cost-effectiveness, efficiency, consumer

satisfaction?

Looking AheadLooking AheadLooking AheadLooking Ahead

32

The Path to Universal Coverage:The Path to Universal Coverage:…Indonesia, Philippines, Vietnam, China, Cambodia

33

I d D d & E t d I i H lthIncreased Demand & Expected Increases in Health Expenditures from Years 2000-2020

Due to Population and Epidemiologic Dynamicsg y

34

Envelope for Health?Envelope for Health?Fiscal Consolidation and Reductions in Deficits:

General Government Balance and Expenditure, 2010 and 2015

Country General Government Balance(Percent of GDP)

General Government Expenditure

(Percent of GDP)(Percent of GDP)

2010 2015 2010 2015

Chi 2 9% 0 1% 22 3% 21 9%China -2.9% 0.1% 22.3% 21.9%

Indonesia -1.5% -1.4% 17.3% 18.1%

Malaysia -4.6% -4.6% 30.5% 30.4%

Philippines -3.9% -1.9% 18.9% 19.4%

35

ConclusionsConclusions Gains to Date in EAP Impressive – Outcomes are good relative to expenditures

B t E id i l i P fil N Ch i NCD d Ch i Di i i But, Epidemiologic Profile Now Changing…NCDs and more Chronic Diseases requiring more sophisticated medical care and health systems, which will be more costly

System public financing may need to increase and must be sustainable -- Future economic growth generates sufficient levels of revenues for decent living standards andeconomic growth generates sufficient levels of revenues for decent living standards and external debt solvency. Still, choices will need to be made to balance financing essential services and providing financial risk protection.

Most countries in the region are challenged to provide universal coverage, reduce f t ti i k l d i h i ffi i th h b fitfragmentation among risk pools, and improve purchasing efficiency through benefit packages, contracting and new payment systems.

How Fast? The critical condition regarding the speed of evolution to universal coverage is the level of income and its rate of growth (Korea, China, Thailand). ST Fiscal consolidationthe level of income and its rate of growth (Korea, China, Thailand). ST Fiscal consolidation and debt reduction in some countries. Evidence also suggests that administrative capacity is a key enabling factor for success, especially for institutions as Health Insurance Funds.

Context Important: Models need to be tailored to individual country circumstances.

Other Trends to Watch in the Region – Hospital Management Autonomy and Reform, rebalancing of decentralization, growth of medical tourism (Philippines, Thailand, Singapore, Malaysia and Thailand