health insurance in thailand and the philippines and lessons for bangladesh

Health Economics Unit Policy Research Unit, Ministry of health and Family Welfare Government of the People’s Republic of Bangladesh

HealthEconomics

Unit

Health insurance in Thailand and the Philippines and lessons for Bangladesh: Report of HEU health insurance study tour, 22nd May – 3rd June Research note 19 Prepared by members of the Asian Health Insurance Study Visit Team, Health Economics Unit, PRU. Mr Abul Qasem, Joint Chief and Line Director Clinic Building - 4th floor Secretariat, Dhaka Tel: + 880 2 8615408 Fax: + 880 2 8617310 Email: [email protected].

Health Insurance Study visit to Philippines and Thailand

Research papers

Research papers report on recent research carried out by, or in collaboration with, the Health Economics Unit. The research may be based upon new primary data or upon the fresh analysis of secondary data.

1. A public expenditure review of the health and population sectors, September 1995 2. An analysis of recurrent costs in GOB health and population facilities, July 1995 3. Balancing future resources and expenditures in the GOB health and population sectors,

January 1996 4. Mobilising resources through hospital user fees in Bangladesh: a report on quality and ability

to pay, August 1996 5. An assessment of the flow of funds in the health and population sector in Bangladesh, January

1997 6. Myemensingh Medical College Hospital: financial analysis (FY1994-5), July 1997 7. Cost analysis of caesarean section deliveries in public, private and NGO facilities in

Bangladesh, March 1998 8. Cost-effectiveness analysis of caesarean section deliveries in public, private and NGO

facilities, April 1998 10. Unofficial fees at health care facilities in Bangladesh: price, equity and institutional issues,

September 1997 11a Cost benefit analysis of reducing lead emissions from vehicles in Bangladesh, January 1998.

11b. Health and technical cost benefit analysis of options for reducing lead emissions from motor vehicles in Bangladesh, January 1998

12.

Economic aspects of human resource development in Health and Family Planning: flow of funds, September 1998

13. Economic aspects of human resource development in Health and Family Planning: dual job holding practitioners, September 1998

14. Economic aspects of human resource development in Health and Family Planning: Costs of Education and Training, September 1998.

15. A survey of private medical clinics in Bangladesh, September 1998. 16. Bangladesh Facility Efficiency Survey, November 1999 17. Public Expenditure Review of the Health and Population Sector 1998/9, January 2000. 18. Resource allocation in the health sector of Bangladesh:

a case study of Medical and Surgical Requisites Research Notes

Research notes are prepared by staff of the Health Economics Unit or other collaborating units. The objective is to raise important research questions that might later be researched in more depth. The series includes research concept notes, structured literature reviews and surveys of current research in a particular area.

3. Draft terms of reference and background briefing document: a pilot programme for resource

mobilization through user fees in the MOFHW, Bangladesh, September 1995 4. Key issues in costing an essential package of health services for Bangladesh, May 1996 5. User fees, self-selection and the poor in Bangladesh, August 1996 6. An agenda for health economics research concerning antibiotics usage standards in

developing countries: the case of Bangladesh, July 1996 7. Experiences with resource mobilisation in Bangladesh: issues and options, June 1997 8. A pre-feasibility analysis of social health insurance in rural Bangladesh: the NGO model,

June 1997 9. Resource envelope for the 5th health and population project: preliminary estimates, May

1997 10. Resource envelope estimation for HAPP5, November 1997. 11. Health insurance for civil servants of Bangladesh, January 1998. 12. Private medical clinics in Bangladesh, February 1998 13. Development of a Health Economics Database Archive for Bangladesh, September 1998. 14. Pricing health services: where to now?, November 1999.

Health Economics Unit, Ministry of Health and Family Welfare


15. Costing the ESP: overview of previous studies and current research needs, December 1999. 16. Economic indicators for monitoring the HPSP 17. The public-public mix in health care in Bangladesh, May 2000 18. Additional funding for health care: covering the population of Bangladesh, June 2000 Occasional Papers Occasional papers (OPs) are prepared by members of the HEU and PRU principally for internal use. OPs may also be prepared for special purposes such as the HPSP Annual Programme Review. Some OPs are later edited and issued as research notes or papers.

Health Insurance – introduction to the main issues, September 1999 Safety net indicators, November 1999 Geographic equity, November 1999

National Health Accounts, 1996/97, prepared in collaboration with Data International. Public-private mix for health sector development: proceedings of the fourth annual conference, 25-26th July 1999

Policy briefs These are policy oriented summaries of all research papers and notes. Policy briefs are available for research papers 1 – 11b and research notes 3 – 12. The policy briefs are currently undergoing revision.



Contents CONTENTS ........................................................................................................................................... 1

1. INTRODUCTION ............................................................................................................................. 2

2. HEALTH INSURANCE IN THE PHILIPPINES........................................................................... 3

INTRODUCTION .................................................................................................................................... 3 OVERVIEW OF HEALTH INSURANCE...................................................................................................... 3 SUMMARY OF MAIN INSURANCE SCHEMES ........................................................................................... 4

National Health Insurance Programme (NHIP) ............................................................................ 4 Community Based Schemes ............................................................................................................ 7 Health sector reform plans of Department of Health................................................................... 10

3. HEALTH INSURANCE IN THAILAND...................................................................................... 11

SUMMARY OF MAIN INSURANCE SCHEMES ......................................................................................... 11 Civil Servants and State Enterprises (6.4 million members) ........................................................ 11 Social Security Scheme (5.5 million members)............................................................................. 12 Public Assistance Scheme (current coverage 20.3 million) ......................................................... 14 The Health Card Scheme (7.8 m members) .................................................................................. 15

OTHER HEALTH SECTOR REFORMS ..................................................................................................... 15 Hospital autonomy ....................................................................................................................... 15 Quality of private hospitals .......................................................................................................... 16

SUMMARY.......................................................................................................................................... 16

4. LESSONS FOR BANGLADESH ................................................................................................... 17

A gradual piecemeal approach to insurance coverage ................................................................ 17 A voluntary approach to insurance requires that attractive and sustainable benefits are offered17 Involvement of private and NGO providers in the provision of insurance services ..................... 18 User charges important to stimulate uptake................................................................................. 18 Collaboration between ministries is required to develop health insurance ................................. 19 Primary care & referral ............................................................................................................... 19 Insurance funds as change agents ................................................................................................ 19

5. NEXT STEPS ................................................................................................................................... 21

6. REFERENCES................................................................................................................................. 23

ANNEX: AGENDA FOR STUDY TOUR ......................................................................................... 24



1. Introduction Between the 21st May and 3rd June a study team visited the Philippines and Thailand. The team comprised: • Mr D.K. Nath, Additional Secretary, • Mr Md Abul Qasem, Joint Chief and Line Director, PRU, • Professor Sushil Ranjan Howlader, Director Institute of Health Economics, Dhaka

University, • Dr Shamin Ara Begum, Senior Assistant Chief, Health Economics Unit, • Dr Tim Ensor, Senior Economist, and • Ms Priti Dave Sen, Associate Economist The purpose of this visit was to examine the experience of health insurance in both countries in order to provide lessons for the development of health insurance in Bangladesh. A detailed itinerary is provided in annex one. The Philippines and Thailand are at different stages of health insurance development. They also differ in socio-economic, cultural and geographic respects. Thailand began developing health insurance more than 20 years ago. It is now a middle income country which has managed to achieve health insurance coverage of the majority of the population albeit with benefit packages that differ significantly between population groups. The Philippines also began developing health insurance over 20 years ago. Though coverage still remains largely confined to those employed in the formal sector, some efforts are underway under the new National Health Insurance Programme to extend coverage to the indigent and informal sector. Bangladesh is markedly different from both countries in many respects. In particular, GDP per capita is only 10% of Thailand’s and 30% of the Philippines. Although there are some local insurance schemes initiated by civil society organisations, total coverage is very small. The main benefit of the study visit was to examine different approaches to developing risk coverage for a population with a small formal sector, much informal activity and large farming communities. All three countries shared this characteristic prior to the development of health insurance.



2. Health Insurance in the Philippines

Introduction The Philippines is an archipelago of over 7,000 islands with a population of 75 million. Per capita income grew steadily over a 10 year period starting in 1988. However, like many countries in Asia, the Philippines was hit by the recent Asian recession. In 1998 it registered negative growth. There are now signs of a recovery with the negative growth rate being reversed. Around 57% of the population currently live in urban areas. The public health system comprises of a network of health facilities from the Barangay or village level, up to municipal, province and regional levels. Local government units (LGUs) were given responsibility for running health facilities in 1992. Sources of health finance for LGUs include central government grant, user fees and other local raised finance. User fees were introduced in public health facilities 1997. However, health services at the Barangay level remain free. Public hospitals have been given a high degree of autonomy. They are able to hire staff as well as raise local revenue. There is a large and influential private health sector. There are 1021 privately owned hospitals compared to 491 in the public sector. However, the total number of hospital beds is higher in the public sector.

Overview of health insurance A National Health Insurance Programme (NIHP) was introduced through legislation in 1995. This has the aim of universal coverage within 15 years. The NIHP replaced the old Medicare Programme which comprised of separate schemes for different groups of the population (for example civil servants, overseas workers, and those employed in the private formal sector). It was adminstered by by different bodies, for example the scheme covering those in private sector employment was administered by the Social Security System (SSS). The main aims of the NIHP were to consolidate and unify the Medicare Programmes, enhance benefits, and accelerate universal coverage. The Philippine Health Insurance Corporation (PhilHealth) was set up to administer the insurance fund. This is a semi autonomous body. In addition to the NIHP, a number of community based health insurance schemes are in operation in the country. These largely aim to extending health protection to those working in the informal sector. They are implemented by a variety of community based organisations, such as cooperatives, NGOs, mutual societies etc. In addition, some Local Government Units (LGUs) run their own health insurance schemes (Bautista 1999). In 1995 a German funded project called SHINE (Social Health Insurance – Networking and Empowerment) was set up to provide technical assistance to community based organisations providing heath insurance. SHINE now works closely with PhilHealth to facilitate the extension of health insurance to those working in the informal sector.



Summary of main insurance schemes This section describes the Philippines Health Insurance Programme, including the profile of its members, financing of the scheme, benefits provided as well as some weaknesses of the programme. Three community based health insurance schemes that were visited by the study group are then described. The section ends with a description of the SHINE project.

National Health Insurance Programme (NHIP) Table 1 describes the different categories of NIHP members, whether membership is compulsory or voluntary, who is eligible to receive benefits, the level of financial contributions, and the cost sharing pattern (PhilHealth 1995). Table 2.1: features of the National health Insurance programme Category of member

Nature of membership (compulsory or voluntary)

Coverage Contribution Cost sharing

Formal employed (private and government)

Compulsory Member plus dependent

2.5% of salary up to ceiling P#5,000

50% Employer and Employee

Self employed (including overseas workers)

Voluntary Member plus dependent

P#900 per annum (paid quarterly)

100% individual

Pensioners Voluntary Member plus dependents

Free life coverage if paid 120 monthly contributions prior to retirement

Depends if employed or self-employed

Indigent Plan phased universal coverage

Household P#1,188 per annum

Local government and PhilHealth (varies from LGU 10% to 50%)

There are four main categories of members – those in formal sector employment (comprising public and private sectors), the self employed, pensioners and the indigent. Membership is compulsory only for those in formal sector employment. PhilHealth plan to extend coverage to all indigents in a phased manner. Indigents are identified through a means test administered by the local government unit. PhilHealth estimate that 25% of the population qualifies for the indigent category. In all cases benefits are extended to the member and their dependants.



Premium levels vary for the different categories. Formal sector members are required to contribute 2.5% of their salary up to a maximum ceiling of 5,00O Pesos. This is shared on a 50:50% basis between the employer and employee. There is a flat rate for the self-employed, payable on a quarterly basis. Premiums for the indigent are higher. PhilHealth and LGUs jointly finance indigent premiums The level of contribution by LGUs varies according to their ability. LGUs have been classified into one of four categories depending on their financial strength. However, it is envisaged that over a four year period even the least affording LGUs will pay 50% of the premium for indigents. Pensioners are eligible for free life coverage if they have paid a total of 120 consecutive monthly contributions prior to retirement. Benefits Benefits have recently been equalised across all categories of NIHP members. Benefits are restricted to inpatient care only. Some outpatient services such as certain minor surgical procedures, chemotherapy, radiotherapy etc. are not covered. Costs are met for room and board, drugs, diagnostic tests, and doctor’s fees all up to a prescribed ceiling. Costs are reimbursed on a fee for service basis. Patients can avail of services from any hospital accredited by PhilHealth. To date, a total of 19,000 doctors and health facilities (both in the public and private sector) have been accredited by PhilHealth. Profile of members Figure 2.1 PhilHealth - profile of members

Private sector64%

Government25%

Overseas6%

Resident1%

Indigent4%



Almost 90% of NHIP members are from the formal employed sector (64% from the private sector and 25% employed in the public sector. 7% are individual paying members, and 4% are indigent. Of the individual paying members, 6% are working overseas. Though membership is compulsory for those in formal sector employment, compliance is very low. PhilHealth estimate that only 30% of employers subscribe to the scheme. PhilHealth estimate that the National Health Insurance Programme currently covers approximately 40% of the population. Weaknesses of the scheme i) The scheme has very poor coverage of those employed in the informal sector. ii) Restricting benefits to inpatient care only has led to some distortion in health

seeking behaviours. There is an incentive for members to by-pass lower levels of care and seek inpatient services.

iii) The fee for service payment method has led to raising health care costs. There is an incentive to over provide services.

iv) Full benefits of cost sharing between the rich and poor has not been achieved. The scheme would be more progressive if the contribution ceiling for those in formal sector employment was higher.

Future plans PhilHealth plan to widen the benefit package to include certain preventive and promotive health services on an outpatient basis, such as maternal and child health, and TB. They are exploring other provider payment mechanisms (in place of fee for service), such as Diagnostic Related Groups (DRGs). Under DRG system, payment is made on a per case basis. They feel outpatient services could be paid for on a capitation basis. PhilHealth would like to strengthen their fraud control activities. Especially enforcing compliance of formal sector employers, as well as the capacity to check claims. PhilHealth coverage of the informal sector is low. With the help of SHINE they plan to expand coverage to this sector by linking up with insurance schemes run by community based organisations (see SHINE section below). They propose to achieve this in one of two ways. A more simple approach is for the CBOs to buy in to the NHIP. A second option is for the CBO to provide coverage for basic outpatient care and for the national programme to cover inpatient care.



Community Based Schemes i) Angono Credit and Development Cooperative Background The Angono Credit and Development Cooperative (ACDECO) was established in 1966. It currently has approximately 2,500 members affiliated to 17 cooperatives. The members work in a variety of informal economic activities ranging from small retail trade to micro-scale manufacturing. Loans are raised and disbursed through a mandatory savings scheme. In the early 1980’s the organisation introduced social security benefits for members. This included a lump sum death benefit, a disability allowance and a pension. Members are required to contribute 840 Pesos annually to avail of these benefits. The scheme is know as Damayan. Health benefits were added to this social security package in the late 1980’s Financial aspects The annual premium for the health insurance scheme is 300 Pesos. Contribution to the health scheme (as well as for the other social security benefits) is compulsory for members. When individual members reach a share capital of 3,000 Pesos, 75% of the interest earned on savings is deducted as payment towards the health and other social security schemes. Benefits of health scheme The co-operative runs a health facility offering medical, dental and optical care. Consultations are free for members. They are required to pay for drug costs as well as for using specialist equipment. The co-operative runs a retail drug store. Members are also eligible to receive cash payment for drugs up to a ceiling of 5,000 Pesos in any given year. In addition, they receive a 20% discount on drugs purchased at the co-operative drug store. Benefits are restricted to drugs only since most of the members go to clinics or hospitals that serve non-paying patients. These clinics provide free consultation and care, but not free drugs. The health insurance scheme was designed to meet this specific need. ii) People’s Managed Health Services and Multipurpose Cooperative (PMHSMPC) The PMHSMPC was established in 1994 to assist different community based groups (mainly agricultural co-operatives) to introduce social health insurance. The partner organisations are required to have a legal status and have existed for a least one year. PMHSMPC provides technical assistance to partner organisations to design, implement and monitor the health insurance scheme. This includes community



mobilisation, undertaking a feasibility study, prepare a market plan, develop and install administrative systems and procedures, develop capacity to run the scheme. Financial aspects and benefits Two different financing approaches are adopted for outpatient and inpatient services. Members of the group are required to pay a fixed capitation fee to a health provider. Typically this is 10 Pesos per month. This entitles members to unlimited free consultation with the provider. For inpatient coverage, the members themselves decide the financial benefits are, and then set contribution levels accordingly. For this reason contribution levels and benefits for inpatient care vary across different groups. This part of the scheme does not operate strictly as a health insurance scheme. Members first decide the financial ceiling for reimbursement of inpatient costs. Members then contribute so that there are two times this amount in the heath fund. Members replenish this fund only when it has been utilised. Members can seek inpatient care in one of two accredited private hospitals. Premiums of indigents in the co-operative are paid through a sponsorship programme run by PMHSMPC. All benefits are extended to the member and his/her family. iii) ORT Health Plus Scheme Established in 1994, the ORT Health Plus is a non-profit community health insurance programme. Membership to the scheme is voluntary. Benefits cover both outpatient and inpatient care. There are three categories of membership, individual, standard sized family (comprising 2 to 6 members) and large family (with 7 or more members). Monthly premiums range from 70 to 150 pesos. This represents approximately 6% of average monthly income. Outpatient benefits include, free consultation, some essential drugs, certain preventive and promotive services (such as immunisation and ANC) and basic diagnostic tests. All inpatient costs are covered (room and board, doctors fees, drugs, and tests) up to a maximum of 45 days. Members can avail of benefits after 3 consecutive months of contributing. Certain benefits are excluded such as dental care, dialysis, optometry etc. The first members ORT plus targeted were from their MCH project. In the second stage they targeted the population covered by the satellite clinics. Recently they have begun to approach government agencies, professional associations (such as tricycle and teachers associations) and individuals through a house to house campaign. Arrangements for providing benefits Outpatient services are provided through 14 satellite clinics run by the ORT Health project. These are located in rented premises at the village level. Outpatient services are also available at the ORT central health unit located in the Ilocos Training and Regional Medical Centre (ITRMC). Inpatient care is provided by this health facility. ITRMC is a regional government hospital (with x beds), and offering all specialties of care. Though a government hospital, ITRMC has considerable financial autonomy. Sources of hospital funding including PhilHealth members, ORT members, user fees, and in-kind contributions. ORT members are only admitted on referral from an ORT



health plus clinic and upon presentation of a membership care. ORT health plus pay a capitation fee of a 100 Pesos a year the hospital. This is paid on a quarterly basis. . Performance of health insurance scheme Membership: Currently 700 members (3,000 including their dependents) are enrolled in the scheme. Approximately 6 to 10 households drop out every. Some re-join after a gap of a few months. Members are employed in farming, fishing, salt manufacturing etc. Their average monthly income is roughly between 2000 to 3000 pesos a month. Premiums therefore represent about 6% of average monthly income. Generally the very poor do not enroll. ORT plus has secured some support from the Rotary club to cover the indigent. Utilisation :The number of referrals to the hospital has steadily increased over 4 years (from 15 in 1996 to 47 in 1999). The average length of stay is 5 days. The main reason for admission is Pneumonia for children and pregnancy for adults. ORT plan to restrict inpatient pregnancy benefits to first pregnancy and high risk or complicated cases. Financial Status i) ORT Health Plus Scheme See attached statements ORT Health Plus made surplus in 1997 of income over expenditure. However, in 1998 expenses exceeded income slightly. This was reversed in 1999 though a fund raising effort. Membership fees represented the main source of income in all 3 years. Drug costs were the largest cost in all three years, with hospital capitation being the second largest cost component in years 1998 and 99. Expenses exclude the head office running costs. These are met through the ORT co-operative. Salary costs decreased due to reduction in staff numbers. i) The Referral hospital (ITRMC) The first three years the hospital made a healthy profit through its contract with the ORT Health Plus Project. However, last year the hospital made a loss due to one expensive case – a case of neo-natal sepsis. This case alone cost the hospital 100,000 Pesos. As a result of this experience the hospital is requesting that a ceiling be set for drugs, diagnostic tests etc. similar to that imposed by the Philippine’s Health Insurance Corporation. 3. SHINE Project (Extending Technical Assistance to Community Based Heath Insurance Schemes) The SHINE project was introduced in 1995 to provide technical support to community based organisations either running or wanting to introduce social health insurance. Technical assistance is provided through networking, capacity development and support in the area of Information Education and Communication.



SHINE has compiled a database of community based health insurance and health financing schemes. Currently, there are 65 schemes in the data base, which collectively provide coverage to 170,000 people. The community based groups include NGOs, cooperatives, and local government units (LGU). In the next phase SHINE would like to utilise professional associations to extend health insurance to informal sector workers. SHINE runs 3 types of training courses directed at health promoters, community health managers, and politicians. They have produced a handbook on social health insurance. This outlines the principles of social health insurance, and provides guidelines in design, implementation and monitoring of a health insurance scheme. The SHINE offices are located in the same building as the Philippines Health Insurance Corporation. An important part of their programme is to lobby PhilHealth to strengthen insurance coverage for those working in the informal sector (this section of the population is not covered by the PhilHelath scheme) and the indigent. SHINE are advocating that PhilHealth recognise the multitude of community based organisations that provide insurance coverage to informal sector workers. They propose that PhilHealth accredit these organisations as financing intermediaries.

Health sector reform plans of Department of Health In recognition of the poor coverage to date of the National Health Insurance Programme as well as the gap in financing and provision of essential health services, the Department of Health has recently outlined a programme of health sector reform. A central strategy of the reform programme is the introduction of a health passport. The health passport will be issued to members of the National Health Insurance Programme. They will be entitled to avail of the inpatient benefits offered under NHIP, as well as essential outpatient services (such immunisation, TB drugs etc) from public health centres and rural health units. It is unclear if members will have to pay a co-payment for basic health services. In recognition of the poor coverage by NHIP of the informal sector, the health sector reform agenda also recommends creation of mechanisms for NHIP to inter-face with community based health insurance schemes.



3. Health insurance in Thailand Thailand is a country of about 60 million people. The economy has grown rapidly in recent years. In 1975 per capita income stood at $375 per capita. By 1995 per capita income had risen to $3,000 The ‘Asian’ recession of the last 3 years has caused considerable economic contraction and restructuring (Sriratanaban 2000). The population is still largely rural with just 32 per cent living in urban areas. Health expenditure per capita exceeds many of its Asian neighbours and fellow ‘tiger cubs’. It is, for example, 20 per cent higher than in neighbouring Malaysia despite having a much lower per capita income.

Summary of main insurance schemes Thailand has extensive experience of health insurance dating back to the mid 1970s. Interest by policy makers in insurance has varied over time but the systems are now well established. The main challenge now appears to be to consolidate the various public schemes both in terms of consistency of benefits and administration. Table 3.1: covering the population of Thailand Main government health insurance schemes Members % Potential members %

Public Assistance Scheme [1] 20.3 33.8% 20.3 33.8%CSMBS [2] 6.2 10.3% 6.2 10.3%Social Security Scheme [3] 5.2 8.7% 9.0 15.0%Health Card 8.1 13.5% 16.1 26.8%Private insurance 5.9 9.8% 5.9 9.8%Total 45.7 76.2% 57.5 95.8%Population 60 100.0% 60 100.0%Notes 1. Covers low income, elderly, primary school children & monks 2. Covers civil servants and state employees and their dependants. The number is expected to fall in the future as

the number of civil servants is reduced. 3. Covers only employees not dependants. The Thai system currently manages to extend insurance coverage to about 76 per cent of the population through four main schemes (table 3.1). In the future it is hoped to extend social security scheme to all enterprises and the health card scheme to the majority of the informal sector. This would increase overall enrolment to near 100 per cent.

Civil Servants and State Enterprises (6.4 million members) Health insurance is provided as benefit to all civil servants and those working in state enterprises and their families. There is no employee contribution - the scheme is financed 100 per cent by Government. At the primary/ambulatory level civil servants must use public providers. For secondary care they have free choice of public and private hospitals. Health facilities are reimbursed on a retrospective fee for service basis. This provides maximum incentive for supplier induced demand. The cost of the scheme is more expensive than



any other in Thailand costing around 2,000 ($55) per capita and costs have escalated considerably in recent years. There is a long run objective to integrate this scheme with the Social Security Scheme (Health_Insurance_Office 1998b). This is logical in that both cover the formal sector and joint administration is likely to have economies of scale. The main difficulty is that the civil servants scheme is considerably more generous and integration would inevitably lead to a reduction in benefits, a policy which is naturally unpopular with the current beneficiaries.

Social Security Scheme (5.5 million members) The Social Security Scheme (SSS) provides insurance for those in informal employment in the private sector. It is compulsory for all enterprises over a certain size. Initially this size was fixed at 20 employees, later it fell to 10 and from next year it will be extended down to enterprises with just a single employee. In addition to health care, the SSS also pays for maternity, invalidity and death (funeral) benefits. Sickness benefits constitute the largest expense accounting for around 88 per cent of the expenditure of the fund. The SSS is financed out of an equal payroll contribution by employees and employers with an equivalent contribution provided by Government. The equality of contributions is fixed in the 1990 insurance law although the actual percentage can be altered. Prior to the recession a 1.5 per cent contribution was collected from each party but this was reduced to just one per cent during the recession to protect industry from excessive payroll costs and minimise employment reductions. From 2001 the contribution is expected to rise once again to 1.5 per cent (see table 3.2). The SSS also collects to provide pension and family allowances. Table 3.2: expected SSS contribution rates for 2001 Employee Employer Government Total Sickness insurance 1.5 1.5 1.5 4.5 Pension and Family Allowance 3 3 1 7 Total 4.5 4.5 2.5 11.5 Note: the sickness contributions are legally required to be equal for all three contributors. No such requirement exists for pensions. The employee contribution is computed as a percentage of gross wage. The contribution is collected up to a maximum of 15,000 Bahts per month. No additional contribution is collected above this level. This normal practice some other well established social security schemes around the world to ensure that support maintained for the scheme among higher paid employees. It does, however, mean that the scheme is mildly regressive. The SSS currently has 5.5 million members about 85% of all those in the eligible group. The number of members has declined slightly since the beginning of the recession. The scheme reaches about 90,800 enterprises. Unlike the other insurance schemes in Thailand, SSS does not cover dependants of employees. Extending the scheme to all enterprises with more than one worker will increase the number of potential members by around 3.8 million while the number of enterprises will increase



to more than 2.1 million: a reflection of the large number of very small enterprises in Thailand. The SSS is permitted by the law to retain a maximum of 10 percent of contributions for administration of the scheme and, in addition, it gets a budget contribution for the same purpose. Currently it spends about six percent of contributions on administration. The fund currently has a large reserve exceeding 85 bn Baht. Reducing the minimum size of enterprises enrolling is likely to have a positive impact on the cost of administration a fact acknowledged by the Fund. The SSS is governed by a board chaired by the Permanent Secretary of the Ministry of Labour. It comprises five representatives of employers, five of employees and five from Government: one each from the Ministries of Labour, Health, Finance, Budget Bureau and Social Security Office. The board has a number of sub-committees including the medical committee. The SSS board took an important early decision that it would have no hospitals of its own. Instead members of the scheme are register with a general hospital of their choice that has a contract with the scheme. This includes all provincial public hospitals as well as a growing number of private hospitals. In the early days of the scheme participation of the private sector was low and in 1991 only 18 hospitals took part in the scheme. Early joiners found that they were able to make considerable profits from the scheme and by 1999 130 private hospitals had joined. The contract signed with joining hospitals requires it to make provision for the all the health care needs of those enrolling. This means that they must develop a network of participating lower level facilities to provide less specialist care. At the other end of the scale, specialist services that the hospital is not able to provide must be purchased from tertiary hospitals. Interviews in several private general hospitals (Sikarin & Manachai), suggest that the SSS scheme constitutes an important source of income. Currently capitation payments constitute 25 per cent of revenue with a 50 per cent profit margin over actual expenses. Patients are provided with a similar standard of medical care to general private patients although they tend to get locally produced generic rather than branded international medicines. Some patients (2-3 each day) choose to waive their right to SSS financed care believing that they will get an inferior standard of care. In one of the hospitals patients receive treatment in different areas where doctors are salaried as opposed to being paid on a fee for service basis. In 1991 fewer that half a million registered with a private hospital and more than 2 million with a public hospital. By 1998 this situation had been reversed and the private-public split stood at 3 and 2.5 million respectively. The SSS finances participating general hospitals using a form of capitation. This works by computing the cost for each insured member during the past year averaged over all participating hospitals1. This is then adjusted for inflation and the difference 1 This is worked as follows. For inpatient it is the average number of days per year in hospital by an insured member multiplied by the average cost (expenditure). For outpatient, the cost is given as the number of visits to the clinic multiplied by the average cost.



between the total cost of members and the revenue available for contributions. The current capitation rate is 1,000 Baht and it is due to rise next year to 1,100. In addition to the capitation payment several other payments are also make. To prevent cream skimming a hospital is compensated if it has a higher than average number of designated chronic cases such as those requiring haemo-dialysis, heart surgery and cancer cases requiring chemotherapy and radiotherapy (250 Baht per patient). Payment is only made if the SSS has agreed that the hospital has the correct facilities to provide such services. Further payments are also made for returning records on time and for a larger than average caseload. In general patients should receive treatment at the general hospital of their choice. In an emergency the patient may be treated anywhere. The home hospital, however, is responsible for transporting the patient back to its own facilities once the condition has stabilised or paying for treatment in the originating hospital.

Public Assistance Scheme (current coverage 20.3 million) The public assistance scheme dates back to 1975 when it covered those with an income below 1,000 Baht. It now covers those with an individual income below 2,000 Baht (family income of 2,800). The beneficiaries has gradually been increased to cover the elderly (1989) and the children age 0 – 12 (1992). The programme also covers the disabled, veterans and religious leaders. Members can only use public health facilities. Provinces are allocated a budget according to the number of card-holders (Health_Insurance_Office 1998a). Hospitals and other facilities are then provided with a budget determined by the Provincial Health Office which is based on guidelines set by the national office. These guidelines take into account factors such as the number of patients, number of poor and particular health problems of the area. In 1999 a multiple regression method was used to explain per capita health care costs as a function of need factors. It is not known whether these methods followed appropriate procedures for adjusting for equation bias. For a group with such high potential need, the scheme operates on a relatively low budget. It is able to spend only about 240 Baht per member which is a tenth of the spending of the scheme for civil servants. There is some discussion about whether private hospitals should join the network of providers able to treat patient. Given the higher than average risk of patients and low current payment available it seems unlikely that they would currently find it economic to join.



The Health Card Scheme (7.8 m members) The development of the health card scheme dates back to around 1981. The original scheme was developed as a pilot project and later integrated into the Ministry financing system. The current scheme was initiated in 1993 and based on a contribution of 500 Baht with a counterpart contribution by Government of a further 500 Baht. This covers up to five family members. The aim is to cover the non-poor with no insurance coverage working in the informal sector, particularly in rural areas. Since 1993 the scheme has grown to cover around 7.8 million members, 8.5 per cent of the population. According to at least one study there is a high level of satisfaction with the health card programme (Supakankunti 2000). Also that health card possession improves access to health services. Like many voluntary community programmes the scheme suffers from the problem of adverse selection. Card holders tend to be high risk compared with the general public – 2.15 outpatient visits and 0.09 admissions per capita – and the presence of illness is one of the most important factors determining card purchase With a voluntary scheme access to, and knowledge about, health cards is vital. Cards are currently available from facilities at all levels of the system. The scheme is advertised through the print and electronic media. There are currently no national user co-payments for service. Restriction of costs is largely undertaken on the demand side and through the restriction in the choice of facilities. However there is currently one pilot province that is piloting co-payment providing cards at only 250 Baht each but with a 30 per cent co-payment.

Other health sector reforms

Hospital autonomy One of the most important changes currently being implemented in the health sector in Thailand is the development of public hospital autonomy. One hospital, Ban Phaeo south of Bangkok, will become an autonomous hospital from the middle of 2000. Pan Phaeo is a large community (district) hospital. Community hospitals usually have anything from 10 to 160 beds. Ban Phaeo has 180 beds largely thanks to generous community donations which has enable the building and equipping of a very modern facility. The hospital has developed a network of primary care providers to enable it to act as the focus for insurance and public assistance funded care for much of the area. It has competition from a near by private hospital (Manachai) and so does not take all the SSS patients. The vision of the hospital is cover the entire community and the director is a strong advocate of universal public coverage with employee insurance paying for top-up hotel services. Ban Phaeo will be governed by a board of directors comprising members of the community and representatives of government. Politicians are excluded from the



board will be chaired by a community representative. The objective is to make the hospital responsive to the needs of the community.

Quality of private hospitals There has been much concern that many of the large number of private hospitals in Bangkok and the provinces are providing low standards of care. A particular concern has been the incorrect calibration of medical equipment leading to wrong medication, incorrect diagnosis and even fatalities. Private hospitals in Thailand have gone to considerable efforts to improve the quality and consistency of services. Most are have now got or are applying for the ISO9002 quality standards awarded to companies ensuring a minimum standard of overall inputs and care process. There are also moves to establish a system of hospital accreditation based on self-regulation but with representation from Government. Such standards assist patients to choose hospitals with good standards of service. They are essential if the private network is to join fully in the public system of insurance.

Summary • Thailand has a long history of health insurance beginning in the middle 1970s. • A heterogeneous and largely informal population meant that a piecemeal approach

to the development of insurance was the only viable option. • The piecemeal approach has led advantages and disadvantages.

• The advantage is that it has enable the system to now cover the majority (around 70%) of the population.

• A disadvantage is that is that the system is somewhat fragmented. There are multiple systems and benefit packages are quite different. It is possible to be covered by more than one scheme while a significant minority still remain uncovered by any scheme.

• Fragmentation is well recognised by the Government and the respective funds and there are now moves to unify the packages and merge the two main insurance agencies (Social Security Office and Health Insurance Office).

• Official user charges were introduced in Thailand in 1976/77. This can be seen as an important incentive to join insurance schemes.

• An important feature of the Thai experience has been a centralised approach to coverage. Although the health card scheme initially developed as a community initiative it was taken up by national government and now all the schemes are run from Bangkok. This is beginning to change. The hospital autonomy developments and private contracting are examples of a gradual process of decentralisation now occurring.



4. Lessons for Bangladesh The experience of both Thailand and Philippines provide a number of useful lessons, both positive and negative, and ‘pointers’ to the development of health insurance Bangladesh.

A gradual piecemeal approach to insurance coverage An important feature of the development of insurance in both countries is the piecemeal and partial nature of the process. Multiple funds cover different groups of the population each offering different benefits. This gives the appearance of complexity and some confusion. Yet it is easy to see that this situation has developed in response to a varied employment and social-economic structure. Social security paid through the payroll only ‘captures’ a minority of the population. Other forms of insurance are required for the informal sector and socially vulnerable. This is developing on a voluntary basis. A piecemeal approach to insurance is the only option feasible for Bangladesh. It is interesting to note that the economic structure of Thailand in 1977, around the time that insurance was first developed, mirrors the structure in Bangladesh today. In 1977 about 24 per cent of GDP was derived from agriculture and about 29 per cent from manufacturing industry. The corresponding figures in Bangladesh in 1998 were 22 and 28 per cent. In the Philipppines the informal sector is still the largest, with 39% of the population engaged in agriculture and fishing and 23% working as labourers. In Bangladesh only six per cent of the population work in formal employment. This group is main target for a social security approach to insurance. Other forms of insurance will be required for other groups. The experience in both countries is that a variety of approaches must be encouraged.

A voluntary approach to insurance requires that attractive and sustainable benefits are offered One of the central challenges of extending insurance is to develop an affordable but sustainable benefits package. The voluntary nature of the scheme for much of the population requires that the scheme must be marketed in a way that convinces people of the benefits of joining the scheme. Although the principle of equivalent benefits across schemes is an appropriate goal it may not be possible in the short to medium term. The need to provide basic insurance at an affordable price for people working in the informal sector may lead to a cheaper benefit package than for those paying into a social welfare fund through compulsory payroll deductions. Some differences in benefits may, therefore, be inevitable. In Thailand there is very large disparity between the benefits offered to civil servants and those provided for the compulsory social security scheme. This is problematic since it makes unification of these two schemes for the formal sector difficult unless civil servant’s benefits are cut, which would be politically unpopular, or social security benefits are increased, which is economically unsustainable. In contrast in the Philippines benefits have been equalised for different constituent members of the National Health Insurance Program



The lesson from this experience is that while there may be differences in benefits and costs between schemes for the informal and formal sectors, benefits should be equivalent for the compulsory schemes. Also that very large disparities between the best and least well endowed schemes should be avoided.

Involvement of private and NGO providers in the provision of insurance services The extent to which insurance funds contract with private providers varies between the schemes in both the Philippines and Thailand. In Thailand both the civil servants and the social security scheme can contract with either public or private institutions. Other schemes only contract with the public sector. In Philippines the National Health Insurance Corporation contracts with both the public and private sectors for provision of in-patients services. Contracting with the private sector is important for a number of reasons. First, private services increase choice for potential enrolees making the scheme more attractive. Ironically, the schemes in Thailand that provide this choice are those that are compulsory. The voluntary public schemes provide access only to public facilities. The reason is probably that the premiums are not seen to be high enough to cover the costs of private facilities. In Bangladesh offering access to a network, of public and private providers might encourage people to enrol. A second advantage to contracting, seen certainly in Thailand, is that it encourages an improvement in quality. The development of contracts between the social security fund and private hospitals is seen as one reason why a large number of private hospitals have voluntarily applied for ISO9002 standards. Being able to display this standard increases the likelihood that insured patients will choose their hospital. In Philippines quality is assured through a process of accrediting both public and private hospitals. Ensuring quality standards for the private sector in Bangladesh through insurance is likely to be a complex business. One of the problems is that most private clinics are small and are unable to offer the full range of services that might be provided to an insured patient. It may be more realistic to think in terms of networks of facilities that can together offer a standardised package of services to be financed through insurance. A third advantage is that permitting private and NGO providers to contract with an insurance fund could help to stimulate quality improvements in the public sector. In the two countries visited public hospitals are actively involved in competing for patients with private facilities. Such competition may not be practical outside the urban areas where the range of facilities is restricted and secondary services are mostly the preserve of district and thana public facilities. In urban areas competition is more feasible. Of course, whether competition really improves standards is an empirical question requiring careful monitoring.

User charges important to stimulate uptake.



The introduction of user charges at public facilities has served as a motivation to the uptake of insurance. In Thailand user charges were introduced in the mid-1970s at about the same time as insurance began developing. In Philippines user charges were introduced in public health facilities (with exception of first level of care) one year after the introduction of the National Health Insurance Programme. Without user charges, voluntary enrolment must rely on insurance providing improvements in the quality of services. Alternatively to rely on the absence of unofficial payments as an incentive to use services.

Collaboration between ministries is required to develop health insurance Developing health insurance cannot be achieved by the Ministry of Health alone. In both countries the involvement of health, social affairs/labour and finance ministries have been essential in developing both a policy framework and in implementing the social security and health card systems.

Primary care & referral A notable feature of insurance in both countries is the strong reliance placed on primary registration with a secondary (hospital) health service provider. This is regarded as the first point of contact for patients. Hospitals may then sub-contract, in the Thai model, with diagnostic, tertiary and primary facilities. Registration with a hospital may well be attractive for patients. It is, however, likely to lead some inefficiency with conditions that could be treatable at primary levels of the system instead being diagnosed and treated by secondary providers. The control of resources by secondary institutions - in Thailand for example the insurance capitation payment all goes to the hospital network - may lead to a mal-distribution of resources favouring secondary services. The main lesson for Bangladesh could well be a negative one. If possible a nascent insurance system should complement development of primary levels of service financed through the Health and Population Sector Programme (HPSP). This could be done by ensuring that, where possible, people register with a primary care (Thana or below) provider. This is likely to be feasible in rural areas. In urban areas registration could be with a public hospital or with a private clinic. At the same time it must be recognised that cover for hospital services, where necessary, is attractive to patients. The cost of hospital services leads to the greatest potential financial loss for the household. Cover for treatment at this level is likely to encourage much greater enrolment in insurance schemes than cover for the primary level.

Insurance funds as change agents It is clear from the experience of Thailand and the Philippines that insurance funds are much more than new sources of funds. Development of insurance has had a variety of other effects including the expansion of risk coverage and the creation of public-private partnerships.



The central potential advantage of an insurance fund is that it is, in pure form, a financial fund that purchases medical services on behalf of patients. It is success, particularly where insurance is voluntary, largely depends on whether it satisfies patient demands. At the same time the fund must balance patient demands with need to obtain services within the financial resources allocated to it. This means that it should seek to obtain cost-effective services from providers. The use of capitation contracts in Thailand shifts the burden and interest to provide cost-effective services to providers. Hospitals and other medical institutions have an interest in attracting patient registrations through good services but at the same time ensure that that expenditure does not exceed the fixed income per capita. Much can, of course, go wrong. If insurance becomes compulsory then there may be a temptation to treat revenue as a tax rather than as payment for service. If insurers are tempted to develop their own network of facilities then the funding may become too dependent on provider rather than patient needs. This is why the Thai Social Security Fund placed such a heavy emphasis on not building their own facilities. If providers, paid under capitation, are not properly monitored then they may be tempted to cut back on service in order to save money. Patients may be the best judge of good hotel services but they are not always able to distinguish between good and bad medical quality. For example, how to tell whether equipment that is properly maintained or not? One answer is to promote international standards of quality and accreditation.



5. Next steps Development of a system of health insurance that genuinely covers the risks of the population requires careful planning and context sensitive implementation. There are many examples, particularly in the Former Soviet Union, of ill-prepared plans that are were developed primarily to generate revenue (Ensor and Thompson 1998). The experience is that the revenue obtained is often not substantial, the system imposes substantial administrative costs and the funds do not act in a way that induces system change. The Government of Bangladesh has an important role to play in the development of health insurance. A number of stages are required in order to prepare for the extension of insurance and Government involvement and support is essential at each stage. 1) Identify key policy pre-requisites for the successful implementation of insurance.

This may include items such as the retention of user charges2, quality assurance for private facilities and guidance on the regulation of insurance funds.

2) Develop plans for implementation of insurance for civil servants and, later, the formal private sector. This will require an inter-ministry committee that incorporates the Ministry of Health and Family Welfare, Ministry of Commerce, Ministry of Finance, Ministry of Labour and Ministry of Establishments. A number of decisions will be required: • • • • • •

•

•

• •

Governance of the fund. Management and administration of the fund Which providers to contract. Payment systems to be used. Initial and extended coverage. Size of premium and benefits. Consideration should be take of the practicalities of extending the chosen benefits to a large part of the population. Cost sharing between employer, employee and government including premiums and out of pocket co-insurance.

3) Encourage and monitor the development of informal sector insurance. Several

pilots have been proposed including: Public-Private Partnership (PPP) component of HPSP which pilot community finance and purchasing and provider partnerships; BRAC-Grameen supported community insurance pilots financed by ILO; Other pilots with community based organisations including existing systems that might be replicated.

4) Policy relevant research to explore the willingness to pay for insurance through

studies This research will be commissioned through the Institute of Health Economics, University of Dhaka. Other research may include a survey to identify

2 The Bangladesh legislation requires that all revenues raised by health facilities are returned to the central treasury



community based groups and other civil society groups who may take on health protection strategies.

It is vital that discussion continue on each of these items between Government, NGOs and the private sector. Discussion was initiated at an HEU seminar in the middle of June 2000. It is strongly recommended that the Ministry continue this discussion in suitable forums and take an active part in NGO sponsored initiatives such as the proposed CARE seminar on micro-insurance tentatively scheduled for the end of 2000. It is recommended that a high level inter-ministerial committee be established to facilitate the development of appropriate health insurance approaches for different population groups.



6. References Bautista, M. (1999). Local government health financing initiatives: evaluation

sysnthesis and prospects for the national health insurance program in the Philippines, Partnerships for Health Reform, Abt Associates.

Ensor, T. and R. Thompson (1998). “Health Insurance as a catalyst to Change in

Former Communist Countries.” Health Policy 1998 43(3): 203-218. Health_Insurance_Office (1998a). Annual Report 1994-1997, Bangkok. Bangkok,

Health Insurance Office, Ministry of Public Health, Thailand. Health_Insurance_Office (1998b). Health Welfare and Health Insurance Programme

under the National Health Development Plan in the 8th National Economic and Social Development Plan (1997-2001). Bangkok, Health Insurance Office, Ministry of Public Health, Thailand.

PhilHealth (1995). Implementing rules and regulations of the national insurance act

1995. Manila, Philippines Health Insurance Corporation. Sriratanaban, J. (2000). Quality and access to care: what should be the roles of the

social security scheme and voluntary private health insurance in Thailand?, Department of Preventive and Social Medicine, Chulalonghorn University, Bangkok.

Supakankunti, S. (2000). “Future prospects of voluntary health insurance in

Thailand.” Health Policy and Planning 15(1): 84-94.



Annex: agenda for study tour Sunday 21st May Depart Dhaka TG 322 14.00

Arrive Bangkok 17.20 Transfer to transit hotel

Monday 22nd May Depart Bangkok TG620 Arrive Manila 15.25 Transfer to Hotel Sulo (Quezon City)

Tuesday 23rd May Am Orientation of health insurance, Health Development Institute Pm Dr Aviva Ron and team, WHO

Wednesday 24th May Am Site visit to ACDECO Pm Meeting with SHINE

Thursday 25th May Am Meeting with Dr Denis Batangan, PMHSMPC Pm Department of Health

Friday 26th May Am Meeting with Philippines Health Insurance Corporation Pm Travel to LA UNION

Saturday 27th May Meeting with ORT Health Plus Project & field trip

Sunday 28th May Return to Manila

Monday 29th May Arrive Dhaka TG 621 16.45 Tuesday May 30th 9.00 – 12.00 13.30 – 16.30

Ayuthaya Provincial Public Health Office Hospital and Health Centre, Ayuthaya Province

Wednesday May 31st 9.30 – 12.00 14.00 – 16.30

Office of Health Insurance, Ministry of Public Health, Nonthaburi Province Sikarin Private Hospital

Thursday June 1st 9.00 – 16.00

Attend Flagship Training course. Sessions on social insurance, regulation and community insurance.

Friday June 2nd 10.00 – 12.00 13.30 – 15.30

Banpahaeo Hospital, Samut-Sakorn Province Mahachai Hospital, Samut-Sakorn Province

Saturday June 3rd Return to Dhaka TG321


health insurance in thailand and the philippines and lessons for bangladesh

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