MoH MYR 2014-2015 Health Insurance Group Discussion

7/21/2019 MoH MYR 2014-2015 Health Insurance Group Discussion

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InsuranceAchieving universal access to health care with fnancial risk protection at the

least cost possible.

Background

The Ministry of Health within the government wide public sector reform program is

considering the introduction of health insurance as one way of improving the delivery ofhealth services in the country.

FINDINGS FROM LITERATURE REVIEW

OBJECTIVES

In most countries the overriding objective of the public health system is to achieve universal

coverage (UHC) in health care. With health care insurance function, achieving universal

coverage is broadened to includephysicalandfnancialaccess to necessary health care of good

quality for all persons in society

Conceptual Models

There are four Traditional Models: Beveridge, Bismarck, Social Health and Out -of-pocket

model. This typology, based on source and modes of raising revenues, seems inadequate for

addressing health insurance in Africa due to high levels of poverty, low levels of formal

sector employment and a predominance of rural population. An emerging African health

insurance model combines three elements: Pay-roll based mandatory social health insurance

for formal sector workers; voluntary private insurance; and community based insurance

Analytical Framework

The health insurance function is broken down into distinct functions within the health care

system. Revenue collectionrefers to the process of mobilizing resources, while poolingrefers to

the spreading of nancial risk across the population or a subgroup of the population through

the accumulation of prepaid health care revenues and purchasingis the process of obtaining

services from providers on behalf of the covered population.

Revenue collection: Health care is typically financed from a mixture of four sources

taxes, social insurance, voluntary private insurance and user fees or out of pocket

payments. Although general taxation is associated with strong public expenditure control

and administrative efficiency, a number of countries in the world have moved towards

social health insurance. In general, for countries seeking to initiate or expand contribution

for health care through compulsory insurance contributions, macroeconomic and labour

market conditions are critical contextual factors.

Pooling: In some countries, health insurance is part of broader social security and

revenues are collected as part of the national social security, while in others they are

collected by national revenue authorities and remitted to the Ministry of Finance.

Revenue Allocation: Different allocation mechanism exist in the literature including

Government allocation where revenues are distributed based on historical patterns

related to utilization/infrastructure, need-based weighting capitation formula orsubsidies for premium payment for participation or otherwise uninsured. Most countries


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with NHI seem to rely on the government revenues allocation methodology where public

funds are distributed according to defined population based on need and past utilisation.

Purchasing-Provider: There are two main models of purchasing-provider payment divide:

integrated models (under which the providers are owned and managed by the purchaser)

and contract models (under which the providers are separate from the purchasers). The

emerging trend in many countries has been movement from integrated model towards

the new form of purchasing.

Benefits Package: For most countries, the definition of the benefit package derives from

the World Development Report (1993) which promoted the idea that countries should

dene, publicly fund, and ensure delivery of an essential packageof clinical health services

based on an analysis of the relative cost-effectiveness of intervention.

Benefits Entitlement: In some countries entitlement is on the basis of residency while in

others it on the basis of membership in national health or social insurance. In general,

health care systems funded from general tax revenues tend to offer benets to the entire

population (citizenship entitles people to benets). In contrast, in social health insurance

systems contributions by or on behalf of individuals or families to an insurance fund

determine entitlement to benets.

MALAWI SITUATIONAL ANALYSIS

Health fnancing: Government per capita spending on health averaging US$7.6 per capita per

annum, is below regional peers and comparators, and inadequate to deliver Malawis

Essential Health Care Package (EHP) free of charge estimated at US$44.4 per capita and is

signicantly below the SADC average of US$141per capita.

Sources of nance:Malawi is increasingly becoming donor dependent, with donor funding

accounting for about 65.4% of total health-care funding and government accounting for just

20.5 percent, way below the Abuja target of 15 percent. Although the country has free health

care, household ironically pay heavily (over 10 percent of THE) while companies pay less

than 4 percent of THE.

Health insurance:There is no national health insurance of any form, a few big companies are

self insured and there is limited private sector insurance schemes dominated by the Medical

Aid Society of Malawi, covering mostly formal sector employees in parastatals and industrial

companies, via payroll deduction and company contribution. Low income and informal

sector workers and the general population have to rely on public health service, pay out of

pocket or just not get formal health care at all.

Out-of-pocket payment: Generally, there are no user fees in public hospital and for those

accessing CHAM facilities, service level agreements have assured no formal fees for accessing

maternal and child health services. There is evidence of some informal user fees spurred by

inequitable geographical service coverage, poor transport infrastructure, poor availability andquality of services in the public sector which forces people to shun the public sector for the


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private sector has resulted in increasing out-of-pocket expenditures by certain sections of the

population, especially the poor.

Risk pooling: In principle there is no national health risk pooling in Malawi. Since themajority of population use public health facilities, eectively the Ministry of Health bears and

pools all the risk. Private schemes cover less than 0.2% of the population and there is no

pooling or cross-subsidy across private schemes and between public and private pools.

Allocation mechanisms: The Ministry of Finance decides how much to allocate to the

Ministry of Health according to Government sectoral priorities. In turn, these resources are

allocated to regional and district levels using a needs -or utilization-based resource allocation

formula.

Benet package: A minimum service package, called an Essential Health Package has been

dened based on estimated prevailing disease burden and includes most of the commonailments and interventions to be delivered at each level of the health service. Those under

medical schemes have varied benet packages depending on the type of coverage and also

have access to a comprehensive range of services, which is primarily limited by the ability-to-

pay user fees.

Feasibility of National Health Insurance Funded From General Taxes

The issue of National Health Insurance for Malawi is not about whetherbut how. Delivering

an Essential Package for Health free of cost for every Malawian has been costed at US$44.4

per capita. This gives the revenue requirement to deliver the EHP to 15 million people at least

US$667.2 million per annum.

Financing from General Taxation

In the current year, Parliament approved an allocation of MK50.7 billion (US$126.9 million)

for health, representing a per capita allocation of MK3,384 (US$8.05), and an overall shortfall

of US$540.3 million (or US$36 per capita). If Government were to implement an insurance

scheme to deliver the EHP as currently dened and funded from general taxes, it will need to

reallocate resources from other sectors towards health or, identify newer sources of tax andnon-tax revenues to supplement current allocation or, adjust the EHP to include less services

and thereby lowering the cost per capita and overall cost.

a)

Reallocation from other sectors

There a number of ways in which the allocation to health can be increased at the expense of

other sectors: an increased by reallocating government expenditures in favour of health or

restructuring sectoral allocations to district assemblies in favour of health.

On the first option, for 2014/15 the total expenditure was estimated at US$1737.33 million

of which US$433 was for development and US$1,274 million is for recurrent budget. In

the recurrent expenditure, when we control for statutory and protected expenditures, the

only room for re-allocation is the K137.7 billion (US$327 million) for ORT. Yet the entire


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amount falls below the US$540 million shortfall in revenues to require to deliver the EHP.

It is therefore inconceivable that we can have a tax funded EHP based insurance scheme

by re-allocating expenditures.

On the second option, re-directing resources transferred to the local assembly level infavour of health, unfortunately health (US$7.85 million) and education (US$21.43million)

already account for over half of the transfers to local assemblies (US$55.21 million). Even

if the entire allocation to local assemblies were earmarked for health, at the expense of all

other sectors, it would be inadequate to achieve the EHP.

b) Raising Tax Rates

If Government decided to maintain the benet package, and current allocation to MoH and

top up the revenue shortfall from additional taxes, it would need to raise an additional

US$540 million, equivalent to 43.7 percent of total revenue and grants, or 52.8 percent of

domestic revenue. If taxes on individuals and companies doubled it would just be adequateto cover the shortfall but at the expense of disposal incomes and company survival. Dobling

VAT or departmental user fees would not cover the shortfall.

c) Innovative Finance Earmarked (Health Fund)

We investigate the feasibility of paying for health Insurance with new taxes earmarked for

health. Possible taxes include: tax on airline ticket, levy on airtime, levy on tobacco

(production), and levy on alcohol. In all cases the new taxes cannot pay for the revenue

shortfall however, they can provide important seed money into the Health Fund

d)

Redefine the EHP

Instead of guaranteeing an Essential Health Package government could come up with a

cheaper less than comprehensive package that would be oered at no cost at primary care

level. How aordable this will be depends on services that can be retained in the package and

at what level these can be guaranteed

PROPOSAL

1. Adopt the African mixed model

Phase 1: Private Insurance already exists. Leave it as is for the moment Phase 2: Introduce Mandatory Social Insurance: starting with civil/public servants and

simultaneously pilot and scale up Community Based Health Insurance model to gauge

appropriate model.

Phase 3: expand and integrate private insurance into National Health Insurance

Phase 4: integrate CBHI into NHI

2. Create a National Health/Social Security fund

Use pool for risk equalization

Cover indigents

Pool resources through earmarked taxes

Top up the Pool with resources from donors


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ISSUES FOR DISCUSSION

1. What is/should be the objective Of Establishing Health Insurance in Malawi?

UHC? Or UHC with financial risk protection? Or revenue generation for health

system or resourcing the system?

2. Should Malawi rely on General Taxes, Earmarked taxes or mixed models, including the

so-called African model

If the African Model, how do we phase and sequence the components?

If there will be a Health Fund, should it be part, complement or substitute of the

Health insurance fund?

If a Health Fund, how should donor funding for the health sector complement a

national insurance fund, if at all.

3.

If Malawi cannot fund/afford the EHP as currently designed can we redefine it. Should the benefit package be tied to EHP or some other package e.g. primary

care, or MNCH or catastrophic package?

4. Should entitlement be based on citizenship / residency or insurance membership and

contribution? How do we secure the system

Documents

MoH MYR 2014-2015 Health Insurance Group Discussion