Abt Associates Inc. In collaboration with: I Aga Khan Foundation I BearingPoint I Bitrán y Asociados I BRAC University I Broad Branch Associates I Forum One Communications I RTI International I Training Resources Group I Tulane Universitys School of Public Health Health Insurance and Priority Services: How They Fit Together Kimberly Switlick-Prose, MPH Technical Officer, Deloitte Consulting Hong Wang, MD, PhD Senior Economist, Abt Associates GHC Presentation Series October 14, 2010

Outline What is health insurance? Poverty and health insurance Priority health services and health insurance: Why they are important Country examples Critical success factors

What is health insurance? Health insurance is a form of financial risk protection mechanism by means of which people collectively pool their risk of incurring medical expenses Two distinct features: Uncertainty of incurring medical expense Catastrophic

Poverty and health insurance What insurances schemes do we have? What determines the enrollment to health insurance? What determines the use of health care services?

Pro-poor features of health insurance schemes TypesHow is this HI Scheme Financed? Equity features Availability of scheme to the poor in developing countries Financing Vertical Equity Delivery Horizontal Equity National Health Service General taxHighDepends on system design, service delivery structure, and population health seeking behaviors Low/Medium Social insurance Payroll taxes paid by employer and employeeMediumNot available Private health insurance Premium contribution from participants and/or their employers LowLimited availability Community financing Premium contribution from membersLow/MediumMedium

What determines the enrollment to health insurance? They are risk averse There is a high probability of a sickness or injury event occurring The cost of sickness or injury is high (magnitude of the loss) Price of insurance is affordable Higher household income Paul Feldstein, Health Care Economics, 2005

Evidence on the poors demand for health insurance Willingness to pay – poor are less willing Enrollment – fewer poor enroll Drop out – poor more likely to drop out

Impact of mutual health organizations: evidence from West Africa Slavea Chankova, Sara Sulzbach, and Francois Diop,2008

What determines the use of health care services? Derived from demand for health* From consumption perspective From investment perspective Actual or perceived illness Economic status (income and price) Cultural-demographic characteristics Health care supply *Grossman 1972

Evidence on the poors use of health services (benefit) Service use in general – the poor use fewer services Reimbursement (benefit incidence) from health insurance – the poor get less

Health care utilization by enrollment and socio- economic characteristics in Rwanda Household or Individual Characteristics % of sick individuals who sought care at a modern health care provider Ratio (1)/(2) BeneficiariesNon- beneficiaries Income quintile Poorest Quintile 2 Quintile 3 Quintile 4 Richest 26,2 42,9 40,2 41,9 50,5 13,7 21,3 25,4 30,7 33,3 1,91 2,01 1,58 1,36 1,51 Total 41,624,71,68 Source: EICV 2005.

China: Participation of a CBHI by income and health status Table 6. The distribution of the Net Benefits among all population by expenditure and health status Health statusL-incomeM-incomeH-incomeRatio of H/L income L-health M-health H-health Ratio of L/H health

No type of health insurance is naturally pro-poor The poor might not be eligible The poor are eligible but might not enroll The poor are enrolled but might not benefit (use services)

Financial means Subsidize or exempt poor populations from premium payments, user fees, or co-payments Target poor Door-to-door enrollment (Rwanda) Cards or vouchers (India, Bangladesh, Thailand, Philippines) Determine at point-of-service or enrollment (Ghana) NGOs, community or affinity groups (India, West Africa, China) Incentives for providers to serve the poor (Argentina) How to enroll the poor and ensure they benefit from health insurance?

Benefit package design Making benefit package attractive to the poor by offering the types of services that they need and would use Including services that are accessible to where the poor live Inclusion of priority services into health insurance benefit package How to enroll the poor and ensure they benefit from health insurance?

Priority services: What are we talking about? Priority services are considered the most important and critical services that target specific health conditions or a specific target group. Priority services include: MCH, RH/FP, and communicable disease prevention. They also include preventive services, or services that are intended to prevent a health condition from escalating into a catastrophic case. Catastrophic is defined as a health care cost that is severe enough to affect ones financial stability and/or socio-economic status.

Priority services: Do they really belong in health insurance? Which priority services would fit in health insurance (are insurable) and which dont (are uninsurable) ? REMEMBER : Two distinct features of insurable risks: Uncertainty of incurring medical expense Catastrophic

If priority services dont all fit, why are they still important to health insurance?

Country example: Ghana NHIS Benefits include coverage for basic health care: outpatient service, inpatient services, essential drugs, maternity FP and immunizations are excluded (considered public goods and provided free by the government) However, there is a proposal to include FP services as part of benefits package

NHIS reduced point-of-service costs and OOP for needed services In Ghana, household spending on health fell after insurance was introduced

Colombia EPS and ARS Empresas Promotoras de Salud (EPS): for those with ability to contribute through income tax Administradoras de Regimen Subsidiado (ARS): subsidized health package; sliding scale contribution with some paying nothing Benefits: catastrophic care, family planning, maternity care, including prenatal, delivery, postpartum, and nutritional support to mothers Coverage is for everyone, even poor who may not be contributing ARS: in public facilities; EPS: in private and public

Colombia EPS/ARS increased use of priority services Since introduction of health insurance: Increase in physician-assisted births (up 66%) Increase of deliveries in health facilities (up 18%) Increase of use of prenatal care among rural women (up 49%)

Increase use of priority services For example, insured children under 5: Twice as likely to have slept under ITNs as uninsured children (Mali) With fever, almost 5 times more likely to seek care for fever within 48 hours than uninsured children (Mali) With diarrhea, 7 times more likely to go to a modern facility than uninsured children with diarrhea (Mali) Nearly three times more likely to seek care upon falling ill than uninsured children (Senegal) Diop, François Pathé, Sara Sulzbach, and Slavea Chankova. September The Impact of Mutual Health Organizations on Social Inclusion, Accessto Health Care, and Household Income Protection: Evidence from Ghana, Senegal, and Mali. Bethesda, MD: The Partners for Health ReformplusProject, Abt Associates Inc.

Other reasons to include priority services: Make health insurance more attractive to user – particularly the poor => increase enrollment and renewal Improve quality of service delivery Make health services more available Reduce long-term costs of health care

What are the drawbacks of including priority services? Operationally, it is very complex to include priority services (which often tend to be out-patient) It can be administratively expensive to include Health infrastructure may not be able to support Provider payment can get complicated depending on the mechanism used

Critical success factors – How to make it work Design insurance model to respond to beneficiary needs Ensure good information dissemination/outreach so beneficiaries know where/how to get services Design benefit package to meet needs of beneficiaries Ensure quality with participating providers Monitoring and accountability

Abt Associates Inc. In collaboration with: I Aga Khan Foundation I BearingPoint I Bitrán y Asociados I BRAC University I Broad Branch Associates I Forum One Communications I RTI International I Training Resources Group I Tulane Universitys School of Public Health Thank you Reports related to this presentation are available at