Integrating Financing Schemes to Achieve Universal Coverage in Thailand: Analysis of the Equity Achievements Phusit Prakongsai Supon Limwattananon Viroj Tangcharoensathien International Health Policy Program (IHPP) Presentation to the 7thWorld Congress of Health Economics Beijing International Convention Centre, Beijing, China 13 July 2009 Thank you Adam and good morning everybody. On behalf of the research team from IHPP-Thailand, I would like to present the case study of Thailand in integrating health financing schemes to achieve universal coverage and the analysis of health equity achievements. My presentation aims to assess the impact of the UC policy on equity of the Thai health care systems in various dimensions. And we try to draw experiences from Thailand for other low- and middle-income countries moving towards UC.

Background By 2002, Thailand achieved universal coverage (UC) by introducing a tax-funded health insurance scheme, the UC scheme, to approximately 47 million (~75%) of the population who were neither beneficiaries of SHI or Civil Servant Medical Benefit Scheme, Health care financing strategies of the UC policy: removal of financial barriers to health services; shift of the main source of HCF from OOP to general tax; changing provider payment from historical allocations to close-ended payments; promoting the use of primary care by contracting a PCU as the main contractor and gatekeeper. Benefit package of the UC scheme is quite comprehensive comprising OP, hospitalization, health promotion and disease prevention, most expensive health services, dental care, medicines and operations.

Informal user fee exemption Evolution of achieving universal coverage in Thailand: Infrastructure development + financial protection extension Establishment of prepayment schemes User fees Informal user fee exemption 1945 Expansion consolidation of prepayment schemes 1970 1975 LIC 1980 CSMBS 1-3rd NHP 1962-76 Provincial hospitals 1990 SSS 1980 1983 CBHI SSS CSMBS LIC  MWS Universal Coverage 4th -5th NHP (1977-86) District hospitals Health centers 1990 1994 Pub VHI SSS We can say that it took almost three decades in using the piecemeal and targeting approaches for social protection expansions. This started from the LIC scheme for the poor in 1975, and CSMBS for civil servant medical benefit schemes, and their dependants in 1980. Then in 1990, SHI scheme was introduced, followed by voluntary health insurance scheme in 1994. Despite using many health insurance schemes for almost two decades, evidence in 2001 which was before achieving UC, indicates that approximately 30% of Thais were still uninsured. 2000 2002 full achieve Universal Coverage CSMBS Health Infrastructure extension--wide geographical coverage 2002

Health care finance and service provision of Thailand after achieving universal coverage (UC) General tax General tax Standard Benefit package Tripartite contributions Payroll taxes Risk related contributions Capitation Capitation & global Co-payment budget with DRG for IP Services Fee for services Fee for services - OP Ministry of Finance - CSMBS (6 million beneficiaries) National Health Insurance Office The UC scheme (47 millions of pop.) Social Security Office - SSS (9 millions of formal employees) Voluntary private insurance After achieving universal coverage in 2002, the Thai health care system comprised three main public health insurance schemes: 1) the CSMBS which covers approximately six million of government employees and their dependants. The SSS which protects nine millions of employees in the formal sector from non-work related health care expenditure, and the UC scheme which covers those who are not CSMBS or SSS beneficiaries. These three public health insurance schemes have different health financing sources, provider payment methods, but similar benefit package. Public & Private Contractor networks Population Patients

Scheme beneficiaries by income quintiles, 2004 After achieving UC, an analysis of the distribution of scheme beneficiaries in 2004 shows that a) approximately 50% of the UC beneficiaries were in the first and second quintiles. While approximately 50% of the CSMBS and SHI were in the richest quintiles. This indicates that the UC scheme is the public health insurance scheme for the poor and those residing in the rural areas.

Total health expenditure 1994-2005 Achieving UC 36 36 37 37 46 53 45 45 44 44 53 55 64 64 63 47 54 63 47 55 55 56 56 45 How burdensome has been the UC policy on the Thai health care system? According to the NHA, total health expenditures of Thailand did not increase much as expected after the introduction of UC policy. Total health expenditures in 2003-2005 were around 3.55 – 3.49% of GDP. This could be explained by the increase rate of total health expenditures was not greater than the increase rate of GDP. There was increase amount and share of public expenditures in opposite to private expenditures. Total health expenditure during 2003-2005 ranged from 3.49 to 3.55% of GDP, THE per capita approx 100 USD

Household OOP for health, % income 1992-2004 As a result from the UC policy and other piecemeal approaches, the proportion of HH spending on health in income in the first decile decreased from 8.2% of income in 1992, to 2.2% in 2004, while that of the richest decile was approximately 1.1-1.3% in the same period.

Type of health facilities Provincial and regional hospitals The distribution of ambulatory service use among different income quintiles in 2001 and 2003, by types of health facilities 2001 2003 An analysis of ambulatory service use from the Nationally representative household surveys in 2001 and 2003 indicates that after UC, ambulatory service use of the first and second quintiles increased significantly, especially at health centers and community hospitals. The concentration indexes show the more pro-poor nature of ambulatory service use at health centre, community, and regional hospitals; while the concentration indexes of private hospitals reveal the pro-rich nature of ambulatory service use both situations of before and after UC. Concentration index Type of health facilities 2001 2003 Health centers - 0.2944 - 0.3650 Community hospitals - 0.2698 - 0.3200 Provincial and regional hospitals - 0.0366 - 0.0802 Private hospitals 0.4313 0.3484 Source: Prakongsai P (2008). The Impact of the Universal Coverage Policy on Equity of the Thai Health Care system.

Equity in utilization: Concentration Index of OP service by type of health facilities: 2001 to 2005 The analyses of the concentration indexes of ambulatory service use from 2001 to 2005 show that after achieving UC, ambulatory service use at HC and community hospitals tended to be more pro-poor, while the CI of ambulatory service use of private hospitals tended to be less pro-rich. However, the overall CI of ambulatory service use was more pro-poor because the CI shows the increasing negative value of -0.090 in 2001 to -0.177 in 2005. Note: CI range from -1 to + 1. Minus 1 (plus 1 ) means in favour of the poor (rich), or the poor (rich) disproportionately use more services than the rich (poor). 9

Equity in utilization: Concentration Index of hospitalization by type of health facilities: 2001 to 2005 10

Equity in budget subsidies: BIA, 2001 and 2003 When we analyzed government subsidies on health gained by different income quintiles, we found that in 2003, the first and second quintiles gained higher percentage of net government health subsidies, compared to the situation before UC. In contrast, the proportion of the net government health subsidies in the third to the fifth quintiles decreased after implementation of universal coverage. The concentration indexes of the net government health subsidies in 2003 had a higher negative value than the subsidy in 2001, which means the poorer gained more government health subsidies in 2003 than the situation before UC. Note: Overall net government health subsidies in 2001 were approximately 58,733 million Baht, and in 2003 were 80,678 million Baht (in 2001-value) The concentration index of government health subsidies in 2001 was -0.044 and in 2003 was -0.123

The incidence of catastrophic health payments from 2000 to 2007 2002 2004 2006 2007 Q1 (poorest) 4.0% 1.7% 1.6% 0.9% 1.9% Q5 (richest) 5.6% 5.0% 4.3% 3.3% 2.8% All quintiles 5.4% 2.0% 2.2% We also analyzed the incidence of catastrophic health expenditure which refers to the level of household out-of-pocket payments for health care over 10% of total household expenditure. The incidence of catastrophic health expenditure decreased from 5.4% in 2000 to 2.0% and 2.2% in 2006 and 2007, respectively. The decrease of catastrophic health expenditure was greater in poorer quintiles because most of them are covered by the UC scheme, while those in richer quintiles are beneficiaries of SSS and CSMBS. Note: Catastrophic health expenditure refers to household out-of-pocket payments for health exceed 10% of household consumption expenditure

Kakwani indexes of different health care finance from 2000 to 2006 (Kakwani = Conc. Index – Gini)   2000 2002 2004 2006 Out of Pocket -0.1502 -0.0755 -0.0764 -0.0450 Direct tax 0.3913 0.4159 0.4424 0.3617 Indirect tax -0.0964 -0.0691 -0.0435 -0.0831 Premium Insurance -0.3623 -0.3906 -0.3233 na Social health Insurance Contribution 0.1650 0.1121 0.1046 Premium Insurance+SHI Contribution -0.0491

Discussion Health financing reform strategies of the UC policy improved equity in health care use (both ambulatory and hospitalization) and financial risk protection. Health care use of government health facilities was pro-poor before UC, and was getting better after UC implementation. Health services at primary and secondary care levels were more pro-poor than tertiary care and private facilities. Out-of-pocket payments for health tended to be less regressive after the UC policy was implemented. The Kakwani indexes of OOPs significantly decreased from - 0.1502 in 2000 (prior to UC) to - 0.0450 in 2006. 14

How equity and efficiency were achieved? 1. Long term financial sustainability 2. Technical efficiency, rational use of services at primary health care Functioning primary health care at district level, wide geographical coverage of services, referral back up to tertiary care where needed, close-to-client services with minimum traveling cost In-feasible for informal sector (equally 25% belong to Q1 and Q2) to adopt contributory scheme 1. Equity in financial contribution Tax financed scheme, adequate financing of primary healthcare 2. Minimum catastrophic health expenditure 3. Minimum level of impoverishment Breadth and depth coverage, comprehensive benefit package, free at point of services 4. Equity in use of services 5. Equity in government subsidies Provider payment method: capitation contract model and global budget + DRG EQUITY GOALS EFFICIENCY GOALS

Concluding remarks 1/2 Enabling factors for achieving UC Strong political supports Health systems capacity and its resilience to rapid nation-wide program scale-up in 6 months Lessons from predecessors SHI capitation contract model CSMBS “no go” fee for service, due to cost escalation and inefficiencies Voluntary Health Card Scheme – adverse selection and non-viable financially Linking evidence to policy decision Integral relationship among researchers – reformists – politicians Pragmatism Limited chance to achieve UC by contributory scheme, especially among informal sector, not feasible for contribution collection and enforcement Learning from SHI, UC takes further advanced steps, Well thought systems design towards efficiency, cost containment, ensure referral, advocates of primary care contractor I like to conclude key enabling factors which help achieve UC, not only strong political supports, capacity to generate evidence, and translate evidence into systems design and the systems capacity and resilience to implement program are very important. SHI informs us to adopt capitation contract model. Capitation helps long term cost containment and financially affordable. It sends a proper message towards efficiency while accreditation and quality monitoring are important tools. CSMBS tells us a “no go” direction of fee for services reimbursement model. It sends a wrong signal towards inefficiency. It is not possible to achieve UC through voluntary health card scheme due to adverse selection and financial non-viability. Voluntary health insurance is a temporary step towards UC, it helps build up capacity in insurance management; an important social asset. Not only lessons learned from SHI, reformist and system designers also take a more advance steps than SHI. 16

Concluding remarks 2/2 UC Schemes covers the poor, half belongs to Q1 and Q2 However, the Scheme faced chronic under-funding, capitation was below than the proposed figures based on cost and utilization Significant increase in utilization more on OP than IP In view of under-funding and increased utilization  danger of poor quality of services and serious hospital financial constraints Empirical evidence indicates Pro-poor budget subsidy, DHS is a major hub of fostering the pro-poor nature of financing healthcare Policy msg.  invest more in DHS (further) reduction in the incidence of catastrophic illnesses (further) reduction of impoverishment from medical bills UC scheme covers the poor, but under-funded than it should be. There is a danger of poor services and serious hospital fiscal constraint. Good news that UC Scheme benefits more to the poor, through the functioning of DHS, it reduces incidence of catastrophic illnesses and impoverishment thereof. Studies on long term projection with technical supports from ILO indicates that by 2020, the THE would be 3.88% of GDP, and is within the fiscal capacity of the government The Prime Minister recently, decides to finance UC scheme totally by excise tax from tobacco and alcohol in FY2007 onwards. 17

Key challenges of the Thai health care system Long-term sustainability of health care finance for the UC scheme and overall health care finance, An increasing disease burden from chronic NCD and the situation of aging society, Inefficiency and inequitable access to good quality of health services among beneficiaries of different health insurance schemes, Low level of health care finance for health promotion and disease prevention, Poor governance of health systems in Thailand, The unknown impact of economic crisis on health of the Thai population, The pandemic of new emerging infectious disease and unsuccessful control of tuberculosis and HIV/AIDS, Mal-distribution and internal brain drain of human resources for health. 18

Thank you for your attention