HEALTH FINANCING MOH - HPG JAHR 2011

UPDATE ON POLICIES Eleventh Party Congress -Increase state investment while simultaneously mobilizing social mobilization for health activities. -Implement universal health insurance -Reform the operational and financing mechanism for public sector health facilities towards greater autonomy, openness and transparency Government -Decision 59/2010/QĐ-TTg issued norms for allocating state recurrent budget to apply to the 2011 budget, increased 1.8 to 18.5 times -Decision 60/2010/QĐ-TTg: issued principles, criteria and norms for allocating investment capital from the state budget for the period : Priority on northern mountainous and Central Highlands provinces. -Circular 06/2010/TTLT-BYT-BNV-BTC guiding implementation of Decree 64/2009/NĐ-CP: occupational salary supplement, to attract health workers to work in socio-economically disadvantaged regions (0.7 times basic salary) MOH: 5 Year health plan ( ) Reform the operational and financial mechanisms towards the orientation to rapidly increase public health spending, develop universal health insurance, adjust allocations and use of health financing to improve efficiency (effectiveness).

Implementation of tasks (1) Increase state budget spending on health – : average increase in health spending at 25,8%, more rapid that increase in general state budget spending at 16,7% Reach health share of state budget spending of 10% – , state budget spending on health reached 7.2 to 7.3% of total state budget spending Achieve universal health insurance coverage –Health insurance coverage increased to 60% by 2010 –Role and accountability of local authorities regarding implementation of the roadmap towards universal health insurance coverage has not been clearly and concretely written into regulations. –Compliance with health insurance among the formal sector workers remains low, especially in the private sector. –Difficulties in expanding health insurance to informal sector workers –Benefits of people participating in health insurance are not yet ensured as desired –Operations of VSS do not yet meet requirements.

Implementation of tasks (2) Expand international cooperation, continue to mobilize and effectively use external assistance projects –In 2010, total ODA provided was about 3500 billion VND, accounting for 8% of state budget for health, with 72% disbursement rate. Priority in allocating state budget for preventive medicine, grassroots health care, PHC, mountainous, remote, isolated areas and to support vulnerable groups. –Proportion of state budget spending on preventive medicine out of total state budget health spending exceeds 30% at both central and local levels. –Ensure state budget to support participation of the poor, near poor and children under age 6 in health insurance. –State budget for recurrent spending at CHS is not yet assured Reform the mechanism for allocating state budget to health facilities towards pay for performance –Implement allocation of state budget based on output indicators, especially for amounts allocated through users of services, such as purchase of health insurance. –Apply results based financing on a pilot basis (WB project) –Not yet implemented state budget allocation based on performance and output indicators.

Implementation of tasks (3) Reform the operational and financial mechanism for public sector health facilities towards greater autonomy, openness and transparency –MOH has developed a draft decree for reforming the operational and financing mechanism in state sector health facilities –Reviewed and assessed implementation of Decree NĐ43/2006 on autonomy in operations and finance for state sector health service facilities –Not yet implemented regulatory impact assessment of the Decree on reforming the operational and financing mechanism in state sector health facilities –Monitoring, checking autonomous operations has not yet been well implemented due to limitations in human resources and instruments. Strengthen effectiveness in use of existing financial resources –Efforts to reduce hospital overcrowding –MOH draft circular guiding competitive bidding in the health sector –Referral system not yet well implemented. –Not yet control effectively abuses of drugs and diagnostics –Lack information on cost-effectiveness of medical interventions

Implementation of tasks (4) Medical cost controls, reduce gradually the share of direct OOP spending in total health spending –OOP share in total spending has fallen from 65% in 2005 to 52% in 2008 –Some ODA projects support indirect costs of seeking medical care for the poor, ethnic minorities –OOP share remains high –Proportion of households with catastrophic spending has not fallen –Selection of drugs and services into the list covered by health insurance is not yet based on evidence of cost-effectiveness. Hospital provider payment reforms –MOH has established a steering committee for medical service provider payment reforms –Application of capitation in 375 facilities paid by health insurance, mainly district hospitals –Pilot test of package case-based payments to hospitals –Efforts to reform lack consistency, lack a comprehensive plan and have inadequate coordination between stakeholders. Develop medical user fees based on complete and accurate costing, and a transparent payment mechanism for medical services. –MOH has developed a Draft circular to replace Circular 14 to adjust health sector user fees. –Determining costs and service prices as a basis for the new user fees has not yet been a transparent and standardized process.

Recommendations (1) Continue to maintain more rapid growth in state health spending compared to general state budget growth Develop and implement the medium term expenditure framework for the upcoming period. Place the goal of health insurance coverage into the annual socio-economic development plans of localities Regulate clearly the role and accountability of local authorities regarding implementing the roadmap for universal health insurance coverage Develop a strategy and action plan to implement expansion of health insurance in the informal sector. Reform operations of the social health insurance agency. Review and improve effectiveness in use of ODA in the health sector.

Recommendations (2) Adjust norms and funding mechanism for regular activities of the CHS Implement on a pilot basis a mechanism to allocate state budget based on performance, then roll out the policy Regulatory impact assessment needed on the Draft decree on reforming the operational and financial mechanism in public sector health facilities Strengthen referral mechanism through administrative means, combined with appropriate financial incentives. Strengthen checking on appropriateness of drug prescribing, requests for lab testing based on practice guidelines.

Recommendations (3) Utilize effectively the contract mechanism in payment of health services. Strengthen application of the criteria of cost- effectiveness in selection of essential drugs and medical services. Develop plans and roadmaps for reforming provider payments at hospitals Develop and implement increasing transparency and standardization in determination of costs and prices of user fees.

Thank you!