PRESENTATION: Financing Solutions for Supplementing Social Security in the Health Sector

7/31/2019 PRESENTATION: Financing Solutions for Supplementing Social Security in the Health Sector

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Financing Solutions for

Supplementing Social Security

in the Health Sector

Pompy Sridhar

30/07/2012 1

Disclaimer: The views expressed in this paper/presentation are the views of the author and do not necessarily reflect theviews or policies of the Asian Development Bank( ADB), or its Board of Governors, or the governments they represent. ADBdoes not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence oftheir use. Terminology used may not necessarily be consistent with ADB official terms.


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Profile

16 + Years of working with Private Sector- Finance, Development, Insurance, Health

systems

Public Sector-Health, Social protection, Policy, Health

Financing Development sector- GIZ, ILO, World Bank

Current Positions

Advisor to Government of India - National Health

Insurance Scheme Advisor to Private Sector- Manipal Group on Health

systems and Insurance

Advisor to Insurance Companies for Mass Insurance

Business targeted at Universal Coverage 230/07/2012


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Agenda

The following will be discussed Financial Inclusion

Access to Finance for Social Protection

Developments on Health Financing initiatives Government Health Insurance Initiatives as

part of Social Protection

Private Health Insurance Initiatives

complementing Governments efforts

Proposal for ADB

30/07/20123


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Challenges in Defining Good Practices

Wide variety of insurance and financial inclusion models/partnerships /hybrids makes it difficult to judge feasibility of a

specific policy and specially in other settings

Little data documenting the contextual causes & underlying

differences between nominal and actual coverage, benefits,

utilization

Findings on the impact of insurance on access is ambivalent: A

trend to greater access, but out of pocket & use of private

facilities for healthcare may not always decrease

Research on the impact of financial inclusion initiatives and

increased insurance coverage on inclusion/health outcomes,

vs access, is still quite rare

Improving access to finance or healthcare is still a challenge30/07/2012 4


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Stages of Financial Protection and Supporting Policies

30.07.2012

Universal Coverage

(Advocacy)

Insurance pool consolidation

(Reinsurance)

Established Insurance Pools

(Funding and Capacity Dev.)

Community Based Schemes

(Evidence)

Dominance ofOut of Pocket Expenditure

Donor Policies

Advocacy, Consumer protectionfunding and Reinsurance

National Policies

Set Up Funding andReinsurance

Capacity building andTechnical support

Evidence based Advocacy

Optimized Subsidy of Low

Income by High Income

Inter pool subsidizes andconsolidation policies

Framework for poolmanagement & Interactions

Commitment to dissociationof Contribution fromUtilization

Renewed PolicyCommitment


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Financing Policies will allow Countries to

Leverage Outcomes

30/07/2012 6

Financing

Governance

Capacity

Policy

Outcomes


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When Good Policies and Capacity are Missing,

Things Break Down:

Policy

ICT

Capacity

Household Behaviors

Institutional Incentives

Financing

Knowledge base

Money Alone

Weak Policies

& Corruption

Lack of Community

Involvement

Problems with Supply

Lack of DemandOutcomes


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Key Success Factors in Scaling up Coverage

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Coherentlegislation,

enforcementand

monitoring

Sharedinternationalframeworks

such asMDGs and t

SocialProtection

Floor

Developingfiscal space

PrivateInsurance

and PensionSchemes forthe ones

uncovered

Provisions ofat least

essentialbenefits in

socialprotectionschemes

8

Untapped,

Low Hanging,

Financial Sector

Solutions?

GapGap

Continuous

Process

Generation of

Lessons and

sharing


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India Story: Policy and Regulation Catalyzed Growth

of the Insurance Industry

Rural Sector Business

Mandatory for all

Supported

by Government

2005 Micro Insurance

Regulation

Definition of Agentsexpanded to

MFIs, SHGs, NGOsRedefined

Training requirements

TechnologyImproved Product Design

Flexible Policy

Packaged Products

TransparencyBuild Trust

Data analysis

Policy dialogue

Lower Costs Increased Penetration Control Growth

Insurance Products


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Distribution is the Key

Integrated Approach for Cost Effective Delivery

Insu

rance

Product

s

r

HI Administrator +Insurance Company+Technical assistanceprovider

HI administrator+Insurance

Company

Minimize Costs of Distribution and Servicing

Control Adverse Selection and Moral Hazard

Increase overall value for the client

Risk Mitigation Measures

Over the counterProducts

HI Administrator +InsuranceCompany

ProductDevelopmentRiskAssessmentBusinessPlanning

Marketing

Outreach

Education

SalesUnderwriting

PolicyIssuance

ClaimsFacilitation

Remittance

Monitoring

PartnerCapacityBuildingEvaluationInnovation

Gap Gap GapGap


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Demand and Supply Side Interventions have to go

Hand-in-Hand

Objective

Building

Blocks

Enablers

To provide financial ProtectionDemand to be complemented with supply side

Interventions and quality initiatives

Supply Side Interventions: Public, PPPs, Private

Product and Process Innovations

Sustainable Transaction Platform

Incubation of Partnerships

Regulation

Knowledge and Insights


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Revenue Pooling Resource Allocation

Collection or Purchasing (RAP)

What are Good Health Financing Policies?

Both Public and Private sector have a Role

Private

P

ublic

Taxes

Public Charges

Mandates

Grants

Loans

PrivateInsurance

Communities

Out-of-Pocket

Public

Providers

PrivateProviders

ServiceProvision

GovernmentAgency

Social Insurance or

Sickness Funds

Private InsuranceOrganizations

Employers

IndividualsAnd Households


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Relation amongst Functions and Objectives of a

Health System

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Stewardship

(Oversight)

Resource Creation

(Investment &

Training)

Fair Financial

Contribution

Service Delivery

(Provision)

Responsiveness to

peoples non medical

expectations

Financing

(Collecting , Pooling,

purchasing)

Health


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The Rationale of Health Financingand The Indian Experience

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What is a Typical Financing Scheme in a

Developing Country

Segmented Health Financing System

Limited public health and concentration of expenditures in supplyside subsidies to curative care (large public hospitals)

Government Insurance with low coverage usually concentrated inmiddle and upper class urban population (salaried workers)

Communities have responded with community risk poolingmechanisms.

Limited supplementary insurance for those who can afford it

Unclear rules of the game

Little development of Capital markets and prohibition to invest

abroad Mandatory requirements to be a fully complying insurance

company in the country.

Large out of pocket payments for curative care, usually paid bylower income families.


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Will More Money Alone Help Achieve the MDG?

There are estimates that to achieve MDG there is a need ofadditional funding for health expenditures in the range of US$

10 to 30 billion.

It is unlikely that this money will come from donor financing

alone and if it did it would be non-sustainable.

Donor financing must leverage structural change

ADB can leverage their working relationships with ministry of

finance and planning for advocacy and shaping financing

policies

This can open up investment opportunities in both financial

sector and health


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Need for Health Insurance ( Expansion?)

Financial protection requires risk pooling andeffective allocation of resources

Targeting helps increased improve awareness and

thus utilization of health services

Insurance activates the principles of economies of

scale: Improves the supply side,helps

Standardization and cost-effective quality health care

Demand side management of health care: Activatesand brings efficiency in supply side health system

Limited Reach-RSBY Covers 100 million lives out of a

population of 1 BillionIncreased Demand


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World Health Report 2010: The Path to Universal

Coverage

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Universal Health coverage

(Advocacy)

Insurance pool consolidation

(Reinsurance)

Established Insurance Pools

(Funding and Capacity Dev.)

Community Based Schemes

(Evidence)

Out of Pocket Expenditure


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Why is the progress so slow

when the opportunity is so large?

Credit

Savings

EntrepreneurialPoor

Self Employed

Poor

Laboring Poor

Very Poor

Insurance

Safety Net Program

Supply? Challenges

cuts across geographic,

socio economic segments

1.Infrastructure not evenly

Available

2. Building capacities of

public and private facilities is

time consuming

3.Costs of delivery high

4. While the private facilities

are responsive to business

solutions, public facilities

need proper incentives to

improve productivity

Demand ?Affordability?

1. Volatility of income at

the Base of the Pyramid

2. Valuable intangible

product?

3. Creating a large enough

pool on voluntary basis

requires the product to

have high perceived value

Health Insurance needs to be tested through experiments in a controlledfashion where we can see what works best and then scale it up


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Access to Healthcare needs a Multipronged

Approach

Collecting RevenueGovernment Taxes

SubsidiesOut Of Pocket

Community FundsGrants

Resource AllocationEquitable

Accessible

QualityService ProvisionPublic & Private

PoolingRisk

Central Govt.Allocations

State AllocationsCommunity Schemes

Private Insurance

Private Out of Pocket

Govt. InsurancePrivate InsuranceCommunity Based

Alternate Financing

CostContainmen

t

Demand Side Supply Side

Govt. suppliesPPPs

Private AffordableCare

Mobile Healthcare

Remote Healthcare


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Universal Healthcare Through Innovations in

Demand Side Financing

Rashtriya Swasthya Bima Yojana (RSBY)- The National HealthInsurance Scheme is a solution developed for India that has

leapfrogged solutions that were available in the world

......Now moving towards Universal Coverage


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Promising Example:

RSBY-The National Health Insurance scheme

Smart Card Technology used

Addresses 2 key challenges Connectivity

Identity

Planned integrated field approach

Adequate scale of operations, 27 states,31 million households

Now expanded to provide Out PatientCoverage


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Why is RSBY Successful?

Address needs of the not so literate client The Technology Backbone

Enrollment

Claims Administration

Audit

Grievance Redressal

Tracking Cash Flows and Utilization real time

Incentives for all Stake Holders For the client

For the Insurance company

For the smart card provider

For the hospitals and Clinics30/07/2012 23


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Rationale for Out-patient Health Insurance

Insurance systems is as a prepayment mechanism againstlarge unexpected medical expenses. Although, in theory,

prepayment for predictable expenses offers no risk pooling

benefits in an insurance sense and can undermine a health

insurance system if they are a significant part of covered

benefits, individuals in most countries appear to preferprepayment even for routine services ( World Bank Report)

More importantly early intervention in health can minimize

losses, it is obvious for risk mitigation

Benefits of Outpatient Insurance Encourage appropriate health seeking behavior

Systematic collection of data

Improve sustainability of the Inpatient scheme

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h h


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Rashtriya Swasthya Bima Yojana

- since 2008 -

Population: BPL Households

Reduce

Out of Pocket Expenditure

Services:

Hospitalization

covered

Direct costs:

Up to 30,000 RSper household

are covered


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- since 2010 -

Population: Unorganised Sector*

Extend Coverage to APL

* BPL households, MNREGA Workers, Construction Workers, Domestic Workers, Beedi Workers ...

Direct costs:


are covered

Services:

Hospitalisation

covered


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- since 2011 -

Services:

Hospitalisation

and outpatient

treatment

covered

Direct costs:


are coveredCover outpatient treatment

Population: Unorganised Sector*

* BPL households, MNREGA Workers, Construction Workers, Domestic Workers, Beedi Workers ...


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Private Insurance for Expanding Reach:

Below Poverty Line (30%)

Government Employees

Private Insurance

B&C

Workers

Domestic

Workers NREGS

Workers

RSBY

FullySubsidised

Self Paid Groups-

Manipal and others

RSBY

PartiallySubsidise

d/

Non-Subsidis

ed

For Profit

Not For Profit

Full Subsidy No Subsidy

RSBY

Arrogyashree

CBHIs

Pvt

Insurance

CBHIsCBHIs

CBHIsCBHIs

Top up Health Financing options will have to complement Governments Effort


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Universal Health Coverage in Thailand- 2009

30/07/2012 2929

98% Population coverage

Government Hexpenditure73% of total

HealthExpenditure


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The ADB Mizoram: Program Description

The program seeks to help the state government of Mizoram(SGM) to create fiscal space by

enhancing tax and nontax revenue measures and rationalizing

expenditures

bringing about service improvements in two key sectors(health and education) in a cost-effective manner

more efficient allocation of budget resources to social sectors

given the application of medium-term expenditure

frameworks

greater access to, and quality of, services in the education and

health sectors

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The ADB Mizoram Project: Progress so far

Reorganization of expenditure on Health Supply side andInsurance

Taps Central Government Funds for RSBY

Collection of premium targeting subsidy

Use of ICT for cost effective delivery Enhanced reach

Built capacities within the state

Expanding to provide universal cover

Expanding to provide comprehensive cover

Moving towards self sustainence

Reduced premium outgo

Increase cover in width and depth30/07/2012 31


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Changing Environment is Facilitating Innovation

Social: Increased realization for social security in generaland health insurance in particular

Political acceptability

Bureaucratic: Acceptance of public-private partnershipfor delivering social services

Market: Increased interest among hospitals, Insurance

Companys to focus on the mass business

Private sector participation on the anvil- For supply side

interventions for health, skill Development and

education as well as distribution(MFIs and Grass root

level Organizations)


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The Proposal for Supplementing Social SecurityInitiatives of ADB in Health Financing

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Current Engagement of Multilateral and

Development Agencies ( Medico-Technical)

Most of the agencies are associated with public healthinterventions, IEC, compilation of schemes

Study of contextual causes for coverage, utilization rare

Trend towards private sector initiatives in filling the gas

ADB can take a leadership role in the following areas:

Financial sector approach to health financing solutions

Regulation and Policy Advocacy for health financing

Creating a comprehensive knowledge base of the

demand and supply side interventions in health

financing

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Proposal I: Landscape Study using a Diagnostic


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Proposal I: Landscape Study using a Diagnostic

Tool for Policy Analysis and Advice

A landscape analysis of Health Financing-Report to contain: Baseline information on Health protection in 3-5 Asian

countries- India, Thailand, Cambodia..

Collect and summarize health insurance policies, practices,

lessons

Catalogue the principal constraints to expanding coverage

where it exists; or introducing schemes where it does not exist

Select and prioritize areas for future research

When possible, use data to examine correlation of health

insurance to equity, as measured by changes in coverage, access,

and/or outcomes

Can be done at Regional, National or State level30/07/2012 35


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Proposal I: Diagnostic tool for Cost effectiveness Study

Cost effectiveness of Health Financing Schemes inIndia

For development prudential policy and regulatory

framework

Working Knowledge: Lessons across health financing

models

Focus on outcomes and value to stakeholders as they

perceive it For advocacy of improved public expenditure

management, creation of fiscal space and improved

governance30/07/2012 36


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Proposal II: Supporting Technology in Providing

Access to Health Care

Sustainable transaction system for health and insurance

Secure transaction platform: collection systems that will reach

the last mile e.g. Micro ATMs

Support development of holistic platforms for insurance

administration that serve the purpose of accessing

Government entitlements, IEC, distribution, claims

administration, purchase of drugs,

Linking up with National Identity initiatives like UID( Unique

Identity for every citizen of India) , RSBY( Health Insurance

identity) to distribution and claims administration

Support Public and private sector initiatives and convergence

where possible

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Proposal II A: Support to RSBY for Expansion

Key Challenges in improved public expenditure management

and improved resource allocation decisions-Inadequate,

Inefficient, Inequitable, Incomplete, Incentives

RSBY is based on the principles of addressing incentives to

deliver healthcare

Outpatient care addresses the issue of risk mitigation

Public Health initiatives complement OP Insurance

Core learning blocks may be supported

Provider incentives Output based payments

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Proposal II B: Supporting PPP Initiatives

Support Manipal Health and Insurance Program Pioneers in Education and Health Development

Region has the headquarters of many banks in South India

Present in India, Malaysia, Nepal, Antigua

Innovative Financing solutions to improve access to healthand education

Interventions include both demand and the supply side

Support the development of a holistic platform for

administration of health and education initiatives

Support skill Development in Health care

It is a deemed university and runs courses on Public

health, Medicine, Community medicine etc. Can partner

for research 30/07/2012 39


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Proposal III: Support Platform for Financial

Inclusion Beyond Microcredit to Microfinance

IFMR Access to finance Initiative Linking households to financial institutions- Banking

and Insurance and Public Health (PPPs)

Innovative collection mechanisms

Supported by aggressive financial literacy drive

Move beyond credit to insurance

Supply side interventions complement demand

Mix of different health financing mechanisms

Testing tertiary care insurance, access, referral

mechanisms

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Value Proposition: Cross Learnings

Support ICT-Focus on cost

effective solutions riding on

technology

Supporting innovations in

expansion to universal

coverage

Support PPP initiatives to

complement RSBY

Cost Benefit Analysis

Bridge knowledge gap for

policy and advocacy and

supporting regulation

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Potential Case study: RSBY

RSBY is 3 years old. The Backbone of thescheme is the smart card platform which inmany ways has leapfrogged the onesavailable in the developed world.

It is now being expanded in width to coverunorganized low income and wider sectionsof the sociiety. It is also being expanded ndepth to offer better value and also helpsustain the scheme in long run.

The platform also addresses the issue ofauthentication f of identity for Governmententitlements. It is therefore being expandedfor financial inclusion and other things likedistributing food subsidy


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Way ForwardCross Learnings Across Sectors

Social Protection, Health, Insurance ,SavingsRemittances, Pensions are synonymous

Innovations in Technologywill drive Growth- Smart

Cards, Mobile Technology

EconomicGovernance and Improved Public Expenditure

Management is the key to long term sustainability

Supported byAnalytical Workand Policy Dialogue

Private sectorto play a significant role in filling the gaps

Possible convergence between public and private

schemes as the there is a huge supply constraint in both

infrastructure and budgets30/07/2012 42


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Power of Finance

..It can create a snow ball effect

Public-Private Partnership

is that the future?

[email protected]

[email protected]

L i A d f h O i
mailto:[email protected]:[email protected]:[email protected]:[email protected]


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Learning Agenda for the Outpatient

Healthcare with RSBY Does the OP care coverage complement RSBY in-patient (IP) care coverage in a

manner that will improve the economic viability of the program in long term?What is the impact of offering a comprehensive OP + IP coverage on beneficiary's

health seeking behavior, provider's treatment and prescription pattern, health

outcomes, out of pocket expenditure, financial risks of households and access to

healthcare?

Does the OP care coverage increase awareness of the RSBY program among the

targeted beneficiaries, which in turn increases the enrolment and renewal of RSBY

among them? Does it vary by gender?

Does the OP care coverage reduce the demand for the IP care by RSBY

beneficiaries? Does the OP care also improve the IP care quality through referrals?

Does it vary by gender?

How do beneficiaries view the OP and IP services rendered by the empanelledhealth care service providers in RSBY?

What are the key factors in implementation of the program which are driving the

observed outcomes for households, including design/policy issues,

administrative/delivery mechanism constraints, institutional factors, and other

success factors or constraints (and of what nature)? Do these vary across space

PRESENTATION: Financing Solutions for Supplementing Social Security in the Health Sector

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