Financial health sector reforms and sexual and reproductive health

Transcription

1 POLICY BRIEF Financial health sector reforms and sexual and reproductive health July 2005 Health sector reform (HSR) has been defined as an inherently political process, initiated by public or political action, motivated by dissatisfaction caused by the failure to deliver outcomes, and implemented on a sector wide level. The motivation underlying HSR is to address the problems of poor quality of care, inequities and limited access to health services, insufficient funding for health, inefficiencies in delivery of services, lack of accountability and/or insufficient responsiveness to client needs. The aim of this policy brief is to summarise the different types of health care financing reforms carried out in developing countries (Asia, Africa and Latin America) during the nineties, showing some results and policy implications for the sexual and reproductive health (SRH) agenda. Health care financing reforms initiated in the 1990s were particularly directed at addressing the heavy burden on governments in attempting to fund health services for all citizens. The reasons for health financing reforms are that: Insufficient resources for health services are raised by governments through tax revenue; Public funding for health care is poorly targeted; Public funding for health is also predominantly channelled towards tertiary and curative care rather than primary and preventive care; and There is limited potential for donor funding to fully meet the gap. The main directions of change initiated in health care financing as part of HSR have included: Increase or introduction of user fees where financing has been predominantly publicly funded through tax revenue. Introduction of prepayment schemes or other forms of health insurance in systems currently financed through tax revenue as well as user fees. Shift from tax - based to social insurance - based systems. Consolidation of multiple insurance funds. Introduction of private insurance. Introduction of public-private interactions in the financing and provision of health care services. The Initiative for Sexual & Reproductive Rights in Health Reforms Women's Health Project School of Public Health, University of the Witwatersrand South Africa

2 2 THE INITIATIVE FOR SEXUAL AND REPRODUCTIVE RIGHTS IN HEALTH REFORMS Health Financing Reforms in practice Financing reforms may be introduced as part of fundamental structural and organisational changes in the health sector, such as decentralisation or privatisation of service delivery, or may be stand-alone changes in financing mechanisms. There are also differences in the scope of financing reforms some affect the health sector as a whole, while some are directed to one part of the sector. The range of financing reforms may be limited to one major shift such as the introduction of user fees, or a combination of fees and insurance schemes, with variations in the extent to which financing and service delivery functions are separated. The mechanisms through which health care is financed include: tax funding; social health insurance; prepayment schemes; private (for-profit) health insurance; and out-of-pocket payment. Of these, tax funding and social health insurance schemes are considered to be public sources of financing. The social health insurance fund is usually an autonomous public fund set up by the government for all formally employed persons. A standard pay-roll deduction is made from both employers and employees. The remaining three are voluntary sources of financing by individuals and households, and are classified as private sources of financing. Prepayment schemes (also known as community funds ) usually consist of the collection of a fixed sum from some or all households in a community. Participation in the scheme entitles household members to the use of specific services, or access to drugs. Funds may be held by the local government or by a communitybased or other non-profit organisation. Private insurance schemes are based on voluntary contributions by individuals or by individuals and their employers jointly. There is usually a wide range of private insurance schemes varying in the type of conditions or services covered. Out-of-pocket payments (also known as user fees ) are payments by the user of health services to the health service provider. This is the normal basis of payment for private health care in the modern as well as traditional systems of medicine. In many countries, a nominal fee is also charged in health services provided by the government. In Sub-Saharan Africa, where health financing reforms have been undertaken on a regional scale, the nature of changes was similar across several countries. A key element of one such regional reform, the Bamako Initiative (BI), was to increase community participation in the financing and management of primary health care facilities through user fees. User fees were in general adopted in most Sub-Saharan African countries, within or outside the BI. In addition to the BI and standard user fees, pre-payment schemes have been introduced in a number of countries. In contrast, reforms to introduce or expand social insurance and/or private insurance have not been as widespread, due to the small proportion of the population in formal employment. In Asia the introduction and/or expansion of user fees has been the most common reform in health care financing. Alternative financial reforms involved the introduction or revitalisation of prepayment schemes aimed at universal coverage and promotion of private health insurance. Out-of-pocket expenditure on health care has increased not only because of the introduction of user fees, but also as a result of the promotion of the role of the private sector in health, given the absence of widespread coverage of the population by health insurance schemes. In contrast, health financing in Latin America has been dominated by social insurance schemes, represented by social security institutions (SSI), which cover the formal employed sector. These represent some of the world s oldest and most deeply institutionalised social security systems. For this reason, health sector reforms in Latin America have often been in response to the segmentation of the health system into the social security sector funded with multi-party financing, the public sector with government funding, and the private sector financed by private out-of-pocket expenses and private insurance. In some countries in the region, financing reforms have introduced the participation of the private sector in insurance (e.g. Chile, Colombia and Peru). In others, the main focus is on rationalising social insurance schemes and the unification of the system fragmented across numerous contributing funds (Argentina and Uruguay). The table on pages 3 and 4 summarises the motivation for each one of the main financial reforms and its effect on efficiency and equity.

3 3 POLICY BRIEF: FINANCIAL HEALTH SECTOR REFORMS AND SEXUAL AND REPRODUCTIVE HEALTH FINANCIAL TOOL MOTIVATION EQUITY USER FEES To raise additional revenue. Also to increase efficiency by sending price signals that encourage adherence to appropriate referral chains and discourage frivolous use of services. Some studies indicate a worsening of existing inequities. Poor people are more affected by increases in the price of health care services compared to the rich (i.e. their utilisation will drop more dramatically). For vulnerable groups without access to financial resources, fees may deter utilisation of preventive health services, leading to use of informal and inadequate care, delay in careseeking and/or discontinuation of necessary treatment. The implementation of user fees has also increased regional inequalities. SOCIAL HEALTH INSURANCE Social insurance funds reduce financial barriers to accessing health care, and offer protection from catastrophic medical costs to workers and others, such as their dependents, covered by the insurance scheme. In social insurance schemes, premiums are based on income levels rather than on health status and the contributions of the better paid subsidise the lower paid. Where social insurance schemes cover a majority of the workforce, they would contribute to equity. However, they often cover only a small priviledged section of the formal sector often the government sector - widening inequity between these groups and those working in the informal sector of the economy. PREPAYMENT SCHEMES In a small number of countries, health-financing reforms have included the introduction or revival of prepayment schemes. This mechanism normally covers low cost but high probability health needs. The main objective is to protect people from being deprived of needed care because of their inability to pay. It addresses the issue of risk pooling for those sections of the population that cannot be covered by formal insurance schemes and especially the poor in this group. One limitation of prepayment schemes is that since payment is voluntary, the poorest and those without access to cash in the community may be unable to participate or most likely to default. Where members are disproportionately represented among serviceusers, this would again widen health inequities between the members and non-members. Prepayment schemes appear to offer a better health care financing option than user fees. However, we need to know more about how to design more effective and equitable prepayment schemes in the future.

4 4 THE INITIATIVE FOR SEXUAL AND REPRODUCTIVE RIGHTS IN HEALTH REFORMS REVENUE GENERATION EFFICIENCY COUNTRY EXPERIENCE Although the revenue raised is only a small proportion of the total recurrent costs of the Ministry of Health, they may generate between 30-40% of non-salary recurrent costs and up to 100% of drug costs at out-patient facilities, according to a review of experiences in some Sub-Saharan African countries. Although a fall in utilisation rates following the introduction of user fees has been reported by many studies, there is no evidence to suggest that this decline represents a reduction in superfluous use. Despite these changes, hospitals continue to be crowded with outpatients who have skipped the referral chain. User fees may actually promote inefficient provider behaviour, such as escalating costs of health care and a tendency towards irrational and excessive prescription and treatment. In Zambia, introduction of user fees is within the context of a shift from project funding to basket funding to supplement the government s health sector budget, similar to the Sector Wide Approach (SWAp). In Brazil, user fees for services have been mainly responsible for a number of unintended consequences, such as curtailing access and utilisation, and in some instances, increasing inequity. The extent of revenue generated by social insurance schemes depends on the size of the labor force employed in the formal sector of the economy in a country, as well as on its average income. Expanding coverage to include a large proportion of the population working in the informal sector would require collection systems that may be administratively difficult to organise. One major concern related to introducing social insurance schemes in many resource-poor settings is that SHI may in fact drain more government resources (in the form of membership contributions for civil servants) than it frees up. Expansion of social insurance is believed to improve efficiency. There are usually two types of payment arrangements for purchasing and paying for health services from service providers: 'fee-forservice', retrospectively reimbursed for services actually rendered; and 'capitation' payment where providers or facilities are paid prospectively for covering a given population with a well-defined package of services. Experiences indicate that both types of arrangements have the potential for introducing inefficiencies within the health sector. Reform measures to change this situation have introduced measures such as replacing the fee for service system with capitation payment, which shifts the risk of high costs to providers, who are paid prospectively. In Zimbabwe a new National Health Insurance Scheme (NHIS) is being planned to increase insurance coverage of formal sector employees to 100%. The insurance scheme will require mandatory participation of all employed in the formal sector. It will receive wage-based payment from both employees and employers. NHIS will not restrict itself only to covering the formal sector. Participation by informal sector workers will be voluntary. Those who have an income below a minimum level will be included in the scheme with exemption from paying a premium. Those who do not qualify for exemption and are not enrolled in the scheme will have to pay user fees for services. Insurees will be eligible to receive a package of core health services that includes primary care and selected hospital services. Unless large sections of the population are covered, the volume of funds raised by prepayment schemes tends to be limited, while the costs of collection and management are comparatively high. Prepayment schemes need to make a conscious effort to cross-subsidise costs of health care and promote risk pooling by enrolling the rich and the poor, and those with a low risk of falling ill or requiring routine health care alongside those who are at high risk of requiring health care. Despite efforts to address limited risk pooling and attempts to crosssubsidise, prepayment schemes seem to require being subsidised by donor or government funding to make them viable. As with insurance schemes, prepayment schemes also run the risk of encouraging excessive use of health services by subscribers, or unnecessary prescriptions and procedures by providers. A number of strategies have been attempted to mitigate such inefficiencies, such as prepayment schemes requiring that first level care be sought in health centres to help promote more efficient use of health resources. There are a number of prepayment schemes for health in Africa. However, many have been initiatives by community groups that are limited to small populations. Only a few of these have been introduced specifically as part of the government s health financing reforms. The Community Health Fund (CHF) in Tanzania is an example of a recent experimental prepayment scheme. This is being piloted in one district Igunga. It will be expanded to nine districts of the country after the pilot phase. Enrollment is voluntary, and every subscriber gets a health card on payment of a flat rate set at US$ 1.79 per person per year. The health card entitles the subscriber to a basic package of curative and preventive services. Inpatient care is not included in the benefits. The subscriber can choose between public, private-for-profit or not-for-profit facilities from the CHF s list of available facilities.

5 5 POLICY BRIEF: FINANCIAL HEALTH SECTOR REFORMS AND SEXUAL AND REPRODUCTIVE HEALTH Fairer financing mechanisms Separating financial contributions for health care and health care utilisation can ensure fairness of financial risk protection. This is especially important for interventions that are high-cost relative to a household s capacity to pay. From this perspective, tax funding and prepayment or other insurance mechanisms with affordable premiums, as a proportion of disposable income, are relatively fairer health care financing mechanisms than private insurance. Out-of-pocket payments at the point of utilisation of health care services is the least desirable mechanism for financing health care from an equity perspective, as it denies access to health care to those who cannot afford to pay at the time of their illness. Waivers and exemptions from payment for health services are seen by proponents of HSR as the route towards making cost-recovery compatible with the goal of providing equitable access to health services and ensuring equity in health care financing. Experience shows that it is preferable to have a system of pre-identification of those eligible for waivers before they actually come to a health facility in need of services. Making health providers responsible for granting waivers also introduces a conflict of interest between raising adequate revenue for a health facility and promoting access to the poor. A range of criteria for eligibility has been used. Targeting of the poor has been attempted through a variety of approaches, such as means-testing, community-based identification by local leaders, participatory rural appraisal, and using data from national household surveys (Grosh 1994). Regularly updating the criteria for identifying the poor is an important issue. However, attempts at protecting the poor and vulnerable groups through waivers and exemptions to user fees have largely been unsuccessful due to the fact that exemption structures have been too complex to be implemented in most situations, and therefore have been implemented in an ad-hoc fashion. Separating financial contributions for health care and health care utilisation can ensure fairness of financial risk protection. SWAPS have the potential for improving financial management and accountability. Sector-wide approaches (SWAps) in health and health care financing reforms This is a method of working between governments and donors in which both the Ministry of Health s funding and donor assistance is pooled into one basket to fund one coordinated sector programme in place of a series of separate projects. In other words, SWAps are a new approach to aid attempts to improve the efficiency and impact of aid delivery by replacing project-specific funding with pool funding for the entire sector. For example, in Zambia, the introduction of user fees has been carried out within the context of a shift from project funding to basket funding to supplement the government s health sector budget, similar to the sector-wide approach. SWAps in the health sector have been introduced in many countries, usually as part of HSR. In Sub- Saharan Africa, SWAps were adopted, especially in those countries with a high dependency on aid. Three Asian countries have adopted a sector-wide approach in health. SWAps have the potential for improving financial management and accountability, and enhancing health sector efficiency by avoiding overlapping activities. Because of the existence of a co-ordinated strategy, SWAps could ensure that health investments translate into gains in terms of health outcomes. Experiences with SWAps in African countries point to a range of potential risks involved, especially during the transition period of reform. For example, political changes could bring about changes in priorities, shifting government and/or donor resources away from the health sector even when there are no external shocks. In a situation where funding is pooled, such shortages affect the entire sector and not just certain programmes (as would be the case in vertical donor funded programmes) and may affect the quality and delivery of health services.

6 6 THE INITIATIVE FOR SEXUAL AND REPRODUCTIVE RIGHTS IN HEALTH REFORMS Implications of health financing reforms for sexual and reproductive health services There are very few studies that have directly addressed themselves to examining the ways in which health financing reforms impact on sexual and reproductive health services. Positive impacts of financing reforms on reproductive health services have come mainly through the inclusion of essential reproductive health care within the benefits package of prepayment and national insurance schemes. Thailand s 30 Baht health policy covers a wide range of reproductive health services, including cervical cancer screening. However, infertility treatment is not included and obstetric services are not covered beyond the second pregnancy, in keeping with the country s population policy. An example of social insurance coverage for select reproductive health services implemented as part of health financing reforms is the basic health insurance scheme in Bolivia, granting women the right to receive prenatal, delivery and postnatal care. It also includes health care for children in all the public health and social security facilities. However, in a context of limited resources, implementation of HSR appears to have created more difficulties than benefits for the progressive provision of comprehensive sexual and reproductive health services. Positive examples cited above notwithstanding, in most instances these mechanisms do not include coverage for some of the most risky health events for women, such as delivery complications. On the other hand, user fees for services have been mainly responsible for a number of unintended consequences such as curtailing access and utilisation, and in some instances, increasing inequity. In Bangladesh a study documenting users perceptions on newly introduced user charges for basic family planning services found that the poor were willing to pay only for life-threatening illnesses or conditions that would affect income earning capacity of the household. There was unwillingness on the part of men to spend money on preventive care and treatment for women. This extended to family planning, despite their awareness of the importance of fertility control. A review of experiences with costrecovery in family planning programmes in Sub- Saharan Africa concluded that the introduction of user fees for contraception at levels that have any revenue generating potential can significantly dampen demand because, unlike curative health care, improvement in the quality of care does not counteract the effect of user fees on utilisation. The focus of SWAps on strengthening the performance of the health system as a whole, in addition to improving health outcomes, is welcome and necessary for the development of a comprehensive package of sexual and reproductive health services as envisaged in the International Conference on Population and Development Programme of Action (ICPD POA). Reproductive health care has been included as a component of the essential services package under the sector strategy in many SWAps including limited prenatal care, emergency and essential obstetric care, and contraceptive supply generally focused on women. When included as part of the essential service package, reproductive health care is affected by the transitional difficulties involved in the switch to SWAp. According to a recent study, the lack of familiarity with SWAp created delays in procurement. Another concern relates to the likelihood that even the limited range of reproductive health services may be affected in the case of a financial squeeze, with funds being diverted to other priority programmes. A key concern with SWAps is whether or not even the limited package of reproductive health services attracts an adequate level of funding. This depends not only on the often changing priorities of the donor community supporting the SWAp in a country but also on the unpredictable political support for the issues within the country. However, the major issue with respect to SWAps and sexual and reproductive health services is that, as they focus on the public sector, many NGOs and other private sector organisations playing an important role in sexual and reproductive health services, have been sidelined from the process of evolving sectoral strategy and policy. These issues have contributed to sidelining these services within SWAps. In most instances HSR mechanisms do not include coverage for some of the most risky health events for women, such as delivery complications.

7 7 POLICY BRIEF: FINANCIAL HEALTH SECTOR REFORMS AND SEXUAL AND REPRODUCTIVE HEALTH Policy Issues Sexual and reproductive health services have been included as a component of essential health care packages introduced in many countries as part of HSR. However reproductive health care is now a euphemism for a very limited range of services, far removed from the ICPD POA. It may be difficult to include additional SRH services unless the sources of financing health services are expanded. Many governments are unable to invest adequately in new services or even maintain existing services at reasonable standards. The revenue raised through alternative financing mechanisms such as prepayment schemes, other health insurance schemes and/or user fees may contribute to the improvement of the quality of services. However, unless properly planned and implemented, health care financing reforms could result in a waste of resources, adversely affect access to services, and may not result in increased funding for sexual and reproductive health services specifically. Initiative would offer countries the possibility of significantly increasing their tax funded health spending by freeing up resources through reducing the burden on government resources of debt repayment. After all the efforts that went into reaching an international consensus at ICPD on the need to make available the full range of reproductive health services by the year 2015, it would be a pity if major initiatives such as HSR, which shape the health policies of the future, take us back to square one, with a few elements of maternal health and family planning being passed off as reproductive health care. To be able to make a case for a broader range of reproductive health services, we need to pull together the research evidence to establish that these services have significant health and social benefits, and that they are feasible to provide. But given the politically controversial nature of a number of SRH issues, this may be only half the battle won. The need to meet the large gap in financing reproductive health services has led to an increasing reliance on the private sector, through publicprivate interactions. Unfortunately, reliance on the private sector brings its own set of problems related to access and equity, because the private sector s functioning revolves around the axis of profitability. Out-of-pocket payments (e.g. through user fees to public facilities or direct payments to private providers) are the least equitable method of financing health services. This is particularly so in the case of sexual and reproductive health care, given that women frequently do not have access to household resources. Thus, in order to promote equitable financing of (and access to) a broader package of sexual and reproductive health services, it may be appropriate to explore financing mechanisms such as pre-payment schemes and other solidarity-based insurance schemes. In addition, efforts to pursue tax funding of these services should be pursued. The Heavily Indebted Poor Countries initiative (HIPC) and the Poverty Reduction Strategy Papers (PRSPs) are a potential window of opportunity for SRH services. It is anticipated that the HIPC References Gilson L. The lessons of user fee experiences in Africa. In: Beattie A, Doherty J, Gilson, L et al (editors). Sustainable health care financing in Southern Africa. Papers from an EDI Health Policy Seminar held in Johannesburg, South Africa, June Washington DC: Economic Development Institute of the World Bank, p Grosh M. Administering targeted social programs in Latin America. From platitudes to practice. Washington DC: The World Bank, Maceira D. Sexual and reproductive health and financial reforms in Latin America and the Caribbean. Unpublished paper. Buenos Aires: CEDES, December United Nations Population Fund. Implementing the reproductive health vision progress and future challenges for UNFPA. New York: UNFPA. Evaluation findings, Office of Oversight and Evaluation, Issue 28 (2 and 5), August This policy brief was prepared by Daniel Maceira. It is based on Ravindran TKS, Maceira D, Kikomba D. Health Financing Reforms. In: Ravindran TKS, de Pinho H (editors). The Right Reforms? Health Sector Reform and Sexual and Reproductive Health. Johannesburg, Women s

8 8 THE INITIATIVE FOR SEXUAL AND REPRODUCTIVE RIGHTS IN HEALTH REFORMS Health Project, School of Public Health, University of the Witwatersrand, The full text of the book can be found at Other policy briefs in this series include Health sector reforms in the 1990s: Implications for sexual and reproductive health services; Public-private interactions: Implications for sexual and reproductive health services; Priority Setting in the context of health sector reforms: Implications for sexual and reproductive health services; Decentralisation and implications for sexual and reproductive health services; Integration, health sector reforms and sexual and reproductive health; Strengthening service accountability and community participation in health sector reforms. They can be found at /whp/rightsandreforms/policy.htm We would like to thank Ford Foundation and MacArthur Foundation for their generous funding which made this project possible.