Success Stories of Health Financing Reforms for Universal Coverage. Ghana

Transcription

1 Success Stories of Health Financing Reforms for Universal Coverage Ghana

2 According to the definition used in the World Health Report 2010 (Health Systems Financing: the Path to Universal Coverage) and backed by all Member States in a World Health Assembly resolution of 2011, a country can be said to have attained Universal Coverage when the whole population has access to needed health services - prevention, promotion, rehabilitation and treatment without the risk of financial hardship linked to paying for the use of these services. Many of the low- and middle-income countries are still far away from this goal; they generally have high levels of direct payments that prevent access to care, while the health services are often not available in the first place for parts of the population or are of unacceptable quality. Accelerating progress towards Universal Coverage calls for concrete actions to reinforce or alter a country s health financing mechanisms. But there are many obstacles in the way of needed reforms and actions; some are financial, some administrative, some political, and most often a country faces a mixture of problems and challenges that will need specific policy answers on the way towards the goal of universal coverage. The situation is not hopeless. Several middle- and low-income countries have recently made significant progress. Some have implemented deep, fundamental changes to the way their systems function, while in others progress is being made through more incremental actions. Whatever the scope of the reform/action, there is much to be learned from these country cases. This document series focuses on countries that have put themselves on track towards Universal Coverage through the changes they have made to their health financing systems. Of course, the reforms in each country are works in progress, and while we use the term success, it is meant to convey systematic progress towards Universal Coverage through health financing reforms, rather than the achievement of Universal Coverage. Many countries have had success in one or several specific areas, but all yet face several challenges. The cases presented in this series reveal problems as well as progress, and thus should not be considered as completely successful, but they do offer valuable insight on the steps countries have taken in order to move towards Universal Coverage, and as such represent valuable lessons learned that can inspire other countries. These Success Story documents are produced under the Providing for Health (P4H) initiative by the World Health Organization with support from the French Ministry of Foreign and European Affairs Providing for Health (P4H) is a global health partnership launched in 2007 during the G8 summit in Germany, aimed at improving social health protection and strengthening health financing systems to promote universal coverage in low and middle-income countries, with particular focus on ensuring inclusion for the poor. P4H operates through an open network of partners, to date including Germany, France, Switzerland, Spain, ILO, WHO, the World Bank and the African Development Bank. The launch of P4H was an important landmark for promoting coordinated responses by external partners to accelerate countries transitions to universal coverage. P4H does not promote any specific standardized model to promote these aims, recognizing that options need to be developed within the particular macroeconomic, sociocultural and political context of each country.

3 1 Ghana: coverage expansion through political commitment and innovative policy choices At the core of the Ghana success story is the development of the National Health Insurance Scheme (NHIS), one of the most comprehensive to be established in sub-saharan Africa to date. The NHIS has enabled the country to make significant advances in moving away from health financing based on direct payment at point of service use, and is Ghana s first nationwide social protection scheme in health that includes and targets the rural and agricultural population, previous post-independence protection schemes being for the benefit of the formal sector only. As this brief will show, significant challenges remain to the development of a sustainable health financing system in Ghana, but real progress has been made. Population enrolment in the scheme has grown rapidly from its initiation in 1999, and while estimates vary widely, Ghana s NHIS currently covers the basic health care needs for a large share of its 24 million people. The growth in coverage over time has been associated with increased use of services by the population combined with a decline in the dependence of the system on out-of-pocket payments (OOPs). But the story of Ghana s health financing system development is not a simple one, and it is worth noting at the outset that the NHIS differs from most financing systems that use an insurance agency as its main intermediary, depending only minimally on the premiums paid by its beneficiaries. It is in fact funded from multiple sources - predominantly general and earmarked public funds - and pools these in a single agency responsible for purchasing services on behalf of the covered population. In this regard the NHIS is an interesting example of the way in which the function of insurance coverage (access to care with financial protection) can be supported by a mix of funding sources. Indeed the policy decision to pool different funding sources is at the core of the innovative approach to coverage taken in Ghana. That said, going forward, Ghana s health financing system will have to overcome a number of challenges, notably with regard to the financial sustainability of coverage objectives. As the system matures, and population coverage increases, imperatives will change, with a move towards a greater emphasis on efficiency as part of a comprehensive approach to ensure that the system can reliably sustain the financing of a socially agreed package of benefits for the entire population. There will also be a need to increase coverage rates by improving revenue collection, exploring alternative funding sources, and easing enrolment practices for groups that todate have been hard to reach the poor and people living in communities located in remote rural areas. It is worth noting that currently the enrolment rates of the wealthiest quintile are roughly double those of the poorest. 1 Another key challenge will be how to build a health service supply system that offers adequate quality care in all areas of the country. Born in the ballot box A key feature of Ghana s success story is the impetus provided by the democratic process. After becoming independent from the United Kingdom in 1957, Ghana ran a health system that was funded out of general taxation, supplemented by external support. Government health services were provided through a network of primary care facilities free of charge to users, while private sector health services continued to be paid for by patients directly out-of-pocket. By the early 1970s, the government health system was struggling financially, and in 1972 very low out-of-pocket payment was introduced, partly to supplement public sector funding shortages. A protracted period of economic stagnation followed, and as a result the health system suffered a further decline in the quality of care provided and shortages of essential medicines, supplies and equipment. In 1985 public sector user fees for health care payable at the point of service use were raised significantly as part of structural adjustment policies. This attempt at cost-recovery, which came to be known as the cash-and-carry system, proved to be an important financial barrier to access and resulted in an initial sharp drop in the utilization of health services. 2 The longer term impact on utilization was less clear, notably because by the early to mid 1990s, facility managers were making effective use of boosted revenues to increase drug supply, which led to some recovery of demand. However, because legal exemption mechanisms were poorly implemented, it is very likely that this recovery mainly benefited middle and upper income groups, while the poor were largely excluded. 3 By the late 1990s, user charges for publicly provided health services had become a significant political issue and was taken up as such by the opposition New Patriotic Party (NPP) in the general election of December The idea of a National Health Insurance system had been floated by the government

4 2 Ghana: coverage expansion through political commitment and innovative policy choices prior to the 2000 election but nothing concrete had been achieved and there was widespread frustration at the lack of progress. Specifically, the NPP called for the replacement of the cash and carry system with national health insurance, and also committed to guaranteeing access to basic clinical services for all Ghanaians regardless of ability to pay and regardless of geographical remoteness. The NPP won the election, but initial progress on the issue was slow, and they came under increasing pressure to make good on their campaign promises. Meanwhile the minority opposition, despite being perceived as a potential threat to the programme, got out in front of the issue by publicly fighting for appropriate policy and programme decision-making as well as appropriate implementation arrangements for a successful NHIS. This added to the pressure the NPP faced, and resulted in a final political push that yielded the 2003 National Health Insurance Act (NHIA), which in turn led to the establishment of the NHIS. This important step forward was a key factor in securing the NPP re-election in 2004, but was not enough to keep the party in power in 2008 when the National Democratic Congress (NDC) took control of parliament. The NDC has retained the NHIS agenda more or less intact, but proposed that the management of the scheme be recentralized, notably by de-emphasizing the role of autonomous District Mutual Health Insurance Schemes (DMHIS); a new proposed law would abolish the boards and autonomy of the DMHIS, and put their core functions such as relations with providers directly in the hands of the NHIA. Implementation While Ghana s robust democratic process may have set the stage for the introduction of national health insurance, it did little to establish a roadmap for implementation. The political actors had no particular blueprint as to the best way forward, but did have a number of key objectives. The first was to introduce a programme that could be rapidly expanded to cover as much of the population as soon as possible. Given the compressed time frame for implementation it was necessary to embrace a number of imperatives, starting with the need to make the most of what was already available on the ground. This included reaping the benefits of the sustained investment that previous governments had made in increasing the capacity of district and regional health managers, and notably the community-based health insurance system comprised of Mutual Health Insurance Organizations (MHO) which were established in the early 1990s with the help of international donors and agencies to improve financial access to health care for those not covered by formal insurance schemes. The voluntary, community based MHOs, started out at the local level, pooling risk for their members, and by 2003 numbered in excess of 250, but on average covered no more than a people. In other words, while the MHOs represented an important part of the base on which the NHIS was eventually built, they initially constituted a small, and highly fragmented network. The MHOs began by working with churchbased health service providers, but over time started contracting with public sector health facilities, opening up new horizons for service provision and the potential for expansion. With the passage of the NHIA, only district-level schemes were allowed (DMHIS), and any smaller schemes were dissolved as a result, thereby reducing the extent of fragmentation. In addition, the government introduced several incentives for the MHOs to join the newly created NHIS, including the fact that only those schemes that joined the national system would be given subsidies and technical support. Through these incentives and other means, government policy effectively pushed the MHOs to become part of the national scheme. That said, they were allowed to retain a degree of operational autonomy as long as they charged the premiums set by the NHIS, and offered the benefit package that was determined at the national level. Thus, the system built on the health financing structures already in place, but reduced some of the prior fragmentation while weaving the various schemes into a coherent national health financing policy framework. More specifically, MHOs were consolidated at district level, and each DMHIS was linked to the NHIS, both by regulation (e.g. the national rules on premiums and benefits) and financial support. The financial links of the national to district level come in several forms: the national level subsidizes the DMHISs for persons in exempt categories that are enrolled for free, there is a reinsurance mechanism that supports DMHIS units that face financial difficulties, and the national level also provides other subsidies to the schemes. Another key initiative taken very early in the development of the NHIS was the decision to set premium contributions at a very low level, certainly below what would be needed if this was to be its main source of funding. In other words it was recognized from the beginning that participation of the selfemployed and low-income population would have to be heavily subsidized, while high premiums would be

5 Success story 3 a major barrier to participation. With hindsight this appears to have been a practical decision. Premium payments represent only around 5% of total NHIS funding, and so even a significant increase in premiums would have only a limited impact on the NHIS s income profile while all the time threatening to exclude lower income groups. Similar observations apply to the decision to waive any form of co-payment, the fear in this case being that leaving co-payments in place would have given the impression that the cash and carry system was simply being pushed at the consumer under a new label, and that the NHIS did not represent meaningful change. There was also a concern that co-payments, even if accepted, would, like high premiums, discourage participation in the NHIS scheme. It is important to note here that exemption system constituted an important channel for funnelling central budget funds into the DHMISs. More than 70% of NHIS membership is made up of exempt categories, predominantly comprised of easily identifiable groups including those under-18 year olds (a group constituting more than half of NHIS members) whose parents paid their own premiums. Other important exempt groups were pregnant women and the elderly. It is also worth noting that only a small percentage of the exempt qualify on the basis of indigence. The funding problem Having decided where not to go looking for money, policy makers had to come up with a plan to find other sources knowing that wherever they went they would face opposition. In the end they took a two-pronged approach, deciding on the one hand to introduce a 2.5% levy, called the National Health Insurance Levy (NHIL), that would be added to the standard rate of VAT. In many ways this was boldest of the decisions taken by the government, and is possibly the key to the progress achieved by the NHIS - NHIL receipts accounting for 75% of the NHIS funding. It was bold for a number of reasons, but mainly because it entailed a considerable degree of political risk: theoretically, VAT is considered to be a relatively inequitable source of public funding, since the poor pay a higher percentage of their income as VAT relative to wealthier income groups. Whether this is true or not in any particular case is an empirical question, depending on the specific nature of how the tax is implemented. In the specific case of Ghana, VAT may be somewhat progressive given that most first necessity products are VAT exempt. 4 Whatever the underlying truth, it required a certain amount of courage to add a levy to an already unpopular tax. Policy makers sweetened the pill somewhat by guaranteeing that receipts derived from the NHIL would go directly to the health insurance fund, and would not be diverted to other uses. At the same time they underlined the fact that whatever the arguments regarding the fairness of a VAT based levy it was clearly preferable to the highly regressive collection of resources through user fees. However fraught with risk the introduction of the NHIL, the potential upside of such a mechanism was obvious and since introduction has become abundantly clear: the NHIL gives Ghana, a country with a largely informal and indeed largely rural economy, an effective and practical way of raising funds that has the double merit of being broad based and largely impervious to tax evasion. A second major source of funding for the NHIS also potentially contentious - was a payroll tax of 2.5% which was redirected from the Ghana pension scheme for formal sector workers known as the Social Security and National Insurance Trust (SSNIT). This 2.5% contribution assured all SSNIT members coverage under the NHIS, however, given that they were already covered, those SSNIT members saw little upside in their enforced participation. Indeed this payroll tax was one of the more contentious issues in Ghana s health financing reform, and highlighted a familiar conflict between national interest and the interest of a particular population group. 5 At the end, the government explicitly guaranteed the future pensions of the SSNIT members against deficits arising from the measure. This was a decisive factor that defused tensions, and recent statements by the Ghana Trade Unions Congress concerning this matter seem to indicate an acceptance that the NHIS is here to stay and that formal sector workers are also benefiting from it. 6 It is clear that the channelling of SSNIT contributions into the NHIS pool has consolidated revenue collection (representing around 20% of total NHIS funding) while also serving to bring about much needed cross-subsidization. This is a major political accomplishment: combining direct contributory revenues with indirect earmarked VAT revenues to provide a standard, common benefit rather than a two-tiered system in which the SSNIT members would obtain greater entitlements. The coverage challenge The NHIA covers all 138 districts in Ghana, linking them through a national insurance fund, and mandating a premium charge amounting to roughly $8 per adult. As noted above, those under 18 years of age whose parents are contributors are exempt, as are

6 4 pensioners (over age 70) and persons judged to be indigent. There are no co-payments or deductibles. Applicable law provides that Ghana residents are obliged to belong to one of three schemes: the NHIS, a private commercial health insurance scheme or a private mutual health insurance scheme, but the subsidies provided effectively compel people to join the NHIS rather than the others. Despite the system being legally compulsory, difficulties in enforcing contribution compliance on informal sector adults makes their participation de facto voluntary. For formal sector employees and their dependants, enrollment is automatic and premiums are collected via the 2.5% payroll deduction. The NHIA mandates a predefined benefits package that according to official figures covers 95% of the disease burden in Ghana and the services covered include outpatient consultation, essential drugs, inpatient care and shared accommodation. Maternity care is also covered, including cesarean section delivery, as are eye care, dental care, and emergency care. Notable exclusions include echocardiography, renal dialysis, heart and brain surgery, organ transplantation, and HIV anti-retroviral drugs; many of these services (such as ARV therapy) are however covered under other publically funded programmes. Exactly how many Ghana residents are covered by the system is a matter of debate partly because of the absence of reliable data. A recent report by a group of domestic and international NGOs estimates the effective coverage rate could be as low as just 18% of the population, 7 while a household study carried out in 2008 puts the figure at 38%. 8 Another study estimates that 39% of women and 30% of men are enrolled. 9 The NHIA itself reports that 53.6% of the population are Active members of NHIS 10, that is to say registered members who have received their ID card and are thus able to enjoy benefits. As already noted eenrollment rates of the wealthiest quintile are roughly double those of the poorest. It is possible that even the small premium that is required is a barrier for the poor, but other social factors may be at work, and hence the reasons for inequity in coverage need to be explored further. While the question of coverage is clearly important and will become more important over time, this is one of several issues on which policy makers must focus. Whatever the formal population enrolment percentage is, the evidence suggests that real progress towards universal coverage better access and better financial protection has been made. Ghana: coverage expansion through political commitment and innovative policy choices NHIS implementation has coincided with a marked increase in prepaid and pooled funds both as a share of total health expenditure, but also in absolute terms, as well as with a decrease in outof-pocket payment. Between 2004 and 2009 outof-pocket spending fell from 51% to 37% of total health care spending, while annual total government expenditure on health went from US$9 per person to US$28. There is also evidence that health service utilization has increased significantly. For example average utilization rates for outpatient services rose from 12 million outpatient visits to 18 between 2005 and 2008 for the total population. 11 It has also been estimated that those covered by the NHIS make yearly visits to a health facility. 12 The increase in utilization combined with a decrease in the share of out-of-pocket payments has to be good news, and is indeed evidence of success in extending coverage through Ghana s health financing reforms. People are accessing care more, increasing the chance of early diagnosis and more effective early treatment as a result. While the impact of earlier detection and treatment may not be a reduction in expenditure, it is reasonable to hope that it will slow the rate of cost growth. Lessons learned Perhaps the first lesson to be derived from the Ghana experience is that democratic political imperatives can have a powerful impact positive or negative - on reform. For politicians and parties following a social agenda, healthcare reform is often the lowest of low hanging fruit. In Ghana, widespread, deep dissatisfaction among the population regarding access to care and financial coverage, became a key political issue in the general election of December 2000 and ultimately gave the winning side a strong mandate to push for the establishment of the NHIS. Ghana is by no means the only country to have taken this route to health care reform, other notable examples being the Republic of Korea, Thailand, and more recently, India. Although political momentum can help drive reform, the nature of the political process typically means that the choices ultimately made are the product of compromise and negotiation rather than a purely technical exercise to determine, define and implement a best policy. In Ghana, while it is indisputable that reform has led to progress, some commentators have raised doubts about a variety of technical issues, most notably the financial sustainability of the NHIS, or what has been deemed the insufficiently rapid extension of coverage, especially to the poorest part of the population. At

7 Success story 5 the same time it can be reasonably argued that the primary short term objective of the Ghana NHIS was to provide a mechanism that would replace cash and carry with some form of prepayment and pooling. This objective has largely been achieved. Despite still partial coverage rates and apparent income- and/or location-based imbalances in membership, since the NHIS was fully implemented in 2004, out-of-pocket payment has declined and the range and volume of services received by people has increased. Above all Ghana s experience shows how a system can combine revenues from VAT and compulsory social security contributions into a single health financing system, rather than relying on different sources generating parallel schemes which leads to fragmentation and the inequities and inefficiencies fragmentation entails. Ghana shows that multichannel resource collection including dedicated (hypothecated) taxes, payroll contributions and general budgetary sources, can be pooled together to finance a scheme able to provide coverage to people who cannot contribute directly or whose potential contribution is difficult to capture. Ghana is not alone in taking this approach and several other lowand middle-income countries have demonstrated progress towards universal coverage through a similar approach to collection, pooling and coverage. 13 As already noted the most interesting aspect of this mix is the innovative use of a VAT levy to raise funds, and the pooling of these revenues with social security contributions from formal sector workers. The use of VAT in a context of limited ability to generate public revenue, is above all a pragmatic choice, the potentially controversial nature of which has been partly defused by earmarking receipts. References 1 Catalyzing Change. The System Reform Costs of Universal Health Coverage. New York. Rockefeller Foundation Waddington CJ and Enyimayew KA. A Price to Pay: The Impact of User Charges in the Volta Region of Ghana. International Journal of Health Planning and Management, 1990; 5: Nyonator F and Kutzin J. Health for some? The effects of user fees in the Volta Region of Ghana. Health Policy and Planning, 1999; 14(4): Who pays for Health Care in Ghana? SHIELD Information Sheet ( reports/shield_ghana_whopays%20forhealthcare. pdf; accessed 5 October 2011) 5 Improving Social Protection for the Poor: Health Insurance in Ghana. The Ghana Social Trust pre-pilot Project Final Report. International Labour Organization. Geneva ( downloads/policy/999sp1.pdf; accessed 5 October 2011) As for the sustainability questions that have been raised about the system, they are legitimate and will certainly need more focus in the near future. The core question in this regard is how much depth, breadth and scope of coverage Ghana can sustain under the present funding arrangements? As already noted, premium contributions constitute a very small share of total NHI revenue, and while conscious of the dangers of excluding low income groups the government is currently considering the introduction of a one-time payment for workers in the informal sector. 14 A longer term fix will probably have to include greater attention to efficiency gains while sustaining, and hopefully increasing, transfers to the system from general budget revenues. To bring more people into the system, a major challenge continues to be reaching the people who do not work in the formal sector of the economy and do not fall into one of the exemption categories. While a move away from de facto voluntary contributorybased coverage for this group to automatic residence based coverage where the system is open to all and simply requires people to sign up would be desirable in terms of coverage expansion and some reduction in administrative costs (of premium collection and checking fraudulent claims by non-members, for example), this approach is not under consideration by the government at this time. That said, while Ghana still faces challenges, it is clear that the country has come a long way in recent years. The priority policy objective was the rapid roll out of the NHIS in a low-income country where most of the working population is in the informal sector and the policy choices made and the implementation mechanisms used clearly supported this objective. 6 There won t be bloodshed in 2012 elections -Veep. The Chronicle. ( accessed 5 October 2011) 7 Apoya P and Marriott A. Achieving a shared goal: free universal healthcare in Ghana. Oxfam International on behalf of Alliance for Reproductive Health Rights, Essential Services Platform of Ghana, ISODECD, and Oxfam Sarpong N et al. National health insurance coverage and socio-economic status in a rural district of Ghana. Tropical Medicine and International Health. 2010;15(2): Brugiavini A & Pace N. Extending Health Insurance: Effects of the National Health Insurance Scheme in Ghana. European Report on Development ( eu/media/2010/brugiavini_pace_erd2010_final.pdf; accessed 5 October 2011) 10 Summary statistics. Ghana National Health Insurance Scheme Web Site. ( gh/?categoryid=309; accessed 5 October 2011)

8 11 Durairaj V, D Almeida S, Kirigia J. Ghana s Approach to Social Health Protection. World health report 2010 background paper, no.2 ( financing/healthreport/whr_background/en). 12 Witter S, Garshong B. Something old or something new? Social health insurance in Ghana. BMC International Health and Human Rights, 2009,9:20-13 Kutzin, J, Ibraimova A, Jakab M & O Dougherty S. Bismarck meets Beveridge on the Silk Road: coordinating funding sources to create a universal health financing system in Kyrgyzstan. Bulletin of the World Health Organization. 2009; 87: Jowett M & S Shishkin S. Extending population coverage in the national health insurance scheme in the Republic of Moldova. Health financing policy paper 2010/1. Copenhagen: World Health Organization, Regional Office for Europe. Li C, X Yu, Butler JRG, Yiengprugsawan V & Yu M. Moving towards universal health insurance in China: Performance, issues and lessons from Thailand. Social Science and Medicine. 2010; 73: Akazili J. Equity in health care financing in Ghana. Cape Town. Health Economic Unit University of Cape Town World Health Organization 2011 All rights reserved. The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the World Health Organization concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Dotted lines on maps represent approximate border lines for which there may not yet be full agreement. The mention of specific companies or of certain manufacturers products does not imply that they are endorsed or recommended by the World Health Organization in preference to others of a similar nature that are not mentioned. Errors and omissions excepted, the names of proprietary products are distinguished by initial capital letters. All reasonable precautions have been taken by the World Health Organization to verify the information contained in this publication. However, the published material is being distributed without warranty of any kind, either expressed or implied. The responsibility for the interpretation and use of the material lies with the reader. In no event shall the World Health Organization be liable for damages arising from its use. This publication does not necessarily represent the decisions or policies of the World Health Organization.