Public-Private Partnership in Healthcare Financing

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Gordon Todd
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1 Public-Private Partnership in Healthcare Financing SiaoWearn Leong Samuel Tan Chi Cheng Hock Gideon Tan Joyce Poh Session Number: TBR5

2 Agenda Goal of SAS project Indicators of quality / level of health funding Qualitative survey Public / private roles in healthcare financing Public / private roles in healthcare provision Actuaries' involvement in healthcare Conclusion and inferences

3 Goal of SAS project Establish repository of information on public-private healthcare financing models around the world Resource for actuaries and researchers Compare contribution to national healthcare expenditure (NHE) by public sector / residents and correlate to economic and healthcare metrics Identify trends over time e.g. - penetration of health insurance in the population - convergence of the design of private insurance plans - involvement of actuaries in the design of financing models

4 60,000 PPP in Healthcare Financing Indicators Relationship between GDP per capita and NHE as % GDP 50,000 GDP per Capital (US$) 40,000 30,000 y = 5E+06x x ,000 10,000 Indonesia Philippines 0 India 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% Indonesia Philippines India -10,000 NHE as % of GDP

5 Indicators GDP and NHE per capita 50,000 45, % 8.5% 8.7% 40,000 35, % GDP per Capital (US$) 30,000 25,000 20, % 6.5% 15,000 10, % 5, % 2.5% 3.6% 4.2% 0 India Indonesia Philippines South Korea Hong Kong GDP per capita NHE per capita

6 Indicators Breakdown of NHE by source of funding India 30% 70% 66% 34% 75% 25% Philippines 35% 65% Hong Kong 50% 58% 50% 42% 68% 32% 81% 19% Indonesia 46% 54% 56% 44% 38% 53% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% GDP per Capital (US$) Govt Expenditure Private Expenditure

7 Indicators Breakdown of General Government Expenditure by source of funding (% Total NHE) India 5% 25% 30% 36% 8% 67% Philippines Hong Kong 10% 0% 25% 50% 45% 13% 0% 68% 71% 10% Indonesia 7% 0% 39% 55% 6% 33% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Social Security Expenditure Others

8 India Philippines Hong Kong Indonesia PPP in Healthcare Financing Indicators Breakdown of Private Expenditure on health by source of funding (% NHE) 60% 54% 53% 41% 34% 32% 20% 15% 3% 7% 7% 5% 8% 0% 0% 2% 7% 7% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Govt Out of Pocket Expenditure Private Prepaid Plans

9 Indicators Hospital Beds per 10,000 population India Philippines 13 Hong Kong Indonesia Beds per 10,000

10 Indicators Number of Doctors per 1,000 population Hong Kong Philippines 1.0 Indonesia 0.2 India Number of Doctors per 1000

11 4,500 PPP in Healthcare Financing Indicators Relationship between Life Expectancy and NHE per capita 4,000 NHE per capita (US$) 3,500 3,000 2,500 2,000 1,500 1, Philippines India Indonesia Life Expectancy at birth - Male (years) Indonesia Philippines India

12 4,500 PPP in Healthcare Financing Indicators Relationship between Life Expectancy and Doctors 4,000 NHE per capita (US$) 3,500 3,000 2,500 2,000 1,500 1, Indonesia India Philippines No of Doctors per 1000 Indonesia Philippines India

13 4,500 PPP in Healthcare Financing Indicators Relationship between Doctors and NHE per Capita 4,000 NHE per capita (US$) 3,500 3,000 2,500 2,000 1,500 1, Indonesia India Philippines No of Doctors per 1000 Indonesia Philippines India

14 Public / private roles in healthcare financing Government role in healthcare financing Limitations of publicly financed healthcare and inference for private insurance role (to what extent does private insurance succeed in "closing the gaps") Coverage under public / private schemes

15 India (B/APL, schemes by trade) China (Urban SHI, rural co-op schemes) Korea PPP in Healthcare Financing Government role in healthcare financing social schemes National health insurance Financing of providers Compulsory savings Hong Kong

16 How is financing obtained? General tax revenue Main form of financing for most countries surveyed Payroll levy on employers + employees China (SHI), India Notional income tax Medicare levy NHI levy

17 Limitations of government financing Long waiting times (: "for certain conditions", Hong Kong: "for electives") Staff shortages (Hong Kong, : "public facilities compete with private") Uneven distribution of quality and facilities (China, Korea, India, and others) Corruption (China, India) Reform of system Opportunity for private sector to fill gaps Hong Kong China Everywhere

18 Coverage under public / private schemes to insert

19 Public / private roles in healthcare provision Provider ownership: Primary / tertiary Provider payment structure: Primary / tertiary Role of primary care

20 Public / private roles in healthcare provision Primary Care Provider Ownership (Private or Public?) Mainly private Dominant Method of payment Fee for Service (FFS)

21 Public / private roles in healthcare provision Hospital : Provider Ownership Public Private 67% 33% Hong Kong 88% 12% 45% 55% 75% 25% 72% 28% 34% 66% 75% 21% India 60% 40% Indonesia 71% 29% Philippines 38% 62% 10% 90% China 92% 8%

22 Public / private roles in healthcare provision Hospital : Dominant Method of Payment Global Budget Fee for Service Diagnostic Related Group Case Based X X Hong Kong X X X X X X X X X India Indonesia Philippines China X X X X - Public - Private

23 Role of primary care Is registration with GP required? GP performs gatekeeping UK Yes Yes No Yes Hong Kong No No * No No No No * No No * No No No No India No No Indonesia No No Philippines No No No No China No No *Often a claim condition for PMI

24 Actuaries' involvement in healthcare Actuaries in public / private sector Roles of actuaries in different markets

25 No. of practising actuaries in health Actuaries Public Private Comment 3 36 in health Hong Kong 1 No statistics 0 No statistics 0 No statistics 3 40 in health 0 No statistics India Indonesia 0 No statistics Philippines 0 No statistics Korea China in total total no of Fellows in 2011 practising actuaries

26 Role of health actuary in Asia Hong Kong India Korea China Product development / pricing / marketing Advice on product design Y Y Y Y Y Y Y Y Calculation of premium rates Y Y Y Y Y Y Y Y Advice on underwriting Y Y Y Y Y N Y Y Work on reinsurance arrangements N Y Y Y Y N Y Y IT-Development / Datasets Support of IT development and implementation Y Y Y N N N N N Establish or managing data sets Y Y Y Y N N N N Product management Revision and review of premium rates at least yearly Y Y Y Y Y Y Y Y Approval of rates is required by a qualified actuary Reserving Y Y Y Y Y Y Y N Calculation of aging provisions N N N Y Y Y Y N Calculation of active reserves (i.e. DAC) Y Y N Y Y Y Y Y Calculation of technical provisions (Unearned premium, reported Y Y Y Y Y Y Y Y but not paid claims, IBNR, claims handling reserve): Accounting / Statistics and reporting Statutory accounting Y Y N Y N N N Y Statistics, reporting and consulting Provide reports to management Y Y Y Y Y N Y Y Provide information or reports to supervisory authorities Y Y Y Y Y Y Y Y Compile statistics or publications Y Y Y Y Y N Y Y Financial modelling Business planning Y Y Y Y Y N Y Y Valuation Y Y Y Y Y Y Y Y Forecasting/Profit testing/stress tests Y Y Y Y Y Y Y Y Medical management and operational reviews N Y Y (for a few) Y N N Y N Benchmarking Y Y N N N Y Y Other activities Y Y Y (if working for consultancy Y Y N N N Analysis for mergers ) Companies appraisal analysis Y Y Y Y Y N N N Involvement in risk management Y Y Y Y Y N N N

27 Conclusion and inferences Public / private contributions to health care financing in Asia ranges across wide spectrum As GDP/capita increases, NHE increases exponentially Public role must extend even more beyond direct financing of providers to providing framework for national health insurance, compulsory savings and incentivisation of private sector There is room for primary caregiver to have stronger role in directing utilization of health services Actuaries' role in public and private health financing is evolving and expanding

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