PROPOSED MECHANISMS FOR FINANCING HEALTHCARE FOR THE POOR. Concept Summary Aug 2014 Insight Health Advisors Dr. Gitonga N.R, Prof. G. Mwabu, C. Otieno.
PURPOSE OF CONCEPT Propose a mechanism for mobilizing and allocating resources to finance healthcare for the absolute poor Secure guaranteed and ear-marked funding for this purpose Propose a clear and efficient way for the funds to flow to target beneficiaries Propose a system that provides government with various policy tools and options to meet the healthcare needs of the absolute poor Draw Lessons from existing interventions that are targeted at the poor Propose optimal institutional arrangements to implement the scheme Propose a transitional model for the existing fragmented approaches targeting the poor Position this mechanism as an input towards the conclusion of Kenya s draft healthcare financing strategy
1.BACKGROUND AND RATIONALE The overarching goal of HCF reform is Universal Health Coverage, which is defined as: Access to key promotive, preventive, curative and rehabilitative health interventions for all at an affordable cost, thereby achieving equity in access (WHO). There is strong global consensus on UHC: WHR 2010, 2013 African ministers for health and finance endorsed UHC in July 2012 UN Resolution to support UHC December 2012 66 th World Health Assembly asserted the place of UHC May 2013. Kenya has also committed itself to UHC (Draft HCF Policy, KHPF 2012-2030, NHSSP II and III draft, V2030 etc).
BARRIERS TO HEALTH CARE ACCESS Challenges in accessing health care among the low income earners and the poor: Geographical Barriers Quality Barriers Financial Barriers Distance to facilities Status of transportation infrastructure Hours of operation Poor technical quality Health worker attitude Acceptability of the care Direct cost of care user fees, cost of drugs Indirect costs transportation costs, lost wages
EVOLUTION OF HEALTHCARE FINANCING IN KENYA Free National Health Service NHIF Risk pooling for formal sector Cost recovery/user fees at public facilities Current Goal: UHC through risk pooling and other mechanisms
STATUS OF RISK POOLING IN VARIOUS POPULATION GROUPS Upper Middle Middle Low Low < $2 per day <$1 per day 1.6 Million 2.4 Million 4 Million 8 Million 16 Million 8 Million Current insurance coverage: NHIF: covers 7 million lives Private insurers: 1 million lives CBHI: 0.5 million lives Low income (8 million) and the poor (24 million), which constitute 80% of the population, have minimal or no cover through risk pooling 2009/2010 NHA shows only 12% of THE is in risk pooling (the rest is direct payment either supply or demand side) 6
Source: KHEUS 2007
Source: DHS 2009
Bringing the poor on board In order to achieve UHC, mechanisms are needed to overcome the barriers to access & utilization for the poor: This concept focuses on one of the key barriers financial access Mechanisms for both demand and supply side financing are needed to enable the poor to access primary and secondary/tertiary healthcare services. The draft HCF strategy proposed an Access and Equity Fund (subsidy) to finance care for the poor through risk pooling and other mechanisms. The absolute poor and poor will require a form of subsidy for any demand side financing mechanism to be adequate(cross subsidy is inadequate due small formal sector).
Basics of Pro-Poor HCF Increased investment in primary care will have the greatest public health returns and will be pro-poor. A basic package of primary healthcare services should be universally accessible to all at dispensaries and health centres (primary care level). Targeted access to secondary and tertiary care for the absolute poor (through risk pooling) is critical not only for public health purposes but also for financial protection of the poor. (Catastrophic health expenditure is a major cause of poverty). Earmarked/ring-fenced funds for the absolute poor are necessary.
HEALTHCARE FINANCING FOR THE POOR SUMMARY OF CURRENT APPROACHES
Relevant International Experience Health Equity Fund (HEF) in Cambodia: HEF accepted as an effective social health protection mechanism for the poor Involvement of target communities in management of the funds/services Use of means-testing to identify the poor Public financing of primary healthcare using government funds. HEF management costs were high but have improved from 45% at the start to 28% Clear and efficient referral system from primary to secondary/tertiary care necessary for success.
HCF initiatives for the poor in Kenya Current healthcare financing initiatives targeting the absolute poor & poor OBA (Output based Approach) HAKI (Health for All Kenyans Initiative) HSSF (Health Sector Support Fund) Health Insurance Subsidy Program (NHIF HISP) Traditional MOH supply side financing in public institutions Disease program funds Subsidized private services (FBO).
Overview of HCF mechanisms from perspective of coverage for the poor Mechanism Pros Cons MOH supply side (input) financing Mainstay of access for the poor (free services at the point of use) Potentially most cost-effective Some reforms to improve efficiency, effectiveness and targeting through PBF initiatives and HSSF Lack of incentives for efficiency, effectiveness, productivity, quality and responsiveness Benefits the wealthier quintiles more than the poor Over-emphasis on hospital based curative care mainly in urban areas. HSSF Better targeting and allocative efficiency Performance based hence potential for improved quality and productivity. Community involvement in management of funds Good model for AEF. Sustainability significant donor funding. Restricted use of the funds at facility levels hence user fees continued. Administrative expenses? Evolving roles of counties, MOH and CRA could pose challenge
Overview of HCF mechanisms from perspective of coverage for the poor Mechanism Pros Cons OBA Effective targeting Increased utilization of targeted priority services Choice of providers for the poor Improvements in quality and responsiveness of care Complete system for demand side financing activities with key lessons. Sustainability due to significant donor funding Limited benefit package? Administrative expenses NHIF Mandate for social health insurance. Established nation-wide infrastructure and systems for risk pooling Growing experience with informal sector HISP study a good start for including the poor through GOK subsidy The poor are excluded mainly due to inability to pay and lack of mechanisms to subsidize their contributions. No government or employer contribution to NHIF (only enrolled members contribute) Reforms needed in NHIF for better efficiency and accountability.
Overview of HCF mechanisms from perspective of coverage for the poor Mechanism Pros Cons HAKI Lessons on costing and innovative purchasing of care (capitation/fixed reimbursements) Removal of user fees. Better targeting Sustainability - donor funding Pilot with only limited experience/lifespan? Administrative expenses Vertical Disease Programs Rapid reach and results Better targeting Major contributor to reduction of OOP due to free services. Can be motivated to contribute to an AEF to cover wider benefit package and be better integrated Not sustainable Limited benefit package (often only a few conditions/services covered). Not well integrated.
FEATURES OF A SUCCESSFUL MECHANISM FOR PRO-POOR HCF Administrative simplicity with low overhead costs (maximize direct benefit cost and minimize management costs) Blend in with existing systems: regulatory, oversight, governance, purchasing, quality assurance, pooling of funds Guaranteed funding source: Government-led through general tax revenue. Targeting Mechanism-need to balance cost of targeting with its effectiveness Mechanism must have a broad objective and function more as a tool of influencing quality improvement and responsiveness of health providers and not just a tool of protecting the poor.
SOURCES OF FUNDS Government funds Main source of funding: A clear policy is needed to secure earmarked government funds for financing healthcare for the poor and vulnerable households building on existing social protection initiatives and budgetary allocations MTP II Goal 4 confirms govt. commitment to subsidize healthcare for absolute poor and has budgets set (Yr 1-1B, Yr 2-18.5B, Yr 3-31B, Yr 4-60B) Starting 2013-18 Financing options (direct provision, insurance etc). When will the funds be factored in budget? Which areas will start to benefit? How will poor be identified?
SOURCES OF FUNDS Contd. Donor funds Direct funding from donors to GoK This is good for start-up, but donors could consider a requirement for GoK to match contributions in order to ensure sustainability Program funding through partners GoK needs to create incentives (and sanctions?) to encourage partners to channel more of their funds meant for the poor through an integrated mechanism. Harmonize all health funds meant for the poor and underserved (including proposed Trust Fund for Aids, malaria and TB and NCD s, Maternity Fund etc) Private Sector Corporate social responsibility from private foundations and large corporate organizations. Social protection or equity tax? Unclaimed financial assets?
USES OF THE FUNDS (MANDATE) To finance insurance premiums/contributions for the absolute poor for secondary care coverage (NHIF, county schemes, micro-health insurance schemes) To finance primary healthcare at primary care facilitates through supply-side financing Direct Provision through county health systems To pay for vouchers if need be for targeting specific, high-priority health services (e.g. MDG-related services)
IDENTIFICATION OF THE POOR Primary care: In the short to medium term primary healthcare should be provided free (at the point of service) to all (eliminate targeting costs, fast implementation, address widespread primary care challenges). In the medium to long term there may be need to target the primary care subsidy to the poor and vulnerable for effectiveness and sustainability Secondary care through risk pooling - health insurance : Work with Social Protection Secretariat in MOLSP in identifying and reaching the poor to avoid duplication.
QUESTIONS TO DEBATE Source of Funds. How much can the govt. afford to raise (fiscal space?) How do we incentivize and give confidence to other sources (donors and private sector) to contribute? What role should cross-subsidy play and is there capacity for that with current NHIF pooled funds? Which counties do we cover first? (Due to budget constraints? How do you decide where to start?) When and how will the MTP II funds be budgeted? NHIF. What are the triggers to indicate successful reforms? What is the role of NHIF under a devolved system? Is there a role for subsidized health microinsurance in reaching the poor and how can this be linked to NHIF (e.g Re-Insurance)?
Discussion