Elsevier

The Lancet

Volume 377, Issue 9768, 5–11 March 2011, Pages 863-873
The Lancet

Series
Health-financing reforms in southeast Asia: challenges in achieving universal coverage

https://doi.org/10.1016/S0140-6736(10)61890-9Get rights and content

Summary

In this sixth paper of the Series, we review health-financing reforms in seven countries in southeast Asia that have sought to reduce dependence on out-of-pocket payments, increase pooled health finance, and expand service use as steps towards universal coverage. Laos and Cambodia, both resource-poor countries, have mostly relied on donor-supported health equity funds to reach the poor, and reliable funding and appropriate identification of the eligible poor are two major challenges for nationwide expansion. For Thailand, the Philippines, Indonesia, and Vietnam, social health insurance financed by payroll tax is commonly used for formal sector employees (excluding Malaysia), with varying outcomes in terms of financial protection. Alternative payment methods have different implications for provider behaviour and financial protection. Two alternative approaches for financial protection of the non-poor outside the formal sector have emerged—contributory arrangements and tax-financed schemes—with different abilities to achieve high population coverage rapidly. Fiscal space and mobilisation of payroll contributions are both important in accelerating financial protection. Expanding coverage of good-quality services and ensuring adequate human resources are also important to achieve universal coverage. As health-financing reform is complex, institutional capacity to generate evidence and inform policy is essential and should be strengthened.

Introduction

The large amount of household out-of-pocket payments for medical bills, resulting in household financial disruption and impoverishment, was a key motive for the adoption of a World Health Assembly Resolution in 2005 on financial protection.1 Countries in southeast Asia, home to 8·7% of the world's population and that have a fast economic growth and a moderate poverty level of 14·6%,2 have a high potential to accelerate protection from financial risks and achieve universal coverage of health care.

Universal coverage is defined as securing access by all citizens to appropriate promotive, preventive, curative, and rehabilitative services at an affordable cost.3 Prospects of progress towards this aspiration seem poor,4 particularly for countries whose government fiscal capacity is low and whose social health insurance for the employed sector is absent or very small, thus restricting the mobilisation of additional resources from payroll contributions. Financing health care in most developing countries greatly relies on out-of-pocket payments,5 with most donors and global health initiatives such as the Global Fund focusing on specific diseases or interventions rather than the broader health system.

Key messages

  • The development of a universal health coverage policy is guided by explicit consideration of how best to cover and finance specific population groups: those in formal employment, the poor and vulnerable, and the informal sector and the rest of the population.

  • Those in formal employment can be given financial protection through payroll-financed social health insurance or tax-funded arrangements.

  • The poor and vulnerable are accepted to need highly subsidised arrangements by general budget, and there is good evidence from Laos and Cambodia that demand-side targeted approaches such as health equity funds work better than a simple fee exemptions policy.

  • The informal sector and the rest of the population remain a challenge, with countries such as the Philippines and Vietnam seeking to expand coverage through contributory arrangements, and others such as Thailand using tax funding.

  • In addition to extension of population coverage, efforts should be given to provide adequate financial risk protection and to design an appropriate mix of provider payment methods that can affect physicians' clinical practices towards rational use of medical technologies, efficiency, and long-term affordability.

  • Expanding coverage of good-quality services and ensuring adequate human resources are equally important elements of achieving universal health coverage.

  • Comparative analysis such as that presented in this paper is helpful in bringing diverse experiences from the southeast Asia region together to learn lessons and develop a culture of evidence in decision making.

Countries with a high share of out-of-pocket payments are more likely to have a high proportion of households facing catastrophic health expenditure—defined as spending more than 40% of household consumption expenditure, excluding food, on health, more than 25% of non-food consumption expenditure of households on health, or more than 10% of total household consumption expenditure on health.6 A 1% increase in the proportion of out-of-pocket payments in total health expenditure is associated with a 2·2% increase in the proportion of households facing catastrophic health payments. The larger the share of prepayment in health-care financing, the smaller the proportion of households that face catastrophic health spending.7 However, there is no strong evidence that countries with social health insurance offer better or worse protection than do countries that rely on general taxation.8 Nevertheless, the existence of prepayment does not guarantee financial protection—inadequate financial protection has been reported from some prepayment schemes. For example, 15% of individuals enrolled in the insurance scheme of the Self-Employed Women's Association in India faced a financially catastrophic level of payment even after reimbursement for hospital admission,9 and the Chinese Rural Cooperative Medical System covers only 30% of inpatient expenditure.10

For universal coverage, progress on three general areas is needed: extension of population coverage of health insurance schemes or other forms of prepayment, specification of which types of services should be provided and ensuring their availability and quality, and improving financial risk protection (webappendix p 1). The breadth is population coverage by insurance schemes, the depth means service coverage such as outpatient, inpatient, and other high-cost services, and the height is the level of financial protection such as co-payment. The smaller the co-payment by users and the more comprehensive the service coverage, the higher the protection against financial risk.

We focus discussion on these three areas. The key dilemma in resource-poor settings is the choice between providing a high level of service and financial protection for a small group of the population versus extending a high level of population coverage but with restricted services and financial protection.

In this paper, we assess approaches to financing health-care reform and progress towards universal coverage in seven low-income and middle-income countries in the southeast Asia region. Brunei and Singapore, two high-income countries, were excluded from this analysis, as was Myanmar, for which there is little information on health financing. On the basis of documentary analysis, we review achievements of the health-financing reforms of these countries and identify challenges with regards to population coverage, service coverage, and financial protection to share lessons and to inform the financing-reform efforts of countries outside this region.

Section snippets

Country background

Seven countries in southeast Asia with different levels of economic development and pace of expansion of health-service coverage and financial protection were selected as case studies: two low-income countries with low coverage (Laos and Cambodia), and five middle-income countries, three of which have more than 50% coverage and clear policies towards universal coverage (Indonesia, the Philippines, and Vietnam), and two of which have achieved universal coverage (Malaysia and Thailand).

Table 1

Level and profile of health expenditure

Private health expenditure has a dominant role in financing health care in five of the seven countries, contributing more than 70% of total spending on health in Laos and Cambodia (table 2),13, 14 although the level of catastrophic health expenditure differs between these countries, consisting of 5% of households in Cambodia and 10·5% in Vietnam.15 Less than 9% of the government budget is allocated to health in five of these seven countries—exceptions being Cambodia (because government funding

Coverage and extension of financial risk protection

The two most commonly used formal financing approaches are social health insurance for formal sector employees and general tax finance for the poor and vulnerable because these groups are generally accepted to be the responsibility of the government. Given these approaches, the coverage of the informal sector is a major challenge, described as “squeezing the middle” at a conference in 2006,18 the middle layer referring to the non-poor or to the not-so-poor informal sector, whereas the top layer

Discussion and recommendations

Table 3 summarises achievements in the three areas of population coverage, service coverage, and financial protection. Population coverage has been established by willingness and capacity to subsidise the poor, enforce formal sector enrolment into social health insurance, and protect the rest of the population through prepayment, whether through tax or contributions. Service coverage is indicative of previous and current investments in the health-service infrastructure, and decisions on benefit

Search strategy and selection criteria

A common protocol was developed by VT and WP and agreed upon by country authors. The protocol included country health financing background, analysis of the government efforts in coverage extension to the poor, those in formal employment, and the informal sector. The analysis covered source of revenue, pooling, service coverage, level of financial risk protection, and the government policy towards universal coverage. In producing each country report, authors reviewed and synthesised the

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