HFS Phua

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HFS Phua

  1. 1. Health Systems Financing in Asia Dr Phua Kai Hong, AB cum laude SM (Harvard), PhD (LSE) Lee Kuan Yew School of Public Policy National University of Singapore
  2. 2. Current Trends and Issues in Health Care Financing in Asia •  Predominantly out-of-pocket expenditure in WHO SEARO and WPRO (Asia-Pacific) •  Growth in social insurance and less taxation in WPRO region (eg Korea, China, Vietnam) •  Increasing catastrophic expenditure and impoverishment due to healthcare spending (China and transitional economies) •  High expenditures for drugs and diagnostics (50-60 % of total health budget in China) •  Strong fundamentals and driving forces for increasing demand and consumption
  3. 3. Comparative Health and Expenditure in Selected Asian Countries (WHO Report 2000) $/capita (Int $) Public/Total %GNP %Pop>60 DALE Japan 2373 (1759) 80.2 7.1 22.6 74.5 Korea 700 (862) 37.8 6.7 10.2 65.0 China 20 (74) 24.9 2.7 10.0 62.3 India 23 (84) 13.0 5.2 7.5 53.2 Singapore 843 (750) 35.8 3.1 10.3 69.3 Brunei - (857) 40.6 5.4 5.0 64.4 Malaysia 110 (202) 57.6 2.4 6.5 61.4 Thailand 133 (327) 33.0 5.7 8.5 60.2 Philippines 40 (100) 48.5 3.4 5.6 58.9 Indonesia 18 (56) 36.8 1.7 7.3 59.7 Vietnam 17 (65) 20.0 4.8 7.5 58.2 Myanmar 100 (78) 12.6 2.6 7.4 51.6 Cambodia 21 (73) 9.4 7.2 4.8 45.7 Laos 13 (53) 62.7 3.6 5.2 46.1
  4. 4. Health Systems Performance WHO Rankings 2000 Health Expenditure % GDP Per capita 1.  France 9.8% $2,369 2.  Italy 9.3% $1,855 3.  San Marino 7.5% $2,257 4.  Andorra 7.5% $1,368 5.  Malta 6.3% $551 6.  Singapore 3.1% $876 7.  Spain 8.0% $1,071 8.  Oman 3.9% $370 9.  Austria 9.0% $2,277 10.  Japan 7.1% $2,373
  5. 5. WHO Health Systems Performance Assessment •  Health Attainment (Effectiveness) •  Responsiveness (Efficiency) - basic amenities, social support, respect, confidentiality, autonomy, choice, communications •  Fairness in Financing (Equity) - distribution of risks, social protection
  6. 6. Effects of Health Care Financing and Payment Systems •  EQUITY Who pays? Who benefits? - Distribution - Access •  EFFICIENCY Supply & Demand - Allocation - Production •  EFFECTIVENESS Outcomes - Quality of Care - Health Status
  7. 7. Comparative Health Expenditure in Selected Developed Countries U.S. Germany Canada Japan U.K. Singapore Year
  8. 8. Some Reasons for Singapore’s High Ranking and Low Expenditure •  Relatively high GNP growth in denominator •  Lower consumption due to age structure (age-adjusted projection up to 6-8% of GNP) •  Strong budgetary controls on public spending •  Absence of comprehensive health insurance •  Government subsidies for public health and differential pricing for personal consumption •  ? Cost-sharing and co-payment system
  9. 9. Health Expenditures as % of GDP in East Asian Economies (2000) •  National Health Insurance Systems Japan 7.1 Korea 6.7 Taiwan 5.0 •  National Health Service Systems Hong Kong 4.7 Malaysia 2.4 Singapore 3.1
  10. 10. Healthcare Expenditure in East Asia % GNP Public:Private Japan 7.1 80 : 20 Taiwan 5.0 66 : 34 Malaysia 2.4 58 : 43 Hong Kong 4.7 54 : 46 Korea 6.7 38 : 62 Singapore 3.1 36 : 64
  11. 11. Asian Health Care Financing Systems With Universal Coverage •  Social Health Insurance - Japan, Republic of Korea, Taiwan, Thailand •  National Health Service - Singapore, Hong Kong, Malaysia, Sri Lanka Without Universal Coverage •  Social Health Insurance - China, Vietnam and transitional economies •  National Health Service - India, Indonesia and other developing countries
  12. 12. Selected Health Care Financing - Social Health Insurance Models •  JAPAN Universal health insurance (1922/1939) NHI Law amended (1984/1990) Trial DRG/PPS in 10 Hospitals (1/11/1998) Long term care insurance (1997/2000) •  KOREA Universal health insurance (1976/1989) Health Care Reform Committee (1994/1997) K-RDRG Pilot Program (1997-1998) •  TAIWAN Universal health insurance (1995) Partial DRG system (from 1998) Cost-containment measures (from 2000)
  13. 13. Selected Health Care Financing – National Health Service Models •  SINGAPORE National Health Plan (1983) Medisave/Medishield/Medifund (1984/1990/1993) Review Committee on National Health Policies (1992) White Paper on Affordable Health Care (1993) Casemix Funding (1999) Eldercare Fund/Eldershield (2000/2002) Enhanced Medishield/Private Insurance (2005) •  HONG KONG Scott Report (1985) Consultation Paper - Towards Better Health (1993) Harvard Consultant’s Report (1999) Consultative Paper - Lifelong Investments in Health Care(2000) Proposal for Supplementary Private Insurance (2010)
  14. 14. Changing Features of the Singapore Health Care System Mixed Public-Private Health Care Market •  Choice of private and public systems •  Competition and integration between public, private and voluntary sectors •  Appropriate mix of financing methods •  Co-payment at the point of consumption •  Selective insurance to avoid moral hazard •  Targeted public subsidies to address inequity •  Government benchmarks for prices & quality
  15. 15. Public-Private Health Expenditure in Singapore (1965-2000)
  16. 16. Singapore Health Statistics – Past and Present 1980 2005 •  Life expectancy 70 years 80 years •  Infant mortality 12/’000 2.5/’000 •  Aged/total population 5% 9% •  Public hospital mix 85 % 80 % •  Health expenditure/GDP 3% 4% •  Health expenditure/ 6% 7% government budget •  User fees recovered / 3% 60% public expenditure
  17. 17. Singapore’s Hybrid Health Care Financing Seeks to avoid either extremes - Welfare State Free Market Tax-funded/ Fee for service Social insurance Private insurance - ‘Free’ services - Moral hazard - Low quality - Adverse selection - Inefficiency - Inequity
  18. 18. Healthcare Financing Strategies Instill personal and family responsibility (Cost-sharing) + Ensure future sustainability with ageing and avoid inter-generational problems (Savings) + Enhance risk-pooling and social protection (Insurance) + Target subsidy and equitable distribution (Taxation)
  19. 19. Health Care Financing in Singapore Financing Method Taxes PUBLIC HEALTH SERVICES Private PRIMARY Payment CARE Medisave Compulsory ACUTE Savings CARE Medishield Social/Private CATASTROPHIC (Eldershield) Insurance (LONG TERM CARE) Medifund (Eldercare fund) PUBLIC SUBSIDIES Source: Dr. Phua Kai Hong
  20. 20. Public Hospitals: Bed Distribution
  21. 21. Health Care Financing Reforms - The Unfinished Agenda 1983  Blue Paper – National Health Plan 1984 Medisave 1990 Medishield 1993 Medifund 1993 White Paper - Affordable Health Care 2000 Eldercare Fund 2008  Eldershield 2005 Enhanced Medishield/Private Insurance 2017  Means Test (Targeted Public Subsidies) 2018  ?
  22. 22. The Singapore Health Care Model •  Singapore’s health system ranked extremely high •  Reputation for high quality, choice and efficiency •  Equity risks covered by subsidies and safety nets •  Fully funded medical savings with social insurance to finance increasing needs of ageing population •  Balance between health care supply and demand with pricing and subsidy, while containing costs •  Goals of efficiency, equity, quality and sustainability to be maintained by appropriate public-private mix in provision, financing, regulation and education
  23. 23. Similar Approaches to Old Age Security and Health Care Financing World Bank’s 3 Pillars for Old Age Security •  Redistribution (Taxation) •  Savings •  Insurance Singapore’s 3M for Health Care Financing •  Medisave (avoids inter-generational transfers) •  Medishield (pools risks for catastrophic care) •  Medifund (subsidizes the poor and indigent)
  24. 24. Health Expenditures and Ageing 14 United States Health Expenditure as % of GDP 12 Canada France 10 Finland Switzerland Australia Russia Sweden Germany Norway Italy 8 New Zealand Belgium Spain Japan Ireland Portugal United Kingdom Korea Taiwan Denmark 6 Greece Hong Kong 4 Malaysia Singapore 2 0 4 8 12 16 20 24 28 Aged Dependency Ratio (>65/Aged 15-64)
  25. 25. Population Ageing: Impact on Health Expenditure •  Health expenditure will increase with growing proportion of the aged •  Health expenditure will increase with longer survival of the aged population •  Health expenditure will increase with widening periods of morbidity and disability before death
  26. 26. Population Ageing Trends by 2030
  27. 27. Health and Long Term Care Financing in Japan •  Universal health insurance 1922-1939 •  National Health Insurance (1961) •  Health Service Law for the Aged (1982/1986) •  National Health Insurance amendments 1984-1990 •  The Golden Plan / New Golden Plan (1990) - 10 -Year Gold Plan for the Development of Health and Welfare Services for the Elderly •  Public Long Term Care Insurance Act (1997) - implemented in 2000 - 50% insurance (40 years and above) - 50% general taxation
  28. 28. Health and Long Term Care Financing in Singapore FINANCING METHOD 3-M SYSTEM + 2E •  Personal savings •  Compulsory savings •  MEDISAVE (1984) •  Catastrophic •  MEDISHIELD (1990) insurance •  + ELDERSHIELD(2002) •  Disability insurance •  MEDIFUND (1992) •  Endowment •  + ELDERCARE FUND •  Taxation (2000)
  29. 29. Special Conditions in Asia •  Fastest pace of economic transition •  Highest rates of population ageing and population growth •  Great propensity for savings •  Strong traditional family support systems Old age security and health care financing must contend with such considerations

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