Improving the Roles and Relationships between the Public and Private Sectors in Increasing Financial Risk Protection

1. Disappearing Dichotomies: Improving the roles and relationships between the public and private sectors in increasing financial risk protection An initiative of the Private Sector in Health Symposium @psinhealth #healthmkt www.pshealth.org 1

2. Symposium: Sydney – 6 July 2013 • Since 2009 a group of researchers and policy analysts working on health markets in low and middle-income countries have organised a pre-congress symposium at the biennial conferences of the International Health Economics Association • The aim has been to encourage and disseminate high quality research on the performance of these markets and on practical strategies for improving access to safe and effective services by the poor • The Future Health Systems Consortium is responsible for organising the 2013 symposium with financial support from the Bill & Melinda Gates Foundation, Rockefeller Foundation, and the USAID-funded SHOPS Project www.pshealth.org 2

5. This webinar series provides opportunities to set the scene before the Sydney meeting and to ensure that those who may not be attending the Symposium have the opportunity to participate in debates about strategies for improving the performance of health markets in meeting the needs of the poor. 3

6. Webinar series • Facilitated by the Future Health Systems Consortium • Organised by a number of organizations • Designed to involve a wide audience • July 2, 2013: Social franchising webinar Global Health Group at the University of California at San Francisco 4

7. Webinar series • Facilitated by the Future Health Systems Consortium • Organized by a number of groups • Designed to involve a wide audience • July 2, 2013: Social franchising webinar Global Health Group at the University of California at San Francisco 4

10. Organization of webinar • Introduction Thierry van Bastelaer (Abt Associates) • Panelists – Alex Preker (NYU Wagner School and Icahn School of Medicine, formerly World Bank/IFC) – Sheila O'Dougherty (Abt Associates) – Somil Nagpal (World Bank, former insurance regulator in India) • Discussion 5

11. Organization of webinar • Introduction Thierry van Bastelaer (Abt Associates) • Panelists – Alexander S. Preker (NYU Wagner School and Icahn School of Medicine; formerly World Bank/IFC) – Sheila O'Dougherty (Abt Associates) – Somil Nagpal (World Bank; formerly insurance regulator in India) • Discussion 5

12. Organization of webinar • Introduction Thierry van Bastelaer (Abt Associates) • Panelists – Alexander S. Preker (NYU Wagner School and Icahn School of Medicine, formerly World Bank/IFC) – Sheila O'Dougherty (Abt Associates) – Somil Nagpal (World Bank, formerly insurance regulator in India) • Discussion 5

13. Questions? How to submit • Via the „Questions‟ box in the GoToWebinar control panel • Via Twitter using the hashtag #healthmkt Be sure to include your name, organization and location with your question. 6

14. Disappearing Dichotomies: Improving the roles and relationships between the public and private sectors in increasing financial risk protection Moderator: Thierry van Bastelaer SHOPS Project, Abt Associates @psinhealth #healthmkt www.pshealth.org 7

15. Public and Private Sectors in Increasing Financial Risk Protection • Do the public and private sectors each have a specific role to play in increasing low-income families‟ financial risk protection and access to health care? • Move away from competitive stance – look for comparative advantage and strategic/tactical complementarities • What is the public sector particularly good at? • What are the strengths of the private sector? • How did India leverage these respective strengths in designing and putting in place its health finance program for BPL? 8

16. Public and Private Sectors in Increasing Financial Risk Protection • Do the public and private sectors each have a specific role to play in increasing low-income families‟ financial risk protection and access to health care? • Disappearing dichotomies: Move away from competitive stance – look for comparative advantage and strategic/tactical complementarities • What is the public sector particularly good at? • What are the strengths of the private sector? • How did India leverage these respective strengths in designing and putting in place its health finance program for BPL? 8

20. Disappearing Dichotomies: A View from Public Financing Sheila O‟Dougherty Abt Associates

21. Abt Associates | pg 21 Disappearing Dichotomies and the Road to UHC  Health systems strengthening vs. vertical service delivery improvement Abt Associates | pg 10

22. Abt Associates | pg 22 Disappearing Dichotomies and the Road to UHC  Health systems strengthening vs. vertical service delivery improvement  Government-funded health systems vs. health insurance Abt Associates | pg 10

23. Abt Associates | pg 23 Disappearing Dichotomies and the Road to UHC  Health systems strengthening vs. vertical service delivery improvement  Government-funded health systems vs. health insurance  Public vs. private financing Abt Associates | pg 10

24. Abt Associates | pg 24 Public Financing Comparative Advantages  Clearly defines the role or space for private financing Abt Associates | pg 11

25. Abt Associates | pg 25 Public Financing Comparative Advantages  Clearly defines the role or space for private financing  Greater contribution to financial risk protection for poor and vulnerable populations Abt Associates | pg 11

26. Abt Associates | pg 26 Stewardship and Governance  Public sector is primarily responsible for stewardship and governance including regulation of both public and private health sectors Abt Associates | pg 12

27. Abt Associates | pg 27 Stewardship and Governance  Public sector is primarily responsible for stewardship and governance including regulation of both public and private health sectors – Government and Ministries of Health may tend to function at extremes Abt Associates | pg 12

28. Abt Associates | pg 28 Stewardship and Governance  Public sector is primarily responsible for stewardship and governance including regulation of both public and private health sectors – Government and Ministries of Health may tend to function at extremes – Good regulatory framework and oversight function are necessary for both public and private sectors Abt Associates | pg 12

29. Abt Associates | pg 29 Public Sector Bridges to Private Sector (1)  General revenue, payroll tax or other public revenue can use unified pooling and purchasing arrangements. Abt Associates | pg 13

30. Abt Associates | pg 30 Public Sector Bridges to Private Sector (1)  General revenue, payroll tax or other public revenue can use unified pooling and purchasing arrangements.  In Kyrgyzstan: – General revenue (health budget) and payroll tax (mandatory or social health insurance) revenue pooled in one health purchaser – Health purchaser uses unified health purchasing mechanisms and systems for both sources of funding.  Reduces fragmentation and helps clarify role of private sector Abt Associates | pg 13

31. Abt Associates | pg 31 Public Sector Bridges to Private Sector (1)  General revenue, payroll tax or other public revenue can use unified pooling and purchasing arrangements.  In Kyrgyzstan: – General revenue (health budget) and payroll tax (mandatory or social health insurance) revenue pooled in one health purchaser – Health purchaser uses unified health purchasing mechanisms and systems for both sources of funding.  Reduces fragmentation and helps clarify role of private sector Abt Associates | pg 13

32. Abt Associates | pg 32 Public Sector Bridges to Private Sector (2)  Key is improving health purchasing mechanisms to better target health budget funds to priority services and poor populations – Shift from line-item budget for health facilities to output- based provider payment systems matching payment to priority services and populations – Efficiency gains to extend coverage  Improves coordination, increases clarity on public benefits and creates space for private financing Abt Associates | pg 14

36. Abt Associates | pg 36 Public Sector Bridges to Private Sector (3)  Legal and regulatory framework to help ensure that public money can go to private providers and vice versa – Tax policy is key to public funding flowing to private providers – If the only legal status available to private providers is commercial/for-profit requiring payment of taxes it could result in losing tax subsidies to health Abt Associates | pg 15

37. Abt Associates | pg 37 Public Sector Bridges to Private Sector (3)  Legal and regulatory framework to help ensure that public money can go to private providers and vice versa – Tax policy is key to public funding flowing to private providers – If the only legal status available to private providers is commercial/for-profit requiring payment of taxes it could result in losing tax subsidies to health Abt Associates | pg 15

38. Abt Associates | pg 38 Public Sector Bridges to Private Sector (3)  Legal and regulatory framework to help ensure that public money can go to private providers and vice versa – Tax policy is key to public funding flowing to private providers – Risk of losing tax subsidies to health Abt Associates | pg 15

39. Abt Associates | pg 39 Implementation  Implementation nuts and bolts are key to improving the relationship between public and private financing  Relationship between public and private financing will evolve over time – Clear vision of where want to go – Step-by-step implementation on the road to universal health coverage Abt Associates | pg 16

43. Disappearing Dichotomies: Role and Evolution in Private Finance in Health Care Alexander S. Preker Executive Scholar Health Investment & Financing Columbia University, NYU and Icahn School of Medicine at Mount Sinai New York, NY June 2013

44. Summary of Presentation • Why private finance and insurance • The multi-pillar approach to health financing • From supply to demand side financing • Conclusion 18

48. 19

49. 19

50. Matching Instruments with Variance and Risk 20

51. Matching Instruments with Variance and Risk 20

52. The Multi Pillar Financing System 21

53. The Multi Pillar Financing System 21

54. Development Path the 20:80 Rule 22

55. Many Options Can Lead to Similar Outcomes 23

56. Ideological Sub Optimal Development Path 24

57. Ideological Sub Optimal Development Path 24

58. From Supply to Demand Side Financing 25

59. From Supply to Demand Side Financing 25

60. New Paradigm for Financing Development 26

61. Conclusions • Private finance already important • Best as part of a multi pillar system • But no “silver bullets” in health financing 27

64. Disappearing Dichotomies: New-generation government-sponsored health insurance schemes for the poor and vulnerable groups in India Somil Nagpal Senior Health Specialist The World Bank South Asia Sector for Health Nutrition and Population

65. India’s Health Financing Context  India spent 4.1 percent of GDP (or US$40 per capita) on health in 2008-09 29

66. India’s Health Financing Context  India spent 4.1 percent of GDP (or US$40 per capita) on health in 2008-09  Over 17 percent of the world‟s population manages with less than 1 percent of the world‟s total health expenditure 29

67. India’s Health Financing Context  India spent 4.1 percent of GDP (or US$40 per capita) on health in 2008-09  Over 17 percent of the world‟s population manages with less than 1 percent of the world‟s total health expenditure  Out-of-pocket payments represent over 60 percent of the total health expenditure- common cause for impoverishment 29

68. India’s Health Financing Context  India spent 4.1 percent of GDP (or US$40 per capita) on health in 2008-09  Over 17 percent of the world‟s population manages with less than 1 percent of the world‟s total health expenditure  Out-of-pocket payments represent over 60 percent of the total health expenditure- common cause for impoverishment  Even for India‟s income and health expenditure level, performance on health outcomes is below par- plus large disparities across states and social groups 29

69. India’s Health Financing Context  India spent 4.1 percent of GDP (or US$40 per capita) on health in 2008-09  Over 17 percent of the world‟s population manages with less than 1 percent of the world‟s total health expenditure  Out-of-pocket payments represent over 60 percent of the total health expenditure- common cause for impoverishment  Even for India‟s income and health expenditure level, performance on health outcomes is below par- plus large disparities across states and social groups  However, there are policy announcements to significantly increase public health spending in the near future 29

70. 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Public health spending, per cent of GDP Central Government State Governments Total 30

71. 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Public health spending, per cent of GDP Central Government State Governments Total Public spending on health is hovering at about 1 percent - significantly below India‟s global income comparators 30

72. 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Public health spending, per cent of GDP Central Government State Governments Total Public spending on health is hovering at about 1 percent - significantly below India‟s global income comparators 30

73. 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Public health spending, per cent of GDP Central Government State Governments Total Public spending on health is hovering at about 1 percent - significantly below India‟s global income comparators The share of total health spending has not kept pace with the country‟s dynamic economic growth and its income comparators (elasticity of 0.99, while comparators are at 1.15) 30

74. Contextual Factors/Building Blocks  Introduction of limited financial autonomy in public hospitals: can retain and use funds at facility level 31

75. Contextual Factors/Building Blocks  Introduction of limited financial autonomy in public hospitals: can retain and use funds at facility level  Case-based package rates for inpatient care introduced by some early public HI schemes (CGHS, Yeshasvini) 31

76. Contextual Factors/Building Blocks  Introduction of limited financial autonomy in public hospitals: can retain and use funds at facility level  Case-based package rates for inpatient care introduced by some early public HI schemes (CGHS, Yeshasvini)  Rapidly growing, highly competitive private insurance industry: • Experience with “cashless” health insurance • Professional manpower, claim processing capacity • Primed private hospitals to join networks and receive third party payment 31

77. Contextual Factors/Building Blocks  Introduction of limited financial autonomy in public hospitals: can retain and use funds at facility level  Case-based package rates for inpatient care introduced by some early public HI schemes (CGHS, Yeshasvini)  Rapidly growing, highly competitive private insurance industry: • Experience with “cashless” health insurance • Professional manpower, claim processing capacity • Primed private hospitals to join networks and receive third party payment  Strong IT industry, relatively low-cost technical manpower 31

78. A Genealogy of public health insurance programs in India Source: La Forgia & Nagpal, 2012 32

79. Engaging with the private sector  Contracting insurance intermediaries and private health providers • Transparent mechanism- competitive bidding by intermediaries for risk and/or administration • Enabled purchase from private healthcare providers at an unprecedented scale 33

80. Engaging with the private sector  Contracting insurance intermediaries and private health providers • Transparent mechanism- competitive bidding by intermediaries for risk and/or administration • Enabled purchase from private healthcare providers at an unprecedented scale  Spin-off effects • Allowed beneficiaries a broader choice - created some competition • For public hospitals, initiation of a broader health sector impact, results based payments • Explicit entitlements • A new and more binding compact between government and citizens • Though these programs are limited in their scope, the benefits and access are clearly defined. 33

81. Engaging with the private sector  Contracting insurance intermediaries and private health providers • Transparent mechanism- competitive bidding by intermediaries for risk and/or administration • Enabled purchase from private healthcare providers at an unprecedented scale  Spin-off effects • Allowed beneficiaries a broader choice - created some competition • For public hospitals, initiation of a broader health sector impact, results based payments • Explicit entitlements • A new and more binding compact between government and citizens • Though these programs are limited in their scope, the benefits and access are clearly defined. The purchaser-provider split shifts provider payments from inputs to outputs and creates an enabling environment for increased accountability for results. 33

82. IEC and Enrolment- illustrations from RSBY Pre-enrolment IEC activities Images courtesy RSBY Connect at www.rsby.gov.in 34

83. IEC and Enrolment- illustrations from RSBY Pre-enrolment IEC activities Images courtesy RSBY Connect at www.rsby.gov.in Enrolment stations in communities, using smart card intermediaries engaged by private insurers 34

84. Major challenges facing the GSHISs  Limited Benefit Package with Inpatient/Surgical Focus that needs to be expanded-- has financial and operational implications 35

85. Major challenges facing the GSHISs  Limited Benefit Package with Inpatient/Surgical Focus that needs to be expanded-- has financial and operational implications  Inadequacy of institutional architecture to conduct major governance functions -- most programs work with very limited institutional and human resource capacity 35

86. Major challenges facing the GSHISs  Limited Benefit Package with Inpatient/Surgical Focus that needs to be expanded-- has financial and operational implications  Inadequacy of institutional architecture to conduct major governance functions -- most programs work with very limited institutional and human resource capacity  No systematic attempt to cost services or collect market prices to improve case payments/ package rates – may not get the „signals‟ to providers right 35

87. Major challenges facing the GSHISs  Limited Benefit Package with Inpatient/Surgical Focus that needs to be expanded-- has financial and operational implications  Inadequacy of institutional architecture to conduct major governance functions -- most programs work with very limited institutional and human resource capacity  No systematic attempt to cost services or collect market prices to improve case payments/ package rates – may not get the „signals‟ to providers right  Insufficient information for consumers on enrollment processes, benefits, providers and their quality etc. 35

88. Major challenges facing the GSHISs  Limited Benefit Package with Inpatient/Surgical Focus that needs to be expanded-- has financial and operational implications  Inadequacy of institutional architecture to conduct major governance functions -- most programs work with very limited institutional and human resource capacity  No systematic attempt to cost services or collect market prices to improve case payments/ package rates – may not get the „signals‟ to providers right  Insufficient information for consumers on enrollment processes, benefits, providers and their quality etc.  Monitoring and data analytics still in their infancy 35

89. Thank you! snagpal@worldbank.org 36

90. TODAY’S PRESENTERS Send in your question or comment Via the „Questions‟ box in the GoToWebinar control panel Via Twitter using the hashtag #healthmkt Include your name, organization, and location 36 Discussion

91. TODAY’S PRESENTERS Alexander S. Preker, NYU Wagner School and Icahn School of Medicine; formerly Head of Health Industry, World Bank/IFC Sheila O'Dougherty, Abt Associates Moderator: Thierry van Bastelaer, Abt Associates Somil Nagpal, World Bank; formerly insurance regulator in India 37

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