Malawi Mid-Year Review 2014-2015 An overview of the discussion at the Expert Panel on Health Insurance A look at the health sector reforms currently underway in Malawi

1. HEALTH INSURANCE
TASK FORCE REPORT

2. Objectives of the review
Gather evidence from both local and international experiences on different
types of health insurance schemes and their pros and cons and draw some
lesson that could be applied in the Malawian context. Specifically, the
assignment called for
• Review international and local trends–SET UP AND SCALE UP.
• Review international and local experience – IMPACT ON HEALTH SYSTEM
PERFORMANCE.
• Review evidence of policies and regulatory practices that have been
successful in preserving EQUITY and INCREASING ACCESS, while minimising
COST ESCALATION, ADVERSE SELECTION, MORAL HAZARD etc?
• Provide DETAILED CASE STUDIES of how different countries have used
health insurance schemes to EXPAND COVERAGE OF HEALTH INSURANCE
SCHEME or MOVE TOWARDS UNIVERSAL HEALTH COVERAGE.

3. What is insurance?
• Refers to risk prevention and management techniques.
• Involves a risk-pooling element, i.e. those in the risk pool who
do not suffer a loss during a particular period essentially pay
for the losses experienced by others.
• Reduces vulnerability by replacing the uncertain prospect of
losses with the certainty of making a premium payment (s).

4. RISK POOLING = RISK MANAGEMENT STRATEGY
Risk management strategies
Proactive strategies Reactive strategies
Reducing the
probability of the risk
Limiting the effects
when losses occur
Risk
retention
Risk diversification
Risk
pooling
Risk reduction
or elimination
Risk
coping
Limiting the effects
when losses occur
Risk
sharing
Public social
security
Risk
mitigation

5. •Risk pooling implies the transfer of risks between high and
low risk groups.

6. 1. Objectives of a NHI scheme
• Can be comprehensive or parsimonious
• Universal Health Coverage [Yemen, Ghana]
• Traditional -access to quality services, risk pooling to achieve equity and social
solidarity, service procurement, improving health system performance. [RSA]
• service cost containment, efficiency, facilitation of private sector
participation, distribution of services and infrastructure, subsidy, health
system financing sustainability etc. [ Ghana, Nigeria]
• Functional or organisational
• Protect from catastrophic OOP
• Resourcing the public health system or
• cost shifting [ note: continuum]
• Taskforce: ACHIEVING UNIVERSAL ACCESS TO HEALTH CARE WITH
FINANCIAL RISK PROTECTION AT THE LEAST COST POSSIBLE

7. USER CHARGES
CONCEPTUAL MODEL based on health system
functions.
Provision of services
Purchasing of services
Pooling of funds
Collection of fund
Allocation
mechanisms
Allocation
mechanisms
Allocation
mechanisms
INDIVIDUALS
HEALTH CARE
COVERAGE
COVERAGE
CONTRIBUTIONS
CHOICE
CHOICE
Kutzin, 2000

8. 1. Financing & Resource allocation
(Collection and Pooling)
1. Direct taxation [UK]
2. Indirect taxation [Ghana]
3. Social Health Insurance (SHI) [Germany, Rwanda]
4. Voluntary Health Insurance [USA, RSA]
5. User charges

9. 2. FUND ALLOCATION
• Government - central or local government
• Based on history of utilisation and or/infrastructure
• Need based weighting capitation
• Epidemiological profiles
• Subsidies for premium payments
• Risk equalisation

10. 3. SERVICE PACKAGING & PROVISION
PACKAGE
• Single or multiple payers
• Competitive or not
competitive
• Single payer ( Monopoly
/Economies of scale/
Coherent set of incentives)
• Multiple (Diluted incentives
/Cost shifting /High
administration cost for
monitoring).
PROVISION
• Competitive or
monopolistic?
• Variation between urban and
rural areas?
• Dual systems
• Differences between public
and private sectors?
• Distribution of service
providers
• Access and equity?

11. 3. PROVIDER PAYMENT METHODS
• Budget
• line item or global, prospective, input based, contracts based on patient volume or
capacity etc.
• Under-provision and patient shifting is a problem
• Salaries
• Prospective, staff time, contract based
• Under-provision and patient shifting is a problem
• Capitation
• With or without fundholding
• prospective, based on capitated provider or service/patient/period.
• Cream skimming – chose health people
• Case based
• Fee for service; with or without schedule
• Mixed options.

12. 4. Benefit packages
• What should be paid from pooled funds
• Package for which paid or EHP?
• Comprehensive/ catastrophic or cost effectiveness
• What services require OOP
• Minimum package of activities in Rwanda (MPA)
• Benefit entitlement (Residency / membership / Equity / Constitution)
• Benefit package and user fees ( Fully covered services / Partially
covered services / Uncovered services)
• Complementarity & fit of cover
• Benefit maximum or OOP maximum

13. EQUITY CONSIDERATIONS
In general much literature on process and not outcomes and where done
usually subnational.
• Questions raised about Ghana’s NHIS
• Rwanda may be a special case??
• Horizontal and vertical equity [Zere et. Al. DHS 1992-2004]
• Perverse widening inequalities favouring the well off
• SWAp and EHP has not been pro-poor
• Benefit incidence analysis [Manghan L. 2006]
• Equitable health system attributable to the EHP
• However public spending may not be addressing the needs of the poor
• ? Inverse equity hypothesis

14. SUGGESTED OPTIONS
• Private sector insurance
• Historical and pragmatic (decongestion of public sector)
• Payroll based mandatory public or formal sector insurance (National
Social health Insurance)
• Benefits principle – if benefit must pay
• Low hanging fruit – maximise activities with lowest operational cost
• Community based or mutual health insurance
• Pilot??? and scale up
• May be more effective if compulsory
????? capacity to pay, governmental social responsibility and
community social solidarity.

15. NHI FROM GENERAL TAXATION?
• EHP = $44.4 / capita, Total annual cost $667.2m.
• Health budget: $126.9 million, $8/capita; GAP $36/capita!
• Options
• Re-allocation – impossible because of protected expenditure (Wages, debt
interest, pensions and gratuities)
• Identify new taxes and non-tax revenue – still not possible if funded from
domestic resources without collapsing the economy [revenue structure]
• Innovative financing (airline levy, tobacco levy, other sin taxes) – may
contribute but do not cover the shortfall.
• Revise EHP to lower cost

16. NATIONAL HEALTH
INSURANCE
TAX FUNDED
CHARITY
SYSTEM
MANDATORY
SOCIAL
HEALTH
INSURANCE
COMMUNITY
BASED
INSURANCE
VOLUNTARY
PRIVATE
HEALTH
INSURANCE