This document summarizes health and social spending in South and Southeast Asia. It notes that spending is generally lower than in OECD countries, though some exceptions exist. Thailand is highlighted as achieving good health outcomes at low cost through supply-side controls, primary care focus, and cost-containment measures. The document examines lessons that could be learned from Thailand's universal coverage system, such as establishing a national health insurance fund and learning from their capitation and DRG reimbursement systems. It also discusses the need to project social grant expenditures and consider supporting institutions like health technology assessment agencies.

1. NationalTreasury
Sustainable financing of health
and social services –
good health at low cost
Mark Blecher, National Treasury,
South Africa
OECD Asian SBO Network
Thailand
December 19 2014 1

2. NationalTreasury
Part 1: Health and social protection
spending
• Social services spending in South and SE Asia generally
significantly lower than in OECD countries, although variability
and some prominent exceptions
• Often lower spending buys lower inputs, outputs, outcomes and
quality but some exceptions (Japan highest Asian spender has
longest life expectancy in world)
• Some countries rapidly stepping up spending and changing
systems e.g. China health system development
• Some countries getting very good value at low cost (Thailand
health)
• Some countries performing “miracles” with almost no funding
(child survival Bangladesh)
• While increasing social sector spending in Asia seems almost
inevitable, how does maximise value and limit unproductive
cost increases? 2

3. NationalTreasury
Health and social protection services
as share of budget
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4. NationalTreasury
Health and social protection
expenditure as share of GDP
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5. NationalTreasury
Total health expenditure per capita
(US$ ppp, Asia-Pacific)
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6. NationalTreasury
Real per capita heath spending is
growing
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7. NationalTreasury
Total health expenditure as % of GDP
• Asia -19 mean lower than OECD, some <2-3% of GDP
especially public health expenditure 7

8. NationalTreasury
Public health expenditure as % of total
• Higher public spending % in OECD
• Many of low health spenders rely >50% on private, mainly out
of pocket expenditure which has poor risk protection 8

9. NationalTreasury
Medicine expenditure as % of total
• High medicine spending in Asia, significant potential to controlo9

10. NationalTreasury
Doctors and nurses
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11. NationalTreasury
Part 2 – Thailand good health at low
cost
• SA planning a UHC reform under banner of NHI and is considering
implementing a NHI Fund
• Thailand has a widely acclaimed UHC system, with a strong UC Fund
• Thailand has achieved both health improvement outcome gains
(IMR<10) and social security objectives of reducing OOP and health
related catastrophic expenditure
• Achieved at low cost ; Despite UHC and purchaser-provider split both
public and total expenditure levels are below SA and administration
costs are <1.5%.
• SA with higher expenditure has worse outcomes and in some ways
less progress (great inequity, no purchaser –provider split, less
developed reimbursement systems)
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12. NationalTreasury
Cost containment in Thai health system
• Remarkably cost-efficient system - "good health at low cost"; universal
coverage, IMR<10 but government health spending <3% of GDP
• Controls mainly on supply side
• Strong primary care focus with saturation with health centres (1:5000)
• Prevention and promotion emphasis
• Capitation for primary care and OPD reimbursement (Civil servant scheme
using FFS is far more expensive)
• Capped DRG system for hospital inpatient reimbursement, v little use of FFS
• Low administration costs – UC Fund only 1.2%
• Some fund-holding for referrals
• Low wage costs (may not be sustainable)
• Entry at PHC level – potential bypass fees
• Single UC Fund
• Central tendering/purchasing for various medicines and other items
• Health technology assessment used to assess new interventions
• Relatively low use of private provision
• Nevertheless have managed to largely retain trust of citizens, with declining
catastrophic and out-of-pocket expenditure
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13. NationalTreasury
Key lessons
• After looking at UC Fund in Thailand, am of view that establishing NHI
Fund in SA is achievable
• (Main issue SA will need to overcome, is legislative position pertaining
to powers of provinces)
• SA potentially has a lot to learn practically from Thai experience of
setting up capitation and DRG systems
• Health intervention and technology assessment agency (HITAP) would
be useful associated institution in SA
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14. NationalTreasury
Site visits Thailand
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15. NationalTreasury
Revenue raising
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Thailand South Africa Comment
Mechanism
Mainly general taxation
for UC and civil servant
scheme; Social security
scheme contributory
tripartite
(4.5%,1.5%,1.5%)
Currently general
taxation; considering
small surcharge on PIT or
mandatory contribution
or VAT increase
Rapid spending growth in
UC backed by econ
growth. Low growth in
2014 has led to budget
cap. Reliance on one
main source?
Economic
growth
Thailand has had high
economic growth
averaging 7% pa;
SA sluggish growth over
decade (2%)
Thailand introduced UC
at time of low growth
after Asian econ crisis
User fees
30 Baht scheme
reintroduced, but not
fully implemented;
catastrophic spending v
low. Does have bipass
fee.
Free PHC. Some user
charges for hospitals.
Catastrophic
expenditure
Declined from 2.71% to
0.49%
Partly due to minimal
user charges, but ?more
importantly trust in the
UC system, gradual
widening of benefits

16. NationalTreasury
Pooling
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Thailand South Africa Comment
Public social
security funds
UHC (75%), Social Security
(formally employed, 15%,
excludes dependants, part of
wider SS contributory system eg
pensions); civil servant (9%) Considering NHI Fund
Gradual process
of fund alignment:
benefits,
administration
Private/mutual
funds Small -7% THE
Medical aids cover 18%,
spend 42.2% of THE; cover
often partial so linked
additional OOP spending
Coverage
Virtually 100%. >99% eligible for
UC are registered with cards etc.
Although all people have
access, only 18% have
insurance cover; large
inequities between public and
private

17. NationalTreasury
UC Fund
• UC Fund potentially has many practical lessons for SA, which wants to
establish a NHI Fund.
• Very good working example of purchaser-provider split in middle
income country
• Both cover all persons not covered by other funds
• Structure of fund potentially useful for SA to understand the functional
tasks
• Information systems for registration, diagnostic and procedural coding
are practical and not overly complex – make establishment in SA
seem feasible
• Functioning of capitation system provides good practical lesson
• Functioning of DRG system excellent practical example
• Low administration costs (1.2%) impressive
• Internal clinical audit processes impressive
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18. NationalTreasury
UC Fund (2)
• Dedicated funding stream for prevention and promotion activities
seems to play very important role at PHC level and is far sighted
• Note progressive strengthening of fund administration, so that other 2
main schemes are starting to adopt UC Fund systems e.g. DRG,
claims clearing house
• Although mainly contracting with public sector also doing some private
sector contracting using standard reimbursement tools (e.g. cataracts)
and willingness to contract more widely if adherence to cost (tariff) and
quality prescripts
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19. NationalTreasury
Reimbursement
Text
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Thailand South Africa Comment
Primary
care
Capitation: well established; CUP
as contracting unit; Population
registration system, use of ID
card, UC info system well
established; Use of CUP appears
to facilitate integration within
district level. In some cases
budget holding for referrals.
Global budgets; no particular
standardised system; often input
based; Considering capitation for
NHI but practically at early stage
progress, no clear proposals yet on
operational details and risk of overly
complex and expensive system;
current proposal of capitation
payment for each clinic may be too
decentralised
Very interesting to see
functioning system and
electronic individual based
information; SA can learn
practically from this
Hospital
DRG system well established and
through several version Thai 5.1;
Subject to global cap helpful in
cost containment
No standardised system and
significant inequities; DRG
development has been slow; limited
and non-standardised diagnostic and
procedural recording and coding and
info systems. No formal case mix
assessment and adjustment.
Seeing this practically working
in Thailand impressive and SA
can learn practically from this,
including IT aspects

20. NationalTreasury
Benefit package
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Thailand South Africa Comment
Summary
Mix of general (largely
undefined eg inpatient) and
specific defined high cost
benefits; some exclusions
No package defition in public
sector, but has many clinical
guidines; Private has
mandatory PMBs
Institutional
framework
Strong Health intervention
and technology agency
evaluating c-e (HITAP); UC
fund pulling out specific
benefits for greater
attention
EDL and clinical guidelines
within DOH, but little formal
econ eval capacity
SA could benefit
from HTA agency
Benefit
management
Specific benefit mangement
programmes and financial
incentives under Fund,
quality audits
Health programmes in DOH,
guidelines

21. NationalTreasury
Provision: Primary health care
• Thai PHC system is very deep – 1 health centre per 5000 (saturated
decentralised coverage) ; up to 30 community workers per clinic.
• Close relationship with local government staff and employment of
public health officers enables multi-sectoral approach
• Strong community focus and outreach – one of best examples of
community based PHC have seen; Community workers, home visits,
profile of community
• CUP as contracting unit seems to facilitate integration at district level,
with health centres and district hospitals working to common purpose
and sharing funds.
• Clear focus on prevention and promotion at health centres and district
hospitals and dedicated funding stream
• District hospital we visited more like large community health centre –
large OPD with 30 short stay beds, doctors, small lab
• Health centres hold own bank accounts and funds; simple admin
systems and are audited. Gives greater power and flexibility.
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22. NationalTreasury
Supporting institutions (1)
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Thailand South Africa Comment
Health technology
assessment
HITAP firmly established as semi-
autonomous entity; Rigorous
detailed technical evaluations of
new interventions and
technologies;
No formal institution.
Limited economic
evaluation capacity;
Approach to benefit
package vague, Priceless
project useful but small
and not
institutionalised.
SA could benefit from
formal institution linked
to HITAPand NICE; Such
an agency could help
inform approach to
benefit package in logical
way
Health promotion
Thai Health formally established
as independent agency; V
interesting funding model with
2% dedicated excise tax on
tobacco and alcohol; Very
interesting programmes in range
of media. Very well funded.
Minister wants agency
under President. Notes
importance of
promotion in chronic
diseases etc. No
detailed planning yet.
Curently some by DOH,
some by ngos eg
Lovelife, Soul City
Formal agency may have
advantages for South
Africa, given high burden
of preventible disease

23. NationalTreasury
Supporting institutions (2)
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Thailand South Africa Comment
DRG development
Thai Equity Centre and case mix
adjustment centre have
developed robust country
adapted DRG system. Provides
sound base for UC Fund
reimbursement of hospitals.
South Africa considering
a price regulating
authority, but private
opposition. DOH little
capacity to develop
DRGs and slow progress
Creating institutional
home for DRGs in SA
might help get this
compelx technical task
done and implemented
Hospital
accreditation
Formal independent institute in
Thailand does hospital
accreditation; Appears to be
voluntary; From site visits does
appear to be having +ve effects
on quality; Informally getting
mixed reports on quality
SA has recently
established on Office of
Standards Compliance;
Current function is
however not
accreditation, but
standards inspection. Is
a private hospital
accreditation body
COHSASA.
SA has significant quality
problems in public sector
and formal quality
accreditation might be
useful
Policy analysis,
international health
IHPP provides powerful policy,
health economic and health
systems analysis to support
Ministry, region and beyond; CAP
UHC training arm
1-2 university based
policy institutes eg
Centre for Health Policy
(Wits)
Interesting institutional
form, partly in Ministry,
partly independent

24. NationalTreasury
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25. NationalTreasury
Lessons from Thailand (UC at low
cost)
• After looking at UC Fund in Thailand, am of view that establishing NHI
Fund in SA is achievable
• UC Fund does appear to be a good practical middle income example
for the NHI Fund MOH wants to establish in SA, with many system and
structure lessons
• SA potentially has a lot to learn practically from Thai experience of
setting up capitation and DRG systems
• Health intervention and technology assessment agency (HITAP) would
be useful associated institution in SA
• Thai Health Foundation can provide lessons for health promotion
institution SA MOH wants to set up under Presidency
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26. NationalTreasury
Part 3: Social protection
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27. NationalTreasury
Social protection programmes
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28. NationalTreasury
Social protection distribution
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29. NationalTreasury
ADB Social protection index
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30. NationalTreasury
South Africa: social grant projection
model (Rand 000)
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Rand 000 2014/15 2015/16 2016/17 2017/18
Old Age <75 35 780 39 447 43 242 46 629
Old Age >75 13 370 14 628 16 024 17 268
Old age 49 150 54 076 59 266 63 897
War veterans 6 5 4 3
Temporary disability 4 060 4 270 4 421 4 570
Permanent disability 14 813 15 698 16 630 17 487
Disability 18 873 19 969 21 051 22 057
Foster care 5 557 5 913 6 285 6 662
Care dependency 2 225 2 426 2 606 2 783
Child support 44 060 47 893 50 728 54 328
Grant in aid 315 274 303 320
Relief of distress 524 249 278 293
Total 120 710 130 804.6 140 519.1 150 342.6
Revised Budget 2015 120 702 130 093.3 139 556.4 148 934.2
(over)/underspend (8) (711) (963) (1 408)
Re-forecast with Sept data

31. NationalTreasury
Projecting social grant expenditure
South Africa
• Medium term projection model
• Cost = (p1*q1)+(p2*q2)+……… (p=price, =quantity)
• Quantity= population*elegibility fraction*coverage
eg: Elderly>60 years * 82% income eligible * 85% coverage
• Adjustment factors
• Audit, risk management, anti-fraud activities
• Can vary cost by varying benefit design, value of grant (Minister announces
annually; elegibility criteria (population, age, income), targeted vs universal,
scale-down rates
• SA social assistance system 3% of GDP, declining as coverage levels off, child
population levelled off, elderly growing 3% pa
• Costing contributory social security similar but typically use actuarial
assessment
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32. NationalTreasury
Conclusion
• Health and social expenditure relatively low in Asia and likely to
rise
• Design features can be critical to achieve value e.g. good
health at low cost
• Controlling personnel costs
• Demographic change important in social security expenditure
• Planning requires detailed projection model
• Consider possibility of convening Joint Finance-Health meeting;
noting OECD Health and fiscal sustainability network; WHO
interested
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33. NationalTreasury
Acknowledgements
• IHPP and Cap UHC: Drs Viroj, Walaiporn, Warisa, Angkana, Suwit,
Phusit, Candyce, Saroja, Waraporn and all staff
• UC Fund: Drs Winai and Jedat, Piang and excellent team from
different sections
• HITAP: Drs Yot, Inthira and other colleagues
• Centre for health equity monitoring: Dr. Supasit
• Staff at Amphawa district hospital, Pitsanolok regional hospital, health
centres and community workers
• Thai Health Foundation
• OECD: Jon Blondel, Camilla Vamalle, Francesca Colombo, Gregoire
Delagasnerie, Mark Pearson
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34. NationalTreasury
Thank you
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