Download Financing Social Health Insurance in Developing Countries: Impacts

Financing Social Health Insurance
in Developing Countries: Impacts
on Fiscal & Labor Market Outcomes
by
Adam Wagstaff (World Bank)
IDB/PAHO Regional Workshop on “Fiscal Space and the
Financing of Universal Health Care in the Americas”
Washington DC, 29 - 30 November 2007
Introduction

90% of OECD countries finance majority of health
expenditures publicly




Half use general revenues. Other half have SHI
systems, dedicated earnings-related contributions
for formal-sector workers
Among the non-OECD countries, 56% finance a
majority of health spending publicly, and only 20%
have SHI
Many countries are embracing SHI, often with the
blessing—if not the encouragement—of donors
Yet this is happening at a time when


Germany et al. trying to reduce their reliance on payroll
financing of health care
LAC advised to follow suit by Baeza & Packard in their
Beyond Survival
Evidence is clear on some issues

Revenues:




Revenues fall short of “theoretical” levels due to
evasion and underreporting of earnings
MOF sometimes reduces govt. spending on health
in line with theoretical SHI revenues
SHI financing less equitable than taxes in general
 Contribution ceilings limit progressivity
 Horizontal inequity: contrib. schedules vary by
scheme
Coverage:

Gaps in coverage until countries reach high per
capita income
Financing less progressive
under SHI
0.4
Progressivity of general
govt. health financing
0.3
Hong Kong
0.2
Portugal
0.1
Ireland
Finland
Denmark
0.0
USA
UK
Spain
Switzerland
France
Italy
Sweden
Japan
Korea
Taiwan
Germany
-0.1
-0.2
0%
Netherlands
20%
40%
60%
80%
SHI share of general govt. health financing
100%
Gaps in coverage under SHI
Vietnam, 2004
Argentina, 1996/7
100%
100%
90%
90%
80%
80%
Volunt.
70%
70%
Student
60%
% insured
% insured
Chile, 1998
FONASA
Other ins.
ISAPREs
50%
40%
20%
20%
0%
Income quintile
90%
80%
80%
OS+priv.
60%
Private
50%
40%
Obras
sociales
30%
70%
% insured
70%
% insured
1 2 3 4 5
100%
Income quintile
60%
40%
30%
20%
10%
10%
0%
Contrib.
Subs.
50%
20%
Pers of
merit
Free
10%
Colombia, 2005
1 2 3 4 5
90%
40%
30%
10%
Compuls.
50%
30%
0%
100%
60%
0%
1 2 3 4 5
1 2 3 4 5
Income quintile
Income quintile
Evidence is less clear on other
issues—i

Do SHI systems spend more on health care?


On the one hand:
 People more willing to pay SHI contributions than
taxes?
 Guaranteed revenue stream?
On the other hand:
 Actual and theoretical revenues often diverge
 SHI revenues grow more slowly than tax revenues
due to ceilings
Evidence is less clear on other
issues—ii



What are the impacts of SHI on health outcomes?
On the plus side, SHI may:
 Bring in additional resources to the health sector
 Stimulate efficiency in the delivery system, through
separation of purchasing and provision, and
provider payment reform
On the negative side, SHI may result in:
 Gaps in effective coverage
 Focus on inpatient care, neglect of prevention,
early detection, etc.
 Higher wages in health sector, not necessarily
higher quality
 Purchaser-provider splits and payment reform
happen also in non-SHI countries, not always in
SHI ones!
Evidence is less clear on other
issues—iii

What’s the impact of SHI on employment?


Argued that payroll financing reduces employment,
by raising cost of labor. But…
 Labor supply curve (for formal sector) shifts
rightwards because workers value SHI benefits—so,
smaller disemployment effect and a larger
reduction in the post-tax wage than in standard
case
 Relevant question is whether a health system
financed through payroll taxes leads to lower
employment than one financed through general
revenues
Does SHI encourage informalization of the
economy?

Depends on incentives people face—ECA different
from LAC?
Europe & Central Asia’s SHI
‘experiment’—learning opportunities



Staggered and incomplete adoption of SHI in
ECA countries during 1990s provides an
opportunity to assess some of the aggregate
effects of SHI adoption
Study design similar to multiple U.S. studies
in many fields that exploit staggered and
incomplete policy roll-out across the 50
states
Country-level analysis permits aggregate
effects to be estimated.

So, capture effects on all the relevant actors in the
health system, including new ones (e.g. new SHI
agency, new entrants into provider market, etc.)
SHI adoption in ECA: A quick history—i


1945-1990, most ECA countries financed
health care through general revenues and
delivered it though centrally-planned
Semashko model
In early 1990s, as they shifted from
Communism, many countries looked to SHI
to help solve several emerging problems:


Dramatic decline of govt. revenues as share of
GDP and falling GDP
SHI thought likely to lead to better health delivery
system. SHI agency would sit at arms’ length
from MOH and MOF, would develop purchasing
capacity, promote competition within public sector
and between it and private sector
Who adopted SHI when?
And what share of spending was financed through SHI?
Source: HiTs and World Health Reports, various years
SHI adoption in ECA:
A quick history—ii




SHI makes up a bigger share of revenues
in E European countries, where
contribution rates are high
Most countries do have a SHI agency, but
so too do Poland and Latvia which use
income taxes or general revenues
Often MOH still transfers some funds to
providers, and SHI agency contracts have
taken time to emerge, are often not
competitive, and often do not involve
private sector
SHI has often but not always led to switch
from budgets to FFS or patient-based
payments (e.g. DRGs). Some non-SHI
countries also switched
Methods
yit  t  zitg  SHI it   i  gi t  uit


Generalization of differences-indifferences (DID) estimator: includes
zitg and git
Also estimate eqn below using IV
where have evidence that above eqn
doesn’t address endogeneity of SHI
adequately
yit    zitg  SHI it  eit
Health sector outcome variables
Variables
Sources
Health spending &
resources
Total health spending per
capita; salaries as %
spending; physician
numbers
WDI; WHO-Healthfor-All
Hospital throughput &
capacity
LOS; bed occupancy rate; #
beds; inpatient admissions
WHO-Health-for-All
Hospital discharges
By diagnosis
WHO-Health-for-All
Immunization
By type
WHO-Health-for-All
Mortality
Life expectancy; U5MR &
IMR; MMR; standardized
death rates
WHO-Health-for-All;
UNICEF TransMONEE
Avoidable deaths
(quality proxy)
Deaths from appendicitis,
hernia, surgery infections
WHO-Health-for-All
Disease incidence
By diagnosis
WHO-Health-for-All
Health outcomes dataset is 77% non-missing. (69 outcome variables. 28 countries. 16 years.
Maximum # observations = 30912. Actual # observations on health outcomes = 23680.)
Labor market outcome variables
Variables
Sources
Wage rate
Total annual wages and salaries in
constant PPP averages for the
employed population aged 15-59
Own calculations based on
data from WDI and
UNICEF TransMONEE
Unemployment
Unemployment rate; registered
unemployed; long-term unemployed
ILO
Employment
% working-age population and
population aged 15-59 employed
ILO; UNICEF TransMONEE
Informal
economy
Based on discrepancy between
growth of GDP and electricity demand
Own calculations, based
on Johnston et al. method
Informal
employment
Self-employment; agricultural
employment
ILO
Labor force
participation
Whole population; women only
ILO
Labor market outcomes dataset is only 55% non-missing. (8 outcome variables. 28 countries. 16
years. Maximum # observations = 3584. Actual # observations on health outcomes = 1987.)
z variables
Variables
Sources
GDP
GDP per capita, PPP (constant 2000 international
US$)
WDI
Public share of
health spending
Health expenditure, public (% of total health
expenditure)
WDI
Elderly population*
Population ages 65 and above (% of total)
WDI
Urban population*
Urban population (% of total)
WDI
Health spending$
Total health spending per capita
WDI
Hospital payment
method
*** EXCLUDED
FROM BASIC
MODEL ***
FFS, patient-based method (e.g. DRG). Budget is
omitted category
HiTs
* Excluded from labor models. $ Excluded from health models.
Basic model: SHI impacts on spending
and hospitals
Basic model: SHI impacts on life
expectancy and mortality
Basic model: SHI impacts on causespecific mortality
Basic model: SHI impacts on disease
incidence & immunization
Effects on SHI impacts of including
provider-payment reforms variables
SHI impacts on labor market outcomes
Conclusions

Already known

Coverage



Raising revenues: SHI vs. taxes



Gaps often occur under SHI—often among poor, near-poor
Less generous coverage translates into lower utilization but
not necessarily inferior financial protection
SHI revenues may be lower than expected due to evasion
etc., are they more/less predictable?
SHI less progressive than tax finance
New from ECA study

Health care delivery



SHI neither necessary nor sufficient for separation of
purchasing & provision
SHI systems more expensive but do not apparently achieve
better health outcomes despite higher spending
SHI and the labor market


SHI raises (gross) wages, decreases employment
Impacts on size of formal sector unclear