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WHOACO/ME8D.12
Ortglnah Engllah
Distribution: Limited
“Macroeconomics,
Health and
Development” Series
1
Towards a
Framework for
Health Insurance
Development in
Hai Phong,
Viet Nam
*
Technical Paper
World Health Organization
Geneva, December 1993
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“Macroeconomics, Health and Development” Series, No. 12
1
*
Other titles in the “Macroeconomics, Health and Development” Series are:
i
No. 1: Macroeconomic Evolution and the Health Sector: Guinea, Country
Paper—WHO/ICO/MESD.1
No. 2: Une methodologie pour le calcul des coGts des soins de santS et leur
recouvrement: Document technique, Guinee—WHO/ICO/MESD.2
No. 3: Debt for Health Swaps: A source of additional finance for the health
system: Technical Paper—WHO/ICO/MESD.3
No. 4: Macroeconomic Adjustment and Health: A survey: Technical Paper—
WHO/ICO/MESD.4
No. 5: La place de I’aide exterieure dans le secteur medical au Tchad: Etude
de pays, Tchad—WHO/ICO/MESD.5
No. 6: influence de la participation financidre des populations sur la
demands de soins de sante : Une aide a la reflexion pour les pays les
plus ctomunis : Principes directeurs—WHO/ICO/MESD.6
No. 7: Planning and Implementing Health Insurance in Developing countries:
Guidelines and Case Studies: Guiding Principles—WHO/ICO/MESD.7
No. 8: Macroeconomic Changes in the Health Sector in Guinea-Bissau:
Country Paper—WHO/ICO/MESD.8
No. 9: Macroeconomic Development and the Health Sector in Malawi: Coun
try Paper—WHO/ICO/MESD.9
No. 10: Macroeconomic Adjustment and its Impact on the Health Sector in
Bolivia: Country Paper—WHO/ICO/MESD.10
a____
No. 11: The Macroeconomy and Health Sector Fir
A medium-term perspective: Nepal, Count
WHO/ICO/MESD.11
Community Health Cell
Library and Documentation Unit
BANGALORE
I
4
Towards a
Framework for
Health Insurance
Development in
Hai Phong,
Viet Nam
with a tool to simulate
cost-sharing and health
insurance premiums
by
Guy Carrin
Aviva Ron
Office of International Cooperation
World Health Organization
Geneva
Malcom Muray
Health Insurance Commission, Australia
»
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This document is not issued to the general public, and all rights are reserved by the
World Health Organization (WHO). The document may not be reviewed, abstracted,
quoted, reproduced or translated, in part or in whole, without the prior written
permission of WHO. No part of this document may be stored in a retrieval system or
transmitted in any former by any means—electronic, mechanical or other—without the
prior written permission of WHO.
The views expressed in documents by named authors are solely the responsibility
of those authors.
Printed in 1993 by WHO
printed in Switzerland
t
*
CONTENTS
Page
. 1
Introduction
1.
The Economy and the Health Sector In Viet Nam :
A Brief Overview ...................................................................
The economy
1.1
The health sector.........................................................
1.2
1.2.1 Organization and performance ..........................
1.2.2 Health sector financing .....................................
1.2.3 Health Insurance .................................................
. 2
. 2
.4
. 4
. 6
. 8
2.
. 9
The Hai Phong Health Insurance Company : 1990-1993
. 9
2.1
Recent status
.
9
2.1.1 General background......................................................
. 10
2.1.2 Management structure .................................................
.
10
Categories
of
insured
and
insurance
premiums
.........
2.1.3
.11
2.1.4 Membership ..................................................................
Recommendations concerning the management
2.2
13
of health insurance in Hai Phong
13
2.2.1 Introduction : The concept of health insurance.........
14
2.2.2 The components of the health financing system ....
17
2.2.3 Setting health insurance premiums ............................
18
Payment
of
Providers
....................................................
2.2.4
2.2.5 The impact of membership profile
on cost calculation.......................................................................... 21
2.2.6 Accounting and reporting.............................................................. 22
2.2.7 Operations : Receipt of premiums and payment of claims .... 23
2.2.8 Summary ........................................................................................ 24
2.2.9 The need for a Health Insurance Development Plan .................. 25
3.
A Tool to Simulate Cost-Sharing and Health
Insurance Premiums..................................................................
Introduction : The purpose of the simulation model
3.1
Basic
structure of the simulation model
3.2
Software requirements
3.3
(0
. 26
. 26
. 27
. 28
Page
3.4
3.5
3.6
4.
Inputs into the simulation model ..........................
3.4.1 Types of health services.....................................
3.4.2 Categories of population ...................................
3.4.3 Base year of the simulation ..............................
3.4.4 Demography ........................................................
3.4.5 Economic environment........................................
3.4.6 Labour force and income ...................................
3.4.7 Health insurance contributions
and health insurance membership .....................
3.4.8 Level of co-payments..........................................
3.4.9 Health care costs and health services................
3.4.10 Administrative expenditure.................................
3.4.11 Financial equilibrium of health insurance scheme
3.4.12 Advice on the determination of targets ............
Simulation results ......................................................
A final counsel for the user ....................................
. 28
.28
.29
.29
.29
.29
.30
.31
. .32
. 33
.35
. 36
. 36
. 37
. 38
Provisional Simulation Analyses for the Health Insurance
Scheme in Hai Phong Province................................................. . 39
4.1
Simulation for the year 1993 : Financial implications of the
announced membership targets .......................................... 39
4.2
Alternative simulation ......................................................... 45
Conclusion
47
Bibliography
49
Annex I
51
Annex II
57
(ii)
Introduction
*
Health insurance has been established in Viet Nam since early 1990 in the
form of pilot schemes.
A recent decree reveals that Viet Nam has embarked on
a gradual nation-wide application of health insurance.
This law should be
understood in the context of a Government that, alone, does not seem to be able to
meet the population’s demand for health services of a minimum quality.
Health
insurance, with insurance premiums paid by the citizens, would provide an
additional means of financing an adequate level of care.
In Section 1 of this paper, we give an overview of the economy and the
health sector in Viet Nam. The purpose is to inform the reader about the recent
economic developments in Viet Nam, including the situation of the government
budget.
In the brief survey of the health sector, emphasis is put on the need for
health service improvement. In view of the current fragile financial position of the
government, it is difficult to fund this improvement solely via taxation.
Hence,
health insurance is perceived as a mechanism to complement public finance.
In Section 2, we expand on one of the first health insurance pilot schemes
in Viet Nam, i.e. the Hai Phong Health Insurance Company (HHIC).
A
preliminary evaluation is given, followed by a proposal for a plan to develop health
insurance in Hai Phong.
A model to simulate alternative options for financing health services via
health insurance is presented in Section 3. The purpose of this software tool is to
assist in the establishment of the proposed health insurance development plan. It
basically analyzes the linkages between costs of upgraded health services, insurance
membership and health insurance contributions.
We provide two provisional simulation analyses for the HHIC in Section 4.
The first is related to the year 1993 and studies the financial implications of the
announced membership targets and health insurance premiums.
The second
presents a projection for the period 1993-1997 and illustrates how the simulation
model can best be used to evaluate alternative options for health insurance financing.
1.
The Economy and the Health Sector in Viet Nam :
A Brief Overview
1.1
The economy
In 1990, Viet Nam had a population of 66.7 million; the average
population growth rate between 1960 and 1990 was 2.2 %.
In 1992, the
population, distributed over 53 provinces, 550 districts and 10,046
communes, is reported to be 69.3 million1.
The population is distributed
over 53 provinces, 550 districts and 10,046 communes2.
About 78 % of
the population lives in rural areas3.
In 1991, the labour force accounted
for 46 % of the total population4.
The education level of the work force
is known to be very high; the literacy rate among the population above 10
years old5 is 87.7 %.
The Vietnamese economy ranks among the low-income economies of
the Asian region. After the establishment of the Socialist Republic of Viet
Nam in 1976, the government instituted a state control of industry and trade.
Agricultural production was organized through collective farms. Domestic
saving was so low that investment had to be financed via external assistance,
mainly from the former Soviet Union. As population growth exceeded the
economic growth during the period 1976-1985, per capita incomes were
virtually stagnant6.
The Vietnamese economy has, however, been undergoing rapid
changes since the policy of economic reform that was established in 1986.
This policy, that is known as Doi Moi7, involves a shift from a centrally
planned economy to a market economy, subject to government regulation.
As a result, household-based agriculture has increased. Farming households
have turned into economic units and have the right to sell products at market
prices.
Cooperatives still exist but are only responsible for irrigation
services and the supply of material and equipment.
Following this policy
1 Ministry of Health (1993, p.2).
2
2
Valdelin et al. (1992, p. 17).
3
UNDP (1992).
4
Tran Hoang Kim (1992, p.87).
5
Tran Hoang Kim (1992, p.50).
6
World Bank (1992, p. 561).
7
The policy "Doi Moi" means renovation or renewal and was launched after
the Sixth Communist Party Congress in 1986. A good overview of the
reform process can be found in SR Vietnam (1993, p.l).
change, farmers’ incomes are reported to have, on average, increased 2 to 3
times, depending on the locality8.
Restrictions on other private commerce
and industry have also been eased9,
Private investment has been
stimulated in the sectors of export, tourism, light industry and
infrastructure10.
In 1989, measures were taken to cut down hyper-inflation and to
reduce the balance of payment deficit.
These measures included a
devaluation of the official exchange rate (to reflect the market value of the
VND11), an increase in interest rates, a reduction of credit growth, enhanced
trade liberalization and a extensive decontrol of prices.
Since the economic reform programme, the government has also
decreased the monetary financing of deficits: the deficit (excluding external
financing) dropped from 7% in 1989 to less than 3% of Gross Domestic
Product (GDP) in 199112.
The latter has contributed to a decline in
inflation rates.
Lower food prices, in response to improved supply, have
also dampened inflation. The annual inflation rate was 67.5% and 67% in
1990 and 1991, respectively. However, it fell rather drastically to 18% in
199213.
The trade liberalization measures in the economic reform programme
have also led to an opening in the Vietnamese economy to the world
economy.
Exports have increased rapidly.
Whereas the ratio of exports
of goods and services in Gross Domestic Product (GDP) was 7.74% in 1986,
it was 29.04% in 199014.
The growth of exports in 1989 and 1990 was
mainly due to the exports of crude oil, rice and seafood. Viet Nam became
the third largest exporter of rice in 1989, leaving its position of rice importer
in 1988.
8
Le Dang Doanh (1991, p.84).
9
Feuerstein (1993,p.4).
10 Beresford (1993, p.l).
11 VND= Vietnamese Dong.
12 In 1992, resumed government expenditure for social and economic
infrastructure brought about a small increase in the deficit relative to GDP,
however; see SR Vietnam (1993, p.7).
13 ESCAP (1993, p.40).
14 Le Van Toan (1992, p.56).
3
Compared to the period 1976-1985, economic growth for the period
1986-1991 has substantially improved; the average annual real growth rate
of GDP has been 5.2%, resulting in an average annual real growth of GDP
per capita of 3%. In 1990, the per capita Gross National Product (GNP) at
market prices was estimated at US$ 20015.
The main economic sector is
agriculture, accounting for 40% of GDP.
In 1992, the estimated real rate
of growth of GDP varieds between 7%16 and 8.3%17.
Despite the overall economic growth and the rise of private sector
activities, the level of government taxation has remained low, due to
difficulties in tapping the new sources of activity. It is, in fact, recognized
by the Vietnamese Government that further improvements in the tax
administration are required in order to broaden the tax base18.
There is
also a problem in collecting existing taxes. For instance, in 1989, 30% of
the taxes for turnover, interest and special consumption were not
collected19.
In 1989, the ratio of taxes to GDP was 11.2% only
(government economic activities were taxed at a rate of 22.9%, but non
government economic activities at 4.5%).
In 1990, this tax ratio rose to
12.1%, in part as a result of better tax collection.
It is evident that the overall low level of government taxation has
hampered the financing of social expenditures, such as those on health
services. For the coming years, it remains to be seen whether economic
growth will have a beneficial impact on higher government revenues and
expenditures. In addition, increased revenues will depend upon the effective
collection of a whole series of newly prepared taxes, including taxes on
natural resources, capital, income and housing20.
1.2
The health sector
1.2.1
Organization and performance
Viet Nam has been traditionally committed to the health sector.
More especially from 1954 onwards, when efforts were made to extend
15
It is interesting to note that the UNDP (1992, p. 128) values the GDP per
capita (thereby using Purchasing Power Parity to convert the Vietnamese
Dong into USS) at USS 1,000.
16
ESCAP (1993, p.36).
17 Le Van Chan (1993, p.17)
4
18
SR Vietnam (1993, p.7).
19
Le Dang Doanh (1992, p.88).
20
Le Dang Doanh (1993, p. 87).
basic health services to the communal level whereby 80% of the rural and
urban population came to have access to this basic health network. These
efforts were accompanied by national health movements in the areas of
hygiene, nutrition and eradication of vectors of disease.
The structure of health delivery in Viet Nam follows the general
administrative structure, that of central or national level through the
provincial, district and commune level. At central level, the government
is responsible for policy-design and implementation and controls medical
training and specialized hospitals. Eighty-two general and 92 specialized
hospitals give health services at provincial and city level. The district
health service oversees one or two hospitals with a polyclinic, laboratory
and pharmacy. This service covers an average of 122,000 people. Inter
commune polyclinics are also operating under the districts; each polyclinic
delivers outpatient services to the population of about five communes.
Finally there are commune health centres that supply primary’ health care
activities for about 5,000 to 7,000 people. It is important to note that at
each level the delivery facilities are subject to strong supervision by the
People’s Committees21 .
Concerning health manpower, the population per medical doctor,
assistant doctor, nurse and midwife in 1992 was 2,569; 1,537; 1,344; and
4,989, respectively22. In 1988-1990, the reported percentage of one-year
olds immunized was 88%, the population with access to safe water was
46%, and the population with access to sanitation was 53%. Advances
were also made in other social sectors such as that of education. In 19881989 the primary and secondary enrolment ratio amounted to 88% and 44%,
respectively. Most of those indicators compare favourably not only with
those of the least developed countries but also with many middle-income
countries .
Health status indicators also reveal that, on average, the Vietnamese
health system has performed better than those in many other developing
countries. In fact, life expectancy has progressed from 44.2 in 1960 to 62.7
years in 1990, and under-five mortality has dropped from 232 per 1,000 in
1960 to 65 per 1,000 in 199024. Infant mortality has reduced from 156
per 1,000 live births in 1960 to 53 in 199225. There seems to be some
inconsistency though with the malnutrition situation showing a high
21
ESCAP (1993, p.l 15).
22 Calculated
from data of Ministry of Health (1993, p.15).
23
UNDP (1992).
24
WHO-WPRO (1992).
25
World Bank (1993, p. 159).
5
proportion of stunted and underweight children26; the number of
malnourished children under five is estimated at 3.9 million in 199027. It
should also be noted that officially reported maternal mortality was still 120
per 100,000 live births.
1.2.2
Health sector financing
During the period of economic reform, the proportion of the national
government budget for current health expenditure has increased from 2.76%
in 1986 to 4% in 199028.
Total government health expenditure29 in
current prices per capita in 1989, 1990 and 1991 amounted to 3,263 VND,
5,406 VND and 8,138 VND, respectively30. Converted into US dollars,
we obtain the following expenditure per capita: $1.11, $1.17 and $ 1.13 in
1989, 1990 and 1991, respectively31. When taking account of inflation,
it can be concluded that real expenditure per capita32 decreased by 1.2%
and 9.9% in 1990 and 1991, respectively.
External assistance for health seems to have declined during the
period 1986-1990. However, in 1991 foreign aid still financed 20,4 % of the
total government health budget. Note, in addition, that in 1991, local
government (communes) financed 8.8% of the total health budget.
Valdelin et al. (1992, p.27) also present an estimate of the total government
health budget for 1990, including household expenditure on user fees; it is,
however, figured that less than 5% of this overall expenditure is from user
fees.
26 Valdelin et al. (1992, p. 13). UNDP (1992, p.149) reports the following
figures concerning malnutrition in the period 1980-1990: The proportion of
children, under 5 years of age, that are underweight is 42%. The
proportion of children, between 12 and 23 months old, that are wasting is
12%. The proportion of children, between 24 and 54 months old, that are
wasting is 49%.
27 UNDP (1992). The malnutrition situation in some regions is confirmed by
a survey in 1992 in Ninh Binh Province: 43.6% of families surveyed claim
they lack food (Kot et al, 1993).
28 Total government expenditure in 1990 is reported to amount to 9,186,370
million VND; see Le Van Toan (1992, p.103).
29 This includes expenditure by central, provincial, district and local
government as well as by external donors.
30 Ministry of Health (1993, p.23).
31 The following exchange rates of VND per US$ were used: 3,884, 6,513
and 8,138 in 1989, 1990 and 1991, respectively.
32 Real expenditure per capita in 1989 prices amounted to 3,227 VND and
2,909 VND in 1990 and 1991, respectively.
6
Over the past years, the quality and quantity of publicly provided
health care services has deteriorated. The annual per capita rates of contact
health services, as calculated from routine reports, vary between 0.3 and 0.5,
with considerable differences between provinces and regions. An important
proportion of the rural population is hardly able to use the health care
system33.
Use of publicly provided health services has decreased in
favour of the private sector. It is also reported that a large proportion of
patients now seek and purchase drugs directly at the market, without first
seeking help at a health station or hospital. In fact, the economic reform
programme has encouraged a supply of privately provided health services,
through licensed medical clinics and the opening of private practices of
physicians34. The importance of the private sector is confirmed via the
results of two household surveys in 1989 and 199035. It was calculated
that private health expenditure amounts to 59-69 % of total national
expenditure on health; 97.5 % of this private household expenditure is for
drugs and medicine.
Among the reasons cited for this recent development are the poor
health infrastructure, emigration of skilled health manpower, a reduction in
external assistance and macroeconomic instability36.
Real salaries of
health workers have also declined, contributing to dissatisfaction among
health personnel. In January 1989, although the government restructured
and substantially increased the wages of civil servants (and thus of health
personnel), real salaries declined substantially due to high inflation between
1985 and 1988.
Surveys that deal with the performance of public health facilities
have been carried out. The following problems were identified by health
workers in a health survey undertaken in two mountainous provinces37: (i)
lack of instruments and drugs; (ii) low salaries for health workers and bad
living conditions; (iii) the health network is well established but the quality
of the service is poor; (iv) there is only a limited amount of health education
as part of health services; (v) there is a a shift from publicly provided health
services to privately provided modem care and traditional practitioners. In
another survey in three other provinces38, similar complaints of very low
salaries and inadequate supply of drugs and medical equipment were voiced
by those health workers interviewed.
33 Valdelin et al. (1992,p. 15).
34 Valdelin et al.(1992. p.15).
35 World Bank (1993, p. 168).
36 Feuerstein (1993, p.3).
37 MoH - World Bank (1991a).
38 MoH - World Bank (1991b).
7
It is now recognized that in the face of such problems, the
government health budget is insufficient. It is estimated that this budget
can only cover about 50% of total health care demand and health care
costs39. In 1989, a system of user fees for district, provincial and national
level hospitals was established in order to increase resources for health40.
At one district hospital, for instance, a consultation costs 500 VND
(US $ 0.05) and a large operation costs 50,000 VND (US $ 5)41.
However, it is recognized that these fees generally remain insufficient to
cover the costs of minimum quality care and that major shortages of
pharmaceuticals still arise at health infrastructure level. Improvement of
health care financing through user fees has not been forthcoming due to the
many exemptions that are granted as well as the reduced attendance at
public health care facilities42.
1.2.3
Health insurance
Up until 1989 all health services in Viet Nam were free to patients.
All doctors were salaried without the right of private practice and all
hospitals were totally funded by the government. In 1989 the State allowed
the health sector to charge patients so as to recover some of the operating
costs and allowed some rights of private practice. As part of the efforts to
bring more resources into the health sector, health insurance schemes that
are managed at provincial level have been advocated for a number of years.
However, the feasibility of health insurance should be investigated at all
administrative levels, including the commune level. Communes are now
required to supplement the funds from the government health budget43 by
their own initiatives to raise funds among the commune’s population.
Health insurance could well be a potential source of funds at the commune
level, if communes were able to mobilise a high proportion of membership
in a provincial scheme. A commune may be able to secure direct funding
from the health insurer in proportion to the number of insured people in the
commune.
Several provincial health insurance schemes have been operating
since 1989. In those schemes, industrial workers, constituting a minority
in the population, were in principle insured on a compulsory basis. Other
citizens could join on a voluntary basis. The initial emphasis was also on
health insurance coverage for the costs of hospital services.
8
39
Bui Due Khanh (1993).
40
Consultations at commune health stations were to remain free of charge.
41
Dung and Hien (1992).
42
Valdelin et al. (1992,p.26).
43
From April 1993 on, salaries of selected commune health workers are paid by the
Government; see World Bank (1993, p. 171).
In the fall of 1992, the Council of Ministers also approved the
principle of health insurance at the national level44. It is now declared
that government administrative workers (civil servants) and industrial
workers45 need to take part in health insurance on a compulsory basis.
Other citizens can join on a voluntary basis. In practice, health insurance
is expected to be gradually expanded.
Indeed, due to different
socioeconomic conditions in various regions, this implementation is likely
to be carried out at a different pace in various regions. Moreover, much
will have to be assimilated and improved about the functioning and
management of health insurance. One has to realize that even the schemes,
now two to three years old, are still at an early stage of development.
Some of the main issues and bottlenecks in health insurance development
in Viet Nam will be illustrated via a preliminary evaluation of the health
insurance scheme in Hai Phong.
The Hai Phong Health Insurance Company : 1990-1993
2.
2.1
Recent status46
2.1.1
General background
Hai Phong is one of the three largest cities of Viet Nam and has the
status of a province. It had a population of 1,447,649 in 1992. It has
339,982 households, and 31.5% live in an urban and sub-urban setting. It
has 21 hospitals of which there are 8 city and specialized hospitals and 13
district hospitals47. There is a total of 2,940 hospital beds (2,100 beds in
city and specialized hospitals and 840 beds in hospitals at district level) or
1 bed for about 500 of population. The number of patients admitted in city
and district hospitals is 62,380 and 40,795, respectively; the overall
admission rate is therefore 7.13% of the population at large. Note that the
204 commune health stations in Hai Phong Province also have a total of
1,610 beds48.
In 1992, total health care expenditure for publicly provided care
amounted to 18,325 million VND49 or US$ 1.2 per capita. Financing of
this expenditure comes from government (50.9%), hospital fees (9.8%),
44 Resolution dated August 15, 1992.
45 In principle, only industrial workers in enterprises with more than 10 workers are
subject to compulsory insurance.
46 Based on Bui Thanh Chi (1993) and infonnation acquired during technical visits
of by the authors to the HHIC in January and June 1993.
47 Hai Phong itself has 7 districts.
48
Ministry of Health (1993, p. 11).
49 Equivalent to US $1.8 million.
9
health insurance payments (6.5%) and international aid (32.74%). Until
now, the government contribution to hospitals has been based on a fixed
amount per bed per annum. Hai Phong is reported to receive VND 3.5
million per city hospital bed and VND 2.5 million per district hospital bed.
It is announced that in the future hospital funding by the government will
be on a per capita population basis.
Hai Phong, in September 1989, was the first city to start health
insurance via the establishment of the Hai Phong Health Insurance Company
(HHIC). The HHIC basically insures against the costs of health services
at govemment-run health facilities.
These health services include
ambulatory and inpatient services.
From the start, insurance was in
principle compulsory for industrial workers50. As from 1993, government
administrative workers are also insured on a compulsory basis.
Compulsory health insurance contributions are defined by law. For other
population groups insurance remains voluntary, and their health insurance
premiums are established at provincial level.
2.1.2
Management structure
The HHIC is run by a Director who is responsible to a Board of
Management. The Chairman of the Board of Management is the Vice
Chairman of the People’s Committee. The other members are the Director
of the Provincial Health Services Bureau, the Director of the Provincial
Finance Department, the Director of the Provincial Labour Department, the
Chairman of the Labour Union, the Chairman of the Peasantry, the Director
of the Hai Phong Port Authority, the Director of Hai Phong Shipyard and
the Director of the Hai Phong Health Insurance Company.
The Director of the HHIC is appointed by the vote of the Board of
Management. He presents quarterly reports on the operations of the health
insurance scheme to the Board.
In turn, this Board is accountable to the Provincial People’s
Committee. Premiums for the voluntary insured require the approval of the
Chairman of the People’s Committee on recommendation from the Board
of Management.
The financial operations of the HHIC are subject to
inspection by the City Financial Inspectors.
2.1.3
Categories of insured and insurance premiums
There are basically five categories of insured: government
administrative workers (including retired), industrial workers, agricultural
workers and other self-employed, spouses and other adult citizens, and
children between 5 and 16 years old.
50 It is known that compliance with this rule was not complete. In addition, several
factories have bargained for contribution rates different from the official ones.
10
The HHIC offers two types of health insurance: for both inpatient
and outpatient care, and for inpatient care only. Three different health
insurance cards are issued.
One for workers who are insured on a
compulsory basis; these are covered for both inpatient and outpatient care.
Another card for those who insure on a voluntary basis against the costs of
inpatient and outpatient care, and a third card for those who only require
coverage for hospital care. The official qualifying period is one month.
It is to be noted that health insurance excludes payment for injuries resulting
from accidents, fights, drunkenness, social disease (which includes
tuberculosis and sexually transmitted disease), suicide and the use of
narcotics.
Coverage for outpatient care has been available since 1993. The
move to insurance for outpatient care was initially for treatment at a
polyclinic established by the HHIC itsef. Recently, the HHIC has also
signed contracts with outpatient departments at all hospitals in the province.
Payment covers examination and tests but not yet all necessary drugs
itemized in the essential drugs list adopted by the Ministry of Health. It
should be noted that, as yet, children cannot obtain insurance coverage for
outpatient care.
Citizens other than industrial workers and government administrative
workers are not compelled to purchase health insurance. If they do not and
yet receive health care, they are required to pay fees and other costs such
as prescribed drugs that are to be bought outside the public health facility.
Children under the age of 5 are, in principle, entitled to free care at all
levels of the system. Poor people can receive free care as well, but the
decision as to who is a poor person appears to rest with the management of
the public health facility.
The structure of health insurance premiums for the years 1991 to
1993 is summarized in Table 1. The premiums are defined on a per-person
basis, implying for instance that a worker would have to pay extra health
insurance contributions if he wants his spouse and children to be insured as
well.
2.1.4
Membership
Over the period 1990-1993 the HHIC has issued 318,700 health
insurance cards of which 161,521 were bought by workers belonging to the
compulsory insurance and 153,179 belonging to voluntary health insurance.
About 8% of the insured have received treatment at hospitals of all levels
in Hai Phong. Membership has varied over the years. For instance, in
1990, 80,000 people withdrew from the insurance scheme, but 170,000
joined.
It is difficult to determine the exact number of people insured at any
one time but the authors were advised that in the first six months of 1993,
120,000 cards have been sold; this is thought to comprise 87,000
compulsory and 33,000 voluntary cards. Given that there will be some
carry over (i.e. people who bought health insurance in the last half of the
11
calender 1992) the total level of insurance is probably around the 150,000
to 180,000 mark. Using an estimated51 population size of 1,580,000 in
1993, the membership rate varies between 7.6% and 11.4%.
It is also important to note that the membership rate is different
between urban and suburban areas; for instance, membership in the
suburban District of An Hai has been 3.4% (= 6,464/190,000).
Table 1 : Health Insurance Premiums
per person/per year
Population category
Industrial Workers
Agricultural workers, and
other self-employed
Government administrative
workers (including retired)
1991
1992
19931
Insurance premium = 1.5 %
of salary (1% paid by em
ployer; 0.5 % by employee).
Insurance premium = 1.5 %
of salary (1% paid by em
ployer; 0.5 % by employee).
Insurance premium = 3 %
of salary2 (2% paid by
employer; 1 % by
employee).
The average premium
amounts to 10,000 VND3.
The average premium
amounts to 14,000 VND.
The average premium
amounts to 35,000 VND.
5,000 VND
na4
8,000 VND
na
10,000 VND (inpatient
care only)
25,000 VND (in- and out
patient care)
Insurance premium = 10 %
of salary (paid by the
government).
The average contribution
amounts to 35,000 VND.
Spouses and other adult
citizens
5,000 VND
8,000 VND
Children 5-16 yrs
3,000 VND
5,000 VND
10,000 VND (inpatient
care only)
25,000 VND (in- and out
patient care)
5,000 VND
(inpatient care only)
Notes:
1 Information as of June 1993.
2 The yearly worker’s salary in Hai Phong is estimated at 1,800,000 VND at the beginning of 1993.
3 The average exchange rates are 13,500 VND= 1 USS in 1991 and 10,500 VND= 1 USS in 1992 and 1st quarter of
1993.
4 na= not available
51
12
Bui Thanh Chi (1993, p.7).
2.2
Recommendations concerning the management of health
insurance in Hai Phong
2.2.1
Introduction : The concept of health insurance52
Health insurance is a means of providing members of a defined
community with some protection against the cost of curative and/or
preventive health services at all levels of the health system.
Health insurance is based on the principles of pooling of risks and
therefore of the redistribution of financial resources: from that portion of the
insured community who does not incur high health costs to that portion of
the insured community which does.
Consequently, a health insurance
scheme needs to attract a large cross section of the community if it is to be
viable. Viable means that over the long term the scheme is able to earn
sufficient income to cover the amounts it has contracted to reimburse its
members or the health care providers53.
Health insurance arrangements are usually established in a pluralistic
way, ie., with several partners involved in the financing of health care
delivery. The partners would normally include the government, the insurer,
the providers and the patients.
Within the conceptual framework depicted so far, the management
of a successful health insurance scheme must:
(•)
decide what types of health insurance will be worthwhile to the
members of the community;
(ii)
reach clear and binding agreements with the providers of the
services (that is the physicians and the hospitals) as to what
standards of care they will deliver, which user fees (co-payments)
insured people will be required to pay, what the health insurer will
reimburse54;
(iii)
make careful and detailed assumptions regarding the cost elements
of each of the insurance types it is to offer;
52 We refer to Ron (1993) for a comprehensive treatment of the potential for health
insurance in developing countries. Based upon the experiences in several
developing countries, she provides an extensive set of guidelines regarding the
tasks in the preparatory stage of health insurance development. See Normand and
Weber (1993) for a general guidebook on social health insurance.
53
Note that in a ’third-party payment system', the health care provider may directly
bill the health insurance institution, whereupon the latter reimburses the provider.
54
We will use ’reimbursements’ and ’payments’ by the health insurer
interchangeably.
13
(iv)
determine which premium structure and which premium levels will
be acceptable to the community and to reconcile that value with the
health insurance payments for each type of insurance;
(v)
prepare a detailed plan of what is expected to be achieved in health
insurance in terms of the level of membership, premium income,
reimbursements, management expenses, desired level of surplus for
the health insurance scheme and intentions regarding the utilisation
of that surplus.
Up until now only industrial workers workers and government
administrative workers are insured on a compulsory basis in Viet Nam - this
still leaves the majority of the population uncovered. However, later in the
paper, it is suggested that a health insurance development plan be estab
lished. In such a plan, the extension of health insurance to uncovered
population groups is analyzed. Most modem health insurance systems, that
presently cover the entire population, underwent a gradual transition from
a mixed to a universal social health insurance system.
In many instances, the type of health insurance offered at the start
of a health insurance scheme is directed first to high cost events such as
hospitalization. In view of the expected high cost implications of hospital
services, the latter is also rational from a patient’s point of view. Insurance
provided initially through the HHIC is, in fact, only covered for inpatient
care.
In the meantime, outpatient care has been added to the insurance
package of those workers that are subject to compulsory insurance.
However, it should be clear that any health insurance development plan
should address the extension of insurance for primary care to the other
insured.
From a public health point of view, health insurance of primary
health care is to be encouraged, since it contributes to greater access to
basic care and preventive activities such as immunization.
In addition,
increased access to primary care can decrease the risk of hospitalization and
can, therefore, reduce or avert hospital costs.
2.2.2
The components of the health financing system
Partners in financing health care delivery
In discussing the management of a health insurance scheme, it is
important to identify those parties which have a role or interest in the
financing of health care services and to define that role. In the context of
health insurance in Hai Phong, there are basically four parties interested in
the financing of health services: the government; the patients; the providers
of care (physicians and hospitals); and the HHIC.
14
The Government
The government’s major aim is to ensure that health services of a
minimum basic standard are available to all citizens at a reasonable cost.
The government must decide how much financial assistance it is prepared
to contribute towards achieving this aim. If it is prepared to totally fund
the health care delivery via a universal tax- based system, there is no place
in the financing equation for the patient or the insurer. The situation in
Viet Nam, like many other countries, is that the government cannot afford
such a high cost and seeks some further contribution from its citizens. The
decision by the government, as to how much it is prepared to pay is
paramount. It must be made first as it is the major influence on the
behaviour and financing of the other parties and, ultimately, on the
availability and quality of health care.
The government must also decide how much it wishes to control or
regulate the delivery system. Will it set a ceiling on amounts payable by
patients either directly or in the form of user fees or via health insurance
premiums? To what extent will the government specify what are health
services of a basic minimum standard? To what extent will the government
require providers to meet efficiency and effectiveness targets? In addition,
what will be the government’s role in establishing the accreditation
mechanism for providers?
What is meant by Government? In Viet Nam, there are several
policy-making government institutions. First there is the National Health
Insurance Board that was established, by the government, on 1 October
1992. Its Director is appointed by the Ministry of Health. This Board
consists of four departments: enrolling and card issue; contracting;
administration; and accounts. The central office of the National Health
Insurance Board services Ha Noi and provides guidelines to the provincial
offices. Up to now guidelines were directed mostly at the compulsory part
of health insurance55.
Other departments at the Ministry of Health are
also involved in the development of health insurance, viz. the departments
of Finance and Health Management.
Secondly, the Ministry of Finance funds those health services at the
central level that are directly supervised by the Ministry of Health. At
provincial level, the Provincial Health Bureau has responsibility for
management and funding of health services. The Provincial Financial
Service56 funds the health services at provincial level and therefore
transfers a budget to the Provincial Health Bureau. In turn, the latter will
allocate the budget to the District Health Bureau, that again transfers funds
to the communes.
55 Abel-Smith (1993).
56 This is the provincial branch of the Ministry of Finance.
15
Thirdly, the People’s Committees as local government authorities,
although not directly involved in funding as such, maintain an important say
in the organizational set-up of the health care system. For instance the
Provincial People’s Committee is implicated not only in the allocation of
funds between sectors but also within the health sector. As explained
above, the Provincial People’s Committee also has to approve the premium
structure proposed by the HHIC.
In addition the District People’s
Committees and the Commune’s People’s Committees take part in decisions
about the management of health services at district and commune level,
respectively.
Frequent discussions are held about the most appropriate model for
the structure of the health system and for health insurance management.
Whatever the final structure selected, the questions raised above need to be
tackled.
The providers
From a public health point of view, it is expected that health
providers act in the best interest of their patients, and have quality of that
care as their primary purpose. However, the provider must also operate in
a way that ensures its continued existence. In the longer term, this can
only be so if the total service that they deliver is regarded as satisfactory by
both patients and financiers. In other words, it must operate in a way that
is acceptable to both the people it serves and to those who provide the
finance.
Providers may be either hospitals or physicians working within those
hospitals. The role of the physician within a hospital is theoretically not
part of the financing equation. However, in many cases hospitals provide
the facilities which allow a physician to provide the actual service to the
patient. Thus, the physician has a major impact on the performance of a
hospital; the physician has great influence on the extent of equipment
installed in a hospital; and the morbidity/mortality statistics and the length
of time patients spend in hospital are recorded. All of these factors will
affect how the patients and the financiers regard the hospital. How the
physicians’ influence is managed is a major consideration for the hospital.
The patients
The patient’s aim in the health equation is to receive the best
possible care, whenever it is required, at the lowest possible cost. The
patient is best able to evaluate cost and less able to objectively assess the
care received. If the patient acquires health insurance, he expects to have
no further unexpected expenses (co-payments are acceptable providing the
quantum is known to the patient at the time insurance is purchased). In
such circumstance the patient is unlikely to be interested in the cost of the
health care he receives.
16
In a voluntary scheme, the patient is unlikely to be interested in
purchasing health insurance if it is perceived that either the care received is
not adequate or there is no additional advantage in being insured. On the
one hand, the additional advantage may be perceived as either better
protection against unexpected health care costs or better quality of care.
On the other hand, there has to be a financial benefit from insuring.
Health service charges to a non-insured must be so high that the cost of an
average episode in hospital is so expensive that a farmer or self-employed
individual would be concerned at the impact of such an episode on the
ability to feed, clothe and accomodate himself and his family. Indeed, it
will be difficult to sell the concept of insurance if the financial loss, as a
result of not insuring, is seen as insignificant.
Hai Phong Health Insurance Company
As an individual patient, it may be difficult to exercise sufficient
control over the cost of health care, certainly when provided at hospital
level. However, the government may take policy steps to control costs.
Apart from the government, a right to financial control can be given to the
HHIC in order to exert influence over the hospitals.
In fact, on the
assumption that the health insurance scheme exists only for the advantage
of its members, the insurer has a vested interest in developing efficiency
within the operations of hospitals.
To properly and most effectively exercise influence on hospital
costs, the HHIC must have access to hospital cost data. Hospital costs
reimbursed via the insurer must reflect these cost levels and be structured
in such a way as to encourage the hospital to meet efficiency and effective
ness targets rather than have a hospital concentrating on the maximization
of revenue or simply having all of its costs reimbursed, without question, by
the insurer.
In the Vietnamese environment, one of the basic issues in health
services delivery is the need for qualitative improvement of health services.
In practice, this means increasing the availability of drugs and improving the
service of health personnel. One of the ways to improve the services of
health personnel is to enhance their work motivation, for instance via
monetary incentives.
In order to reach such targets, costs of publicly
provided health services are likely to increase in the short run. The HHIC
would have to verify whether any future rise in costs announced by
providers does not surpass the rise in costs that is needed to reach the target
of quality improvement.
2.2.3
Setting health insurance premiums
This section considers the process necessary to establish appropriate
premiums, once the characteristics of the health care services to be covered
by insurance have been determined.
The Hai Phong Health Insurance
Company (HHIC) offers to cover the citizens of the Province for the costs
of both outpatient and inpatient care at any district or provincial hospital.
Citizens without insurance will have to pay user fees directly to the hospital.
17
At present, the premiums charged for health insurance vary
according to the employment category of the individual. In Table L we
already stated the official premiums as of June 1993. However, it is not
clear whether, in practice, the HHIC adheres to this structure of contribu
tions. It needs to be ascertained whether the premiums actually paid are
indeed a fixed and uniform proportion of each individual’s wages, or
whether they are different according to the industry or enterprise in which
insured employees work.
It must be emphasized here that delivery of health care should not
be isolated from the financing of health care. At present the premium
levels do not necessarily have any direct relationship with health care costs.
Yet, the move to health insurance was prompted by the realization that the
funds devoted to health care were insufficient to provide an adequate level
of care. It is important that the partners in health insurance come to define
precisely which kind of targets they intend to achieve by the new financing
arrangement. Adequate information on those targets will permit one to
estimate total health care costs and to set premium levels accordingly.
Understanding of the concept of total cost to the insurer is essential
to the successful management of health insurance.
The overriding
constraint, while setting premium levels, must be that the average premium
of all classes of insured persons must be equal to the average health care
expenditure per person plus the average administrative costs per person57.
Of course, for purposes of social policy, certain categories of the population,
such as children, low premiums could be established that do not cover
"their" average health care expenditure.
Such categories could also be
exempted from paying health insurance contributions. However, in these
cases, one must ensure that these internal subsidies are properly financed:
either the premiums of other categories of insured need to be adjusted
upwards, or another financier, such as the government, could make a special
financial contribution to the HHIC.
2.2.4
Payment of Providers
Fee-for-service
Premiums must be set in anticipation of estimated health
expenditures. The health insurer must, therefore, have an agreement with
the providers of insured health services as to which services will be covered
and how the payment for these services will be arranged.
At present, the HHIC uses a fee-for-service system for its payment
to providers. For instance, regarding hospital services, the HHIC receives
a hospital bill (via the patient) where fees for various types of services are
itemized: accomodation charges; operating theatre fees; cost of
57 The costs of administration could include any surplus which the HHIC wishes to
build up. This surplus could be established in order to finance future investments,
for instance.
18
pharmaceuticals; etc. Each claim from the provider of insured services
must state the quantity of each type of health service for which payment by
the HHIC is being claimed.
From the point of view of the provider, the fee-for-service system
is a way to ensure that the costs per service, or per input into a service, are
reimbursed.
However, this system provides a monetary incentive to
hospitalize too quickly and then to use hospital services excessively: indeed,
the larger the quantity of hospital bed-days and the more extensive the
treatment, the larger the reimbursement and gross provider income will be.
From a public health point of view, it is necessary to establish a
quality control of hospital treatment. Some quality control is instituted by
the HHIC. Three full-time medical doctors appointed by the HHIC office
visit insured patients during their treatment at the hospital, in order to
supervise medical treatment by the hospital’s physicians. Small incentive
payments are given to the collaborating hospital physicians.
For the
execution of the supervisory tasks, use is made of standard treatment
schedules58 developed by the Ministry of Health as a quality assurance
measure.
This quality control also includes signalling and preventing
"excessive" treatment, for the purpose of cost-containment. However, it is
emphasized here that the objective of this monitoring by the HHIC should
not be confined to a mere lowering of costs. Monitoring should be in the
best interests of patients, and therefore make sure that the extent of care
provided is adequate.
Note that the remarks made above also apply to the reimbursement
of outpatient services on a fee-for-service basis. Finally, warning must be
taken, that quality control enhances administrative costs. In addition, the
administration of a fee-for-service system by the HHIC is likely to be
especially costly in view of the amount of registration, control and
processing of itemized bills.
Alternative options
One alternative option regarding provider payment is the establish
ment of a schedule of flat payments or reimbursements per health service
that vary according to the type of treatment. For instance, such a method
is applied in the Bwamanda health insurance scheme (Zaire) where 15 types
of hospital treatment are specified59 for the purpose of reimbursement.
58 Containing about 400 types of treatment, using 700 types of drugs.
59 See Moens and Carrin (1993). One can think of this particular method as a much
simplified version of the method of "Diagnostic Related Groupings" (DRG).
Within each DRG, a certain medical resource use is linked to a patient’s treat
ment, whereas the use of these resources is made to vary according to factors
such as the age of the patient, sex, primary and secondary diagnoses, and
discharge status. In the American health care system for the aged (Medicare), one
distinguished 473 groupings in 1988; see Feldstein (1988, ch. 11).
19
The advantage of this approach is that the reimbursement per admission is
defined, in a prospective way, and agreed between the providers and health
insurance. This system produces an incentive for greater cost-efficiency on
the part of the provider. Cost-efficiency is stimulated because costs above
the agreed flat amount will not be reimbursed. There is a further stimulus
if the provider is able to keep the difference (or a part thereof) between the
flat payment per admission and the true cost of that admission.
Flat payments per type of consultation can also be established along
the same lines. This particular system is also relatively simple to adminis
ter, in that an itemized bill is replaced by a bill showing a flat amount
according to the type of service. However without some quality control
mechanism providers could take advantage of this system. Indeed, it has
to be verified regularly whether some providers give insufficient care in
order to realize unjustified profits.
It is also worth mentioning a second alternative option for paying
for health services, viz. the establishment of a capitation system60.
Applied to the present Hai Phong environment, this would mean that the
HHIC pays a fixed amount per insured person to the health facility. The
capitation amount could be based upon the average health expenditure per
capita of the insured. Note that the National Health Insurance Board uses
this method for reimbursing ambulatory services at polyclinics in central Ha
Noi; the capitation amounts to 6,000 VND per year and is paid in advance
to polyclinics that are chosen by the insured61.
As was the case with the first option, one of the main advantages of
this system is that one gives an incentive to health facilities to manage its
revenues in a more cost-effective way. The advantages and disadvantages
of this method are similar to that of the first option. The fact that a flat
payment is made per insured person is an advantage, when cost-containment
is among the objectives of the health policy-makers.
Another main
advantage is that administrative costs are likely to be much less, since there
are no longer any reimbursement procedures. The risk that the providers
will be providing insufficient care to patients in order to make unjustified
profits is, however, one of the main disadvantages.
The current provider payment method selected in Hai Phong is the
fee-for-service method. It is necessary to investigate the feasibility and
acceptability of alternative payment systems such as the ones just described.
It should be emphasized that, in the case of the alternative options
discussed, one avoids the system whereby whatever level of cost is incurred
by the provider of health services be automatically refunded by the insurer.
Indeed, in the case of a fee-for-service payment system, the insurer could
20
60
The latter is especially associated with the notion of a ’health maintenance
organization’. See Feldstein (1988, ch. 12). Note that in the USA, the capitation
system is used in the government-regulated health care programme for the aged.
61
Abel-Smith (1993, p.5).
be faced with an ever-increasing level of liability without any ability to
control it.
Consequently, health insurance premiums would tend to
increase.
In any case, it is necessary for both the health insurer and the
providers to reach agreement as to the structure and level of reimbursement.
The level of reimbursement or payment by the insurer must be based on the
reasonable costs incurred by the provider and must be agreed in the context
of improving provider effectiveness and efficiency.
In Viet Nam,
improvement of quantity and quality of health services figures among the
most important health policy issues. The work done on cost analysis at
Dong Anh Hospital is important in this regard62. Indeed, it is shown how
the financial implications of such improvement can be integrated in a
hospital cost analysis. This work thus provides the basis for establishing
"prospective" budgets per hospital department, and thus for the establish
ment of flat payments per type of treatment that are consistent with the
targeted improvement in health services63. In addition, this type of cost
analysis can also be applied to analyze the level of capitation amounts for
a health insurance scheme that would operate on the basis of a capitation
system.
2.2.5
The impact of membership profile on cost calculation
When a new health insurance scheme is introduced it is quite
appropriate to use the observed utilization of health services of the total
population as a basis for calculating premiums.
This is based on the
assumption that the expected membership of the health insurance scheme
will have the same hospital utilization as the general community.
However, once a scheme is established it is imperative that it
monitor the utilization of its own membership (and the expected utilization
of future members) as the basis for setting future premium levels. The fact
is that, in a health insurance arrangement that is not universal, the health
services utilization rate of the insured may be different from the utilization
rate of the community at large. There is the prospect that the members of
a health insurance scheme are more likely to seek health care than the non
insured member of the community. In other words because of the benefits
offered, the health insurance scheme would attract the citizens with greater
62 See Dung and Hien (1992).
63 It is worth making the observation in regard to capital equipment costs that it may
be possible to borrow funds to allow and upgrading of equipment and to include
the costs of borrowing in the operating costs of the hospital. However, it must be
said that such an approach is unlikely to be successful unless the true costs of
running the particular hospital are known and the sources of financing those costs
are understood. In other words, transparency in cost-accounting and cost-sharing
is an important prerequisite.
21
health risks and greater demand for health care64. Of course, the greater
the proportion of the community that is insured, the less will the utilization
patterns differ.
The characteristics which may influence utilization patterns and
which should be monitored include: age, sex, geographic location, employ
ment category, family/marital status, access to health delivery facilities, etc.
With information on the characteristics of its membership related to the
utilization patterns of the membership, a health insurance scheme is able to
more accurately predict its future expenditure.
Information about the
determinants of utilization also helps policy-makers in defining strategies
aiming at a target utilization rate. Indeed, some of the utilization rates
observed initially may be considered to be too low, inducing policy-makers
to establish targets above those rates.
It is advised to investigate how both providers and the HHIC can set
up a joint mechanism to monitor utilization and cost. On the one hand, the
HHIC is interested in adequate health services and needs to know whether
the cost of health services is justified. It is also interested in monitoring
the quantity of services in order to spot any excess utilization. On the
other hand, the providers are keen on receiving an adequate reimbursement
of their services. They have to show, therefore, that treatments and their
cost levels are warranted. A joint monitoring board may be a workable
mechanism to agree upon quantity and quality of treatment and upon the
structure and level of reimbursement payments.
2.2.6
Accounting and reporting65
Critical to the successful management of a health insurance scheme
is the existence of sound accounting practices and of regular reporting.
This reporting should be in the context of advising both the Board of
Management as well as external parties such as the Ministry of Health, the
Provincial People’s Committee and the Provincial Health Bureau of what
has happened and how that compares with budget or plan.
Quarterly
reports are currently prepared and this practice should be developed. In
addition, the concept of preparing budgets, development plans and historical
financial statements should be expanded on an annual basis.
The accounting must be on an accrual basis. This means that the
income figure must reflect what is "earned" in a period as distinct from
what may have been "received" in the period. Similarly, the expenditure
figure must show the liability "incurred" in the period rather than only that
which was "paid".
22
64
This is referred to in the insurance literature as the problem of "adverse selection".
65
For a discussion of the organisation and administration of health insurance, see
Ron et al. (1990).
For example, if a number of people paid health insurance premiums
of 1,400,000 VND on 1 April 1993, they would be covered until 31 March
1994. It can be reasonably assumed that 1/12 of this premium relates to
each month of the year. If a financial report for the period 1 April 1993
to 30 June 1993 were to be prepared, only 3/12 of the annual premium or
350,000 VND would be shown as income. The balance of the amount
actually received would be regarded as premiums for insurance cover in the
future. Similarly, if in the same period of 3 months 200,000 VND had
actually been disbursed but it was expected that a further 100,000 VND
would be paid for services which were rendered in the period, a total of
300,000 VND must be recorded as expenditure. In such an example, the
scheme would be stated to have earned a surplus of 50,000 VND for the 3
month period although it would have a cash surplus of 1,200,000 VND.
Financial reporting on this basis can then be supported by reporting
of membership numbers and profile, utilization rates, average payments per
service66 etc. It is unlikely that such detailed reporting and analysis can be
done without computer resources (both hardware and software) in the HHIC
offices.
2.2.7
Operations : Receipt of premiums and payment of claims
Premiums for the HHIC are payable annually and provide 12 months
cover. Details of each member (name, year of birth, sex) are recorded.
Membership records are manually based and therefore not kept in a manner
which would facilitate the collection of the type of management information
referred to above.
Details of cash received are registered in a cash receipts book which
is used to control banking and recording of income.
As each health
insurance card is issued, it is allocated a number.
For those that are
insured on a compulsory basis, the number is recorded on a special form
submitted by the employer. At present, the card itself is only signed by the
insured member. However, the cards ought to carry this number as well.
The claims payment process involves each hospital receiving a
monthly advance from the HHIC which is an estimate of 50% of what the
hospital expects to claim. The method of preparing this estimate is not
clear but involves negotiation between the HHIC and the hospital. This
process is quite sound but would be improved if the calculation of the
advance were based on the budget of the HHIC.
In this way, the
management of the HHIC could be sure that the payments are consistent
with its membership and utilization forecasts.
As each patient is discharged, the claim is submitted to the local
representative of the health insurance scheme who verifies with the patient
that the services have been provided and checks the patient’s entitlement to
66 This is worthwhile in the case of the current fee-for-service system, in order to
monitor the prescribed treatment and the ensuing costs.
23
health insurance. At the end of each month, the amount of the advance
made to the hospital is deducted from the sum of the claims approved for
that hospital and the balance paid. Again the records are manually kept
and it is therefore not possible to maintain a claims history in a manner
which would allow the type of analysis discussed in this paper.
It would be highly advantageous for the HHIC if data for both
premium collection and reimbursements were able to be collected in a
computer system. This information is fundamental to the good manage
ment of a health insurance scheme.
2.2.8
Summary
The main points of sections 2.2.1 to 2.2.7 may be summarized as
follows:
24
(i)
Health insurance is a means of pooling risks among the
insured population and operates on the principle of redistri
bution of financial resources.
Simultaneously, health
insurance helps to finance the health care delivery system.
(ii)
Management of a health insurance scheme must be clear as
to which services it will cover and what it will reimburse.
It needs to work closely with other parties, particularly
health facilities.
(iii)
The total amount of premiums must be based on the
expected health care expenditures incurred by the insured.
The costs are tied to the costs of operating health facilities.
The health insurer must have access to that cost data.
(iv)
The payments by the health insurer must be structured in a
way that encourages the health facilities to meet efficiency
and effectiveness targets. The health insurer should not be
required to simply reimburse the health facility for whatever
costs it incurs. In this respect, the feasibility of adopting
other payment mechanisms needs to be investigated.
(v)
The components of the costs of a health insurer arc the
membership size, the utilization rate of the membership, the
costs of health services, and the administrative costs related
to the management of the health insurance scheme.
(vi)
Utilization rates will vary with the membership profile. It is
part of the management of a health insurance scheme to
develop an appropriate membership profile.
(vii)
If hospitals and health insurers have well-constructed
development plans, it may be possible to borrow money to
buy equipment for health facilities.
(viii)
Accrual accounting, annual budgets, the preparation of
annual financial statements and regular (at least quarterly)
reporting to management and government is an essential
part of good management.
2.2.9
The need for a Health Insurance Development Plan
What is required at the present stage of health insurance in Hai
Phong is the establishment of a Health Insurance Development Plan. This
plan should reflect the necessity to control and manage the type and size of
membership aspired for the scheme and the structure and level of health
insurance payments to be met from the income of the scheme.
It is proposed that the plan has three components. First, it should
start by providing a description of the health services that are currently
covered by health insurance, of the provider payment system and of the
premium structure.
Secondly, the plan needs to discuss the principal objectives
regarding health insurance established by the Board of Management of the
HHIC. What is the objective regarding the population’s participation in
health insurance? Will one move from a mixed compulsory-voluntary
health insurance scheme to a true compulsory scheme, and with which
speed? Will other options concerning the payment of providers be
envisaged, apart from a fee-for-service reimbursement? And, if the HHIC
intends to develop a surplus, what is the level of the planned surplus and its
utilization?
Thirdly, the plan should address the measures to be taken in order
to reach the objectives set. An important question is how to foster the
participation of the population? The measures could include changes in the
premiums to attract certain categories of the population and, together with
the collaborating hospitals, improvements in the quality of health care. In
turn, to what extent will quality of health care be improved via an increase
in the availability of pharmaceuticals or extra financial incentives for health
personnel?
In June 1993, the HHIC had started to reflect upon some of the
components of such a plan. It had set targets for the memberhip of the
various classifications of people. The overall aim is to sell 300,000 health
insurance cards in 1993 which is equivalent to 20% of the total population.
A dissection has been derived from various data in presentations by HHIC
staff and is presented in Table 2.
The figures presented in Table 2 are quite uncertain, however. For
example, it is not explained why only 30% of industrial workers are
expected to be insured when it is obligatory for them to be insured; one
assumption though is that the total size of the industrial workers comprises
workers and their families. It should also be recognized that the target of
300,000 memberships for 1993 is not supported by details of how it is
intended to achieve this target. For instance, it is known that only 33,000
25
voluntary memberships have been sold from January to June 1993. It is
difficult to see how the remaining voluntary memberships targeted are going
to be sold. It is obvious that further and more coherent work will need to
be done for the elaboration of the proposed Health Insurance Development
Plan.
Table 2 : Target Membership of Health Insurance, 1993
Classification
Estimated
Population
Target
Membership3
Government administrative
workers
90,000
90,000
(100%)
Industrial workers
233,000
70,000
(30%)
Voluntary insured
- Self employed
317,000
54,000
(17%)
86,000
(10%)
860,000
Farmers
Total:
1,500,000
300,000
(20%)
Note: a Figures in brackets indicate membership rates in the
relevant population category.
3.
A Tool to Simulate Cost-Sharing and Health Insurance Premiums
3.1
Introduction : The purpose of the simulation model
As shown in the previous chapter, the different building blocks of the
health insurance system in Hai Phong have to be better specified within the
framework of a health insurance development plan. The model presented
here proposes to assist in better understanding and analyzing the impact of
targets (concerning health insurance membership, the level of quality of
health services) on the level and structure of health financing.
The simulation model is given two particular functions.
First, it
analyzes cost-sharing of health care expenditure, thereby introducing, from
the start, health insurance as an additional financing method. It is important
to stress that the issue of health financing via health insurance is analyzed
within the global framework of health policy objectives. In this model
therefore, special attention is paid to issues of improvement of quality of
health care, of general access to health care, and of cost-sharing between the
government and other financing partners.
26
Secondly, it focuses on the basic mechanism of health insurance
financing. On the one hand, there are the health care costs incurred by the
insured that need be paid to health facilities via health insurance. On the
other hand, there are the revenues that the health insurance scheme needs to
collect in order to reimburse those costs. These revenues result from the
payment of premiums by the insured; premiums can be either nominally
fixed or can be calculated as fixed percentages of incomes. The model can
analyze the level and structure of premiums required to ensure financial
equilibrium in a health insurance scheme.
The simulation model does not require the user to assume compulsory
health insurance from the start. It allows for scenarii whereby one gradually
expands a voluntary insurance scheme, covering an ever growing part of the
population. In the model it is assumed, as is now the case in Viet Nam, that
the non-insured pay for health services via a fee-for-service system. The
government, however, remains an important financier of health care. It will
also be seen that the level of payments by patients themselves, either via
health insurance premiums or via user fees, depends upon the level of cofinancing of health services committed by government. It is evident that, cet.
par., the greater the contributions by government (for example for salaries,
equipment etc.), the lower the insurance premiums and the user fees will be.
At the outset, we point at some important caveats. First, the model is
basically a simulation and calculation tool. The calculated outputs always
reflect the initial hypotheses about the inputs formulated by the user. There
is thus no intrinsic truth in any of the simulated results. The model only
provides assistance in understanding the problem of health care financing and
in designing financing alternatives. It also ensures a coherent set of results,
given the users’ inputs. This model is certainly not a substitute for policy
decisions, but rather a tool to formulate these and to understand their
implications.
3.2
Basic structure of the simulation model
As can be seen from Figure 1, the basic reasoning in the simulation
model is as follows. First, health care costs (a67) are determined. Subse
quently, one defines the insured and the non-insured population (f and g).
The government co-finances health services via its health budget (d).
Health care costs of children under 5 are paid via the government budget;
hence, children are exempted (e) from paying any user charges. The non
insured (and non-exempted) population pays user fees (f) to the hospital.
The insured population (g) pays a premium (i) to the health insurance
scheme. A co-payment (h) to be paid by the insured directly to the health
facility can also be introduced. Health insurance expenditure (c) consists of
67 Each time this letter refers to the relevant item in Figure 1.
27
the payments of the health care bills (b) incurred by the insured (net of co
payments). A category of insured patients that is exempted (j) from paying
contributions can also be specified. The costs incurred by these exempted
patients will, however, have to be covered by the other insured (and non
exempted) patients.
Figure 1
Health
care
costs (a)
Financing of
bills of
the insured
(b)
Health
insurance
expenditure(c)
premiums
(i)
co-payments (h)
Government
(d)
Exempted
patients (e)
Non-insured
patients(f)
Insured
patients(g)
Exempted
patients(j)
Health budget
(d)
No
contri
butions
(e)
User
fees
(f)
Co-payments
(h)
Premiums
(i)
No
contri
butions
(j)
3.3
Software requirements
The model runs on a LOTUS spreadsheet-version 3.1 that allows for
a multi-sheet segmentation of a file. It is the latter feature that the model
uses.
In fact it uses three worksheets: the first (Sheet A) is the input
section and must be completed by the user; the second (Sheet B) contains
the intermediate calculations; the third (Sheet C) presents the final results
together with basic graphs. Users can scroll through the simulation model
and move from sheet to sheet if so desired in order to read specific
information. They are also able to print any part of the simulation model.
3.4
Inputs into the simulation model
3.4.1
Types of health services
It is possible to enter a maximum of 15 different types of health
services. Health services can comprise inpatient as well as outpatient
services. The first eight types are reserved for inpatient services at city
and/or provincial hospitals. The next four types are retained for inpatient
services at district hospitals. The last three types of services are kept for
outpatient services at city or provincial hospitals, district hospitals and
commune health stations, respectively.
28
For example inpatient services can be defined, as admissions or as
inpatient days in particular hospital departments. Outpatient services can
be defined, for instance, as consultations.
Categories of population
3.4.2
The user can identify up to a maximum of six categories of popula
tion. The names of the categories already entered are dependants and
farmers. The purpose of specifying the population categories is to enable the
management of the health insurance scheme to estimate the membership
rate, exemption status and to set the premium according to population
category.
Base year of the simulation
3.4.3
The user states the base year of the simulation.
A forecasting
period of ten years is built in automatically in the simulation model. For
instance, if the user quotes 1992 as the base year of the simulation, the
model will provide projected results on a yearly basis up to the year 2002.
However, it is not compulsory for users to analyze the whole ten-year
projection period. They can restrict themselves to the analysis of results
related to a three or five-year projection period, for instance, if there are too
many uncertainties involved in the projection of a full ten-year period.
Demography
3.4.4
Required inputs
(i)
(ii)
(iii)
Total population of the base year
Population growth rate
Percentage of dependants in the total popula
tion.
First, the total population in the base year is given. Secondly, one
states the annual population growth rate for the ten-year period. Thirdly, the
percentage of dependants in the total population is estimated for a ten-year
period as well.
3.4.5
Economic environment
Required inputs
(i) Domestic inflation rate
(ii) External inflation rate
(iii) Exchange rate of the local currency vis-a-vis the USS
29
First, the domestic inflation rate is needed to estimate future costs
of inputs for health services, such as pharmaceuticals, water, electricity etc.
As soon as inputs are known in "constant" prices (in other words, if the
quantities of those inputs are estimated), the input costs in "current" prices
can be computed using the domestic inflation rate.
Secondly, the external inflation rate and the exchange rate are used
to estimate the future cost of imported inputs such as pharmaceuticals and
equipment. Note that the external inflation rate is to be understood as the
average inflation68 in countries exporting to Viet Nam.
Thirdly, concerning the exchange rate, the user can choose between
two alternatives: (i) his own estimation of future exchange rates; or (ii) the
Purchasing Power Parity (PPP) calculation69. The PPP calculation takes
account of the evolution of domestic as well as external inflation, according
to the following formula:
EXR, = EXR^n+DPyoJ/n+EPyoJ
where:
EXR
DP%
EP%
t
3.4.6
= exchange rate
= domestic inflation rate
= external inflation rate
= time period.
Labour force and income
The simulation model identifies two age groups, viz. the
"dependants" and "adults"70. At present the model enables the user to
select up to 5 adult population categories; the category of farmers is the
only class imposed by the model. For the four other categories, the users
can choose the population categories according to the population groups
they wish to distinguish in a health insurance development plan. In the
context of Hai Phong health insurance, it is possible, for example, to
distinguish the categories of active and retired government administrative
workers, industrial workers, the self-employed, and spouses and other
citizens.
30
68
The external price inflation rate is estimated, by expressing price levels in the
exporting countries in dollar terms.
69
A special parameter in the simulation model can be set at either 1 (PPP method)
or 0 (own estimation).
70
If it is decided to include mothers not participating in the labour market in
the category of ’dependants’, they will be excluded from the adult
categories.
Required inputs
(i)
(i>)
(iii)
Share of each population category in total adult popu
lation
Average annual income in the base year
Nominal income growth per population category.
First, one enters the share of each population category in total adult
population throughout the projection period. Secondly, one gives the average
annual income of each category in the base year. Thirdly, one gives the
nominal income growth per adult population category throughout the
projection period.
Information about composition of the adult population and incomes
is necessary for the model to calculate the health insurance contributions
and, hence, the total revenue of the health insurance scheme. In addition,
note that each category of the adult population represents a specific target
group for the health insurance scheme. One therefore has to estimate the
possible extension or reduction of this target group as a proportion of total
adult population. For example, as economic development continues, one
can expect that the share of salaried workers in the adult population will
increase to the detriment of the share of farmers.
Health insurance contributions and health insurance
membership
3.4.7
Required inputs
0)
(ii)
(iii)
(iv)
(v)
(iv)
Health insurance contribution rates (as a % of
income)
Premium for dependants
Premium for farmers
Insured population as a percentage of each population
group
Indicator per population category whether the insur
ance contract covers outpatient care
Percentage of insured, in each population group, with
First, health insurance contribution rates are determined for the non
farm adult population. The user is free to change the level and structure
of contribution rates throughout the projection period.
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31
Secondly, for dependants and farmers, a flat health insurance
premium is to be determined from the start. The latter feature corresponds
to the current practice in many health insurance schemes in developing
countries.
Thirdly, users need to specify the health insurance membership of
the various population groups (the dependant population and the categories
of adult population), as a percentage of the population in each categoiy.
Via this feature, a gradual transition towards compulsory health insurance
can be simulated.
Fourthly, one needs to specify whether the insurance contracts for
the various population groups cover outpatient care in addition to inpatient
care.
Finally, for each population category, it is possible to define a
percentage of the insured that is exempted from paying health insurance
contributions.
This feature is probably more applicable in the case of
compulsory insurance, whereby one insures the whole population, all the
while granting exemption status to targeted population groups such as the
poor and the old.
3.4.8
Level of co-payments
Required inputs
Co-payment rates per health service.
Apart from the payment of premiums to the health insurance scheme
(see 3.4.7), insured patients may also be required to share directly in the
cost of health services via co-payments. A co-payment rate is defined as
a fraction of the average patient cost that is paid directly by the patient to
the health faciltiy. The user can establish co-payment rates, for instance,
if he judges that this is an efficient method to dampen any existing excess
utilization of services. The insured with exemption status do not have to
pay this co-payment.
32
3.4.9
Health care costs and health services
Health care costs and health services in the base year
Required inputs
(i)
(ii)
(iii)
(iv)
Cost by health service and by type of cost
Government’s share in the financing of health care
costs
Number of health services per type of serice
Number of health services per type of service, by
■
First, the model introduces four categories of costs per health
service: health personnel’s salaries; maintenance of equipment and
buildings; pharmaceuticals and other recurrent costs such as electricity and
water. Depreciation allowances can be included in the maintenance cost
item.
We remind the reader that 15 different health services can be
defined. Categorizing costs per health service is justified by the fact that
shares of the cost items are likely to vary according to the health service.
Secondly, the model addresses the issue of cost-sharing between
government and patients (insured as well as non-insured). The user needs
to specify the government’s share in the financing of the various cost
components, for each health service. This is done for the base year only.
The patients’ share is then simply calculated as 100% minus the
government’s share.
Thirdly, the user needs to provide the number of services per type
of health service. The average cost per health service in the base year will
then be computed by the simulation model. In addition, using the data on
cost-sharing between government and patients, the model will compute the
average government cost and the average patient cost per health service
in the base year. It is understood that the government cost should reflect
the willingness of the government to co-fmance health services.
The
patient cost is to be financed, either via health insurance arrangements, or
via direct payment of user fees by the non-insured.
Fourthly, the number of health services is broken down into health
services consumed by the various population categories.
33
Targets for health care costs
Required inputs
(i)
(i«)
(iii)
Unit cost targets for health service
Share of the cost of imported inputs in patient cost
Share of the cost of imported inputs in government
cost.
So far, the average costs reflected the level of quality of health care
provided in the base year only. The user can now set targets for the average
costs per health service. In the context of Viet Nam, the targets are likely
to exceed the initial costs in view of the need to improve the quantity and
quality of health care. These targets are set for both the patient and the
government cost. For example, assume that the initial patient cost per
admission in the internal medicine department is 17,000 VND and that it
covers the average cost of drugs prescribed. If it is judged that the real
input of drugs should double, in order to ensure a minimum quality of care,
the target will be set at 34,000 VND. We emphasize that these targets are
expressed in constant prices.
For each target, the user must select an arrival year (the year in
which the target is to be achieved) and the years of delay (the number of
years one waits before starting to move towards the target). The starting
year can then be defined as the base year plus the years of delay. Between
the starting year and the arrival year, average costs will move in a gradual
(and linear) way towards the target. For example, suppose that due to
budgetary constraints on the part of the government and the population, one
can only start to finance an improvement in health care two years after the
base year 1992. Furthermore, suppose one expects that the target should
be reached five years after the initial year. In this particular example then,
the starting year and arrival year are 1995 and 1997, respectively. Between
those years, the average patient cost and the average government cost move
towards the target according to a linear formula: between 1995 and 1997,
the yearly absolute increase of the average costs amounts to 1/3rd of the
difference between the initial values and the targets. We refer to Annex I,
item 1, for the algebra.
Subsequently, the user needs to determine the share of imported
inputs in patient and government cost. The shares of domestic inputs in
those costs are then calculated as residuals. Earlier on (see 3.4.5) the user
was already requested to put in estimates of the domestic and external
inflation rate, and the exchange rate. Hence at this point, the simulation
model will have all the information to compute the costs of health services
in current prices. The main objective of this cost information in current
prices is to analyze expected payments by health insurance, on the one hand.
34
and the level and structure of premiums that can ensure a financial
equilibrium in health insurance, on the other.
Targets for health services
Required inputs
Targets for health service rates per population group
and per health service.
*
For each population group, the simulation model will calculate the
"observed" health service rates. These can be compared, for instance, with
"expected" health service rate that reflects the population-based morbidity
pattern. It stands to reason that the observed health service rates could well
be lower than the expected rates.
The differences could reflect, for
instance, problems of access due to poverty and low demand due to an
inadequate quality of health care. However, the observed health service
rates could also be considered as excessive. For example, there may be too
many hospitalized children as a result of a lack of primary health care. In
those cases, public health policy-makers may want to set targets for health
service rates that better reflect the needs of the population. It is important
to note that it is assumed that these targets will apply to both the insured
and the non-insured.
The model permits the user to set such targets. The same methodol
ogy outlined above in this section is applied. In other words, the user
defines the years of delay and the arrival year. And the yearly increase (or
decrease) of the health service rates between the starting and arrival year is
computed in a linear fashion.
3.4.10 Administrative expenditure
Required inputs
(i)
(ii)
(iii)
(iv)
Total amount of salaries of administrative personnel
Expenditures for maintenance of equipment and buildings
Other expenditures
Real growth rates of administrative expenditure items.
The model distinguishes three categories of administrative expendi
tures : salaries, expenditures for maintenance of equipment and buildings
(including depreciation allowances), and ’’other" expenditures. The latter
category can be used to plan a surplus, for instance. The user defines the
35
initial costs related to those categories, as well as the estimated annual real
growth rates of these expenditures.
Administrative costs are an essential component of the operating
costs of any health insurance scheme.
The model permits the user to
simulate the impact of alternative levels of administration on the overall
costs of health insurance.
In practice, the level of administrative costs
depends in part on the magnitude of membership of the health insurance
scheme. The user may therefore wish to establish a link between health
insurance membership and the level of administrative inputs.
3.4.11 Financial equilibrium of health insurance scheme
The simulation model does not guarantee a financial equilibrium of
health insurance. With given levels for health services and premiums, a
positive or negative balance may well arise.
However, the simulation
model is so built that the user can analyze the necessary adjustments to be
made in order to achieve a financial equilibrium.
Adjustments can be made in the following variables: health
insurance premiums, co-payments, health service costs, government
financing of health service costs and the health service rates. The choice
of variables to adjust as well as the level of adjustments do not have to be
final after one round of adjustments. Several iterations may be needed in
order to find a pattern of adjustments that is feasible.
For example,
suppose that in a first simulation the health insurance scheme is projected
to run a deficit. In a second simulation run one may then hypothesize that
health care costs for patients will be reduced as a result of additional
government financing. However, this hypothesis is unrealistic should the
government announce that there is an absolute constraint on its budget for
health. The response of the user could then be to review the current level
of health care costs and to inspect whether there exist inefficiencies that
enhance costs. A reduction in these inefficiencies can decrease the cost
level. The latter simulated policy could then result in a financial equilibri
um.
3.4.12 Advice on the determination of targets
We saw above that targets about insurance membership, health
service rates and/or average government and patient costs per health service
can be set by the user. The insurance membership rates can be determined
on a yearly basis. In the case of health service rates and average goverment and patient costs, one can define the years of delay before moving
towards the target and the year of arrival at the target (arrival year).
When defining the targets, the user should, however, be concerned
about their coherence. For example, suppose that in a mixed compulsoryvoluntary health insurance arrangement, one defines increasing health
insurance membership rates over time. These targets should not be treated
in an isolated way. In fact, membership is not likely to increase if the
insured do not receive value for money. In other words, an improvement
36
of health services may well be needed in order to accept the presumed
increase in insurance membership as a plausible assumption. Hence, in
such a case, it is advisable to increase average patient and government cost
in the simulation run.
The plausibility of the targets concerning patient and government
cost per health service, and the capacity to pay by government and
households for any likely increase in those costs, can also not be verified
within the model itself The overall government budget for health and the
level and distribution of household income should be checked before one
can qualify the targets as realistic.
♦
3.5
Simulation results
The results are presented in Sheet C of the simulation model.
consist of the following:
They
(’)
Economic Environment
domestic price index
external price index
exchange rate
(ii)
Demography
population
number of dependants
number of farmers
(iii)
Health services - all patients
inpatient services at city/provincial hospitals
inpatient services at district hospitals
outpatient services at city/provincial hospitals
outpatient services at district hospitals
outpatient services at commune health stations
(iv)
Health service costs - all patients
patient cost (current prices)
government cost (current prices)
total cost (current prices)
total cost (constant prices)
(v)
Health insurance membership
total membership
(among which members belonging to the various population
categories)
members exempted
(and as a percentage of the insured population)
(vi)
Structure of health insurance premiums
37
(Vi)
Structure of health insurance premiums
health insurance premiums by category of insured
(vii)
Expenditure and revenue of the health insurance scheme
total expenditure
(of which administrative expenditures and health care pay
ments)
total revenue from premiums
memorandum items: health care payments per capita in
VND and administrative expenditures as a percentage
of revenue from premiums
(viii)
Direct payments by patients to health facilities
total co-payments by the insured
direct fees paid by the non-insured
(ix)
Structure of health care financing
user fees
co-payments
health insurance payments
government financing.
3.6
A final counsel for the user
First, this simulation model does not produce "the" solution to the
problem explored by the user. Surely, it illustrates the main effects of
decisions taken, for instance, by the government, hospital management and
the health insurance management. However, in no way is the model able to
provide the best alternative set of decisions.
Second, the simulation model is particularly useful for the initiation
of a health insurance scheme. With the data at hand about incomes, price
levels, population and presumed membership, it is possible to give a good
indication of the level of premiums needed to ensure a financial equilibrium.
The results for the rest of the ten-year period are more speculative. In view
of the uncertainty of the future values for several variables, the user may
wish to inspect, say, only a period of two to three years.
Third, the simulation model is not a tool for day-to-day management
of the health insurance scheme. The latter requires more detailed calculations,
such as those related to the follow-up of bank accounts and the financial
management of (temporary) surpluses (See sections 2.2.6 and 2.2.7).
Fourthly, in order to obtain useful simulation results, it is recommend
ed to involve the various partners in hospital financing in the preparation of
simulation scenarios. Crucial decision variables in the simulation model are
the (i) cost-sharing between government and patients and/or households and
(ii) the evolution of health services quality. It is obvious that the simulation
38
results will appeal to all concerned parties, if the inputs into the model reflect
commonly acceptable and credible assumptions. The latter is also a way to
avoid the excess formulation of alternative scenarios.
4.
Provisional Simulation Analyses for the Health Insurance Scheme
in Hai Phong Province.
In this section, we first use the simulation model to study the projected
situation of health insurance in 1993.
In particular we analyze the financial
implications of the membership targets and health insurance premiums as announced
by the HHIC in June 1993. We will evaluate whether the resulting scenario is
feasible. In a second simulation analysis, we show how the model can be used to
make alternative projections of revenue and expenditure of the health insurance
scheme related to the period 1993-1997.
It must be said at the outset that all the necessary data to fully exploit the
possibilities of the simulation model were not available. In fact, because of lack of
detail about government financing of health services, the simulations below will
focus exclusively on the "patient" costs of health services and on the financing of
these costs.
Note that the population categories and the types of health services are
common to both simulation analyses. The five population categories are:
(i) dependants (children below the age of 16); (ii) farmers, self-employed, spouses
and other citizens71; (iii) government administrative workers; (iv) industrial
workers; and (v) retired government workers. The five health service types are: (i)
inpatient days at city/provincial hospitals; (ii) inpatient days at district hospitals;
(iii) consultations at city/provincial hospitals; (iv) consultations at district hospitals;
(v) and consultations at commune health stations.
4.1
Simulation for the year 1993 : Financial implications of the
announced membership targets
Inputs
We refer to Table 3 for the inputs into this simulation analysis.
Notice that the total membership assumed is 300,000 which is the target of
the HHIC for 1993.
Health insurance premiums and contributions
correspond to the data presented to the authors by the HHIC (See also
Table 1). The data entered for health service costs and health service rates
are based upon information from the HHIC and the Department of Finance
of the Ministry of Health. The inputs for administrative expenditure are
also based on data from the HHIC. The category of other administrative
expenditure is to be understood as a "surplus" that is apparently to be
transferred from the HHIC to Central Government.
71 Henceforth abbreviated as "farm-se-sp".
39
Table 3 : Inputs for the Simulation Analyses
Inputs
1. Demography
- total population of the base year
- population growth rate
- percentage of dependants in the total
population
2. Economic Environment
- domestic inflation
- external inflation
- exchange rate
3. Labour Force and Income
- share of each population category in
total adult population:
. farmers, self-employed, spouses,
other citizens (farm-se-sp)
. government administrative workers
. industrial workers
. retired government workers
- average annual income in the base
year (VND)
. government administrative workers
. industrial workers
. retired government workers
- nominal income growth per
population category
. government administrative workers
. industrial workers
. retired government workers
4. Co-Payment Rates
- Co-payment rates per health service
40
Financial Implications of the
Announced Membership
Targets for 1993
Simulation Analysis for the
Period 1993-1997,
Imposing Financial Equilibrium
1,500,000
na
Idem
2.2%
39%
Idem
15%
5%
10,500 VND=1$
Idem
Idem
Purchasing Power Parity
assumption used for the period
1993-1997
82.51%
7.38%
7.65%
2.46%
Throughout the period 1993-1997:
82.51%
7.38%
7.65%
2.46%
350,000
1,167,000
200,000
800,000
Idem
400,000
}
}na
}
Throughout the period 1993-1997:
15%
15%
15%
No co-payment
No co-payment
Financial Implications of the
Announced Membership
Targets for 1993
Inputs
Simulation Analysis for the
Period 1993-1997,
Imposing Financial Equilibrium
5. Health insurance insurance
contributions and health insurance
membership
- health insurance contribution rates (as
a % of income)
. government administrative workers
. industrial workers
. retired government workers
10%
3%
10%
- premium for dependants (VND)
5,000
1993: 5,000
1994: 7,500
1995: 10,000
1996: 13,000
1997: 16,000
- premium for farm-se-sp (VND)
10,000
1993:
1994:
1995:
1996:
1997:
- insured population as a percentage of
each population group
. dependants
. farmers, self-employed, spouses,
other citizens (farm-se-sp)
. government administrative workers
. industrial workers
. retired government workers
- indicator per population category
whether insurance contract covers
outpatient care
(Yes=l; No=0)
. dependants
. farmers, self-employed, spouses,
other citizens (farm-se-sp)
. government administrative workers
. industrial workers
. retired government workers
- percentage of insured in each
population group with exemption
status
Throughout the period 1993-1997:
3%
3%
3%
11,000
16,500
21,000
25,500
30,000
10,79%
100%
100%
100%
- 1993: same percentages as
previous simulation
- 1994-1997:
. for all workers (incl retired
government workers): 100 %
throughout the period
1993-1997
. for dependants and farm-se-sp:
1994: 15%
1995: 20%
1996: 25%
1997: 30%
0
1
o
i
i
i
i
10%
1
i
i
No exemption
No exemption throughout 19931997
41
Financial Implications of the
Announced Membership
Targets for 1993
Inputs
6. Health care costs and health services
in the base year
- cost by health service and by type of
cost (in VND)
. cost per inpatient day at
city/provincial hospitals
. cost per inpatient day at district
hospitals
. cost per consultation at
city/provincial hospitals
. cost per consultation at district
hospitals
. cost per consultation at commune
health stations
- government’s share in financing of
health care costs
- number of health services per type of
service
. inpatient day at city/provincial
hospitals
. inpatient day at district hospitals
20,000
Simulation Analysis for the
Period 1993-1997,
Imposing Financial Equilibrium
5,000
}
}
}Idem
}
}
}
}
1,000
Only the patient costs are consid
ered
Idem
10,000
7,000
Inpatient days:
It is assumed that the admission
rate to hospitals is 7% of total
population; 86% are admitted to
district hospitals and 14% to
city/provincial hospitals. The length
of stay is 9 and 16 days in
city/provincial hospitals and district
hospitals, respectively.
Inpatient days:
It is assumed that the admission
rate to hospitals is 8% of total
population; 86% are admitted to
district hospitals and 14% to
city/provincial hospitals. The
length of stay is as in the previous
simulation.
. consultations at city/provincial
hospitals
. consultations at district hospitals
. consultations at commune health
stations
Consultations:
The estimated number of consulta
tions per person is 1.5 per year, of
which 0.23 consultations per per
son at commune health station
level, 1.12 consultations per person
at district hospital level and 0.15
consultations per person at city and
provincial hospital level.
Consultations:
- number of health services per type of
service by population category
Health services are allocated ac
cording to the share of each popu
lation category in total population.
Idem
na
Unit costs per health service (in
constant prices) remain constant
throughout the period 1993-1997
No imports assumed
Idem
na
na
na
Health service rates remain con
stant throughout the period 19931997
}
}
}
}Idem
}
}
}
}
7. Targets for health care costs
- unit cost targets per health service
- share of the cost of imported inputs
in patient cost
- share of the cost of imported inputs
in government cost
8. Targets for health services
- targets for health service rates per
population group and per health
service
42
Inputs
9. Administrative expenditure
- total amount of salaries of
administrative personnel
- expenditure for maintenance of
equipment and buildings
- other (planned surplus)
Financial Implications of the
Announced Membership
Targets for 1993
Simulation Analysis for the
Period 1993-1997,
Imposing Financial Equilibrium
}Equal to 8% of health care }payments of the health insurance
} scheme
}
1993: all administrative expendi
ture as in previous simulation
1994-1997:
all administrative expenditure (in
constant prices) remains constant
Equal to 2% of health care pay
ments by the health insurance
scheme
Note: na = not applicable
Results
Total expenditures by the HHIC would amount to 4,033.7 million
VND. The latter amount consists of health care payments ( 3,667 million
VND) and administrative expenditures (366.7 million VND).
The total
revenue from premiums amounts to 6,370.7 million VND. In other words,
there would be an excess revenue of 2,337 million VND or 36.6% of total
revenue from premiums. The latter result is puzzling as no such surplus
appeared to have been planned by the HHIC. We attempt to clarify this
result by addressing four main questions:
(i)
Are health care costs underestimated?
Minimum information about costs of health services is
(a)
currently available at hospital level only.
Closer scrutiny of
available cost information on hospital services reveals the following.
For instance in 1991, average cost72 per inpatient day amounted to
13,922 VND at Dong-Anh District Hospital73. And in Viet Tiep
Hospital (Hai Phong) the average cost per inpatient day was quoted
to be 18,886 VND in 1992. It follows that the ratio of patient cost
to average inpatient cost in the present simulation analysis is very
high: 72 % (10,000/13,922) for district hospitals and 106% (=20,000/18,886) for city and provincial hospitals. It is important to note that
these ratios contrast with current practice. In fact, at Dong-Anh
District Hospital patient contributions amounted to 10% of total costs.
In Hai Phong, patients contributed 16.3% of the total cost of publicly
provided health services.
72 These costs include salaries and allowances, drugs and solutions, electricity and
water and other recurrent expenses.
73 Calculation based on Dung and Hien (1992, pp.6 and 10).
43
Two possible explanations for the announced levels of patient
costs. Either government plans a reduction in its financing of
hospitals and counts, henceforth, on health insurance financing to fill
any shortfall.
Or, government maintains its current level of
financing but any additional revenues from health insurance will be
used for quality improvement. The latter possibility seems to be the
most reasonable. But then it is not certain that hospitals will be able
to absorb such high additional revenues and effectively use these for
the improvement of health services. Also in view of this uncertainty,
we conclude that hospital costs to be borne by patients are more
likely to be overestimated than underestimated.
Adequate cost information concerning outpatient services is
not available as yet. The announced level of the patient cost for
consultations at commune health stations seems quite low, and
constitutes only l/5th and l/7th of the patient cost for consultations
at district level and city/provincial level, respectively. Is the low
cost the reflection of a lower quality of outpatient services at
commune level? If this is indeed the case, and if one wants to avoid
substantial differences in quality, the cost level of the outpatient
services at commune health stations needs to be adjusted upward. In
other words, in the present simulation the costs of outpatient services
at commune health services may be underestimated.
(b)
(ii)
Are health service rates underestimated?
These rates are based upon observations related to the total population. Health service rates of the insured could well exceed those of the non
In this sense, the forecasted health services by the
insured, however.
As mentioned earlier, the hospital
insured could be underestimated.
admission rate of the insured amounted to 8%; the latter is to be compared
to an average admission rate for the total population of 7.13%. Should we
apply this higher admission rate for the insured, and keep the levels of all
other variables as in the previous simulation, health care costs of the insured
would increase by 12.2% (= [8%/7.13%]-1). The latter increase will only
contribute partially to reducing the excess revenue: it can be verified that
excess revenue would drop to 1,844.9 million VND.
(in)
Are premium levels overestimated?
It has be to remarked that some premiums have risen quite substan
tially from 1992 to 1993. Using an estimated inflation rate of 15%, we can
calculate the real rise in premiums. The average premium for industrial
workers rose by 117.4%. Premiums for farmers, self-employed, spouses and
other adult citizens rose by 8.7%. The average premium for children
decreased by 15% in real terms. The question remains whether such
increases are warranted, and whether the resulting additional revenues will
be effectively used for health service improvement.
In the current
44
simulation analysis, the average premium per insured amounts to 21,236
VND; 90% of this amount (19,112 VND) should cover health care expenses
and 10% the administrative expenses (2,124 VND). However, the average
health care expenditure per insured is 12,223 VND. It does seem there is
an over-estimation of the level of premiums.
4.2
Alternative simulation
The purpose of this simulation is to show how the simulation model
can be used in the search for a scenario whereby financial equilibrium in
health insurance is achieved.
In this alternative simulation, we project
revenues and expenditure of the health insurance scheme for a five year
period, i.e. 1993-1997.
It is obvious that adjustments in the levels of
selected variables will need to be made in order to respect the constraint of
financial equilibrium74.
Inputs
We refer to Table 3 for a full account of the adjustments effected visa-vis the previous simulation. We highlight several important adjustments:
(i)
membership among the population groups, that can insure on
a voluntary basis, is assumed to expand gradually to reach
30% by the end of 1997;
(ii)
health insurance premiums for government workers (including
the retired) are lower; health insurance contribution rates drop
from 10% to 3% of income;
(iii)
the coverage of insurance for outpatient care is extended to all
categories of insured;
(iv)
the hospital admission rate increases from 7% to 8%75.
Results
All results as they appear in Sheet C of the computer programme, are
presented in Annex 2.
Apart from achieving financial equilibrium in health insurance, two
other important results are worth reiterating:
74 We will accept that a financial equilibrium has been achieved if the absolute
difference between revenue and expenditure of the health insurance scheme is less
than 1% of total revenue.
75 This is applied to the insured as well as the non-insured population.
45
(i)
Health insurance membership
Total membership will more than double by the year 1997. This is
the result of two factors.
First, as a result of population growth, total
membership rises in each population group. Secondly, this increase is also
due to the assumption that 30% of the population groups, that can insure
voluntarily, become members.
(ii)
Structure of health insurance premiums
All premiums rise in order to be able to finance the increasing health
care expenditure to be reimbursed by health insurance. The structure of
premiums also shows that the initial structure is slightly modified: by 1997,
the premium for retired government workers is less than that for the category
of farmers, self-employed, spouses and other citizens.
Discussion
We repeat that there is no intrinsic truth in this particular simulation
analysis. Much more work will need to be done on the elaboration of a
workable health insurance development plan. The simulation tool presented
can be of assistance in this task. However, the actual use of this tool needs
to be preceded by a thorough deliberation by HHIC management about the
basic elements of the health insurance equation.
The most important
elements are the types of health services covered, the costs charged to
patients, the level and structure of health insurance premiums and health
insurance membership.
Health insurance is more than just a mechanism to reimburse health
service costs to health facilities. It is also a way to enhance the quality of
health services and to improve access by the various socio-economic
population categories to those services.
In this sense, health insurance
financing could be seen as an important complement to public financing.
It follows that the level of public financing of services is also be to be
considered in the health insurance development plan. Indeed, the question
needs to be addressed as to what the government’s share will be in the
financing of health services and of quality improvements. Subsequently, it
can be evaluated what the role of the HHIC would be in the general
development of health services.
46
Conclusion
In Viet Nam, an endeavour is made to introduce health insurance at a
national scale. This would not mean, however, that health insurance will be
regulated and organized from one centre. It appears that districts and provinces will
have a large say in the development of health insurance.
Already, some pilot health insurance schemes have been established since
1989. One is the Hai Phong Health Insurance Scheme. In this paper, we have
provided a preliminary evaluation of this particular scheme. It is initially observed
that this scheme has not been able to make a breakthrough, however. Membership
rates are not increasing, due in part to inadequate quality of care that is being
provided at provincial hospital level. It is then recommended that a health insurance
development plan be established, that would outline the objectives of this scheme
and the strategies to reach those objectives.
As a tool to assist in developing health insurance in Hai Phong, we presented
a simulation model that concentrates on the projection of health care costs, the
financing of those costs, and the analysis of the level and the structure of health
insurance premiums. A first simulation addressed the financial implications for the
HHIC of the announced membership targets and health insurance contributions for
1993. It appeared that, given certain levels of health service costs to be borne by
patients, the scheme would realize excess revenues. Subsequently, we gave one
example of how values of certain variables needed to be changed in the simulation
model in order to achieve financial equilibrium. The latter simulation resulted in
a projection for the period 1993-1997.
Significant efforts on the part of the HHIC are needed in the next stages in
order to produce a complete framework to develop health insurance over the next
five years.
The simulation model could then be of greater use. Government
authorities and the HHIC will need to clarify the targets concerning health care
delivery and the ways of financing health services. The latter would already be a
significant step forward. However, many more tasks await the HHIC. The search
for an appropriate provider payment system will need further attention. In addition,
and last but not least, ways to fostering the population’s interest in health insurance
need to be explored.
47
Bibliography
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Report for SIDA, Ha Noi, Viet Nam.
Beresford M. (1993), Some Key Issues in the Reform of the North Vietnamese
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Bui Thanh Chi (1993), Report on the Research on Health Insurance of An Hai
District and Haiphong City, paper presented at the MOH/WHO Seminar on Health
Financing, Ha Noi, 3-4 February 1993.
Bui Due Khanh (1993), Some main points regarding Viet Nam Health Budget
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Noi, 3-4 February 1993.
Nghiem Tran Dung and Do Duy Hien (1992), Report on Preliminary Findings
about Price Calculation of Health Technical Services at Dong-Anh District
Hospital, Ministry of Health, Ha Noi, paper presented at the MOH/WHO Seminar
on Health Financing, Ha Noi, 3-4 February 1993.
ESCAP (1993), Economic and Social Survey of Asia and the Pacific, United
Nations, New York, 1993.
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1988.
Feuerstein M.T. (1993), WHO in Viet Nam, WHO (Office of International
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Kot R et al (1993), Ninh Binh Province Health Care Plan for the Provincial
Hospital and the Health Stations 1992-1997, Cap Anamur, Viet Nam
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Prospects, in Dean K Forbes et al (eds ), Doi Moi - Vietnam’s Renovation, Policy
and Peformance, Australian National University, Research School of Pacific
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Le Van Chan, Overview of Investment and the Economy in 1993, Vietnam
Investment Review, 14-20 June 1993.
Le Van Toan (ed) (1992), Vietnam Economy 1986-1991, Statistical Publishing
House, Ha Noi, 1992
49
Ministry of Health of SR Vietnam - World Bank (1991a), Final Report on Health
Survey in Bac Thai and Yen Bai Provinces, Ministry of Health, Department of
Planning, October 1991.
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of Health, Department of Planning, May 1991.
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Ministry of Health, Health Statistics and Informatics Centre, February 1993.
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Health Zone, chapter 9 in Carrin G and Vereecke M., Strategies for Health Care
Finance in Developing Countries, London: MacMillan, 1992
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Guidebook, WHO and ILO, Geneva, forthcoming.
Ron A., Abel-Smith B. and Tamburi G. (1990), Health Insurance in Developing
Countries - The social security approach, International Labour Office, Geneva.
Ron A. (1993), Planning and Implementing Health Insurance in Developing
Countries:
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October 1993.
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(prepared for the Donor Conference), Hanoi, September 1993.
Tran Hoang Kim (1992), Economy of Vietnam—Reviews and Statistics, Statistical
Publishing House, Hanoi, 1992.
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Valdelin J., Michanek E., Persson H., Tran Thi Que and Simonsson B. (1992), Doi
Moi and Health - Evaluation of the Health Sector Co-operation Programme
between Viet Nam and Sweden, SID A, Stockholm, 1992.
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Division, East Asia and Pacific Region (World Bank, Washington DC), September
1993.
50
Annex I
Calculation methodology76
1.
Moving towards a target
As previously stated (see section 3.4.8), the calculation of the gradual move
towards targets for admission rates as well as government and patient cost requires
each time a "starting year" and an "arrival year". These data inputs are presented in
Figure A.
Figure A
Years of delay, starting year and arrival year of target variables
st
0
t
vt
F
-4
v0
Vst
ar
10
-4
V10
Vat
d
Notes: t
d
vt
year (st=starting year; ar=arrival year)
years of delay
value of the target variable in year t.
The simulation model computes the path of the target variables as follows:
(0
If st < t < ar
then vt = v,.] + (var -vBt)/(ar-st)
(ii)
If t < st or t
then vt = vt-i-
ar
76 Only the main calculations are presented here. A complete overview of the
equations in the model can be obtained from the authors upon request.
ft
ano
OOCU^-N-
51
If condition (i) applies, a linear progression of the variable is calculated
between the starting year (st) and the arrival year (ar). If condition (ii) is fulfilled,
the value in t is set equal to the value in t-1. The latter implies that the variable
takes on the value of the initial year for all years up to the starting year, whereas it
takes the value of the target for the years beyond the arrival year.
2.
Conversion into current prices77
Cost items with domestic inputs only
Conversion of a cost item measured in constant prices is straightfor
ward, provided this variable only concerns domestic activities or inputs. In
the present version of the simulation model, we assume that administrative
costs of the health insurance scheme belong to this category of variables. For
any administrative cost item, we can then define its value in current prices
as follows:
ACt = act * DPI/100
where:
t
AC
ac
DPI
year78
administrative cost in current prices
administrative cost in constant prices
domestic price index (base year value:
100).
The growth rates of ac and DPI, that are defined by the user, will
determine the evolution of those variables (see sections 3.4.10 and 3.4.5,
respectively).
Cost items with imported inputs
If the cost item concerns imports, account needs to be taken of
external inflation and the evolution of the exchange rate. In the model, the
variables with import contents are the average patient cost (pc) and average
government cost (gc) per health service.
In the previous section, it was outlined how the path of variables like
pct and gct are computed. Previously, the user has also defined the shares of
imported inputs in patient and government costs (see section 3.4.8). Using
52
77
Henceforth all variables denoted by small letters and capital letters refer to
variables expressed in constant and current prices, respectively.
78
Henceforth, the subscript t indicates the year.
those data, one can then compute the imported and domestic components of
those costs as follows:
mpc, =
dpc, =
mgc, =
dgc. =
a, * pc
| t
(1-a,)I * pc,
Bt*;gc,
(1-6.)I * gc,
where:
mpc
a
dpc
mgc
B
dgc
= value of imported contents of patient cost
= share of imported inputs into patient cost
= value of domestic contents of patient cost
= value of imported contents of government
cost
= share of imported inputs into government cost
= value of domestic contents of government
cost.
The values of the domestic contents of patient and government costs,
in current prices, are simply defined as:
DPCt = dpct * DPI/100
and
dgct * DPI/100
DGCt
where DPI = domestic price index.
The values of the imported contents of costs, in current prices, are
calculated as follows:
MPCt = mpct * EPI/100 * EXRI/lOO
MGCt = mgct * EPI/100 * EXRI/100
where:
EPI
EXRI
external price index (base year value=100)
exchange rate index (base year value=100).
It stands to reason that the cost of imported inputs, expressed in
current prices of local currency, depends upon external inflation and on the
evolution of the exchange rate. The evolution of the external price index
is based upon the projected external price inflation (see section 3.4.5).
53
The exchange rate index is computed as follows:
EXRIt
( EXRt / EXR^ ) * 100
EXR
exchange rate.
where:
The calculation of the exchange rates themselves have been discussed
earlier (see section 3.4.5). The exchange rate index reflects the appreciation
or depreciation of the local currency vis-a-vis the USS. Suppose that in the
base year of the simulation (year 0), the exchange rate (EXR0) was 10,000
VND ; this then corresponds to an exchange rate index EXRIo=lOO.
Imagine that a year (year 1) later the exchange rate EXR^l 1,000 VND. In
this example, the exchange rate index in year 1 becomes EXRI^llO79.
This value would reflect that the exchange rate depreciated by 10% since
year 0.
The values of total government cost and patient cost can now be
computed as follows:
PCt = DPCt + MPCt
GCt = DGCt + MGCt,
where:
PC
GC
3.
= patient cost
= government cost.
Total expenditure and revenue of the health insurance scheme
Expenditure
Premiums ought to be related to the costs of health services consumed
by the insured population. These costs will have to be financed by the
health insurance scheme and are therefore part of the scheme’s expenditures.
Those costs will be denoted as CHSt. The latter are defined as follows:
CHS^ Ej
79 110
54
[l-COPjl -HS.t.u •
(11,000/10,000)* 100.
. PCtij .
. P0PE(
where:
= Patient cost per health service j
= Co-payment rate per health service j
= Health service rate j of population
category i
=
Number
of non-exempted insured in
POPM
population category i
POPE^j = Number of exempted insured in population
category i.
PC.,
copj
HSUj
Note that only those health services that are covered by health
insurance are part of this equation. The administrative expenditures (ACt)
of the health insurance scheme also need to be covered by the insurance
contributions, Hence, the total expenditure of the health insurance scheme
is as follows:
Ct = CHSt + ACt.
Revenue
The premium of dependants and farmers is predetermined.
The
insurance contributions for the non-farm adult population categories are
calculated by multiplying the insurance contribution rates by the income of
the latter population categories. The total revenue received by the health
insurance scheme from the latter contributions, HIR, is as follows:
HIR^Vt hicrlJNCt]r.POPADtl^PRFlIII
.POPF^PRDPt.POPDPtI
where:
hicrk
INCk
POPADk
PRF
POPF
POPDP
PROP
HIR
health insurance contribution rate
of adult non-exempted population category k
average income of adult non-exempted
population category k
size of adult non-exempted population
category k.
farmers’ premium
insured non-exempted farmer population
dependant population
dependant premium
total revenue from health insurance
premiums.
The balance of the health insurance scheme in year t is then simply
equal to (HH^ - Ct).
55
Annex II
WORLD HEALTH ORGANIZATION
Office of International Cooperation
MINISTRY OF HEALTH OF VIETNAM
Dr Guy CARRIN
Mr Fabrice SERGENT
Dr Bui Due KHANH
Dr Nghiem Tran DUNG
MrDoDuy HIEN
COST-SHARING AND HEALTH INSURANCE PREMIUM
SIMULATION MODEL
Version 2»1*October 1993
57
Sheet C
1993
1994
1995
......... <
MAIN RESULTS ANDGRAPHS
Scenario:
Projection 1993-1997:
Financiai equilibrium health insurance
' Noto: tho figuno only depict rooulto pertaining to a 5-yoar period
starting from tho baoo year
IVe ro/er to tho following figuroo
Price indices
Exchange rate
Population
Health services * all patients
Health service costs - all patients
Health Insurance membership
Structure of health insurance premiums
Expenditure and revenue of the health insurance scheme
Direct payments by patients to health facilities
Structure of health care financing
58
1996
1997
a
ECONOMIC ENVIRONMENT
Domestic pries index
External price index
Exchange rate / US$
■
100.00
PPPMtodad
115.00
105.00
$11,500.00
100.00
$10,500.00
132.25
110.25
$12,595.24
152.09
115.76
$13,794.78
174.90
121^5
$15,108 £7
Price indices
190
180
170
160
150
140
130
120
110
100
90
1994
1993
1995
Domestic price index
1997
1996
External price index
Exchange rate
16
15
□
£
14
13
§
12
79
S
z
11
10
9
1993
1994
1995
1996
1997
59
1
■
DEMOGRAPHY
(in thousands)
■
Population
Numbar of
Do pendants
farm-se-sp
1500.000
1533.000
1566.726
1601.194
1636.420
585.000
755.000
597.870
771.610
611.023
788.585
624.466
805.934
638.204
823.665
Population (in 1000)
1800
* 1600 -
1400
1200
1000
800
600
400
1994
1995
Total population
Dqicndants
1993
60
1996
Fanners
1997
I
HEALTH SERVICES - ail patients
Inpatisnt ssnr. at cfty/prov hospitals
Inpatient serv. at district hospitals
Outpatient serv. at city/prov hospitals
Outpatient serv. at district hospitals
Outpatient serv. at commune health st
268800
928800
225000
1680000
345000
274714
949234
229950
1716960
352590
280757
970117
235009
1754733
360347
293247
1013271
245463
1832791
376377
286934
991459
240179
1793337
368275
Health Services
2000
1500
1000
500
o
0
1993
199*
1995
1996
1997
_g_ MpatMldtoMei
1
’S-^sS^BK^
61
HEALTH SERVICE COSTS - all patients
(in thousands)
In current prices
Patient cost
Government cost
Total Cost
024,984,000
DO
024,984.000
029,363,695
DO
029,363,695
034,511,151
DO
034,511,151
040,560,956
DO
040,560,956
047,671.291
DO
047,671,291
in constant prices
Total cost
024.984.000
025,533,648
026,095.388
026.669,487
027.256^16
Health service costs
55
50
45
3
i
40
35
30
25
20
1993
1994
Current prices
62
1995
1996
Constant prices
1997
1
Total mamborship
.................... Of which
HEALTH INSURANCE MEMBERSHIP
(in thousands)
300.000
368.942
447.039
528.394
613.112
Dapandanta
farm-oa-ap
58.500
81.500
89.681
115.742
122JOS
157.717
156.116
201.484
191.461
247.099
Workara
gov adm workers
industrial workers
137.500
67.500
70.000
140.525
68.985
71.540
143.617
70.503
73.114
146.776
72.054
74.722
150.006
73.639
76.366
retired gov adm •
22.500
22.995
23.501
24.018
24.546
0.000
0.00%
0.000
0.00%
0.000
0.00%
0.000
0.00%
0.000
0.00%
Members exempted
as a% of total population Insured
Health Insurance membership
700
600
500
o
3
400
Q.
a
1
I
300
200
100
0
1993
1995
199*
Total membenhip
Dependants
Woricen
Retired gov workers
1996
1997
Fann-SE-SP
63
STRUCTURE OF HEALTH INSURANCE PREMIUMS
(in Dong)
Dependants
farm-se-sp
gov adm workan
Industrial woriiM
retired gov adm •
05,000
011,000
024,000
035,010
012,000
010,000
021,000
031,740
046,301
015,870
07,500
016,500
027,600
040,262
013,800
013,000
025,500
036,501
053,246
018,251
Structure of health insurance premiums
70
60
50
I
1
1
40
30
20
10
0
1994
1993
64
1995
Dependmli
Fann-SE-SP
Induanai woriten
Retired gov woricen
1996
Govadmwoifcen
1997
016,000
030,000
041,976
061,233
020,988
'''' ' '
'''' EXPENDITURE AND REVENUE OF THE HEALTH INSURANCE SCHEME
(in thousands)
05,496,480
07.641,495
010,508,009
014,145,066
DI 8,734,787
0499,680
04,996,800
0574,632
07,066,863
0660,827
09,847,182
0759,951
013,385,115
0873,943
017,860,844
05,529,700
07,683,963
010,530,045
014,214,372
018,758,734
033,220
042,469
022,036
069,306
023,947
Memorandum Hems:
Health care payments per insured in 0
16656
19154
22028
25332
29131
Administrative expenditures
as a % of revenue from premiums
9.04%
7.48%
6.28%
5.35%
4.66%
Total Expenditure
of which
admin expenditure
health care payments
Total Revenue
from premiums
* Balance of the Insurance scheme
Revenue and Expenditure of the health insurance scheme
20
15
no
s
•c
c
.2
10
sg
5
0
1993
1994
1995
1996
Total expenditure
Administrative expenditure
Health care payments
Total revenue
1997
65
1
XRECT PAYMENTS BY PATIENTS TO HEALTH FAdUTlES
(in thousands)
Total co-paymanta by the Insured
Direct fees paid by the non-insured
DO
DI 9,987,200
DO
022,296,833
Co-payments and user fees
35
30
25
20
|
15
10
5
0 L-i-
1993
—*-
-41994
1995
Co-payments
■
66
User fees
-41996
—4-J
1997
DO
024,663,969
1
DO
027,175,840
DO
029,810,447
a
STRUCTURE OF HEALTH CARE FINANCING
/n thousands
User foes
Copayments
Insurance payments
Government financing
Total
019,987,200
00
04,996,800
DO
022.296,833
DO
07,066,863
DO
024,663,969
DO
09,847,182
DO
027,175,840
DO
013,385,115
DO
029,810,447
024,984,000
029,363,695
034,511,151
040,560,956
047,671,291
80.0%
0.0%
20.0%
0.0%
75.9%
0.0%
24.1%
0.0%
71.5%
0.0%
28.5%
0.0%
67.0%
0.0%
33.0%
0.0%
62^%
0.0%
375%
0.0%
100.0%
100.0%
100.0%
100.0%
100.0%
shares in %
Userleea
’Copayments
Insurance payments
Government financing
Total
bo
017,860,844
DO
Structure of health care financing
(shares in health service costs)
0.9
0.B
0.7
0.6
03
04
03
02
0.1
0
1993
1994
■ User fee*
Insurance payments
J'
-
■■■■
■■■
■■
■ ■■.
■
■■
.
■ ■■
■
1996
1995
1997
□ Co-payments
EB Government financing
•
■
’
'
’
•
’
■■■ •
■
■
' ■
67
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