1 ricardo bitran, ph.d. rodrigo muñoz, m.s. ursula giedion, m.s. bitran & asociados december...

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Ricardo Bitran, Ph.D.Rodrigo Muñoz, M.S.Ursula Giedion, M.S.

Bitran & Asociados

December 2003

Waiver Systems for Government-Financed Health Care:

Lessons from Suriname and Jamaica

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Contents

• Part I: Suriname• Part II: Jamaica• Part III: Conclusions

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Part IEvaluation of Suriname’s Ministry of

Social Affairs (MSA) Card SystemSu

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Study objectives

1. Compliance of MSA Card system with own policy

2. Type I and II errors in MSA Card system

3. Use of services and out-of-pocket expenses by MSA Card beneficiaries

4. If necessary, explore alternative identification mechanism based on “proxy means test”

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Description of MSA Card System

MeetsRequirement

s (Poor or Near Poor)

MSA Social Worker

MEANS TEST

Get MSA Card. If they get care, MSA pays for it

Do not get MSA Card. If they get care they, or their insurer or employer, pay for it, not MSA

Do not meetrequirements

• Mission:– Identify the poor and near-poor and subsidize their health care– Pay health providers for services delivered to the MSA Card holders

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– Income-based criterion to identify the poor & near-poor– Small administrative fees– Modest co-payments for hospitalizations and medicines

MSA Card system summary, in SF. and $ (period of Jan. 1999 to Sep. 2000)

MSA Card type CurrencyMonthly income

range Administrative fees

Co-payment for hospitalization (per

day)

Co-payment for medicines at the

pharmacy

A: Poor SF. 0 – 20,000 1,000 300 150

$ 0 – 14.30 0.70 0.20 0.10

B: Near-poor SF. 20,000 – 30,000 2,000 1,200 300

$ 14.30 –21.40 1.40 0.90 0.20

• Official selection criterion and fees:

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• Other (informal) selection criteria:

Household size Education level Medical condition (chronic, disabled, handicapped, elderly)

Early adulthood pregnancy

Dwelling condition Female single

Running water and electricity

Square meters per household member

Number of bedrooms

Cooking fuel used Means of transportation

Distance to work

Presence of a previous card

MSA staff knows that the income-based criterion has flaws: they reach the poor more accurately with informal socio-economic criteria

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1. Effectiveness of MSA Card System: Compliance with own policy

• 6% of MSA Card holders declared income below SF.30,000• Among those with income below SF. 30,000, 37% held MSA Card• 94% of MSA Card holders with income above SF. 30,000.• Limitations of these measurements:

– 5 percent of the 1,255 households declared an income below SF.30,000– Income data from Household Budget Survey unreliable (poor correlation

with expenditure)

Possession of MSA Card according to self-reported income

Number of households reporting income Has an MSA Card

Does not have an MSA Card Total

Below SF. 30,000 23 40 63

Above SF. 30,000 363 829 1,192

Total 386 869 1,255

Household survey: MSA officials use a higher implicit cut-off point. This is consistent with the other selection criteria based on the socio-economic assessment of applicants

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2. Effectiveness of MSA CardSystem: Type I and II errors

• Type I error or Under-coverage:– Number of individuals entitled

to an MSA Card who do not have one, divided by the total number of people entitled.

• Type II error or Leakage:– Number of MSA Card holders

that are not entitled, divided by the total number of MSA Card holders.

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Poor: should have a card

Non-Poor:

should not have a card

Has a card Ok

Type II: Leakage

(94%)

Does not have a card

Type I: Under-

coverage (63%)

Ok

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2. Effectiveness of the MSA CardSystem: Type I and II errors

Causes of error:

• Inappropriate classification criteria:– Actual cut-off line of SF.30,000 is too low it does not represent

the target population, i.e. the poor and near-poor.

• Some individuals are classified incorrectly:– Income-based classification is difficult to implement reliably.

• Some individuals are never classified:– Actual policy does not actively search for potential beneficiaries.

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2. Effectiveness of the MSA Card System: Type I and II errors

The SF.30,000 set too low, thus cut-off line does not identify the poor and near-poor. Researchers used official Surinamese poverty line to define the target population.

Total number of individuals and households from the HBS

Individuals Households

Below the official poverty line 2,780 617

Above the official poverty line 2,177 638

Total 4,957 1,255

More than half of the population lives under the poverty line

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MSA Card40%

Other insurance37%

No insurance23%

Poor64%

Non-poor36%

Health insurance among poor households

Households with an MSA Card

141households

140households

Cards needed = Cards leaked

Type I error

Not all poor households have health insurance: under-coverage

Type II error

Not all MSA cards belong to poor households: leakage

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What are the causes of the under-coverage? The data available do not permit clear determination of the causes

0

5

10

15

20

25

30

I II III IV V

Percent of individuals without MSA Card (five lower deciles)

However, the data suggest that a main cause is that some individuals are never classified.

Actual policy does not actively search for potential beneficiaries

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3. Effectiveness of MSA Card System:Access to health services

Ambulatory care

Health problem during last 30

days

27

20

16

29

23

20

0 20 40

MSACard

Other

None

8

7

17

4

5

11

0 10 20

Took no action regarding health

problem

Sought informal care only

26

26

38

24

17

28

0 20 40

Sought formal care only

67

67

46

72

78

61

0 50 100

Received care

98

99

99

100

99

99

0 50 100

Hospitalized during the last

year

9

5

1

11

7

3

0 10 20

Non-poor

Poor

24

26

19

29

34

25

0 20 40

MSACard

Other

None

Pap-smear test during the last year (women)

77

75

67

82

86

93

0 50 100

Children under 3 w/ immunizations

up to date

Prevalence of chronic illnesses

11

7

5

14

11

6

0 10 20

26

7

33

25

14

36

0 20 40

Took no action regarding

chronic illness

16

20

30

16

24

21

0 20 40

Sought informal care for chronic

illness

Non-poor

Poor

59

73

37

59

63

43

0 50 100

Sought formal care for chronic

illness

Chronic illnesses

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3. Effectiveness of MSA Card System:Financial protection

6

10

11

31

38

136

0 100 200

Non-poor

Poor

5

4

8

4

5

11

0 10 20

Non-poor

Poor

Hospitalizations (yearly)

2

6

19

3

10

10

0 10 20

Non-poor

Poor

2

2

7

1

1

3

0 5 10

Non-poor

Poor

Chronic illness care in the formal sector

(monthly)

4

4

10

13

9

21

0 20 40

MSACard

Other

None

Non-poor

Poor

4

3

7

3

2

7

0 5 10

MSACard

Other

None

Non-poor

Poor

Ambulatory care in the formal sector

(monthly)

Mean expenditure in

$ (over the relevant

population)

Percentage of total household

consumption expenditure

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– Number of members under 15 years of age– Cooking fuel– Condition of the dwelling– Presence of electricity– Presence of telephone– Presence of toilet inside the dwelling– Construction material of the dwelling– Ownership or mortgage of the dwelling– Company water inside/outside the dwelling– Dwelling surface per capita– Number of bedrooms per capita

4. Exploration of alternative eligibility criteria

R² = 0.267

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Statistically significant variables

Initi

al li

st o

f va

riabl

es

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4. Exploration of alternative eligibility criteria

Type I errorUnder-coverage

Type II errorLeakage

Measured from HBS 1999/2000 23 36

Predicted with proxy means test 22 28

Includes only the errorcaused by wrong classification total under-coverage would

be slightly higher

Slight reduction in leakage

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Conclusions

• With time, MSA staff has reduced classification errors by:– Using an implicit higher income cut-off point– Adopting informal criteria based on socio-economic status of applicants

• MSA beneficiaries tend to be poorer System is progressive

• Under-coverage (poor people with no insurance): 23 percent– Caused mainly by lack of policies that actively search and screen the poor– Also caused by inadequate income cut-off line and informal selection criteria – Good performance in comparison with other countries– Coverage (poor people with MSA Card): 40 percent

• Leakage (MSA Card holders above the poverty line): 36 percent– Caused by errors during the screening process– Standard performance in comparison to other countries

• The good news: Needed cards = Leaked cards

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Conclusions

• MSA Card increases utilization of health services by the poor:– Use of services by poor MSA Card holders approaches that of the

non-poor, whereas the use by the uninsured poor is much lower: Card promotes equity in delivery

– Adverse selection is also observed

• MSA Card reduces the financial burden of the poor:– Proportion of income allocated to health expenditure by MSA Card

holders approaches that of the non-poor, whereas the uninsured poor spend much more: Card promotes equity in financing

• Available proxy means test:– Would not improve (may worsen) under-coverage

– Would only slightly reduce leakage

– Higher cut-off line would reduce both errors, but more cards needed

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Part IIAssesment of User Fee Program (UFP)

in JamaicaJa

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Background

• Strengthening of user fee program (UFP) in late 1980s and 1990s– User fee revenue from a low 1% in 1986 to 10% in year 2000

• Concerns that UFP creates access problems leading to:– Non-attendance at primary care (e.g. family planning) and other

outpatient clinics (e.g. diabetes, hypertension)– Early hospital discharges– Increasing hospital re-admission rates– Non-attendance for elective surgery– Denial of access to birth and death registration data at hospitals

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Study Objectives

1. Examine policy and operational frameworks of UFP

2. Evaluate data on service use before and after UFP

3. Get views of key stakeholders on performance of UFP

4. Do ‘cost-benefit’ and ‘equity’ analysis of UFP

5. Recommend actions to re-design or expand UFP

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Review of “history” of UFP and exemption schemes

• 1993 User Fee Schedule– Different fees for public and private patients– Different fees for patients with or without insurance– Different fees for hospitals and health centers– Fixed fees– List of waived people + inability to pay

• 1999 User Fee Schedule– More detailed specification of services– Patients with insurance treated as private patients– Fees increase– Similar waiver scheme

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• Unusually large number of user fee studies in Jamaica over last 20 years.

• Consensus that collection of fees has increased steadily and substantially, though problems in collection detected (collection is only 60-65% of amount billed, Lefranc & Lalta (2001)).

• Recognized that utilization of health services dropped especially in public health facilities previous to 1994

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User fee collection as a percentage of total public health expenditure in selected countries

0

2

4

6

8

10

12

14

SVG 1996 Zimbabwe1995

Jamaica2001

Chile 1995 Ghana1999

Thailand2000

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• Drop of utilization in public facilities due to many factors

– Low quality of government health services

– Adoption of fees

• Several studies identify equity problem in access. For example:

– Wagstaff (1998): horizontal equity problems in service provision, explained by lack of financial protection for the poor.

– Lefranc & Lalta (2001): equity in access problems as income is shown to be a strong predictor of service use.

• Consensus that the waiver policy not working well, leading to basic problems shared by countries implementing waivers to protect the vulnerable:

– Lack of a strong national waiver policy, leading providers establish their own waiver criteria

– Substantial administrative burden to assess waiver eligibility

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Study results based on previous surveys: Hospital Information System (HIS)

• Results:– Total utilization of

health services: Total decline 14.4% for

the period 1994-2002

“M”-shaped: pickup after historical low figures in 1994 and renewed drop after new increase of user fees in 1999. Increases in user fees

Change in utilization of services in public health facilities 1991-2002

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

Year

%

Total hospitalservices

Total healthcenters visits

Total servicespublic facilities

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Study results from previous surveys:Hospital Information System (HIS)

• Results:– Primary care services:

Total decline 34% for the period 1994-2002

Maternal child health services seem less elastic to price changes than curative OP (outpatient) visits and casualty visits

Substantial drop of service utilization in 1999

Utilization of services in health centers 1990-2002

0

500

1000

1500

2000

2500

Year

Th

ou

sa

nd

s

Curative visits

Maternal/childand othervisitsTotal healthcenters visits

Introduction of user fees in health centers

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Study results based on previous surveys: Jamaican Survey of Living Conditions (JSLC)

No substantial differences in self-reported health status

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Percentage of those reporting illness/injury

in last 4 weeks, 1992-2001 (Quintile 1 and 5)

0,02,04,06,08,0

10,012,014,016,018,0

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

AV

G

Quintile 1

Quintile 5

Illness-related impairment higher among the lowest quintiles

6.8

4.8

Days of illness/injury related impairment ,

1992-2001 (Quintile 1 and 5)

0,01,02,03,04,05,06,07,08,09,0

10,0

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

AV

G

Quintile 1

Quintile 5

Lower propensity to seek care among the poor (steady decline since 1999)

Percentage of those ill seeking care, 1992-

2001 (Quintile 1 and 5)

0,010,0

20,030,040,0

50,060,0

70,080,0

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

AV

GQuintile 1

Quintile 5

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• Use of public/private facilities– Jamaicans make strong use of private

services. Even among the poorest, on average only one-half of those seeking care went to public facilities

– General trend for this period: towards increase in proportion of people using public facilities

1992: 28.5%

2001: 38.7%

JSLC 1992-2001

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Public sector use by those seeking care, 1992-2001 (Quintile 1 and 5)

0,0

20,0

40,0

60,0

80,0

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

AV

G

Quintile 1

Quintile 5

Use of public services by those seeking care (Quintile 1), 1992-2001

0,0

20,0

40,0

60,0

80,0

100,0

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

AV

G

Medical Care Medication Hospitalization

– Public sector used mainly by the poorest

– For hospitalizations, the poorest only use hospital services whereas the majority buys medication in the private sector

– These data suggest existence of quality-related problems in public sector

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• Use of public/private facilities by the wealthiest (Q5)

– They rarely use public facilities when seeking medical ambulatory care or medications

– For hospitalizations, public facilities are used extensively

JSLC 1992-2001

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Use of public services by those seeking care (Quintile 5), 1992-2001

0,0

20,0

40,0

60,0

80,0

100,0

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

Medical Care Medication Hospitalization

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• Cost of services in the public/private sector– Overall, the mean cost for visits in

the public health sector has increased from 5 J$ to 63J$ in year 2001 (Real 1990 $)

– On average, Jamaicans spend three times more in private sector than in public sector

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All Patients: Mean Patient Expenditure in Public and Private Facilities

1992-2001 (Real $ 1990)

0

40

80

120

160

200

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

AV

G

Public

Private

Quintile 1: Mean Patient Expenditurein Public and Private Facilities

1992-2001, (Real $ 1990)120

020406080

100

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

AV

G

Public

Private

– For the poorest, the mean expenditure on visits in private sector dropped substantially after 1999

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Study results based on surveys collectedfor this study

• Survey Design– Applied to patients, front line workers and directors of health

facilities

– 16 public health facilities surveyed2 hospitals and 2 health centers from each RHA

– 280 Patients interviewed231 outpatients and 49 inpatients

– 42 Frontline workers26 cashiers, 11 SAOs and 5 others

– 27 Managers13 administrative and 14 medical

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Study results based on surveys collectedfor this study

• User charges tend to be regressive– 90% of patients in Q1 paid– 65% of patients in Q5 paid

• In public facilities, most of poorest pay upfront whereas 50% of wealthiest either receive total or partial waiver or are granted a credit for future payment

• Worrisome situation as rich use predominantly more costly hospital services Leakage of public subsidies

• 83% of inpatients did not pay charges– Most of inpatients in the sample belong

to quintiles 3,4 and 5.

• 8% of outpatients did not pay charges– Most outpatients in sample from Q1

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0

20

40

60

80

100

120

%

1 2 3 4 5 Total

Quintiles

Patients according to payment of services

Service free/full exemption

Payment of total or part offee in the future

Part of fee at the point ofservice

Total fee at the point ofservice

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Study results based on surveys collected for this study

• Patient attitudes:– Most of patients in Q1(86%) did not request waiver compared with 61% in Q5.

– All waiver requests accepted and full or partial waiver granted.

– More needs to be known to explain this situation. On the basis of other countries experiences this might be due to one or a combination of the following reasons Inadequate information Stigma Complicated and time consuming procedures to receive an exemption together with low fee

levels (“it is not worthwhile”)

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Waivers: Patients’ behavior and system response

Quintiles

Did not ask for exemption --full payment made

Exemption refused --full

payment made

Partial exemption --

payment madeFull exemption or service free

1 86 0 2 22 74 0 2 103 78 0 0 44 74 0 4 45 61 0 0 8

Total 75 0 2 6Source: Outpatients and inpatients survey, August 2003.

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• Coping with payment of health care costs:– Most patients reported to have

been in situation of not having funds to pay for their health care

– Of those under financial pressure:

Borrowing from the extended family network seems to be the principal way of coping

One-fourth decided to delay treatment showing a problem of access to health services.

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Patient coping under financial pressure

Frequency % of total

Never under financial pressure 79 31Have been under financial pressure 179 69Total 258 100

Of those under pressureBorrow 69 39Delay treatment/stay at home 46 26Still come for treatment try best to pay 35 20Use home remedies 13 7Borrow or delay treatment/stay at home 4 2Go to a cheaper public facility 3 2Savings 2 1Pray/God provides/other 7 4

Total 179 100

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• Financial aspects– Between 1998 and 2001

budget cuts were substituted by user fee increases

– This implies a shift of financial responsibility from the public sector to patients without a simultaneous quality improvement

– In this situation, utilization of services will drop (as has been observed) as there is only a price and no quality effect.

MOH current budgetUser fee

collection

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Total budget and fee collection (real $J 2003)

0

2.000

4.000

6.000

8.000

10.000

12.000

19

97/9

8

19

98/9

9

19

99/2

00

0

20

00/0

1

20

01/0

2

20

02/0

3

01002003004005006007008009001.000

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Conclusions and recommendations

• Institutions should have incentives to collect fees

• Price definition in 1999 Gazette defies basic economic design criteria

• User fees to be applied uniformly across country

• Fee collection evaluation and monitoring tools in health facilities

• Administrative cost of UFP is 8 percent of fee collection. However, data on UFP staff and salaries is still not clear.

• The good news: the institutional implementation of the UFP is in accordance to internationally accepted guidelines.

• Institutions to have incentives to grant waivers and to collect fees

• Government should set aside special fund for waiver reimbursement

• Users unaware of waiver rules

• Waivers to cover the neediest

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Part IIIConclusions

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Conclusions

1. Pricing policy to be consistent with health policy objectives

2. Tendency to define user fee and waiver systems loosely

3. Designing & implementing systems of waivers: easier said than done

4. Successful waiver systems must be accompanied by appropriate incentive schemes

5. Chief incentive: provider to be reimbursed for forgone income from waivers

6. Propensity to abuse waiver systems by non-poor is substantial: leakage remains a threat

7. Waivers to cover the neediest: fine tuning of targeting systems seems possible mainly through individual means testing

8. Widespread education of the poor about their rights is essential

9. Evidence that waiver systems can improve equity in delivery and in financing

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1 ricardo bitran, ph.d. rodrigo muñoz, m.s. ursula giedion, m.s. bitran & asociados december...

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