case study from japan · 15 -30 50% with a ceiling of 600 baht (2,000 yen) per year 30 -50 80% with...
TRANSCRIPT
Fiscal Policy for a Sustainable Healthcare and Pension System in Thailand under an Aging Population
Presented by Miss Supanun Chumjai
Fiscal Policy Office, Ministry of Finance
Thailand
Case Study from Japan
Thailand Healthcare and Pension System
Japanese Healthcare and Pension System
Comparisons between Thailand and Japan
Conclusion and Policy Recommendations
01 02 03 04 05
Paper Objectives
Content
Paper Objectives
Make comparisons with the Healthcare and Pension System in Thailand
Study theJapanese Healthcare and Pension System
Recommend efficient and sustainable fiscal policy and other related policy for theThai government
Aging Society
Aged Society
Super-Aged Society
Level of aging population (by UN)
60+ years old >10% of total population
60+ years old >20% of total population
65+ years old >20% of total population
Japan: Super-Aged Society
Overview of Aging Population in Thailand and Japan
Thailand: Aging Society
41%
29 %
70%
43%
Have not planned for or started saving for retirement
Still in debt at age 60
Builds with facilities that
are not elderly-friendly
Age 45+ in informal sector
Ratio of Old Age Population Dependency Ratio
2020
2040
45%
13 %
80%
23%
Want to work until
age 65
Age 75+ and 90% of centenarians
are women
Born after the end of WWII
Want to work as long as they
are in good health
Ratio of Old Age Population Dependency Ratio
2020
2040
Source: United Nation Prospect, 2015
System of Payment
Keywords for Healthcare System
01
02
03
Fee for services
- A method in which doctors and other healthcare providers are paid for each service performed.
Fee for schedule
- Means a listing of the fees normally charged by a given health care provider for specific therapies and procedures is provided.
Capitation
- The amount paid by a health care provider annually for each patient in a medical group plan
There are three main healthcare schemes in Thailand
Thailand Healthcare system
The Civil Servant Medical Benefit Scheme (CSMBS)
organized by the Comptroller General’s Department (CGD)
under the Ministry of Finance
The Social Security Scheme (SSS)
organized by the Social Security Office (SSO)
under the Ministry of Labor
The Universal Coverage Scheme (UCS)
organized by the National Health Security Office (NHSO)
under the National Health Security Board chaired by the public health minister from the Ministry of Public Health (MoPH)
01 02 03
?
Civil Servant Medical Benefit Scheme (CSMBS) 01
Financial resources
Coverage
“Fee-for-service”
Direct Payment- Hospital claim through the CSMBSIndirect Payment- The patients can get reimbursed through their affiliated office.
Type of Payment
Claim, reimbursement
- only for civil servants - 5 million people
(approximately 7.5 % of National Population)
Government (annual budget)
Social Security Scheme (SSS)02
?
Financial resources
Coverage
“Capitation”
Hospitals claim through the Social Security Office (SSO)
Type of Payment
Claim, reimbursementContribution from
employees, employers and
government
- employees in the private sector
- 12 million people (approximately 17.5 % of National Population)
Universal Coverage Scheme (UCS)03
?
Financial resources
Coverage
“Capitation”
Hospitals claim through the National Health Security Office (NHSO)
Type of Payment
Claim, reimbursement
- Thais who are not a member of the CSMBS
or SSS - 50 million people
(approximately 75 % of National Population)
Government (annual budget)
Budget Allocation for Healthcare
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
2009 2010 2011 2012 2013 2014 2015 2016 2017
National Budget CSMBS's actual expensesSSS's budget MoPH's and UCS's budgetCSMBS's actual expenses as percentage of the national budget SSS's budget as percentage of national budgetMoPH's and UCS'S budget as percentage of national budget
Percentage (%)Million baht
3%1%
9%
Principles of Financial System
Keywords for Pension System (1)
Pay-As-You-Go (Unfunded)The government imposes a tax on the income of the
working population and then uses the tax revenue to provide retirement benefits for the retirees
Fully-Funded Dedicated assets are accumulated to cover the
scheme’s liabilities. These assets are assigned by law or contract to the pension scheme and hence they must be used for financing the payment of pension benefit obligations.
Partially fundedA combination of the Pay-As-You-Go and Fully-Funded
systems.
01
02
03
Main Pension Scheme
Keywords for Pension System (2)
01
02
Defined Benefits Scheme
- A pension plan with a guarantee by the insurer or pension agency that a benefit based on a prescribed formula will be paid. Such plans can be fully funded or unfunded.
Defined Contribution Scheme
- A pension plan in which the periodic contribution is prescribed and the benefit depends on the contribution plus the investment return on accumulated contributions. Typically, such plans are fully funded.
Thailand Pension System
Old-age allowance
Government Pension
SSFProvident
Fund (PVD)
RMF
Informal workers- Private employees- SOE’s employees- Permanent government employees
National Savings Fund (NSF)
Everyone
Pillar 0Pillar 3
Government Pension Fund (GPF) National Pension
Fund (NPF)
Formal workers who are not members of PVD funds, excluding civil servants
Pillar 2
Civil servants
Social Security Fund (SSF)
- Private employees- Temporary Government employees
Pillar 1
SufficientSubsistent
- Government retirees
Thai elderly, except
government pensioners
Social welfare
Supplementary
Pillar 0: Old Age Allowance
?
Financial resourcesCoverage
Government (annual budget)
Benefits
Thai people aged 60 and above who do not receive pension from the central and local government (around 8 million people)
Type of Scheme
a non-contributory social protection
Age Allowance
per month
60-69 600 baht
(2,000 yen)
70-79 700 baht
(2,330 yen)
80-89 800 baht
(2,400 yen)
90 and
above
1,000 baht
(3,330 yen)
Social Welfare
Pillar 0: The Civil Servant Pension Scheme
?
Financial resources Coverage
Benefits
government officials who were employed before 27 March 1997 – around 4 million people.
Type of Scheme
a non-contributory defined benefit plan
• monthly payment for people who worked at least 25 years, or people who worked 10 years of service and are aged over 50.
• lump sum benefits for people who worked at least 10 years or one year of service and are aged above 50.
Social Welfare
Government (annual budget)
?
Pillar 1: Social Security Fund (SSF)
Financial resources
Coverage
tripartite contributors from government (1% of salary), employers and employees (each 3% of salary but not above 450 baht, or 1,500 yen, per month as the salary base used to calculate must range between 1,650 and 15,000 baht or 5,500 yen to 50,000 yen)
Benefits
formal private sector employees(around 12 million people)
Type of Scheme
a mandatory defined benefit
Duration of
Contribution
Type of Benefit
Less than 12
months
Lump-sum consisting of the
employee’s contribution
only
12 months –
less than 180
months
Lump-sum consisting of the
employer and employee
contributions
180 months
(15 years) or
longer
Lifetime annuity
(retirement age 55 years)
Subsistent
Pillar 2: Government Pension Fund (GPF)
?
Financial resources CoverageContribution from civil servants (employees) and government (employers)
Benefits
civil servants who were employed after 27 March 1997(around 1 million people)
Type of Scheme
a mandatory defined contribution scheme
• monthly payment for people who work at least 25 years, or for people who work 10 years of service and are aged over 50.
• lump sum benefits for those working at least 10 years or one year of service and are aged above 50.
Sufficient
• A mandatory provident fund appropriate to formal workers that fit into Pillar 2 (add-on from SSF and PVD)
• The fund aims to cover employees in the private sector, temporary employees in the public sector and employees of State-Owned Enterprises
• Contribution from employers and employees is at least 3% of salary and will be increased to 5%, 7% and 10% within 10 years (wage ceiling at 60,000 baht, or 200,000 yen, per month)
• The members will receive a 20-year pension or lump-sum payments from the fund for a total amount equal to the balance of their individual accounts.
Pillar 2: Proposed National Pension Fund (NPF)Sufficient
Pillar 3: A voluntary defined contribution (1)
Provident Fund (PVD)
• An occupational pension established under an agreement between employers and employees
• The purpose is to offer retirement saving to employees
• Contribution from employees and employers which ranges from 2% to 15% of the salary for each employee
• Payment depends on each fund
Supplementary
National Savings Fund (NSF) • A new voluntary retirement saving program
• Introduced by the government in 2011 but started operating in 2015
• The Fund covers Thai citizens who are not covered by any pension schemes, especially informal workers
• Member qualification - Thai Nationals aged 15 – 60
• Contribution:Age of Member Co-contribution from the government
15 - 30 50% with a ceiling of 600 baht (2,000 yen) per year
30 - 50 80% with a ceiling of 860 baht (2,700 yen) per year
50 and above 100% with a ceiling of 1,200 baht (4,000 yen) per year
Pillar 3: A voluntary defined contribution (2)Supplementary
Pillar 3: A voluntary defined contribution (3)
Retirement Mutual Fund (RMF)• Long-term fund suitable for individuals earning
income in such forms as wages, salary, and freelance income
• Investors of the fund can be a member of a provident fund, government pension fund or otherwise wish to further enhance their current retirement saving
• Tax exemption up to maximum of 15% of the annual taxable income
Supplementary
2,0
70
,00
0
2,3
80
,00
0
2,5
75
,00
0
2,7
76
,00
0
2,7
33
,00
0
24
8,9
20
26
0,6
00
27
9,8
00
30
7,3
00
32
6,0
50
12.0
10.9 10.9 11.111.9
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
2013 2014 2015 2016 2017
National Budget
Government's Budget for old-age
Government's Budget as percentage of National Budget
Budget Allocation for Old-Age
Percentage (%)Million baht
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2013 2014 2015 2016 2017
National Saving FundGovernment Pension FundGovernment PensionSocial Security Fund*Old Age Allowance
Million baht
Japanese Healthcare System
National Health Insurance (NHI)
Employees’ health Insurance
Late-State Medical Care System for the Elderly
01
02
03
Type 1Farmers, Self-employed individuals, non-regular employees, etc.(operated by municipalities and NHI
associations)
Type 2Retired person under employees’ health
insurance(operated by NHI associations)
Type 1
Employees of large companies(operated by health insurance society)
Type 2
Employees of small and medium companies(operated by Japan health insurance association)
Type 3- National public employees/Local public
employees/Private school teachers/staff (operated
by mutual aid association)
Elderly aged over 75 or aged 65-74 and certified as having
a specific disability(operated by Municipalities)
Defined contribution
pension plans (corporate
type)
Defined-benefit
corporate pension
Employees’ Pension
funds(Workplace-
oriented addition)
Mutual Aid Association
Pension(4.39 million subscribers)
(Substitution portion)
Japanese Pension system
Employees’ Pension (35.27 million subscribers)
National Pension (Basic pension)
Defined-contribution pension (individual type)
(0.18 million subscribers)
National’ Pension Funds (0.48 million subscribers)
(4.64 million subscribers)
(7.88 million subscribers)
(4.08 million subscribers)
(Self employed persons, etc.) (Private salaried workers) (Public officers, etc.)
(Dependent spouses of Category-2
Insured persons)
First layer
Category-1 Insured persons18.05 million 9.45 million39.67 million
67.18 million persons
Category-2 Insured persons, etc.* Category-3 Insured persons
Second layer
Third layer
01
02
03
As of the End of March 2014
Comparisons between Thailand and Japan
Healthcare System
Pension System
Fiscal Policy
Local Authorities Organizations (LAOs)
01 02 03 04 05
Reformation of Social Security
System
Japan- Started “Social Security System” after
World War II- In 1961, the government introduced
the “Universal Health Insurance System” and the “Universal (nationwide) Pension System”
- Strategies of the reformation - The New Gold Plan (1989)- The Angle Plan (1994)
- In 1973, the government introduced the “first welfare year”
- in 2000, the government launched “Long-Term Care Insurance Program”
Thailand- Started a kind of social security
system during King Rama V for civil servants only (government pension)
- Introduced the “Government Pension Fund” in 1997
- Social Security Scheme started in 1999 for private sector employees
- In 2002, the government introduced the “Universal Coverage Scheme (UCS) to cover those who had been outside of any public health security system
Reformation of Social Security System
Japan- Provides healthcare system
through “social insurance”
- Manages under “multiple healthcare system” that decided for different occupational class
- Ministry of Health, Labor and Welfare is an authority on national public health policy.
1. System
Thailand- Provides healthcare through the
“annual budget” (except SSS is social
security system)- Manages under “multiple healthcare
system” that is decided for different occupational class
- Healthcare system is supervised by different agencies:
- CSMBS by Ministry of Finance- SSS by Ministry of Labor- UCS by Ministry of Public Health
Healthcare System (1)
2. Financial Resource
Japan- “Multi-payer system” that is
attached to the social security system
- Financial resources come fromemployees, employers and the state
- The reimbursement of services is co-payment method
Thailand- “Single-payer system” for which
finances mainly come from the annual budget
- Financial resources come from annual budget
- The reimbursement of service is under conditions in each scheme(from its agencies)
Healthcare System (2)
3. Method of Payment to Healthcare Providers
Japan- Mostly get paid by “fee for
services” method- The cost of services will be revised
every two years by the Ministry of Health, Labor and Welfare
- MHLW defines the price of services and all citizens get the same standard of treatment
Thailand- Healthcare providers get paid by various methods:
- Fee for service for CSMBS- Capitation for SSS and UCS
- The cost of service depends on each agency:- CSMBS around 12,000 baht person (40,000 yen)
- SSS around 2,860 baht person (9,500 yen)- UCS around 2,200 baht per person (7,400 yen)
- Inequality among members of different groups
Healthcare System (3)
4. The role of private stakeholders
Japan- Play two significant roles in the public
healthcare system:(1) “healthcare providers” at the
different level of healthcare(2) “insurers”
-Insured persons may buy a “supplemental” healthcare insurance from private insurers to get minor additional benefits.
- All private hospitals are not-for-profit by law and play equally important roles as public hospitals
Thailand- Most private hospitals in Thailand are for-
profit hospitals- There are around 200 private hospitals
taking part in NHSO and approximately 80 private hospitals in SSS
- People who are able to buy additional health insurance and pay high premiumsby themselves prefer private hospitals
Healthcare System (4)
5. Budget Allocation
Thailand and Japan
- The Government allocated annual budget for the healthcare system from FY 2008 to FY 2017:- at 14% on average of the National Budget (Thailand) / General Account (Japan)- at 3% on average of GDP
- The world healthcare expenditure as percentage of GPD was at 10% in 2014
Healthcare System (5)
1. The system
Japan- Provides pension system through
the “social insurance”
- Operates under “multi-pillars or layers” of pension system that are suitable for different groups of member
- The system is compulsory:- National Pension is a Defined
Benefits Scheme- Employee’s Pension is a
Defined Contribution Scheme
Thailand- Provides pension system through both
“social insurance” and “annual budget” from government
- Operates under “multi-pillars or layers” of pension system that are suitable for different groups of member
- Combination of compulsory and voluntary systems:
- GPF is a Defined Contribution Scheme (Compulsory)
- SSF is a Defined Benefits Scheme (Compulsory)
- NSF is a Defined Contribution Scheme (Voluntary)
Pension System (1)
2. Financial Resource
Japan- Equal funding from premiums and
state subsidies- National Pension system
- Equal payments from premiums and government subsidies
- Employees’ Pension system- Payment from premiums
(government subsidy for administrative cost)
- Pay-As-You-Go
Thailand- Funding from annual budget, contribution- Old-age allowance scheme and government
Pension- funding from budget (Pay-As-You-Go)
- GPF - funding from annual budget (Fully-Funded)
- SSF - funding from contributions (Fully-Funded)
- NSF- funding from members and the
government (Fully-Funded)
Pension System (2)
Japan- 3% on average of General Account- 12% on average of GDP- Super-Aged Society
Thailand- 3% on average of national budget- 3% on average of GDP- Aging Society
3. Budget allocation
Pension System (3)
Japan- Implemented reforms
- increased the formal retirement age from 60 to 65 years for social security pension benefits
- employers are required to choose one of three options for employees who reach age 60:
- increase the retirement age to 65 years
- drop the mandated retirement age- introduce the “continued
employment system
Thailand- The formal retirement age is still at 60 years
old
- The government has tried to increase the retirement age for civil servants from 60 to 65 years old (still unsuccessful)
- SSF decided to increase the retirement age from 55 to 60 and increase the ceiling of contribution (coming soon)
4. Government Policy for Pension system
Pension System (4)
Japan- The government is currently implementing
“a comprehensive reform of social security and tax”
- Increased consumption tax from 5% to 8% in 2015 and plans to increase tax from 8% to 10% in 2019
- In 2017, the amount of increasing revenue will be 8.2 trillion yen
- 3.1 trillion yen or 38% will support basic pension system
- 3.3 trillion or 40% for reducing public debt in terms of ensuring the sustainability of the social security system.
Thailand- Establishing “extra budgetary funds”- “Thai Health Promotion Foundation”
- health promotion- funding from “surcharge excise
taxes” at 2% on tobacco and alcohol (limited at around 4,000 million baht per year)
- “Older person fund” - pension support for poor elderly
persons- funding from “surcharge excise
taxes” at 2% on tobacco and alcohol (limited at 4,000 million baht per year)
Fiscal Policy
Japan- Prefectures and Municipalities are
responsible for developing regional health plans for:
- cost containment- licensing hospitals- monitoring providers in row with the
central guidelines. - Each municipality established many
community centers at each middle or primary school district for elderly (65 years old and above) to easily access the needed services (Act Securing Hometown Medical and Long-Term Care)
- Local government in Japan plays almost no role in public pension
Thailand- There are complications between the
duties of the central government and LAO
- Several related laws from various agencies overlap regarding the
operation of programs- LAOs supervise old-age allowance for
elderly
Local Authorities Organizations (LAOs)
UCS(50 million people)
SSS(12 million people)
CSMBS(5 million people)
Only UCS(62 million people)
Financial Resources- Insurance system- “Premium” from members and annual Budget
Expectation of
reformation
- Special scheme for
civil servants only, as
they are employers of
government
- The government
needs more time to
decide on an efficient
and sustainable system
for government officers
in the future.
ThaiHealth
Surcharge excise tax
from tobacco and
alcohol
Transfer money
(LAOs)- Old-Age allowance
- “Long-Term care for elderly”
Long-Term care for elderly
- Reduce fiscal burden- Prevent high fiscal risk in the
future- Sustainable system for long
term
Reimbursement- Capitation methodPayment method- “Co-payment” between member and government
designated national schemed
designated authority
Conclusion and Policy Recommendations
NSF- For the 50 million citizens who cannot
participate in the GPF or SSF funds
- Voluntary scheme
GPF- 1 million of civil servants
- Compulsory Scheme
SSF- 12 million insured persons
- Compulsory scheme
Reformation
- Change to “Compulsory scheme”
- Reach all citizens(only 530,000 people have joined the NSF)
- Decide on an efficient and suitable
contribution between member and government
(Fully Funded principle)
- Prevent fiscal risk in the future
- Increase the retirement age from 55 years
old to at least 60 years old
- Increase the ceiling of contribution from
employers and employees as much as possible
(limited at 3% of salary and not higher than
750 baht per month)
- Increase the retirement age
of civil servants
- Provide more benefits to
civil servants who aim to
work after 60 years old
- Reduce the fiscal burden for the government- Prevent fiscal risk from the pension system for the government in the future- Create sustainable pension system in the long term
Expectation of
reformation
Conclusion and Policy Recommendations
• Recommendations• Transparency issue about extra budgetary fund (tax
directly transfers to the fund)• needs an “independent organization” to monitor and
evaluate the performance of extra budgetary funds
• Needs more an efficiency of tax collection from agencies who are in charge of taxes
Fiscal Policy
Conclusion and Policy Recommendations
“Tax policy” is a common tool for solving the problem of fiscal burden for the government
Japan- Increased consumption tax for
supporting the rapidly of social security system fiscal burden (5% in 2015 and will be 10% in 2019)
- The consumption tax will need to exceed 25% by 2050 to cover the amount accountable for national expenditures in social security system
Thailand- Uses “extra budgetary fund” to receive money from “surcharge excise taxes” on tobacco and alcohol to support both healthcare and pension system
• Thailand• The number of LAOs in Thailand is excessive and the scale of each organization is different• Tasks become complicate due to coordination between central government and LAOs under
several laws that are mandated by several agencies
• Japan • Local government plays a significant role in the healthcare system• Local government has authority to collect taxes by itself and supervise the healthcare
providers in its area
Local Authorities Organizations (LAOs)
Conclusion and Policy recommendations
Recommendations- The government should allow LAOs to play a significant role in the social security system- Ministry of Interior (Supervisor of LOAs) should revise the laws to allow LAOs to collect more taxes by
themselves, such as taxes on natural resources in their area- The government should support LAOs becoming the center of long-term care for elderly by transferringsome money from “ThaiHealth”
Thailand can not avoid becoming an aged-society
Final Conclusion
The government needs to:- take a responsibility for budget allocation to support the healthcare and pension systems - implement efficient fiscal policies and other related policiesThai citizens need to
prepare themselves by:- having a good health- saving money to live adequately after retirement
Financial literacy is necessary for Thai citizens to understand more how to prepare an adequate pension after retirement
Q&A