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Performance of Health Financing Function and Overview of Main Policy Challenges
Georgian Health Care 2020Washington DC, February 1-2, 2010
Bakhuti ShengeliaSenior Health Specialist
East Asia and Pacific Region, Human Development NetworkThe World Bank
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Outline• Current architecture of the Georgian health care system• Framework for evaluating the performance of the financing
system• Health expenditure profile and trends
– The issue of out-of-pocket payments– Composition of private expenditure and drivers of cost
inflation• Financial access to health services• Impact of health care costs on households and equity in
health financing• Conclusions and Policy issues to be address
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Organization of Health Financing
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What Do We Mean By Performance of the Health Financing System?
Raising resources
Pooling
Purchasing
Protection of population from financial risk/shocks
Ensuring access to services for all when needed
Fairness of financial contribution
Sub-functions Performance goals
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HOW MUCH ARE WE SPENDING ON HEALTH?
WHO PAYS FOR HEALTH CARE?
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Health Expenditures in Relation to GDP
In 2007 - 8.6% of GDPIn 2009 – 10.1% of GDP
EU – 8.9%CIS – 5.5%
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Per Capita Total Health Spending
• US$245 equivalent (GEL409.9) • In $PPP terms – $459• CIS in $PPP terms – $621
Switz
erlan
dMalt
a
Fran
ce
Germany
Denmark
Belgium
United Kingd
om
Finlan
d EU Italy
Monaco
Israe
l
Euro
pean Reg
ion
Czech Rep
ublic
Hungary
Estonia
Poland
Bulgaria
Russian Fe
deration
Belaru
s
Turke
y CIS
Ukraine
Kazakh
stan
Azerbaija
n
Kyrgyzs
tan
Turkm
enist
an0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
Per capita health spending in EURO region in $PPP (2008)
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Trends in Health System Financing2001-2009 (GEL,000,000)
2001 2002 2003 2004 2005 2006 2007 2008 20090
200
400
600
800
1000
1200
1400
1600
1800
2000
400 484 563 655775 846
10031144
1295
7588
109130
196254
255
343
419
46 79
54 51
27
59
128
174
105
External sourcesPublic expendituresPrivate expenditures
Source: National Health Accounts 2001-2009, MOH
Private increased by 320%Public increased by 560%Other sources by 230%
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Composition of Health Expenditures
2001 2002 2003 2004 2005 2006 2007 2008 20090%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
76.7% 74.3% 77.6% 78.4% 77.7%73.0% 72.4% 68.9% 71.2%
14.4%13.5%
15.0% 15.5% 19.6%21.9%
18.4%20.6%
23.0%
Other sources as % of THE
GGEH as % of THE
PE as % of THE
98% of private spending is
out of pocket
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Out-of-Pocket Payments in Georgia and the rest of the European Region
0
10
20
30
40
50
60
70
80
Source: WHO-EURO HFA database
Out of pocket payments as % of THE (2008)
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Why Are the Out-of-Pocket Payments Bad?
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How Much Priority Does the Health Sector Enjoy in the Government Spending?
2001 2002 2003 2004 2005 2006 2007 2008 20090.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
6.1 6.36.7
5.46.0 5.7
4.24.9
7.8
12.0 12.0 12.4 12.6 12.7 12.8 12.8 12.9 12.913.7 14.0 14.3 14.4 14.6 14.8 15.0 15.0 15.0
8.9 8.9 9.1 9.2 9.29.7 9.4 9.3 9.3
GeorgiaEUROEU CIS
The size of the health care spending in the total government spending is the direct measure of how much priority the government gives to the health of the nation!
Source: National Health Accounts, Georgia, WHO HFA database.
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How Would Health Spending Change if the Government Gave More Priority to Health?
Current(7.8 % of total gov. Spending)
Scenario 112.9% of the total gov. spending (WHO-EURO average)
Scenario 29.3% of the total gov. spending (CIS average)
Scenario 315% of the total gov. spending (Abuja declaration)
Total gov. spending 419 mln GEL 696 mln GEL 502 mln GEL 810 mln GEL
Public expenditure as % of THE
23% 38% 28% 45%
Per capita spending
410 GELPPP$ 459
472 GELPPP$ 530
427 GELPPP$ 479
498 GELPPP$ 560
THE 1.8 bln (GEL) 2.1 bln (GEL) 1.9 bln (GEL) 2.2 bln GEL
Health spending as % of GDP
10.1% 11.7% 10.6% 12.2%
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Does Health Financing System Provide Adequate Access?
Can People Get Care When They Need it?
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Trends in Health Insurance Coverage
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Utilization of Health Services
Indicator Year Total Urban Rural
Average number of consultations / contacts per person per annum (all sources of care) (2)
2007 2.01 2.36 1.672010 1.91 1.85 *** 1.97 **
Average number of outpatient consultations (all types) per person per annum (1)
2007 1.74 2.03 1.462010 1.66 1.60 1.72
Percentage of total population who reported being sick with any condition in last 6 months and consulted a healthcare provider (2)
2007 59.5 59.8 59.3
2010 60.3 59.6 60.9
Percentage of occurrences of acute illness in the past 30 days where a healthcare provider was consulted (2)
2007 56.5 55.6 57.9
2010 66.0 *** 68.0 *** 64.3 *
Notes: (1) Significance of difference not tested; (2) Statistical significance of difference with baseline figure: *** p<0.01; ** p<0.05; * p<0.1.
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Do Georgians Use More or Less Health Care Compared to the Rest of the Region?
Outpatient contacts per person per year - 7, in 1990
Outpatient contacts per person per year – 1.9 in 2009
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Cost of Care is a Serious Access Barrier2007 2010
Percentage of consultations where medicine wasprescribed
82.1% 80.4%
Percentage of consultations where medicine wasprescribed but not purchased because it was tooexpensive (base: consultations where medicines were prescribed)
14.5% 16.3%
Percentage of consultations where a lab test wasprescribed
43.5% 45.1%
Percentage of consultations where a lab test wasprescribed but not done because it was too expensive (base: consultations were lab tests were prescribed)
9.6% 9.3%
Percentage of population who were reported to need hospitalization in the last year but were not hospitalized
4.4% 3.4%
Percentage of population who were reported to needhospitalization in the last year but were not hospitalizedbecause it was too expensive/they did not haveenough money (base: those that were not hospitalized)
89% 76.4%
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Composition of Per Capita Private Spending (in GEL)
2001 2002 2003 2004 2005 2006 2007 2008 20090
50
100
150
200
250
300
350
22 24 28 33 38 44 51 65 71 17 19 21 25 31 35 41
45 50
35 51
67 76
89 89
105
128 151
1013
1518
2026
33
41
59 The rest of private expenditure
Medicines and other consumables
Outpatient
Inpatient care
Source: National Health Accounts, MoH
435% increase in pharmaceutical spending323% increase in inpatient spending289% increase in outpatient spending
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Expenditure on Pharmaceuticals as % of Total Health Expenditure (OECD versus Georgia, 2008)
New Ze
aland
Netherl
ands
Icelan
d
Swed
en
Belgium
German
y
Canad
aFra
nce
Slove
niaSp
ain
Estonia
Czech Rep
ublic
Poland
Korea
Hungary
Georgi
a05
101520253035404550
43.2
2001 2002 2003 2004 2005 2006 2007 2008 20090.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
48.0%53.1%
56.7% 54.4%51.5% 50.2% 51.3%
45.0%
56.4%
Private Expenditure of Pharmaceuticals as % of Total Private Expenditure on Health
Sources: NHA 2009, Georgia, MOH; OECD health database, HUES Georgia 2010.
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Inflation of Cost of Drugs and Its Impact on Private Health Expenditures
-5
0
5
10
15
20
25
30
35
Jan
-07
Feb
-07
Mar
-07
Apr-
07M
ay-0
7Ju
n-0
7Ju
l-07
Aug
-07
Sep
-07
Oct
-07
Nov
-07
Dec
-07
Jan
-08
Feb
-08
Mar
-08
Apr-
08M
ay-0
8Ju
n-0
8Ju
l-08
Aug
-08
Sep
-08
Oct
-08
Nov
-08
Dec
-08
Jan
-09
Feb
-09
Mar
-09
Apr-
09M
ay-0
9Ju
n-0
9Ju
l-09
Aug
-09
Sep
-09
Oct
-09
Nov
-09
Dec
-09
Medicines Overall CPISource: GeoStat
Inflation between 2007 - 2009 Changing the pattern of private spending between 2007 - 2010
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Price of Drugs in Georgia Versus Other EU Countries
-100%
-50%
0%
50%
100%
150%%
diff
eren
ce
Brand
Generic
Source: WB survey and OBIG
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Estimated Average Combined Wholesale and Retail Margins, Georgia and Five EU Countries
102%
35%
46%
27%
49%
32%
0%
20%
40%
60%
80%
100%
120%
Georgia Czech Rep. Greece Hungary Italy Poland
% m
argi
n
CountrySource: WB survey and OBIG
Source: Georgia Programmatic Poverty, Technical Note #2, June 28, 2010. World Bank (data based on the WB survey and OBIG)
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How Do Health Care Costs Impact Households?
How Equitable is the System?
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Private Spending on Health in Relation to Total Household Private Consumption
2001 2002 2003 2004 2005 2006 2007 2008 20090%
2%
4%
6%
8%
10%
12%
14%
3 33 4 4 4 5 5
6
2 2 2 33 3 4 3 44
6
8 8
99
10 10
12
1 1 2 2 2 33
3
5
Inapatient care Outpatient Medicines and other consumables Rest
Source: National Health Accounts
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Impact of Out of Pocket Expenditures on Household Economy
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Catastrophic Health Expenditures
Source: Georgia Poverty Assessment, 2009, World Bank.
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Health Care is an Important Domestic Policy Issue
54.6%
42.8%
52.0%
44.9%
66.1%
57.3% 57.7%
33.3%
0%
10%
20%
30%
40%
50%
60%
70%
Buying medicines Medical services Unemployment Hunger, undernourishment
% o
f hou
seho
lds
2007
2009
Source: WB LSMS and UNICEF WMS
Main problems cited by households, 2007-2009
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Equity In Financial AccessIndicator Year Poorest
20%Second Middle Fourth Richest
20%% of acute sickness in last 30 days where no consultation was sought because it was too expensive
2007 21.5 18.7 23.7 15.2 11.3
2010 27.7 21.9 21.6 20.5 7.3
% of consultations where medicines where prescribed but not purchased because it was too expensive
2007 16.4 11.6 11.6 12.2 7.3
2010 21.7 14.2 11.1 9.4 10.3
% of population needing hospitalization but not hospitalized because it was too expensive
2007 4.7 3.9 3.3 4.7 3.4
2010 3.5 1.8 2.3 2.8 2.6
% of population covered by any type of health insurance 2007 18.5 14.8 12.5 14.4 8.6
2010 39.9 31.1 26.6 23.7 26.2
% of population in households covered by MIP/MAP 2007 14.3 13.2 8.3 9.3 4.2
2010 39.2 26.8 20.1 16.7 13.1
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Government Tries to Improve Financial Access for Economically Vulnerable Groups
89%
46%
11%
54%
0% 25% 50% 75% 100%
Not a MIP Beneficiary
MIP Beneficiary
Odds Ratio = 9.8; p<0.01
Paid for services Received free treatment
82%
34%
18%
66%
0% 25% 50% 75% 100%
Vulnerable =No
Vulnerable=Yes
Odds Ratio = 8.8; p<0.01
Paid for services Received free treatment
Free hospital benefits among various groups in 2010
Source: HSUE Survey 2010
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Impact of Medical Insurance Program for Economically Vulnerable Groups
63.6
221
43.6
233
52.2
431
85.2
596
0
100
200
300
400
500
600
700
Out-patient 70,000 In-patient 70,000 Out-patient 100,000 In-patient 100,000
GEL
MIP Non-MIPSource: Bauhoff, Hotchkiss, and Smith, 2010
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Targeting Performance of MIP
0%
5%
10%
15%
20%
25%
30%
35%
1 2 3 4 5
%
Quintile
% of MIP benefits received by each quintile
Source: UNICEF WMS
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Investing in Health Care is Considered top Policy Priority for the Government by Predominant Majority of the Population
Source: Georgia Poverty Assessment, World Bank, April 2009
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Main Policy Challenges
• Increasing the role of the state in financing health care and increasing its strategic
purchasing role
• Pooling the private resources to ensure better risk coverage, solidarity and cross
subsidization among the population
• Reducing the out-of-pocket expenditures and increasing the share of pre-paid
expenditure in the private spending
• Stronger regulation of pharmaceutical sector and reducing the price of medicines
• Extending the benefit package to include drug benefits
• Improve targeting of Medical Insurance Program for the poor and deepening the
coverage
• Increasing the awareness of population about their health care benefits