Comparative Health Insurance System Chih-Liang YaungTaichung Healthcare and Management University

Supply side:,Demand side:luxury goods

Reported admission rates for selected procedures: Selected countries for which data were reported,1980ProcedureCountry Tonsill- Coronary Cholecyst- Inguinal Exploratory ectomy bypass ectomy hernia laparotomy repair Number of admissions per100,000 populationAustralia 115 32 145 202 99Canada 89 26 219 224 105Denmark 229 -- 21 -- ---Ireland 256 4 91 100 52Japan 61 1 2 67 --- Netherlands 421 5 131 175 ---New Zealand 102 2 99 211 110Norway 45 13 30 78 ---Sweden 65 -- 140 206 111Switzerland 51 -- 49 116 68United Kingdom 26 6 78 154 116United States 205 61 203 238 41

ProcedureCountry Prostat- Hyster- Operation Append- ectomy ectomy on lens ectomy Number of admissions per100,000 populationAustralia 183 405 101 340Canada 229 479 139 143Denmark 234 255 118 248Ireland 124 123 64 245Japan ---- 90 35 244Netherlands 116 381 68 149New Zealand 191 431 95 169Norway 238 ---- 71 64Sweden 48 145 --- 168Switzerland ---- ---- 22 74United Kingdom 144 250 98 131 United States 308 557 294 130

NOTES: These figures are not age standardized and assume equal proportions of men and women. Some are likely to be incomparable for artifactual reasons..SOURCE: Organization for Economic Cooperation and Development: Health Data File, 1989.

Total Health Expenditure as Proportion of GDP and Public Health Expenditure as Proportion of Total Health Expenditure among OECD Countries, 1997*THE: Total Health Expenditure**PHE: Public Health Expenditure

Country

THE* as % of GDP

PHE** as % of THE

R.O.C

5.44

63.5

Australia

8.44

66.7

Austria

8.25

73.0

Belgium

7.61

87.6

Canada

9.16

69.8

Denmark

8.00

83.8

Finland

7.45

76.0

France

9.61

74.2

Germany

10.71

77.1

Iceland

7.95

83.8

Italy

7.59

69.9

Japan

7.16

79.9

South Korea

6.01

45.5

Luxembourg

6.95

91.8

Netherlands

8.54

72.6

Norway

7.51

82.2

Spain

7.40

76.1

Sweden

8.62

83.3

Swiss

10.04

69.9

UK

6.81

84.6

USA

13.93

46.0

Type of Health Systems and Their Determinants

ECONOMIC LEVELGNP per Capita

HEALTH SYSTEM POLICIESMarket Intervention

Entrepreneurial Permissive

Welfare-Oriented

Univeral Comprehensive

Socialist Centrally Planned

Affluent Industrialized

United States

1

West Germany

Canada

Japan

2

Great Britain

New Zealand

Norway

3

Soviet Union

Czechoslovakia

4

Developing Transitional

Thailand Philippines South Africa

5

Brazil

Egypt

Malaysia

6

Israel

Nicaragua

7

Cuba

North Korea

8

Very Poor

Ghana Bangladesh

Nepal 9

India

Burma

10

Sri Lanka

Tanzania

11

China

Vietnam

12

Resource-Rich

13

Libya

Gabon

14

Kuwait

Saudi Arabia

15

16

Entrepreneurial & Permissive

Medicaid Medicare

Welfare--Oriented,

Universal & Comprehensive

Socialist & Centrally Planned

Attainment/Health, Responsiveness, Fair financing Performance Attainment and Performance

Health System GoalsHealthprimary and defining goal Financial protectioncostlyneed of care is unpredictableResponsivenessillness and medical care threaten peoples dignity and control abilityfear and shame bring with sick

-- --Measuring goal achievement

Average level

Distribution

Health improvement

Responsiveness to expectations

Fairness in financial contribution

Responsivenessrelative to non-health aspects, and contributes to health by promoting utilization

Components

Aspects

respect for persons

50%(subjective)

Respect for dignity 16.7%

Respect for individual autonomy 16.7%

Respect for confidentiality 16.7%

interaction of individuals with the health system

client orientation

50%(objective)

Prompt attention to health needs 20%

Basic amenities 15%

Access to social support networks for receiving care 10%

Choice of institution and individual providing care 5%

several dimensions of consumer satisfaction that are not a function of health improvement

Fair financingability to payrisk of illness (need)To avoid poverty of illness or without care due to cost (or)

Fair financingunexpected expenseMinimize out of pocket Predictable prepaymentregressive paymentscollecting through capacity to pay not risk of illness

17

Source: WHO, The World Health Report 2000.

()

(goodness)

(fairness)

()

50%

25%

25%

16.7%16.7%16.7%

20%15%

10%

5%

Ex post

Ex post

()

=

Ex post > 50%

25%

25%

12.5%

12.5%

25%

(goodness)

(fairness)

(fairness)

Total=100%

Health System Functions Financing Provision of health services Resource generation Stewardship

STEWARDSHIPRESOURCE GENERATIONPROVISIONPersonal health servicesNon-personal health servicesFINANCINGRevenue collectionFund poolingPurchasingStrategyStructureImplementation

RESOURCE ERATIONA diverse organizations that produce inputs to services educational institutions / research centers / Pharmaceutical companies, devices, equipment

STEWARDSHIP3 key aspects : (purchasers, providers, patients) 6 sub-functions : Overall system design Performance assessment Priority setting Inter-sectoral advocacy Regulation Consumer protection

WHOS FRAMEWORK FOR ASSESSING HEALTH SYSTEM PERFORMANCESource:Addressing the major health system challengers among Ministers of Health at the 53rd World Health Assembly in Genera in May 2000. Service provisionProviding or delivering personal and non-personal health servicesImprove health Via goodness and fairnessFinancing Raising and pooling the revenues used to purchase servicesStewardshipActing as the overall stewards of the resources, powers and expectations entrusted to themResource generationGenerating necessary human and physical resources to make that possible

Health system models, according to types of integrationCOVERGEFUNCTIONS

Classification of Health InsuranceRole of governmentPublic administration vs cooperative vs entrepreneurialSingle system or multiple systemsSingle payer or multiple payersLayer of integrationpolicy making, financing, payment, service provisionMacro-structure of delivery systemPayment method

United StatesMedicare for aged 65 and aboveMedicaid for poor and disabledBlue Shield and Blue CrossHMO, PPOHE is 14% of GDP and 40 million without insurance

Canada

997310(Province)2(Territory)Ottawa34 12%65

-1 72%28%(Single Payer)(socialized insurance)(socialized medicine)

-2 (Universality)1002(BCAlberta)(Comprehensiveness)(all medically necessary)

(Accessibility) Alberta Quebec1984 (Portability) (Public Administration)

Germany

---1977-1985,1992---1986-1991,1993-19971998--- ---1993,1994-1997---1998

JAPAN

1 192219381961

21998 77.16 84.01 65 17% 3.6 19.1 132.3 GDP 7%100%

4-----80% 20%----760/d650/d300/d-----80%

5

---------80%20%----------60%-----100,000-----300,000-----425660%

6Dependents,Medical Care Expenses-----70% 80%Dependents,Home-Visit Nursing Care Expenses-----70%Dependents,Transportation ExpensesDependents,Funeral Expenses-----100,000Spouses Childbirth and Childcare Lump-Sum Grant----300,000

7a. 63,60035,400b. 10,000c. 37,20024,600

910

101/3

1-----1983 ----------70 65-70

2/3 1/6 1/6

Korea

(Health Care System) Social health insurance 96% cover 96%of population () limited overage (in services)high coinsurance rates1998(374 )Up to 1998, large number of small insurance funds (374 funds) & each insurance fund was financially autonomous Fee-for-service

Almost free choice of providersDTS(designated treatment system) DTS(designated treatment system) in hospitalsMultiple providers Physicians in oriental medicine Physicians in western medicinegate keepersFew gate keeper

Stimuli for the NHI South-North Korea competitionSocial equity concern from unequal distribution of wealthLabors demand for protection from illness1977 After initiation of insurance in 1977, expansion of coverage was a popular political subject

1998Health Care Security Coverage by Type of Program: by 1998

Stage of Development1977 $1,009Corporate insurance, started in 1977, per capita income $1,009/1981$1,749Civil servants/school employee insurance, started in 1981, pci $1,7491989 $5,185Regional insurance, in 1989, pci $5,18519897NHI born in July 1989

Components of Total Payments for services, by Insurance coverage STC (Special Treatment Charge); STC (Special Treatment Charge); Out-of-pocket payments to provider beyond stated price of service

-Direct Payments by Households: Household SurveySource: Yearbook of Health Insurance Statistics, various years, re-quoted from Myung JI, 1994.

Percentage of Out-of-Pocket Payments out of Total Treatment CostsNote : OP = , IP =OP = outpatient service, IP = inpatient service a) . (Cosmetic surgery is not included)

Health Care FinancingNHE()/GDP 6%NHE(national health exp)/GDP is about 6% Householders are major source of financing/NHE 25%insurance exp. / NHE is about 25%/NHE 12%government exp. / NHE is 12%/NHE 63%direct payments / NHE is 63%

/2%Health budget / central gov t budget is around 2%Private sector dominateshas been growing rapidlyis the major providermuch impact on performance of the system

Private ProvidersLarge number of For-profit(Weakly) regulatedPaid by Fee-For-Service

Public and Private BedsNote : Numbers in parenthesis are percentage out of total.Source: 1994 Yearbook of Health and Social Statistics, Ministry of Health and social Affairs;and Reports by Korean Medical Association and Korean Hospital Association

1962

1977

1987

1994

Public

2,564

(24.5)

8,504

(33.3)

10,580

(12.5)

10,642

(8.5)

Non-profit

3,535

(33.7)

5,078

(19.9)

14,759

(17.4)

18,228

(14.5)

Private

4,378

(41.8)

11,941

(46.8)

59,841

(70.1)

95,727

(77.0)

Total

10,477

(100.0)

25,523

(100.0)

85,180

(100.0)

125,597

(100.0)

Health Insurance Financing()Contribution rates (salary based)3.4%()Corporate HI:3.4%(shared equally between employer and employees)3.4%()CS HI: 3.4% (shared equally between government and employees)-- To be Continued

Premium basis for Regional HI 66% (50% 16%)Evaluated income or taxable income: 66%(50% from evaluated and 16% from taxable) 34% (27% 7%)Plus assets & automobile: 34% (27% from assets & 7% from automobiles)

Features with the Health System & Insurance System Equity high user charges expensive uninsured services

Efficiency()lack of referral channel (allocative inefficiency)1998()Up to 1998, low economies of scale with large number of small funds (adm. inefficiency)

2 (Features 2) Quality

high dependence on high-cost technology () excessive treatment (C-section) over-prescription low level of trust on providers -- To be Continued

2 (Features 2)Cost control: rapid cost increase by FFSby for-profit private providers Sustainability: funds rapidly moving into deficitsby cost inflationby consumers reluctance to pay higher premiums

Reform in Health Care Are ConsideredChange in prescription rule-Establishing patient referral channel - family doctor programReform in payment-reimbursement methodStrengthening public health programsConsolidation of insurance funds

Consolidation of FundsBased on the solidarity principleTo strengthen social equity thru health insurance & to enhance efficiency on insurance managt (228NMICRegional HI and Civil Servant HI (total of 228 funds) are merged into fund (NMIC): 1st stageNMIC 146NHICNMIC and Corporate HI (total of 146 funds)will be merged into a single fund (NHIC): 2nd stage

Two Stages in the Process of Consolidation

Economies of ScaleReduction in administration costs expected373 235373 funds reduced into one fund with 235 branchesLRAC 110()LRAC estimates that 11 billion Won of administration costs be saved annually (when cost structure of branch and fund is assumed the same)Further savings expected if number of branches reduced in the future

Proportion of Administration Costs Out-of Total Expenditure: 1999 5.6%Corporate insurance program: 5.6% in 1999NMIC(/): 1999 7.2%NMIC (Regional & Civil Servant/School Employee Programs): 7.2% in 1999 (NHIC) 20014.7%With single payer (NHIC) in 2001, estimate is 4.7%

EquityGain in equity if high risk people are elderly and the less affluentFairer financial burden among social classespremiums strictly based on income levels, but not based on occupation, geographyRemaining issue is the identification of income levels of the self-employed

Other Remaining Issues with Health Insurancelimited coveragehigh user chargescost inflationinsolvency of health insurance system

/Limited Coverage / High User Charges--High tech services outside the domain of HI-perverse incentive-inefficiency

50% (): User charge rates greater than 50% (especially for major risks): equity abandoned-- To be Continued

- Need to lower user charges thru expansion of coverage-gain in efficiency and equity Level of contribution to be increased substantially -political burden- MHor shift coverage from minor risks to major risks - to achieve the objective of income protection, lower MH

/Cost increase / Insolvency of HI1020%Rate of increase of HI expenditure over 20% annually for the last 10 years: ,, The system is inflationary by choice: FFS, for-profit private sector, perverse incentive by HI, inappropriate govt role

-- To be Continued

The whole surplus in HI be drained in a few years(/)Decreasing support ratio (work force/elderly)will aggravate the financial status of HIBoth macro reforms (at the system level) and micro reforms are essential

Insolvency of HI (: 10) (unit: billion Won)

20001231919Accumulated surplus as of December 31,2000 is 919 billion Won

Government Strategies for Insolvency-Raise premiums-not easy-Increase Government subsidy for self-employed beneficiaries-considered Eliminate bubble in drug expenditure-new pricing policy implemented recently

()-Strengthened investigation of fraudulent claims by service providers (Hospitals, clinics, dental clinics, oriental medicine clinics, pharmacies)-actively pursued recently

Taiwan

Principle of NHIPublic financingEquityPrivate provision--efficiency

International Comparison of Tax and Social Security BurdensNote1Aging rate figures are for 1997.Note2Figures for Japan only are for the fiscal year.sourceFigures on tax and social security burden to ratio of national income are taken from Yosan no hanashi Talk on Fiscal 1999 budgetof financial research committee. Figure of aging rate is from Ministry of Health and Welfare.

Tax burden

Social security burden

Share of

national income

Aging rate

percentage of those age 65 or over

Japan

23.1

13.3

36.4

15.7

U.S.A

26.4

10.1

36.5

12.7

U.K.

39.0

10.2

49.2

15.8

Germany

30.0

26.4

56.4

15.4

France

35.1

29.0

64.1

15.7

Sweden

51.0

22.2

73.2

17.0

NHI and Total Health Expenditure*:Estimation

GDP Growth

Rate

NHI Exp

Growth Rate

NHI Exp as

of GDP

Health Exp as of GDP

1995

6.1

3.15

5.39

1996

6.7

3.10

5.46

1997

4.6

6.68

3.18

5.30

1998

5.7

10.18

3.33

5.39

1999

6.3

8.82

3.31

5.42

2000

6.5

4.86

3.24

5.47

19953200212 6.4 4.13

Chart1

0.320.68

0.030.97

0.140.86

40,651

492

94

Chart2

0.98

0.02

Chart3

0.93

0.07

Chart4

0.3345454545

0.3910743802

0.2743801653

830

1,183

1,012

Chart5

0.34

0.66

Chart6

1939.911568.47

2413.282229.38

2436.382376.13

2620.42604.8

2648.952858.98

2851.72842.06

2861.463017.88

3076.973234.74

3,076.11

Chart7

4.21990

4.51991

4.771992

4.881993

4.931994

5.275.2

5.295.4

5.275.6

5.335.8

5.466

5.446.2

5.776.4

Chart8

0.330.5

0.2020.595

0.30.53

0.2970.451

0.390.47

0.450.442

0.5020.365

0.4760.403

0.5080.405

0.5490.376

0.6070.328

0.5860.274

0.530.384

0.610.27

0.5840.324

0.6860.225

0.7050.237

0.5990.34

0.5960.343

0.6570.25

0.6640.262

0.70.251

0.730.215

0.6540.225

0.7340.239

0.6650.234

0.7580.194

0.7250.192

0.6830.22

0.740.199

0.6330.259

0.6840.263

0.7460.196

0.7640.191

0.6380.245

0.7280.207

0.6720.242

0.7260.174

0.6560.201

0.810.101

0.7110.172

0.7640.147

0.7850.136

0.6640.266

0.5970.296

Sheet1

32%68%19951,939.911,568.47

3%97%19962,413.282,229.38

14%86%19972,436.382,376.13

19982,620.402,604.80

98%2%34%19992,648.952,858.98

93%7%66%20002,851.702,842.06

20012,861.463,017.88

101233%101220023,076.973,234.74

118339%1183

83027%83019904.20

302519914.50

19924.77

84.4.2033.0%50.0%19934.88

84.4.2420.2%59.5%19944.93

84.4.2830.0%53.0%19955.275.20

84.5.2529.7%45.1%19965.295.40

84.5.2939.0%47.0%19975.275.60

84.9.1245.0%44.2%19985.335.80

84.9.2750.2%36.5%19995.466.00

84.10.0647.6%40.3%20005.446.20

85.1.1650.8%40.5%20015.776.40

85.1.1854.9%37.6%

85.2.660.7%32.8%

85.3.458.6%27.4%

85.5.1953.0%38.4%

85.6.1061.0%27.0%

85.8.1058.4%32.4%

85.12.268.6%22.5%

86.2.1570.5%23.7%

86.3.259.9%34.0%

86.4.1059.6%34.3%

86.5.1665.7%25.0%

86.6.2366.4%26.2%

86.8.870.0%25.1%

86.11.1873.0%21.5%

87.1.765.4%22.5%

87.2.573.4%23.9%

87.4.2866.5%23.4%

87.5.775.8%19.4%

87.8.2672.5%19.2%

87.11.1468.3%22.0%

88.2.874.0%19.9%

88.5.3163.3%25.9%

88.9.1368.4%26.3%

88.10.1874.6%19.6%

89.2.976.4%19.1%

89.3.2763.8%24.5%

89.9.2972.8%20.7%

89.10.2667.2%24.2%

90.4.2072.6%17.4%

90.6.1965.6%20.1%

90.10.1981.0%10.1%

90.12.2771.1%17.2%

91.3.1776.4%14.7%

91.5.3178.5%13.6%

91.8.2666.4%26.6%

91.11.159.7%29.6%

Sheet2

Sheet3

Sheet4

Sheet5

Total Health Expenditures as % of GDP1983-2000Private SectorInsurance SectorGovernmental SectorTotal Health Expenditures

1990-2001

Chart1

0.320.68

0.030.97

0.140.86

40,651

492

94

Chart2

0.98

0.02

Chart3

0.93

0.07

Chart4

0.3345454545

0.3910743802

0.2743801653

830

1,183

1,012

Chart5

0.34

0.66

Chart6

1939.911568.47

2413.282229.38

2436.382376.13

2620.42604.8

2648.952858.98

2851.72842.06

2861.463017.88

3076.973234.74

Chart7

4.21990

4.51991

4.771992

4.881993

4.931994

5.275.2

5.295.4

5.275.6

5.335.8

5.466

5.446.2

5.776.4

Sheet1

32%68%841,939.911,568.47

3%97%852,413.282,229.38

14%86%862,436.382,376.13

872,620.402,604.80

98%2%34%882,648.952,858.98

93%7%66%892,851.702,842.06

902,861.463,017.88

101233%1012913,076.973,234.74

118339%1183

83027%83019904.20

302519914.50

19924.77

19934.88

19944.93

19955.275.20

19965.295.40

19975.275.60

19985.335.80

19995.466.00

20005.446.20

20015.776.40

Sheet2

Sheet3

Sheet4

Sheet5

(84.592.7) 1995.05 1995.09 1996.06 1998.01 1998.04 1998.11 1999.05 1999.09 1999.10 2000.03 2000.10 2001.06 2001.12 2002.05 2002.11 2003.07

Chart3

0.330.5

0.2020.595

0.30.53

0.2970.451

0.390.47

0.450.442

0.5020.365

0.4760.403

0.5090.381

0.5080.405

0.5490.376

0.6070.328

0.5860.274

0.530.384

0.610.27

0.5840.324

0.6860.225

0.7050.237

0.5990.34

0.5960.343

0.6570.25

0.6640.262

0.70.251

0.730.215

0.6540.225

0.7340.239

0.6650.234

0.7580.194

0.7250.192

0.6830.22

0.740.199

0.6330.259

0.6840.263

0.7460.196

0.7640.191

0.6380.245

63.8%

24.5%

Chart1

0.390.47

0.5020.365

0.610.27

0.6540.225

0.6650.234

0.6830.22

0.6330.259

0.6840.263

0.7460.196

0.6380.245

0.6720.242

0.6560.201

0.7110.172

0.7850.136

0.5970.296

0.7090.206

901227

84.05.2984.09.2785.06.1087.01.0787.04.2887.11.1488.5.3188.9.1388.10.1889.03.2789.10.2690.6.1990.12.2791.591.1192.7

()()()()()(TVBS)(TVBS)(TVBS)(TVBS)TVBSTVBSTVBSTVBS

39.0%50.2%61.0%65.4%66.5%68.3%63.3%68.4%74.6%63.8%67.2%65.6%71.1%78.50%59.70%70.90%

47.0%36.5%27.0%22.5%23.4%22.0%25.9%26.3%19.6%24.5%24.2%20.1%17.2%13.60%29.60%20.60%

&A

&P

10(Province) 2(Territory) Ottawa 300(Quebec)

102

1. (risk)

1.()2.1.2.153.GDP59.7%7%

12.3.4.---------1980---199227019931074.136.420029In reference to health expenditures, total health expenditures in 2000 was 5.44% of GDP. In 1999, that figure was 5.46%. Both figures are much lower than those of OECD countries.20015.7720005.44 OECD, , --81%

1. 12%, (10%, 2%)2. 6000 29600(, )3. (40),