Learning from the Best
Lesson from iHEA for young researchers and young insurance programs
By Tom Fagan and Lyubov Teplitskaya of Health Policy Plus (HP+)
Innovative and largely unexplored opportunities exist for achieving sustainable, accessible, and equitable health services. While many of the methods being applied in low- and lower-middle-income countries are those that have been applied for years—or even decades—and face the same challenges and limitations they always have, many countries are exploring social and national health insurance as a solution to sustainable health financing, while sharing stories and research that offer hope and direction.
For us, as young researchers working in developing countries, participating in the 2017 International Health Economics Association (iHEA) World Congress last month was an opportunity to view our work through a different lens. The wide array of experiences and lessons shared during the conference, particularly from countries with more mature health financing programs, represented new ways of thinking about the challenges of mobilizing and sustaining sufficient domestic resources for health in developing countries.
One major theme at this year’s Congress was technical efficiency—in other words, how countries can get the most from their health investments. While technical efficiency is not exactly new to the field of health financing, its meaning has evolved. Several presenters highlighted efforts in developing countries to achieve technical efficiency by focusing on the optimal mix of human resources and patient volumes to bring facilities to scale. Others highlighted the importance of an integrated fiscal and programmatic planning framework, such as a value-for-money framework, to better understand how to improve overall health system efficiency. Although the analytical tools to measure technical efficiency that were presented were not necessarily novel, the focus on more pragmatic approaches present a new way forward by highlighting the steps needed to measure and identify efficiency savings in resource-limited settings.
At our preconference session, we highlighted further potential efficiency gains for JKN, Indonesia’s national health insurance. In Indonesia, where facility reimbursements constitute nearly 80 percent of total JKN healthcare expenditure, we have to ask:
- How can we set appropriate reimbursement rates to control costs while ensuring high-quality care?
- How can we reduce payments made to the highest-cost diagnosis groups, which represent a disproportionate share of costs?
- How can we avoid up-coding to higher severity or unnecessary referrals to higher cost and higher profit hospitals?
- Are JKN’s recently updated reimbursement rates appropriate for private-sector facilities, which face competition from heavily-subsidized public facilities?
Another topic discussed at the conference was how efficiency at public facilities in many developing countries can benefit from improved budgeting methods. Global budgeting, while not itself a new concept, introduces new evidence for how hospitals can increase efficiencies and the cost-effectiveness of service delivery. By establishing a set budget for hospitals—independent of caseloads, mix, or of the rigidity of line item allocations—hospitals are given the incentives and flexibility to provide the most cost-effective interventions and mix of inputs.
The iHEA conference also highlighted a move away from the national health service model toward social health insurance among higher-income countries in an effort to increase efficiency. The UK is moving toward a national health insurance model which promotes a purchaser-provider split. This split promises to achieve more cost-effective delivery of services by combining the bulk-purchasing and negotiating power of a single payer system with the profit-maximizing incentives of the private sector. Should low- and lower-middle-income countries consider implementing national health insurance programs or is the national health service model a better fit?
Lessons learned from higher-income countries indicate that the answer is highly dependent on the country’s context:
- Is there political commitment for a national health insurance program?
- Can the potential single payer system stimulate enough competition to foster efficiency?
- Can the government effectively negotiate with the private sector?
As more low- and lower-middle-income countries consider implementing social and national health insurance programs, understanding and applying these concepts to their context is crucial to maximize their limited resources for health.