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Covering the informal sector

Eduardo P. Banzon
Senior Health Specialist
SDAS - SDCC

Thanks to Joe Kutzin and Inke Matheur of WHO-HQ for their slides

DISCLAIMER: This presentation does not necessarily reflect


the views of ADB or the Government concerned, and ADB
and the Government cannot be held liable for its contents.

HISTORICALLY
Service provision
Household (HH) out
of pocket
Government
financing

Ministry of
Health
Budget
Salaries

Private
Health Care
Providers

Government
Health Care
Providers

Through the years


Population Coverage is not clear
Entitlements were implicit
Accountability to fulfil entitlements weak

Decrease Access to Needed Health Care services


Limited government revenues resulting:

ONLY Prescriptions and diagnostic orders provided


Dual practice
Rationing of access to services and procedures
Infrastructure and equipment poorly maintained /not upgraded

Increasing Out of Pocket payments and worsening financial


protection
Growing yet minimally regulated private sector
Responses to limited government revenues

Call for Universal Health Coverage

Some countries decided to improve government direct provision

MANY others used national health insurance (NHI) systems as


their primary instrument
4

Covering All People in NHI


Formal Sector

Non-poor informal sector

Poor and Near Poor


Other vulnerable population

Feasible to collect direct income taxes and


other income-related compulsory premiums

With capacity to pay but with some


difficult to collect income taxes and
voluntary or compulsory income-related
payments BUT easy to collect indirect taxes
from them

Difficult to collect income taxes,


compulsory and voluntary
income-related fees/premiums
and with minimal capacity to pay
BUT easy to collect indirect taxes
from them

Covering All People in NHI


Formal Sector

Non-poor informal sector

Poor and Near Poor


Other vulnerable population

COMPULSION
Compulsory with or without
subsidies?
Full subsidies?
Voluntary with or without
partial subsidies?

SUBSIDIES

NHIs and government subsidies


NHI schemes

% of government subsidies as
to NHI spending

Japan

25%

Hungary

> 50%

Moldova

55% (2008)

Kyrgzystan

78% (includes "basic"


package for all)

Ghana

61%

Rwanda (partial subs)

% of subsidized as of
total "insured by the
NHI

71% (NHIA 2010),


YEAR
13.5% of CBHI
members fully
subsidized

Gabon

60%

69%

Philippines

2.6% of THE (2010)

59% (2015)

Vietnam

43% (2009)

60% (2009)

Provisions of the Philippines Sin Tax Law


(Republic Act 10351)
Rule II, Section 1.2 General allocation of incremental
revenue from Sin Tax

85%

15%

Allocation for
Health

Allocation for
TobaccoProducing LGUs

100%
Incremental
Revenue from
Sin Tax

Provisions of the Philippines Sin Tax Law


(Republic Act 10351)
Rules III and IV: Allocation for Health

80%
Allocation for
Universal
Health Care,
MDGs and
Awareness

20%
Allocation for
Medical
Assistance and
Health Facilities
Enhancement

100%
Incremental
Revenue from
Sin Tax for
Health

DOH Budget 2010 2016


In Billion PhP

Sin Tax Revenue

Distribution of Sin Tax Incremental


Revenue* for Health (in billion pesos)
2014

2015

2016

Universal Health
Coverage +

80%

24.50

26.97

55.65

Medical
Assistance &
HEFP

20%

5.99

6.77

13.75

30.49

33.74

69.40

Total

*Based on Projected Sin Tax Increment

Lessons from a few successful


voluntary NHIs
Level and mechanisms used for directing budget subsidies,
with cost of the premium being less than the perceived
value of the benefit, stimulating demand (implicit
subsidies)
Strong central governments able to direct local government
actors and encourage population to enroll (quasicompulsory)
Population aware that not being covered means risk of
high out-of-pocket spending (soft compulsion)
Services must be both physically available and deemed to
be worth it by the population

Moving Forward in covering the informal


sector population
Compulsion

some who can afford it are unwilling to voluntarily pre-pay

Subsidization

some will be too poor or too sick to be able to voluntarily pre-pay

One condition without the other wont work:

subsidies alone not sufficient because rich/healthy will not join; and
compulsion without subsidies imposes a heavy burden on the poor and
sick

A number of countries are moving to compulsion + FULL


SUBSIDIZATION (i.e.Thailand)

Covering All People, NHI and UHC


Formal Sector

Non-poor informal sector

Poor and Near Poor


Other vulnerable population

COMPULSION

COMPULSION +
(FULL) SUBSIDIES
AS WELL
(COMPULSION)
+ SUBSIDIES

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