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Social Health Insurance – Solution to the Healthcare Financing in Pakistan and Developing Countries

Submitted by on August 29, 2013 – 10:46 PM


nsfBackground: Social health insurance (SHI) is one of the key methods of healthcare financing. Many countries have attained the goal of universal health coverage by implementing this method. Numerous developing countries are presently working towards extending their current health insurance coverage for targeted populations to ultimately cover their entire populations. For those countries interested in such an extension, it is vital to comprehend the factors that affect the transition from fragmented to universal health coverage. 1-5




SHI pools both the health risks of enrolled members, on one hand, and the revenues collected from enterprises, households and government, on the other. Usually the contributions from employers and households are based on percentage of salary deductions, while government contributions come from the collected of general taxes. SHI basically responds to the goal of universal health coverage, through which a package of basic healthcare services is accessible to all, regardless of income and social status. SHI is therefore, theoretically different from user-fee and direct payment mechanism, in which the user is solely liable for the payment of medical treatment at the time of illness. 2 6 7




This paper attempts to explore experiences of developing countries with health reforms for implementing social health insurance. Lessons should be learnt from their experiences and health reforms shall be brought in Pakistan for national health insurance. Also, there is ample opportunity for health policymakers to research on this topic with the objectives of improving overall health of population, and increase equity as well as efficiency of health system.3-5 7-9




Methods: Literature review was conducted from May 17, 2013 to June 2, 2013 from Science Direct, Willey Science, Google Scholar, WHO Reports and WB Publications. WHO handbook on Social Health Insurance (1994) and World Health Report 2010 were the additional readings referred for referring significance of SHI and its proposed strategies for implementation. Combination of following search terms for inclusion: “Social Health Insurance”, “National Health Insurance”, “Universal Health Coverage”, “developing countries”, and “Pakistan”. The terms for exclusion were: developed countries, website commentaries, and newspaper columns. Primary data was also referred such as case-studies cited in organizational reports.




Findings: The key findings from literature search are summarized in the table annexed at the end of the document. Various case studies illustrated origin and evolution of health reforms regarding social health insurance. The literature was reviewed for developing countries that include Vietnam, Indonesia, India, Philippine, Republic of Korea, China and South Africa3 10-18. The comparison of systems could be made upon the coverage box model of universal health coverage mentioned in World Health Report 2010. 1 8 Moreover, a comparison of approaches could be done, upon revenue generation, types of risk pooling and service delivery by private or public sector.




The first comparison of coverage box model reveals that majority of the countries who have developed national health insurance aim to target entire population. Whereas, the total percentage of population covered via SHI is highest in republic of Korea.  As far as scope of services is concerned, PhiliHealth covers only inpatient with outpatient services for only 4% of the population that is extreme poor. Otherwise all countries in contrast provide comprehensive services.




The second comparison between revenue generation and risk pooling mechanism could be done. Almost every country in comparison has adapted one common mechanism of general tax revenue and payroll tax deduction. Whereas health cards are made for poor to be recognized and equity is insured in Vietnam. India has started successful pilot projects based on health cards for poor. Lastly, it is observed that countries that adapted single (unitary) risk pooling successfully achieved universal health coverage such as the case in Korea and Philippine.




Further analysis could be done on stewardship, role of economic growth, and provider-payment mechanism. The case of Kenya and Vietnam illustrates that strong stewardship and transparent accountability is necessary to gain trust of general population.2 10Similarly, cost-sharing in Korea proved to rationalize medicine and technology use.2 3 5 Hence, user fee must be studied for possible supplier induced demand in developing countries. Also, the case of balance billing was seen in many countries which gives rise if cost discrimination.3




Discussion and analysis: There is no single simple guideline for implementation of social health insurance in Pakistan. To meet the demand for national health insurance, government has to increase health budget. It is also necessary to create ways for collaboration between government and all the stake holders like population at large, government as well as private hospitals, NGOs, CBOs, private health insurance companies, social welfare institutes and all leading entrepreneurs for considering the need for social health insurance to achieve universal health coverage.




Firstly, policy makers in Pakistan should move towards a comprehensive and integrated national health policy, and allocate budget towards quality and number of health services, before developing national health insurance. Furthermore, government health expenditure should increase and in the long run health financing should be independent from external donors. Also, Pakistan must overcome problems of unequal income distribution and lack of solidarity across provinces, prior to implementing SHI reforms.




Exclusively pertaining to SHI reforms, it is important to ear-mark a certain percentage of tax for health. This will be applicable to all government employees. Policy reform must be made to compulsory enroll private sector employees in health insurance schemes. A flat-rate enrollment for self-employed could attract them for inclusion.


The enrollment should not be restricted to employees only, as was the case with China and Vietnam. The enrolment of families is necessary because the exclusion of dependents from insurance will ultimately result in out-of pocket expenditure. In reference with the lessons learnt, Pakistan must follow the footsteps of Korean and Vietnam model by stratifying poorest among poor and targeting the needs of that population by introducing health cards. Also, the risk pools can be merged between private insurance companies and state employees’ tax deductions to form a larger pool as happened in Korea.


As the larger single pool will balance the risks of population, it will reduce issues of access and affordability. Also, the single pool will be administered by government so it will be free from dividends. Also, the national health policy must shift its focus from user fee payment mechanism to capitation and cost-sharing. It will increase rational use of medicine and technology.


A further improvement could be brought up by engaging private sector in contracting. Capitation mechanism will reduce costs and guarantee accountability.




It is shown in the Korean model that the cost sharing reduced irrational medicine. Another measure to increase efficiency of national health insurance is to de-concentrate its administrative structure. The community based insurance schemes must be encouraged with the autonomy to manage the members and the services offered to them. All community based insurance schemes could be pooled into a single pool as happened in Korea.




After reviewing case studies from developing countries, it is evident that comparatively less research has been done in Pakistan on Social health insurance. Although initiatives have been taken at provincial level in KPK (previously known as NWFP) and Punjab, but there is no documented research study to my knowledge that focused on impact of health insurance towards improved health status of population.




First of all, it is necessary to conduct baseline knowledge, attitude and practices research on introduction of health insurance for informal sector. Also, the stakeholders’ analysis shall be done in order to bring consensus for national health insurance. Moreover, the health systems research on policy reforms is required to introduce insurance schemes that would target poor and vulnerable population and improve health indicators of maternal and child health.




Limitations: Firstly, there is a dearth of local and regional peer-reviewed research on social health insurance. Only documentaries and commentaries are available in local context.




Secondly, there are organizational reports that describe case studies of different countries, but the focus is towards universal health coverage.




Thirdly, there are fewer studies even in developed countries that question health system’s efficiency and equity aspects. There are even fewer studies that evaluate impact of health care financing reforms related to social health insurance. Moreover, a few articles were inaccessible.




Lastly, there were a few studies discussing the findings in econometric calculations that I am unaware. Hence, it was difficult to understand econometric solutions and their findings.




Conclusion: In conclusion, it is complex to apply government funded SHI scheme at national level envisioning universal health coverage due to financial as well as human resource constraints. But there have been recent developments such as newly formed government after elections 2013, provincial governments have autonomy to form budgets and allocate resources for health, scale up pilot schemes like Benazir Income Support Program at provincial level and then national level.




The current state of affairs is perfect to endorse policies at provincial levels for engagement of private sector for compulsory enrollment of employees in health insurance schemes. The community based family health insurance schemes shall be tested and scaled up in order to increase the percentage of total population covered. In a nutshell, three main fundamentals for social health insurance in Pakistan could be increased health budget, awareness and open debate on merits of social health insurance, and public private engagement to ensure accountability, access, quality and advocacy for national health insurance reform.






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2. Carrin G. Social health insurance in developing countries: a continuing challenge. International Social Security Review 2002;55(2):57-69.


3. Lagomarsino G, Garabrant A, Adyas A, Muga R, Otoo N. Moving towards universal health coverage: health insurance reforms in nine developing countries in Africa and Asia. The Lancet;380(9845):933-943.


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About the Author: Hussain Maqbool Ahmed Khuwaja is a student at AKU, Pakistan, studying MSc Health Policy and Management. He graduated BScN from AKU School of Nursing and worked in AKUH for 2 years as registered nurse. He wishes to work for Research and Development, Policy Analysis and Public Health Management in future. He can be reached at [email protected]


About this article: This article is competing for the JPMS International Medical Writing Contest 2013

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