Social health insurance is a misguided policy for Uganda
Social health insurance (SHI) enthusiasts claim that the proposed national SHI scheme for Uganda will address the key problems of the health sector, namely: cost escalation of health care, inadequate tax- funding, and unstable and unsustainable donor fund
By Dr Sam Okuonzi
Social health insurance (SHI) enthusiasts claim that the proposed national SHI scheme for Uganda will address the key problems of the health sector, namely: cost escalation of health care, inadequate tax- funding, and unstable and unsustainable donor funding. They also claim that Uganda should adopt SHI because such schemes are “working†in Kenya, Nigeria, Rwanda and Tanzania. But a critical analysis of the issues shows that none of these claims is true.
The latest evidence from the richest countries, which have experimented with SHI for over 50 years, is that the tax — financed health systems (TFHS) are far better in terms of health outcomes, efficient spending and employment opportunities (see World Bank Policy Research Working Paper number 4821 “Social health insurance vs. tax-financed health systems evidence from the Organisation for Economic Cooperation and Development (OECD)†by Adam Wagstaff, published in January 2009, at http://econ.worldbank.org
The study analyses SHI and financed health systems in 29 organisation for economic development countries between 1960 and 2006. Comparison of impacts of the two models was made with respect to mortality, spending and employment.
Four categories of countries were studied:
- Those with predominantly SHI (France, Germany, Switzerland)
- those with predominantly TFHS since 1960s (Canada, Finland, Ireland, the UK);
- Those that had SHI and switched to TFHS (Denmark, Italy, Norway and Sweden)
- Those that had SHI in 1940s, switched to TFHS in 1960s and back to SHI in 1990s (Czeck, Hungary, Poland and Slovak).
The results are astounding. SHI systems were found to be cumbersome, costly, and without organised referral (gatekeeper) arrangements, and with less than optimal health outcomes.
Contributors to SHI schemes typically pay for their personal welfare, not for the betterment of the whole health system. Typically, finance ministries reduce tax revenues they assign to the health sector as SHI revenues grow. So SHI revenues are not necessarily additional. In SHI systems, coverage of the population is not universal but is typically so under the TFHS.
It takes awfully a long time, at least 30 years, for a high income country to achieve universal coverage. Some organisation for economic development countries have not achieved universal coverage at all under the SHI system (Turkey and Mexico).
It is not uncommon to have gaps in healthcare packages offered under SHI schemes. Also, where there are many schemes competing for enrollees, some groups (the elderly and those with chronic diseases) will prove to be less profitable and will be avoided by insurers.
Gaps and inequalities in coverage under SHI schemes translate into less health outcomes nationally as compared to TFHS. Under the financed health systems, the health system is integrated and has a better chance of forging close relationship between public health and personal healthcare. But SHI schemes concentrate on the latter to the detriment of the former.
SHI raises the total health spending by 3 to 4 % unnecessarily and reduces formal employment by 8 to 10%. SHI systems perform worse in preventing premature deaths, especially of women from breast cancer, with 5 to 6% higher deaths. The study concludes that “SHI models have less comprehensive national public health activities than those of financed health systems because SHI systems focus on individual members and TFHS focus more broadly on the entire populationâ€.
Financed health systems have integrated population-wide programmes while under SHI schemes, countries have disjointed activities undertaken by several poorly coordinated health system actors. Thus, on the balance, a TFHS spends less, achieves better health for all, and leads to better formal employment opportunities.
The move to SHI in Uganda may be politically correct, but is not the best option for Uganda right now. It will divert attention from enabling the health system to function, which requires serious attention, to dealing with a small number of individuals, with negligible positive cumulative population-wide impact. It will lead to long-term and deep crisis in the health sector.
The clamour for SHI is not based on evidence or careful analysis but on a trend in Europe and elsewhere. The health system in Uganda has been run down over the past two decades because of copying a trend of free-market reforms.
African countries cannot hope to build health systems on SHI financing. Organisation for economic developmen countries managed to ride on the SHI systems because they had earlier established functioning health systems through tax-financed investments in the health sector. But African countries have no health systems to speak about.
The claim that SHI have been introduced in four African countries and therefore, it must be a good thing is false. None of the countries mentioned has a well functioning health system. Rwanda’s system which is often praised provides less than basic care under the SHI, leaving patients to seek for real care elsewhere, according to a recent survey report.
The basic problem is inadequate health services, arising from tax-based under-funding. In most cases, it is misallocation rather than whether the funds are available.
The evidence that is building up is that the direction for health systems development in Uganda and other poor countries is not to go through the SHI route but to build and consolidate health services through tax-financing. Some people think SHI is the shortcut to the desired health system. But in 30 years, we will come back to the drawing-board to start a tax-financed investment in the health sector — something we will have avoided doing for 50 years. Legislators can either save the situation or sink the country into oblivion when they take a decision.
The writer is a health policy and systems consultant
Social health insurance (SHI) enthusiasts claim that the proposed national SHI scheme for Uganda will address the key problems of the health sector, namely: cost escalation of health care, inadequate tax- funding, and unstable and unsustainable donor funding. They also claim that Uganda should adopt SHI because such schemes are “working†in Kenya, Nigeria, Rwanda and Tanzania. But a critical analysis of the issues shows that none of these claims is true.
The latest evidence from the richest countries, which have experimented with SHI for over 50 years, is that the tax — financed health systems (TFHS) are far better in terms of health outcomes, efficient spending and employment opportunities (see World Bank Policy Research Working Paper number 4821 “Social health insurance vs. tax-financed health systems evidence from the Organisation for Economic Cooperation and Development (OECD)†by Adam Wagstaff, published in January 2009, at http://econ.worldbank.org
The study analyses SHI and financed health systems in 29 organisation for economic development countries between 1960 and 2006. Comparison of impacts of the two models was made with respect to mortality, spending and employment.
Four categories of countries were studied:
- Those with predominantly SHI (France, Germany, Switzerland)
- those with predominantly TFHS since 1960s (Canada, Finland, Ireland, the UK);
- Those that had SHI and switched to TFHS (Denmark, Italy, Norway and Sweden)
- Those that had SHI in 1940s, switched to TFHS in 1960s and back to SHI in 1990s (Czeck, Hungary, Poland and Slovak).
The results are astounding. SHI systems were found to be cumbersome, costly, and without organised referral (gatekeeper) arrangements, and with less than optimal health outcomes.
Contributors to SHI schemes typically pay for their personal welfare, not for the betterment of the whole health system. Typically, finance ministries reduce tax revenues they assign to the health sector as SHI revenues grow. So SHI revenues are not necessarily additional. In SHI systems, coverage of the population is not universal but is typically so under the TFHS.
It takes awfully a long time, at least 30 years, for a high income country to achieve universal coverage. Some organisation for economic development countries have not achieved universal coverage at all under the SHI system (Turkey and Mexico).
It is not uncommon to have gaps in healthcare packages offered under SHI schemes. Also, where there are many schemes competing for enrollees, some groups (the elderly and those with chronic diseases) will prove to be less profitable and will be avoided by insurers.
Gaps and inequalities in coverage under SHI schemes translate into less health outcomes nationally as compared to TFHS. Under the financed health systems, the health system is integrated and has a better chance of forging close relationship between public health and personal healthcare. But SHI schemes concentrate on the latter to the detriment of the former.
SHI raises the total health spending by 3 to 4 % unnecessarily and reduces formal employment by 8 to 10%. SHI systems perform worse in preventing premature deaths, especially of women from breast cancer, with 5 to 6% higher deaths. The study concludes that “SHI models have less comprehensive national public health activities than those of financed health systems because SHI systems focus on individual members and TFHS focus more broadly on the entire populationâ€.
Financed health systems have integrated population-wide programmes while under SHI schemes, countries have disjointed activities undertaken by several poorly coordinated health system actors. Thus, on the balance, a TFHS spends less, achieves better health for all, and leads to better formal employment opportunities.
The move to SHI in Uganda may be politically correct, but is not the best option for Uganda right now. It will divert attention from enabling the health system to function, which requires serious attention, to dealing with a small number of individuals, with negligible positive cumulative population-wide impact. It will lead to long-term and deep crisis in the health sector.
The clamour for SHI is not based on evidence or careful analysis but on a trend in Europe and elsewhere. The health system in Uganda has been run down over the past two decades because of copying a trend of free-market reforms.
African countries cannot hope to build health systems on SHI financing. Organisation for economic developmen countries managed to ride on the SHI systems because they had earlier established functioning health systems through tax-financed investments in the health sector. But African countries have no health systems to speak about.
The claim that SHI have been introduced in four African countries and therefore, it must be a good thing is false. None of the countries mentioned has a well functioning health system. Rwanda’s system which is often praised provides less than basic care under the SHI, leaving patients to seek for real care elsewhere, according to a recent survey report.
The basic problem is inadequate health services, arising from tax-based under-funding. In most cases, it is misallocation rather than whether the funds are available.
The evidence that is building up is that the direction for health systems development in Uganda and other poor countries is not to go through the SHI route but to build and consolidate health services through tax-financing. Some people think SHI is the shortcut to the desired health system. But in 30 years, we will come back to the drawing-board to start a tax-financed investment in the health sector — something we will have avoided doing for 50 years. Legislators can either save the situation or sink the country into oblivion when they take a decision.
The writer is a health policy and systems consultant