Health insurance must be an election agenda

If Nepalis are to vote on issues rather than personalities in this year’s elections, they should pay attention to the manifesto of the Nepali Congress (NC) which has put an emphasis on the 2017 National Health Insurance Act.

It was the NC’s firebrand leader Gagan Thapa who pushed that legislation when he served as Health Minister. He is now the party’s general secretary, and sees health insurance as a way to improve the access and affordability of quality health care in Nepal.

Even for a country like Nepal, universal health coverage is not a distant dream if there is the necessary political will. The Covid-19 pandemic has already made it evident that investing in health care and prevention is central to the well-being of the society with added economic benefits.

Many countries in the region have health insurance for their citizens. An example is Thailand’s Universal Health Coverage Scheme, lauded as the best model for a developing country. 

The Nepal Health Insurance program was initiated to achieve universal health coverage and was one of the key agendas in the 2015 election with widespread political support. The program actually started in 2016 and the Health Insurance Act was enacted in 2017. 

With Ministry of Finance (MoF) funding, it offers monetary protection to people by paying directly to the service providers’ on-behalf of insured members. 

In a few years, Nepal’s health insurance program has had a scalable impact. Our 2020 study in the Kaski district showed that in patient expenses of insured families was less than that of non-insured ones, and were also better protected against catastrophic expenses than the non-insured. 

Broadly, the program aimed to improve the health quality through provider and purchaser split, and by employing a strategic purchasing approach. For instance, in Thailand, the National Health Security Office purchases services for 43 million people independently which has played a large role in improving health care services. 

Health insurance generates an additional health budget, as it is a pooling mechanism. The MoF has allocated the insurance budget without curtailing the current national health budget.

Unfortunately, the insurance scheme design and implementation have been drowned out by political rhetoric resulting in operational ambiguity and erratic implementation. Without a serious political will to strengthen the program, it is likely to come to grief before long. 

Insured people are dissatisfied with service providers for their historically low-quality services. In fact, the quality of care has worsened in places after the insurance scheme was introduced, resulting in a high drop-out rate. 

In turn, service providers are frustrated over the Health Insurance Board (HIB)’s sluggish reimbursement process and some have even stopped their facilities. The HIB does not have adequate skilled human resources to speed up the reimbursement, nor has it formulated an efficient service purchase mechanism. 

The Board has not been able to function as a prudent insurance manager because of the lack of basic organisational policies on human resources, finance, monitoring and evaluation, communication etc. There are also crucial design errors in the insurance program, such as reimbursement strategy, un-equitable premiums, and provider/purchaser split, to name a few. 

The current program primarily employs fee-for-service (FES) which is a traditional, retrospective and input-based approach with a cumbersome process to review, validation of cost, and payment. The FES was selected despite other programs including free health service and safer motherhood implementing relatively efficient, output-based and prospective approaches such as capitation. 

There are also traditional and cultural problems within the MoH, and HIB as a semi-autonomous body does not have the influence or muscle to monitor and negotiate with service providers

The premium amount and benefit package was fixed through very limited study which was a modest Rs2,500 and Rs 50,000 respectively in the beginning, later increased to Rs 3,500 and Rs100,000 but with no scientific basis. 

This benefit package is quite small for a family of five. The amount gets smaller with increased cost for the high prevalence of non-communicable and chronic diseases in the general population.

Apart from the targeted groups (with premium subsidy), the flat premium amount of Rs3,500 for the rest is largely unbalanced. The richest 10% of Nepal’s population has more than 26 times the wealth of the poorest 40%. What this means is that while Rs3,500 is peanuts for some households, it could be a monthly household food expense for others.

Despite this, the HIB claims that there is no clear provider and purchaser split between MoH and HIB, the former has a high influence on the latter’s organisational structure, as such, many staffing decisions are still pending the ministry’s approval years later. 

The majority of the HIB staff are seconded from the Ministry of Health,  none of them are health economists or have financial background. Learning by doing is a costly, ineffective and inefficient approach for a high-priority national program. 

Similarly, the Health Insurance Board is incapable of coordinating with line ministries for the program’s effective implementation. For example, the Act has delegated the NIB’s members to standardise service providers’ quality control. However, its board is dominated by MoH members. 

This results in poor service quality, leading to dissatisfaction amongst insured populations and in the high dropout rate and under-utilisation of the services. 

Nepal’s health insurance program must undergo a serious and urgent reform to prevent it from becoming obsolete:

Short to medium term recommendations:

  1. HIB needs to develop organisational guidelines to streamline reimbursement. The focus must be on demand generation to enrol rich, healthy and poorest groups equitably.
  2. The health service purchasing strategy must be reviewed, and this should also guide the structure and human resources needed. 
  3. Private health service providers will inevitably be integrated into the program given the access gaps created by the limited number of public providers. But private providers are often more politically placed and vested interest can put HIB in a weaker negotiating position.   
  4. HIB should develop standards for hospital/PHCC preparedness, provide additional training and incentives for the health workers and develop monitoring tools.
  5. Integration with other social security funds and health programs will improve efficiency and reduce duplication and wastage. Coordination with these funds will help access data on informal, and formal sector populations and cross-share promising practices particularly on investment.
  6. HIB should partner with existing research agencies and health economists to conduct studies and use ground-up feedback to reform. 

Long term recommendations:

  1. Premium-based pricing won’t be fair or sustainable because of poverty and amidst high informal sector employees. So HIB should look into the possibility of fully tax-funded schemes for the informal sector populations.
  2. Provider and purchaser split: The provider and purchase split might go through lengthy technical and political discussion after HIB fulfils the majority of short and medium plans eventually. It requires having clear roles and responsibilities between MoH and HIB, understanding of the scope of work and mutual trust. 

Gaj Gurung is a public health practitioner currently based in Bangkok, Thailand. He has PhD in public health from College of Public Health and Sciences, Chulalongkorn University. His PhD evaluated the Nepal Health Insurance Program implementation fidelity and its effectiveness in reducing the out-of-pocket health expenses amongst insured populations.

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