Financing Healthcare in Asia:
Issues and Challenges
William C. Hsiao, PhD, FSA
K.T. Li Chair Professor of Economics
Harvard School of Public Health
World Health Summit
Singapore
April 10, 2013
Importance of Health
Financing
Money is
the Mother’s Milk of Health Care
Organization & Incentives
Financing is More Than Mobilize Money
Mobilize
& collect
Funds
Pool the Risk
Allocate
Resources
Payment
Health Financing Functions and Objectives
Functions
Objectives
Revenue
mobilization &
Collection
raise sufficient and sustainable
revenues in an efficient and
equitable manner
Risk Pooling
pool health risks equitably and
efficiently
Resource
Allocation
Allocate the money efficiently to
provide individuals with a package of
essential services to improve health
status and to protect against
impoverishment against unpredictable
catastrophic financial losses
Issues in Financing
• What’s the nation’s ethical foundation for
health care? Is equity a priority over efficiency?
• For whom you allocate resources and for what
services/drugs?
• How much would the program cost? Who
pays?
• Can the nation’s transform money into effective
and efficient services?
• Is financing scheme sustainable?
Priority Setting
The dismal human conditions (i.e. Constraints):
•What’s the fiscal space?
•What’s the political space?
•What’s the health human resource capacity?
•What’s the technical capacity to design a “good”
and realistic policy for UHC?
•What’s the state capacity to implement UHC?
Stages of Development
Low Income
Countries
GNI $1,025 or less
Lower-Middle
Income
Countries
Upper-Middle
Income
Countries
GNI $1,026-4,035
GNI: $4,036-12,475
GNI $12,476 or
more
-Afghanistan
-Bangladesh
-India
-Indonesia
-China
-Malaysia
-Hong Kong
-Japan
-Laos
-Pakistan
-Thailand
-Turkmenistan
-Singapore
-South Korea
-Cambodia
-Kyrgyz Republic
-Myanmar
-Nepal
-Tajikistan
-Philippines
-Sri Lanka
-Vietnam
High Income
Countries
-Taiwan
Financing Issues Confronting
Advanced Economies
• Health expenditure inflation
Question of
financial sustainability
• Options for financial sustainability
Shift from public to private side (private insurance, outof-pocket payment by patients)
Reduce payments to physicians and hospitals
Increase taxation or shift budget to pay for health
• Alternative Strategy--Produce efficiency gains:
Shift resource to prevention and primary care
Improve operational efficiency
Low and Lower-income Nations
How Do You Finance
Universal Health Coverage?
Effective Coverage
Insurance coverage ≠ Effective
coverage
Current Situation—Low Income Nations
Depth
(Share of cost from pooled sources)
Income Class:
Top 20%
Next 30%
Bottom 50%
Breadth
(Proportion of people covered by income level)
Scope
(Service Covered)
Priority: Pro-Poor
Depth
(Share of cost from pooled sources)
Income Class:
Top 20%
Next 30%
Bottom 50%
Breadth
(Proportion of people covered by income level)
Scope
(Service Covered)
Priority: Pro-poor
Depth
(Share of cost from pooled sources)
Income Class:
Top 20%
Next 30%
Bottom 50%
Breadth
(Proportion of people covered by income level)
Scope
(Service Covered)
Innovative Financing
• Mandatory SAVING for long-term care and
use saving to purchase at age 65 with single
premium for long-term health insurance.
• Conditional cash transfer to encourage people
to seek better health.
• Variable premium for employers who provide
primary prevention at work place
Thank You!