Equity and financial risk protection: How were policies for the Universal Coverage Scheme

in Thailand developed?

• Consistent political and financial commitment,

despite several changes in government in the last

decade, played a key role in nurturing and

strengthening the Universal Coverage Scheme

(UCS).

• The decision to fund the universal scheme from

general tax was made possible by the need to fulfil

an election promise and adequate fiscal

capacities; collecting premiums from UCS

members in the informal sector was neither

politically nor technically feasible.

• There is now a considerable public ownership of

the UCS, which is important for holding politicians

accountable.

• The initial relatively comprehensive benefit

package was extended to include anti-retroviral

treatment (ART) in 2003 and renal replacement

therapy (RRT) for patients with end stage kidney

failure in 2007. These additions to the package

were driven by the ethical imperative to provide

life saving interventions and to garner political

support before an election.

• Evidence is power: the NHSO budget is

determined by the population covered by the

UCS, and evidence on current service utilization

rates and unit costs. In this way, the NHSO has

managed to secure adequate annual budgets

while extending the benefit package to cover high

cost services.

In 2001, prior to the achievement of universal

health coverage (UHC), approximately 30% of

the Thai population were uninsured despite the

gradual extension of coverage of the Medical

Welfare Schemes for the poor and vulnerable

population; the Social Health Insurance (SHI)

scheme for private sector employees; the Civil

Servant Medical Benefit Scheme (CSBMS) for

government employees, retirees and

dependants; and the public subsidized voluntary

health insurance for the informal sector [1].

It took 27 years from the launch of the Medical

Welfare Scheme in 1975 before UHC was

introduced for the whole population in 2002 [1],

when GNI per capita was US$ 1,900.

Beneficiaries of the Medical Welfare Schemes

and the publicly subsidized voluntary insurance

scheme, and the 30% uninsured were all

covered by a new UC scheme (UCS), financed

from general taxation. See Figure 1.

Background Key points

Figure 1 Thailand’s pathway towards universal health

coverage against GNI per capita, 1970-2010

Page 1 Equity and financial risk protection:

How were policies for the Universal Coverage Scheme in Thailand developed?

441111

Evidence on equity and financial risk protection

o General tax is the most progressive source of finance;

the rich contribute a higher proportion of their

income to health financing through tax than the

poor.

o The use of health services is pro-poor. The “close to

client” district health system plays a crucial role in

pro-poor utilization due to its geographical proximity

to the rural population, who are mostly poor.

o Government health spending has benefited the poor

more than the rich prior to and after UCS.

o Financial risk protection had been greatly improved.

Catastrophic health expenditure, measured by health

expenditure exceeding 10% of household

expenditure, dropped from 6.8% in 1996 to 2.9% in

2009 amongst the poorest quintile (see Figure 2).

o As a result of its comprehensive benefit package,

which has been extended to include high cost

services and is free at point of service, UCS prevents

non-poor households becoming poor due to medical

expenditure. Medical impoverishment reductions at

sub-national level are impressive (see Figure 3).

Incidence of catastrophic health spending by wealth quintiles,

>10% household consumption, 1996-2009

5.1%

7.1%

3.4%3.8% 3.7%

2.8% 2.8% 2.9%

6.0%

7.1%

5.0%5.5% 5.6%

4.9%

3.7%

4.7%

6.1%

6.8%

0.0%

2.0%

4.0%

6.0%

8.0%

1996 1998 2000 2002 2004 2006 2007 2008 2009

Q1 Q5 All quintiles

Figure 2 Incidence of catastrophic health expenditure prior to

UCS 1996-2000 and after UCS, 2002-2009, national averages

Page 2 Equity and financial risk protection:

How were policies for the Universal Coverage Scheme in Thailand developed?

Per 100 households

0 – 0.5

0.6 – 1.0

1.1 – 2.0

2.1 – 3.0

3.1+

Per 100 households

0 – 0.5

0.6 – 1.0

1.1 – 2.0

2.1 – 3.0

3.1+

Per 100 households

0 – 0.5

0.6 – 1.0

1.1 – 2.0

2.1 – 3.0

3.1+

1996 2002 2008

Figure 3 Household medical impoverishment map, prior to UCS (1996), at time of UCS implementation (2002), and post-UC 2008

Three features have particularly contributed to health equity: 1) a tax-financed universal scheme; 2) a

comprehensive package that was gradually expanded to cover high cost catastrophic illnesses; and 3) the

capacity of the NHSO to mobilize resources. This study sought to explain how and why these features came

about. What was the interplay between different actors with varying powers, influence and positions, within

the given context of decision-making and governance, in shaping these features?

Political events contributed in a major way to policy decisions. During the election campaign in January 2001, the Thai

Rak Thai party, convinced by reformists in the MOPH, made an election promise to introduce UHC and adopted “THB 30

for treatment of all diseases” as a campaign slogan.

To fulfill this political promise, tax financed UCS was decided upon. Collecting premiums from UCS members, who

were mostly engaged in the rural informal economy, was neither technically feasible nor politically palatable [3].

While the total estimated resource requirements for universal coverage were THB 56.5 billion, compared with the

MOPH’s pooled budget for health services of THB 26.5 billion, the shortfall of THB 30 billion was within the Prime

Minister’s leadership and capacity to mobilize without collecting premiums from members. The oppositions’ concerns

were ultimately disproved by empirical evidence which shows that utilization and budget subsidies under UCS are pro-

poor.

The study undertook document reviews and in-

depth interviews with key informants, including

policy actors, civil society representatives and

academics, and using a snow-ball technique.

Interviews were analyzed using NVIVO, based on

themes identified from an initial review of the

transcripts. The protocol was approved by WHO

and the National Ethics Committee.

Between 2001 and 2011, the UCS has survived seven

governments, six elections, one coup d'état, and ten Health

Ministers who chaired the National Health Security Board (NHSB).

Despite these political changes, UCS has received continued

support, as free access to a functional district health service

network not only improved access and utilization but also

significantly reduced household out-of-pocket payments. This

support is not only clear from political statements; financial

commitment has also been demonstrated by government health

expenditure increasing from 56.3% to 74.8% of total health

expenditure over this period [2].

Despite rapid turn-over of Governments, the technical arms of the

NHSB are relatively stable. The chairpersons of the Finance and

Benefit Package sub-committees served long terms and

consistently applied evidence to systems design. The UCS

secretariat was also relatively stable. The NHSO has good

operational capacity and has effectively implemented policy.

Strong national health policy and systems research capacity has

supported the functions of these technical arms of the NHSB.

Page 3

Equity and financial risk protection:

How were policies for the Universal Coverage Scheme in Thailand developed?

Methods:

Tax-financed universal scheme: political promise and financial feasibility

UCS 2001-2011: continued enabling environments

“I don’t understand why UCS should cover the rich who should pay their own health; tax revenue should be used by the

poor. When services are free, the rich will crowd out services.” (KI03 academic and public provider)

Since its inception, the UCS has covered a comprehensive,

not minimum, benefit package. Path dependence matters;

all schemes prior to the UCS had provided a comprehensive

package, covering a wide range of services with an

exclusion list including services such as treatment of

infertility and aesthetic treatment or surgery.

Cabinet approved expanding the package to include RRT in

2007 due to civil society pressure and recognizing the real

hardship of paying for dialysis out-of-pocket [4]

.

The NHSO demonstrated good performance as a skilful

purchaser, ensuring access to high cost services covered by

the package through initiatives such as outsourcing services

to private hospitals with spare capacity. Central negotiation

and active purchasing by the NHSO has contained costs.

Page 4 Equity and financial risk protection:

How were policies for the Universal Coverage Scheme in Thailand developed?

Deepening financial risk protection: path dependence and NHSO capacities

Annual budget exercise: evidence based negotiation on a level negotiation field

The UCS budget more than doubled from THB 1,202 Baht per member in 2002 to THB 2,693 in 2011. This was driven by

increases in utilization rates and annual increase in the cost of production, as well as expanding benefit coverage to

include ART and RRT.

There were significant changes in budgeting for the health sector with the advent of UCS. Budgets are now determined

on a per capita basis, taking account of utilization rates and unit costs. The new budgeting system furnishes an

evidence-based level negotiation field and has curtailed the discretionary power of the Bureau of Budget (BOB).

The annual budget process comprises of a series of detailed discussions between BOB and the NHSO’s Financing sub-

committee and it has become more of a “public issue”. Public ownership has been created gradually with media

monitoring of budget discussions to ensure that UC members’ interests are protected.

“NHSO negotiates price of haemodialysis down from

US$ 67 to US$ 50 per session, with a million sessions a

year, cost saving was as large as US$ 170 million.

Price of drug coated stents for coronary artery

expansion went down from US$2,700 to US$ 600 per

piece resulting in US$ 21 million annual cost saving.”

(KI 05, implementer and KI 18, policy maker)

“In the Cabinet, I saw no objections from members of

the Cabinet (ministers and vice ministers), though the

policy had long-term fiscal implications.”

(KI09 policy maker)

Reference:

1. Tangcharoensathien V., Prakongsai P., Limwattananon S., Patcharanarumol W., and Jongudomsuk P. From targeting to

Universality: lessons from the health system in Thailand (Chapter 16). In Townsend P, editor. Building decent societies:

rethinking the role of social security in development, 310-322. Houndmills, Basingstoke, Hampshire: Palgrave Macmillan, 2009

2. Thai Working Group on National Health Account. National Health Account 1994-2010. Nonthaburi, International Health Policy

Program

3. Pitayarangsarit S, The Introduction of the Universal Coverage of Health Care Policy in Thailand: Policy Responses. Doctoral

thesis, London School of Hygiene and Tropical Medicines, 2004

4. http://prachatai.com/node/14458/talk [access 2 February 2012]

Acknowledgement:

This study is financially and technically supported by the Alliance for Health Policy and Systems Research, WHO. We also wish to

acknowledge the inputs of the Health Systems Financing Department, WHO and the late Guy Carrin, in particular.

Correspondent: Viroj Tangcharoensathien, International Health Policy Program (IHPP), Ministry of Public Health, Thailand

(viroj@ihpp.thaigov.net)

This policy brief is produced in February 2012 and is designed by Mr Meta Boonasart, IHPP