Report of the technical support mission for the
Feasibility assessment and financial projection results for a
Social Health Insurance Scheme in Swaziland
Exploring Possible Options
WHO, July 2008
Report prepared by:
Inke Mathauera Laurent Musangob
Guy Carrina Khosi Mthethwac
a World Health Organization, Headquarters, Geneva
b WHO African Regional Office, Brazzaville
c WHO Country Office, Swaziland
Table of Contents
Acknowledgement ... iii
Acronyms ...iv
EXECUTIVE SUMMARY ...V 1. INTRODUCTION ... 1
1.1. Overview and purpose of the report... 1
1.2. Health financing mechanisms ... 2
1.3. The rationale for social health insurance in Swaziland... 3
2. STUDY OBJECTIVES AND STUDY METHODS ... 4
2.1. Terms of Reference ... 4
2.2. Methodology ... 4
2.3. Stakeholders and respondents consulted... 6
2.4 SimIns projections... 6
2.5. SimIns Training... 7
3. THE SWAZILAND HEALTH CARE SYSTEM ... 9
3.1. Health policy objectives and health sector reform objectives with respect to health financing... 9
3.2. Health expenditure... 9
3.3. Health care provision... 10
3.3.1. Decentralization and the role of the Regional Health Management Team (RHMT) ... 10
3.3.2. Health care infrastructure and staff ... 12
3.3.3. NGO/mission facilities... 12
3.3.4. The private sector... 13
3.4. Key challenges in the health sector... 14
4. FINDINGS FROM STAKEHOLDER CONSULTATIONS ... 15
4.1. Views from stakeholders ... 15
4.2. Views from providers ... 17
4.3. Views from ministerial stakeholders ... 18
4.3.1. Ministry of Health and Social Welfare... 18
4.3.2. Ministry of Economic Planning... 18
4.3.3. Ministry of Public Service and Information (MOPSI) ... 19
4.3.4. Ministry of Enterprise and Employment (MoE)... 19
4.3.5. Ministry of Finance (MoF)... 20
4.4. Views from civil society... 21
4.4.1. Civil servants' unions (teachers, nurses, civil servants):... 21
4.4.2. Employers Federation ... 21
4.4.3. SUFIAW (Swaziland Union Federation for Financial Assistants and Workers) ... 21
4.4.4. CANGO ... 22
4.4.5. Rural Health Motivators... 23
5. KEY DESIGN ISSUES OF SOCIAL HEALTH INSURANCE AND MANAGERIAL IMPLICATIONS... 24
5.1. Resource collection ... 24
5.1.1. Additional resource mobilization ... 24
5.1.2. Contribution rates... 25
5.1.3. Collection methods... 30
5.1.4. Willingness to pay SHI contributions in the context of tax-financed government health provision... 32
5.1.5. Willingness to pay SHI contributions among the very high-income earners... 33
5.2. Pooling... 34
5.2.1. Type of membership... 34
5.2.2. Membership basis... 36
5.2.3. Number of pools... 36
5.2.4. The role of private health insurance ... 37
5.2.5. Merging of RSA referral scheme funds with the SHI scheme... 38
5.3. Purchasing ... 38
5.3.1. Benefit package... 38
5.3.2. Strategic purchasing and provider payment mechanisms ... 42
5.3.3. Setting provider remuneration rates ... 44
5.3.4. Contracting... 46
5.3.5. Accreditation and quality management ... 46
5.3.6. Co-payments ... 48
5.4. Governance and management of the SHI fund... 49
5.4.1. Governance structure... 49
5.4.2. Management structure and administration... 50
5.4.3. Measures to ensure appropriate use of SHI funds ... 51
5.4.4. Government's stewardship function ... 51
5.5. Administration costs and reserves ... 52
5.6. Regulatory framework and a SHI Law... 52
5.7. Key differences between Private Health Insurance and Social Health Insurance... 54
6. FINANCIAL PROJECTIONS ... 55
6.1. Description of Scenario C: "Phased SHI for all Swazi over 6 years"... 57
6.2. Results and implications of Scenario C... 65
6.2.1. Equity and solidarity ... 65
6.2.2. Financial feasibility ... 65
6.2.3. Government employer contributions to SHI... 68
6.2.4. The structure of health expenditure... 69
6.2.5. Resource flows ... 69
6.3. Managerial implications for Scenario C... 70
6.4. Variants of Scenario C... 70
6.4.1. Sensitivity analysis: Variations relative to Scenario C input variables... 70
6.4.2. Other variants of Scenario C ... 70
6.5. Conclusions for Scenario C ... 72
7. CONCLUSIONS... 75
7.1. Feasibility of Social Health Insurance... 75
7.2. Key decisions to be taken by Government... 76
7.3. SHI Implementation Plan... 77
7.3. Further success requirements ... 78
7.4. Challenges and open questions... 78
7.5. Summary of recommendations on key design issues for a planned SHI scheme... 79
References ... 83
ANNEXES
Annex 1 - Terms of References
Annex 2 - Data sources and assumptions for Scenario C Annex 3 - Description and analysis of Scenarios A and B Annex 4 - Sensitivity analysis
GDP p.c.: $4,800 (2007 estimations) (source: see Annex 2) Population: 950,000 (estimations for 2008)
Exchange rate: 1 USD = 7.79 Emalangeni (2008 average)
Acknowledgement
We thank the Minister for Health, Mr. Njabulo Mabuza as well as Ms. Nomathemba Dlamini, Principal Secretary, for his strong support of this social health insurance feasibility study mission.
The mission team would like to express their sincere thanks to Dr C Mabuza, Director of Health Services/Public Health for their enormous support to the mission's work.
Likewise, we are very grateful to Mr. Sibusiso Sibandze and his team for the great assistance during the mission both in terms of organizing the meetings, but above all in terms of the fruitful discussions and exchange of ideas. Mr. Sibandze had joined the mission team in mid February in Geneva to further discuss and agree on the assumptions made for the financial projection scenarios. This was extremely helpful and valuable for this exercise, and we therefore would like to specially thank him for his commitment.
We equally thank the teams of the Ministry of Economic Planning and Development, Ministry of Finance, Ministry of Public Service and Information, and the Ministry of Employment and Enterprise for the interesting discussions and the provision of data and information.
Furthermore, thanks are due to the members of the different discussion partners at provider level, among the private health insurance sector as well as civil society organizations who shared their views and information.
Last but not least, we extend our gratitude to the WHO Representative Dr. Edward Maganu and Mrs. Khosi Mthethwa and the team at the WHO country office as the driving force behind this effort. Both conceptually as well as organizationally, the WHO Swaziland office was indispensable to make this mission a success.
We also would like to thank Mr. Ole Doetinchem from the Health Financing Policy Team who assisted in some background calculation requirements for the SimIns projection scenarios.
Finally, thanks are extended to all respondents who shared their insights and views on the feasibility of Social Health Insurance in Swaziland with us.
Acronyms
ADB African Development Bank AFRO WHO African Regional Office ART Anti-retroviral therapy
CANGO Coordinating Assembly of Non-governmental Organizations E Emalangeni (currency of Swaziland)
GDP Gross domestic product GOS Government of Swaziland
Gvt government
Ibid. same place
IDA International Development Agency
IP Inpatient
KOS Kingdom of Swaziland
MoE Ministry of Employment and Enterprise MoF Ministry of Finance
MOHSW Ministry of Health and Social Welfare MoPSI Ministry of Public Service and Information NGO Non-governmental organization
NHA National Health Accounts NRPL National Reference Price List OOPs Out-of-pocket spending
OP Outpatient
p. page
p.c. per capita
PHE Private health expenditure PHI Private health insurance PPP Public-private partnership
RHMT Regional Health Management Team RSA (Republic of) South Africa
SHI Social health insurance
SimIns WHO-GTZ Health Insurance Simulation Model
SUFIAW Swaziland Union Federation for Financial Assistants and Workers
TB Tuberculosis
THE Total Health Expenditure TWG Technical working group
UN United Nations
USD US Dollars
WB World Bank
WHO World Health Organization
Executive Summary
The Ministry of Health and Social Welfare (MOHSW) of Swaziland requested the World Health Organization (WHO) to undertake a financial feasibility study of social health insurance (SHI) as an option of financing health care in Swaziland. This technical support was undertaken from January to July 2008. It comprised two missions to Swaziland and desk work, including stakeholder consultations and information/feedback workshops, data collection and preparing of financial projections. There is not one unique way to social protection for health and therefore WHO aims to assist in identifying down the possible options that are adequate and technically feasible in order to facilitate policy decision making by the Swaziland government.
The outcome from the discussions with stakeholders is a vision of social health insurance for all Swazi. For that matter, financial projections were made using the SimIns health insurance simulation tool. These give the MOHSW and other central agencies as well as policy-makers an indication of the financial implications of the policy directions under consideration. However, a complete and detailed actuarial analysis would still need to be undertaken once concrete and more detailed policy decisions have been made.
Two financial scenarios were prepared on the basis of the first mission consultations.
They can be summarized as follows:
Scenario A:
Social Health Insurance (SHI) for all Swazi with rapid transition to universal coverage All Swazi become members of the SHI within two years
The MOHSW budget is maintained; the additional resources mobilized through SHI are supposed to finance the additional health care costs due to increased unit costs (for improved service quality) and due to increased utilization rates.
Scenario B:
Social Health Insurance for all Swazi, with a gradual extension of coverage to the informal sector over 10 years.
Universal coverage is achieved within 10 years.
The SHI is financially fully responsible for all costs incurred by the insured.
Government subsidies cater for those with low incomes and those unable to pay contributions.
From the stakeholder feedback during the second mission, it became clear that a scenario inbetween the two above resonated well among them. Hence, an extension period of 2 years was considered to be too rapid, whereas reaching universal coverage over 10 years appeared too long. Therefore, a third scenario, called Scenario C “Phased SHI for all Swazi within 6 years” was developed that takes this and other concerns into account. It has the following characteristics:
Scenario C:
Social Health Insurance for all Swazi, with a gradual extension of coverage to the informal sector over 6 years.
Universal coverage is achieved within 6 years.
The SHI is financially fully responsible for all costs incurred by the insured.
Government subsidies cater for those with low incomes and those unable to pay contributions.
Summarized, these scenarios are assumed to achieve universal coverage, though at different speeds, i.e. all Swazi will become eventually members of the SHI scheme. As the poorer part of the population is exempted from contribution payments and co- payments (i.e. no out-of-pocket payments for the SHI benefit package), the likelihood for a Swazi to experience catastrophic illness expenditure, which constitutes one of the greatest risks of being impoverished, is substantially reduced. Furthermore, in these scenarios, the Swazi would have access to better health services than currently, if the additional resources mobilized through SHI are adequately turned into quality improvements in health care services.
Achieving universal coverage requires government spending on health: The MOHSW budget needs to be maintained (in constant prices) to pay for curative health care services at GOS and partly at mission/NGO services (in constant prices); in absolute terms, the MOHSW budget for curative health care would increase in line with inflation and economic growth.
In Scenario C, government funds flow (directly) to the SHI to subsidize the contributions for the exempted and for the low-income members. There is no financial deficit as the amount of government funds is budgeted in a way to avoid this.
The contribution share by government as an employer of civil servants would amount to E 60.4 Mio. for 2009, assuming a total contribution rate of 7% and employer and employee each paying 50% of this.
It is also important to note that with respect to the average out-of-pocket household expenditure on health, which was E 40 in 2001 - 4.65 USD (projected to be E 63 - about 9 USD - in 2008, current prices), many low-income formal sector workers and civil servants of lower grades will not pay more for health care than before. However, most of their current out-of-pocket expenditure would be turned into prepayment with the introduction of a SHI scheme, except some small OOPs for the remaining (low) co- payments. Since SHI relies on prepayment, households will no longer be forced to pay important sums out-of-pocket when illness strikes.
It is important to be aware of the challenges as well as success requirements with respect to realizing a SHI scheme. To address these requires careful reflections and planning on the design and implementation of SHI.
The government is advised to take key decisions in the following areas:
The type of health financing, i.e. the decision to favour social health protection via social health insurance, but with continued financial support from Government to the health sector, rather than a pure tax-based system;
The type of SHI, i.e. who is covered how quickly. The three scenarios provided sketch out difference options: Scenario A ("SHI for all Swazi - rapid transition to universal coverage", within 2 years), Scenario B ("SHI for all Swazi - with gradual extension to the informal sector", over 10 years), Scenario C ("Phased SHI for all Swazi", within 6 years) or variants of it;
The type of governance structure of the SHI fund;
The type of management structure of the SHI fund.
Once these key decisions are made, and the government opting for a SHI, it will have to decide on critical key design issues and to negotiate with the respective stakeholders, foremost the contribution rates and provider remuneration rates.
Two other critical issues to define and decide upon are the future role of private health insurance and of the medical referral schemes (Civil Servants Medical Referral scheme and Phalala Fund):
Ideally, private health insurance companies' role is that of complementary health insurance; in other words all Swazis are members of the social health insurance, and those who can afford it can purchase a top-up insurance package for mostly "hotel"- related aspects (private rooms with better equipment and facilities; additional coverage of extra services that are not covered by the SHI).
As RSA referrals, based on clearly defined criteria and proceedings, should be included in the SHI benefit package, one option is to transfer parts or all funds of the Phalala Fund and the Civil Servants Medical Referral Scheme to the SHI fund. The projected budget required for RSA referrals would amount to E 60 million (in 2008 prices).
The Government will also have to develop and agree upon an implementation schedule to establish the SHI agency. This could be realized in the form of an "Implementation Project", which financial support for investments in infrastructure and administration and training of staff in the various management and administration skills.
Such a SHI scheme is much more comprehensive than earlier concepts of a medical aid scheme for civil servants only. In fact, the proposed SHI scheme is able to offer better services to all Swazi, while increasing equity in access and equity in financing.
The following box outlines in more detail the key characteristics of the potential SHI scheme:
Box 7.1: Key assumptions and possible institutional design for establishing a SHI for all Swazi (Scenario C)
Key design issues for establishing a SHI for all Swazi Resource collection:
The MOHSW budget is maintained (in constant prices).
Resources mobilized through SHI do not replace but complement existing government funding.
SHI resources are based on contributions by members.
(Chapter 5.1.1) Contribution rates:
The formal sector employees (public service officers, formal sector employees and pensioners) pay a uniform contribution rate based on their salary (7%, except pensioners: 3.5%).
Contributions are shared between employees and employers at 50/50.
Informal sector workers (including the unemployed) pay a flat contribution amount of E 500 (in 2008 prices), which would be adjusted over the following years due to inflation.
The poor (including orphans and other vulnerable groups without any income) are exempted from contributions, namely 40% of informal sector workers, as they are unable to pay contributions.
(Chapter 5.1.2)
Extension of coverage:
Formal sector:
All public sector and public enterprise officers become SHI members in Year 1.
Private sector employees join the SHI scheme in Year 2 and 3 (50% in each year).
All pensioners join in Year 1.
Informal sector:
Informal sector workers gradually join the SHI scheme, starting in Year 4 Initial suggestions for the extension schedule:
Year 4: Vendors, taxi/bus drivers and home workers (20% of all informal sector workers)
Year 5: Farmers (30% of all informal sector workers) Year 6: All remaining informal sector workers (50%)
From Year 6 onwards: 40% of informal sector workers are exempted (Chapter 5.2.1)
Membership:
Membership is mandatory, i.e. all population groups will eventually join the SHI scheme. Opting-out to join private health insurance should not be made possible.
Membership is family based, i.e. children below 18 and other dependents (e.g. orphans) or other adult dependents (first grade relatives living in the same household without their own income) are covered.
(Chapter 5.2.1) Pooling:
The GOS establishes one SHI agency that pools contributions from public service officers, private sector employees, pensioners and at a later stage from informal sector workers.
(Chapter 5.2.3) Benefit package:
The benefit package comprises of all essential outpatient and inpatient care at GOS and NGO/mission health facilities and private providers.
Specialized care for specific cases could be obtained in RSA on the basis of referral through the Mbabane Government Hospital.
The details of what is included and excluded needs to be determined.
(Chapter 5.3.1)
Provider payment mechanism:
Health care providers could be remunerated on the basis of a combination of capitation and flat case payments, the latter serving for high cost services.
It is noted that a fee-for-service remuneration is not advisable.
The detailed payment structure and managerial proceedings need to be elaborated to ensure that health facilities receive their facility income through both the existing channel of MOSHW budget transfers and the new capitation/flat payment system in parallel. This includes establishing or strengthening clear accountability channels for heads/managers of health facilities.
There may be an element of better payments for increased performance.
(Chapter 5.3.2)
Provider remuneration rate:
Based on more detailed unit cost information, the government sets capitation-based remuneration rates and flat (case) payment rates for health providers.
(Chapter 5.3.3) Contracting:
The SHI scheme could offer contracts to all accredited health care facilities that provide services to SHI members to clearly spell out rights and obligations of both sides.
(Chapter 5.3.4)
Accreditation and quality management:
Accreditation should be applied to all health care providers.
Accreditation could become a precondition for contracting.
(Chapter 5.3.5)
Governance and management of the SHI agency:
Governance and ownership of the SHI fund could be semi-public or autonomous.
The supervisory board should encompass a wider range of different stakeholders representing various ministries and government institutions, professional
associations/trade unions, provider associations as well as other civil society representatives.
The management of the SHI agency could be undertaken by a parastatal or contracted out to a private company.
(Chapter 5.4) Legislation:
It is recommended that the MOHSW develops a SHI Law, jointly with other ministries.
(Chapter 5.6)
Specific recommendations for the SHI Implementation:
The SHI TGW's membership, Terms of Reference, objectives, and decision-making rules should be defined.
Inter alia, it should be composed of:
- Senior staff from the MOHSW
- Senior staff from the Ministry of Employment and Enterprise (social security experts)
- Senior staff from the Ministry of Finance (macroeconomist/fiscal experts) - Resource persons with expertise in specific issues, including actuarial analysis.
The SHI TGW should be strengthened institutionally and technically to be better prepared to the tasks ahead such as policy discussions, preparing policy documents for decision-makers, assessing the financial feasibility study, overseeing further financial projection activities.
Small sub-groups of the SHI TWG, with additional resource persons representing non- government stakeholders could be set up to work on specific issues and questions.
An inter-ministerial group with senior technical/managerial staff should be established.
A SHI team/unit should be set up within the MOHSW to coordinate and steer the SHI planning and implementation process.
Development partners should be involved in future consultations and discussions on SHI to get their support.
An awareness raising campaign needs to be developed, which is tailored to the specific information needs and group interests of the various target groups, namely:
- Potential beneficiaries from the formal and informal sector - Providers
- Government stakeholders, - Other non-governmental actors
- The very high-income earners and those with a private health insurance plan.
The existing household survey data should be analysed to gather more detailed information on household health expenditure per quintile as well as on the percentage of Swazi households facing catastrophic expenditure and impoverishment. This information may contribute to strengthening the arguments and objective of the MOHSW to introduce a SHI.
1. Introduction
1.1. Overview and purpose of the report
The Ministry of Health and Social Welfare (MOHSW) of Swaziland requested the World Health Organization (WHO) to undertake a financial feasibility study of social health insurance (SHI) as an option of financing health care in Swaziland.
This technical support was undertaken in three steps:
1. A first mission in Swaziland took place from 21 January to 1 February 2008 to undertake stakeholder consultations and data collection;
2. A meeting took place in Geneva in mid February 2008 with the Head of the Planning Department/MOHSW to discuss assumptions and undertake initial projections. This was followed by more detailed desk work to analyse the collected data and to analyse basic financial projection scenarios;
3. A second mission was undertaken from 9-17 June 2008 to present and discuss the findings and subsequently finalize the report.
This report presents the feasibility assessment for a Social Health Insurance in Swaziland.
The financial projection scenarios illustrate the expected financial consequences of the policy directions that they represent. They serve to inform policy makers, and as such are one tool among others that the SHI Technical Working Group may use to help plan possible future financing options.
The outcome of the first mission were two financial projection scenarios for two different SHI scenarios representing alternative policy directions with varying implications for the design of the health financing system. These were:
Scenario A: "SHI for all Swazi - rapid transition to universal coverage "
Scenario B: "SHI for all Swazi - with gradual extension of the informal sector"
Both scenarios were presented and discussed with the various stakeholders. A mix of both scenarios resonated best among the stakeholders. Another scenario was therefore developed and refined by including the comments and feedback gained during the second mission. This is Scenario C "Phased SHI for all Swazi within 6 years" that covers initially all civil servants, formal sector employees and pensioners and then gradually extends coverage to the informal sector over several years.
As such, this scheme is more comprehensive and achieves wider objectives of health financing than earlier concepts of a medical aid scheme for civil servants, while at the same time achieving the earlier objectives as well.
As there is not one unique way to social protection for health, WHO aims to assist in identifying the possible options that are adequate and technically feasible to facilitate policy decision making by the Swazi government. This report explores and analyses the feasibility of social health insurance as per the Terms of Reference, yet this does not automatically constitute a recommendation for SHI against other financing mechanisms.
The report is structured as follows: After this introduction, Chapter 2 outlines the study objectives and methodology. The Swazi health care system and health financing system are portrayed in Chapter 3. Considering this context is important to understand the implications and challenges of a SHI scheme. Chapter 4 presents the findings from the stakeholder consultations from the first mission. Both Chapter 3 and 4 serve as the basis for Chapter 5, which discusses key design issues for a potential SHI scheme. Chapter 6 explains and analyses the SHI financial projection scenarios made as part of this study and discusses their implications for the health financing system. Chapter 7 provides conclusions and a way forward.
The present report goes beyond the Terms of Reference (TORs). It not only discusses feasibility in financial terms, but also preliminarily in technical terms. Furthermore, it touches upon some of the political feasibility aspects.
1.2. Health financing mechanisms
Social health insurance is one of several options of health financing. A health financing system seeks to organize the way that payment is made for health systems in an efficient and equitable way. The most common ways of financing health care are tax-funding, social health insurance, private health insurance, community-based health insurance and out-of-pocket spending (OOPS), or mixes of those. The following list provides a very brief overview:
• Tax-based financing: the money to pay for health services comes from general government revenue (sales taxes, income taxes, import/export taxes, etc.) and is usually spent by government on public health facilities, but also increasingly on private provision. Generally, all residents are included and have access to these facilities. Additional user fees may be levied for specific services.
• Social health insurance: members pay a contribution to a health insurance agency, which purchases health services from public and/or private facilities. For the formal sector, the payment is proportional to income, so that within the pool of SHI members, the better-off usually subsidize lower income groups. Also, the healthy and young subsidize the sick and elderly. For the informal sector, flat payments may be scheduled, at least in the short to medium run. After a transition period, SHI usually becomes compulsory.
• Private health insurance: Individuals or groups buy health insurance for themselves from private, for-profit insurance companies. These companies pay providers for health services for their insured members and charge premiums from their members according to their health risk status. As a consequence, the poor can usually not afford private health insurance.
• Community-based health insurance (CBHI): Local insurance schemes raise money from their members to pay for their health services. CBHIs show both characteristics of private health insurance and social health insurance, as they are usually voluntary, premiums are not risk-rated and schemes are often self- managed. However, in poor communities CBHIs rarely raise enough funds to provide adequately for health services.
• Out-of-pocket spending: OOPS is not a health financing scheme in itself but rather the way money is spent on health in the absence of organized health financing schemes. Here, people pay for the services provided. OOPS is very problematic as it causes people to fall into poverty because of medical expenses.
This is called catastrophic expenditure. Since health services can be extremely expensive and because illnesses are unplanned, people usually are unable to save (enough) money individually for health services.
Wherever OOPS occurs, prepayment mechanisms can strongly improve on access to care.
Each has benefits and disadvantages, none is perfect, and most countries choose a mix of them as their health financing system. What is most appropriate depends on the country context.
1.3. The rationale for social health insurance in Swaziland
In Swaziland, SHI could be an alternative means to financing health care by increasing resource mobilization.
In general, the reasons why a low-income country may want to introduce a SHI include:
A. Increasing spending on health care through prepayments rather than through increasing user charges (out-of-pocket expenditure)
B. Mobilizing additional resources from the incomes of the working population to raise revenue for health care either in addition to tax-funding (or to replace tax funding, though the latter is not recommended in Swaziland).
C. The prepayments into a SHI will replace OOPs and hence improve financial risk protection; they may also substitute wholly or partly for private insurance premiums.
D. Providing better or more services to the insured population.
E. Introducing organizational change to improve the efficiency of the health system, e.g. purchaser provide split, new provider payment mechanisms, etc.
The Kingdom of Swaziland appears to be seeking all of the above points. Another specific objective in Swaziland is to reduce expenditure for referrals to the RSA, and building up specialized tertiary care in Swaziland.
Raising revenue for health services is seen as a necessity to be able to solve the problems in quality of care and human resources in particular, which should then lead to improved health status and satisfaction with the health care system among the population.
Other possible sources of financing include tax revenues and donor funding. While the latter is being sought, it is not seen as a sustainable and systemic solution to the problem.
Furthermore, increasing the budget to the health sector from government revenue, either at the expense of other government sectors or through increased taxes, is seen as unattainable by MOHSW officials. It should be noted however, that from the point of view of the individual members of a potential SHI from the formal sector, the contribution may be seen as a payroll tax.
2. Study objectives and study methods
2.1. Terms of Reference
Swaziland is a small country in Southern Africa. It consists of 4 regions, with a total population of less than 1 million people. Its territory is enclosed by the Republic of South Africa (RSA) and Mozambique. Indeed, some of the health care needs of its population are met through medical referrals to RSA, a problem that has motivated government decisions in the following area: The formulation of a social health insurance (SHI) program.
The objective of the mission is to provide technical support to the SHI Technical Working Group (TWG) revolving around the area of actuarial analysis of the planned SHI. The technical support consists of three parts:
a) Stakeholder consultations and feasibility assessment to generate additional information to formulate appropriate assumptions for applying a financial projection tool. The stakeholder consultations are also meant as an opportunity to educate would-be members, providers, and supporters of the SHI.
b) Financial analysis of the proposed SHI scheme.
c) Local staff training in the financial projection and simulation software SimIns and institutionalization plan
For the full Terms of Reference (TOR), please refer to Annex 1.
Upon arrival, the mission team met with the MOHSW Senior Management to discuss the TORs, expectations of the Swazi colleagues regarding the mission, as well as the proceedings of the mission. Likewise, discussions took place with the General Director of Services and the Director of the Planning Unit of the Ministry of Health and Social Welfare (MOHSW) in order to clarify the objective and rationale of the planned SHI.
The MOHSW made it very clear that they are interested in establishing a social health insurance scheme for all Swazi people, rather than just for specific population groups, like civil servants. Equity in financing, universal coverage and access to health care are the guiding principles of this initiative.
2.2. Methodology Mission team:
The WHO mission team to Swaziland comprised of:
- Inke Mathauer - Laurent Musango - Charles Waza
Data collection during the first mission:
Based on the TOR discussion, a wide range of different actors and interest groups were consulted. All key government ministries were met, as well as four professional associations and trade unions representing different professional group. Health facilities of Government, of the mission sector as well as the private for-profit sector were selected on purposive sampling. Also, non-state actors were met to gather additional or contextual information (see 2.3 for a list of stakeholders met). In most cases, two persons were met during each of these meetings. Data was collected through interviews as well as focus group discussions based on guiding questions. The questions covered the range of issues as outlined in the terms of reference. Usually, open questions were asked, and only if respondents felt unable to answer, were questions changed into closed ones or respondents were prompted.
In addition to the stakeholder consultations, secondary data was collected from various ministries as well as from UN sources (see list of references at the end of this report). For the application of the SimIns health insurance model, data were needed on utilization of health services and health care unit costs. These proved to be difficult to obtain. The mission team was greatly assisted by the team of the MOHSW and the WHO country office in getting contacts, arranging appointments and meeting discussion partners.
Stakeholder feedback and refinement during the second mission:
The second technical support mission in June 2008 served to present and discuss the financial feasibility study with the Government of Swaziland, the MOHSW and the SHI TWG. This feedback and the comments from the discussions have now been included in this present final report of the financial feasibility assessment.
Several sessions were held with the SHI TWG to discuss the findings and to receive their comments. Also, two feedback workshops were organized during the second mission for the following stakeholder groups:
1. Providers from the public, private for-profit and NGO/mission sector 2. Beneficiaries (professional associations, trade unions)
These workshops had the following objectives:
• Explain the concept of Social Health Insurance and its importance
• Inform about the findings from the 1st mission
• Inform about the SHI plans and how people can benefit from it
• Get feedback and views from workshop participants
• Point to the further implications regarding the key institutional design issues on which the Government of Lesotho needs to decide upon.
In addition, meetings took place with individual ministries (senior technical and managerial staff) and a joint discussion was held with the Principal Secretary of the MOHSW and the MOF. In particular, the next steps to be undertaken at technical as well as political level were deliberated. All questions and concerns raised are taken up in Chapter 5 and 6.
2.3. Stakeholders and respondents consulted Government stakeholders
• MOHSW
• Ministry of Public Service and Information (MoPS)
• Ministry of Finance (MoF)
• Ministry of Employment and Enterprise (MoE) Potential beneficiaries
Representatives from the following professional associations and trade unions were met:
Civil Servants Association Teachers Association Nurses Association
Labour Union (SUFIAW)
A group of Rural Health Motivators Employers Federation
Coordinating Assembly of NGOs (CANGO) World Vision
Executive Committee of the Vendors' Association, an informal sector organization1 Providers
Mbabane Government hospital 1 regional hospital
1 health clinic
1 public health unit 2 Mission hospitals
2 private facilities with inpatient care 2 private clinics
1 Regional Health Management Team 1 mission health centre
Other groups and individuals
Administrators of 3 private health insurance schemes (SwaziMed, SwaziCare, Mphilwenhle)
Individuals from the informal sector, randomly met on the street for 10 minute talks 2.4 SimIns projections
The financial projections produced as part of this work and described in Chapter 6 were calculated using the "SimIns" tool (version 2). SimIns is a health insurance simulation tool in a software package that analyses the basic mechanisms of health insurance.
1In this report, as a working definition, the informal sector comprises all those persons not working in the public service, in parastatals or in the formal sector (the latter comprising all those registered companies that pay corporate tax). Thus, the informal sector includes subsistence farmers. Pensioners, however, are also part of the formal sector, as they have a regular income.
SimIns projects the development of incomes and expenditures under certain assumptions over a 10 year period. Its principal purpose is to produce financial projections of SHI schemes.
SimIns has three principal uses:
1. To illustrate the implications of initial policies with respect to key health
insurance variables, thus reflecting (as opposed to setting) different policy options.
2. To determine what sets of contributions and/or utilization patterns and/or health care costs can ensure financial equilibrium in a dynamic, changing environment.
3. To illustrate the impact of health insurance on the overall structure of health financing.
The key focus is on the revenue-expenditure account of social health insurance, the surpluses or deficits, and ways to address deficits. The basic output also includes estimates of health care expenditures for the non-insured and insured. These are based on cost estimates (for different health service categories) multiplied by associated utilization rates (for different population groups, further separated into non-insured and insured).
Financing of these health expenditures comes from the government health budget, health insurance contributions, user fees or co-payments and government subsidies.
Assumptions for key input variables of the models were developed from secondary data as well as from the different stakeholder discussions. Some important information for the SimIns projection had to be estimated as no data was available. Chapter 6 present the detailed scenarios produced with SimIns. Annex 2 explains for each input variable how it was calculated, what the source of the data is and what assumptions were made.
2.5. SimIns Training
During the second mission five local staff were trained in the usage of SimIns. The objective was to ensure that the MOHSW and the SHI TWG has the capacity to produce financial projections in a continued basis to facilitate their work on designing a sustainable financing mechanism. The projections show the financial consequences of policy proposals, so that these proposals’ financial feasibility can be verified and adjusted if necessary. As the proposal for SHI in Swaziland matures, the financial implications should be tracked using such tools as SimIns.
The training consisted of 5 half day sessions and covered the following syllabus:
• The SimIns interface
• Data input
• Output, calculations and graphs
• Projection cycles
• Data housekeeping
The focus was on hands-on usage of SimIns, and the participants worked on several exercises and contributed to the development of the projections described in Chapter 6 of this report.
The local staff trained comprised of Sbongele Dobem (Bureau of Statistics), Sibuziso Mamba (Ministry of Health and Social Welfare), Janet Mzungu (Ministry of Finance), Dumisani Shongwe (Ministry of Economic Planning and Development), Sibusiso Sibandze (Ministry of Health and Social Welfare). This team reviewed the assumptions and input variables and suggested some changes for a third scenario to be developed. The major differences between the earlier scenarios (Scenario A and B, see Annex 3) and the one presented in this report are outlined in Table 6.12.
3. The Swaziland health care system
3.1. Health policy objectives and health sector reform objectives with respect to health financing
The following sections of the National Health Policy on Health (MOHSW 2007b, emphasis by authors) relate to health financing and universal coverage:
"Mission: The Health and Social Welfare sector seeks to improve the health and social welfare status of the people of Swaziland by providing preventive, promotive, curative and rehabilitative services that are of high quality, relevant, accessible, affordable, equitable and socially acceptable."
"Individual and community participation in the financing of health activities shall be based on the principle of pre-payment and fair contribution."
"Health services shall be provided free of charge to eligible children, elderly persons, orphans and persons with disability."
"The MOHSW shall explore alternative financing options to ensure equity and access to services by all citizens."
Overall, there is coherence between the guiding principles of the Swazi Health Policy and the World Health Assembly Resolution 58.33 on sustainable health financing, universal coverage and social health insurance.2 Any health financing system, or reform thereof, in Swaziland should thus be expected to adhere to the above principles.
3.2. Health expenditure
Swaziland's population amounts to just about 1 million people, yet the population is decreasing (UN 2006). Except of a very small number of foreigners, the population consists of Swazis only. The following table provides key indicators relating to health care expenditure (Table 3.1). The table reveals that health care financing is primarily tax- based, but that there is also already some substantial spending on private health insurance schemes.
2 Cf. WHO, Report of the Secretariat, World Health Assembly Resolution on Sustainable Health Financing, Universal Coverage and Social Health Insurance. http://www.who.int/health_financing/documents/cov- wharesolution5833/en/index.html
Table 3.1: Health expenditure data
Indicator Data for 2005
(unless otherwise indicated)
Source/reference
THE as % of GDP 3.8% (for 2003) MOHSW 2003, cited in MOHSW
2007b
THE p.c. USD 164 (exchange rate) WHO NHA estimates, 20053
Govt health expenditure E 344 Mio KOS 2007 (budget)
Govt health expenditure p.c USD 51.8 Calculations based on KOS 2007 Govt health expenditure as % of
THE
64% WHO NHA estimates, 2005
Private health expenditure as % of THE
36% WHO NHA estimates, 2005
Private health insurance as % of THE
7.5% WHO NHA estimates, 2005
OOP as % of THE 14.5% WHO NHA estimates, 2005
External resources on health as
% of THE
9.7% WHO NHA estimates, 2005
Average health expenditure per person and month (2001)
E 10.93 SHIES 2001
% of health expenditure in total household expenditure (2001)
8.33% SHIES 2001
Exchange rate 2005: E (Emalangeni) 6.36 /USD
3.3. Health care provision
3.3.1. Decentralization and the role of the Regional Health Management Team (RHMT) and Rural Health Motivators (RHM)
The local administration is called "Tinkhundla", where various local developmental initiatives are coordinated (e.g. in agriculture) and were certain administrative tasks are being carried out (e.g., elections of MPs, registration of births, marriages and deaths).
There are 55 Tinkhundla in Swaziland, which are well known and respected by the community.
In practice, the decentralization is not fully effective at the local levels. Even though the decentralized structures were set up, gaps continue to exist. It was noted that the budget is not decentralized, and the traditional decentralized structures (Chiefdom Clerk and
"Inkhundla") lack some of the technical and managerial capabilities. To improve the operations of these local level structures, capacity strengthening may be necessary, whereas in some cases, the recruitment of new executive secretaries of Chiefdom and Inkhundla may be necessary (information from key respondents). As regards the budget, it is proposed that it could be also decentralized.
3 When comparing the estimated THE with the KOS 2007 information (MOHSW budget), this figure appears to be too high.
The Regional Health Management Team (RHMT) is located at the critical level in the system in between the top and the bottom. As stated by the MOHSW on RHMT: “[The RHMT] can thus be seen as a key cross-over point within the health system, where national strategies are converted into action; local demands are aggregated and incorporated into action plans; and where horizontal relationships are established with other agencies and other sectors covering the same geographical area.”
Regions have a plan and budget, but they are only deconcentrated, not decentralized. The RHMT participates in a collective decision-making process and is responsible for planning, budgeting, monitoring and supervising all health facilities and services within the region, for both government and missions. The members have in principle authority over their respective areas of responsibility of hospital administration, medical services, nursing services, public health, health education, health inspection, etc. In practice, the relationships between the hospitals and RHMTs are not yet fully clarified.
Rural Health Motivators (RHM)
There are approximately 4000 Rural Health Motivators (RHM) in Swaziland, who have been selected by their Chiefdoms and community to support communities by promoting health and managing common health problems. They undertake a 10-week preparation training in which they learn to recognize common conditions and refer patients to health facilities as appropriate. More recently, RHMs have been trained on home-based care, initially on how to instruct and support families. Training for RHMs is organized and run by the local government centres. As families increasingly suffer from HIV/AIDS, RHMs also provide care themselves.
Rural Health Motivators receive a small stipend for their work (about 14 USD per month) and supplement this small income with subsistence farming and some financial appreciation of their work from the families and households that they care for. They are predominantly married women who are selected, though the chiefdoms are now encouraged to select younger people. RHMs are supervised and supported by Community Nurses, though nursing staff shortages have compromised the ability of the community nurses to give adequate support.
Each RHM was originally assigned to 40 homesteads, but because of the burden of diseases, this number has been drastically reduced sometimes by half. The RHMs are a good potential source of support for individuals, families and community in different programs of the Ministry of Health.
RHMs: in charge of 40 households. The majority of them have become old, the younger ones that were recruited come with less motivation. Government pays RHMs 100 E per month as a stipend, and they get gifts from the household. A problem is that RHMs have been overused.
3.3.2. Health care infrastructure and staff
Table 3.2 below provides an overview of the health facility infrastructure by region and type of ownership, whereas Table 3.3 presents the distribution of medical doctors by speciality comparing the public sector to the private sector.
Table 3.2: Health Facilities by Region and Type of Ownership
Provider type Region
Govern- ment facilities
Mission / NGO facilities
Private for profit facilities
Industry- based facilities
Total
HHOHHO 19 11 7 3 40
LUBOMBO 19 7 2 7 35
MANZINI 21 12 14 5 52
SHISELWENI 19 4 4 0 27
TOTAL 78 34 27 15 154
Source: SAM survey (MOHSW 2007c)
Table 3.3: Distribution of medical doctors by speciality
Provider type Region
Govern- ment facilities
Mission/
NGO facilities
Private for profit facilities
Industry- based facilities
Total
General practitioners 43 17 48 9 117
Obstetrical Gynaecologist 2 2 2 0 6
General Surgeon 2 2 4 0 8
ENT specialist 1 0 1 0 2
Pathologist 3 0 0 0 3
Paediatrician 1 1 1 1 4
Orthopaedic surgeon 1 1 1 0 3
Ophthalmologist 0 0 2 0 2
Anaesthetist 1 0 1 0 2
Psychiatry 1 0 1 0 2
Specialist physician 0 1 3 0 4
Public Health 3 0 4 0 7
Family Physician 1 0 0 0 1
Total 59 24 68 10 161
Source: Database from Swazi Medical Association
3.3.3. NGO/mission facilities
Table 3.2 has listed the types and number of NGO/mission health facilities. The two biggest ones are the Nazarene church health facilities. NGO/mission facilities are co- funded by government resources for staff salaries and parts of operational costs. The Nazarene and Roman Catholic Church health facilities receive about 90% of their funding from government, whereas a few other clinics (Red Cross, Family Life Clinics, Salvation Army) receive about 50% of their revenues from government. The rest comes from user fees and other donors. Thus, in 2005/2006, Government provided a total of E 68 millions to NGOs and mission facilities, whereby E 62 millions went to the two
biggest churches mentioned above. Their programmes are closely linked to those of the government, and the two mission hospitals serve as referral facilities.
Table 3.4 provides an overview of their user charges structure.
Table 3.4: Approximate user fee structure at NGO/mission facilities (in E)
Adult Clinic OP minor
STI treatment
10 20-45 *
Mission hospital OP 10 **
Mission hospital IP 20 per day **
* including drugs
** excluding drugs and other diagnostic services
3.3.4. The private sector
In Swaziland, the private sector consists of two types: the company/industry- based/provided health care, and the private sector.
The Industry/company owned health care delivery sub-system is confined to the plantations and industrial towns. Their services are largely curative. Promotional and rehabilitative services are mainly limited to company employees, and thus not accessible to the general public.
The private health care sector is owned by individuals or groups of medical practitioners. The whole system is a commercial enterprise and the sub-system is almost exclusively urban based. The majority of the private health care sector offers curative services in outpatient, but some of them offer curative care for inpatients.
The income of private clinics comes from private health insurance schemes (SwaziMed, SwaziCare and Mphilwenhle), company/industries payments and out-of-pocket expenditure (OOP). Private clinic doctors estimated that over 70% comes from the private health insurance schemes and companies, whereas the remaining part is from OOPs.
There is no formally defined collaboration between public and private health facilities.
Certain patients are referred to public facilities, when the required services cannot be offered at private facilities. Also, AIDS and Tb patients are referred to government facilities, where they can obtain drugs at subsidized costs. Most private clinics do not have their own laboratory facilities, but use the “Lancet” laboratories.
User charges at private clinics are very high, and there is a big difference between the tariffs of government and private health facilities. The table below compares two clinics (private and public) which have both 5 doctors.
Table 3.5: Comparison between a public and private hospital Characteristics:
Public hospital Private hospital
Number of doctors 5 5
Number of nurses 45 24
Number of beds 350 42
User charges:
Consultation 10 E 168 E
Ray- X 10 E 160 E
Laboratory 3 E per exam 3 to 10 E per exam
Admission 6 E for the 10 first days;
3 E thereafter
Deposit of 4000 E to be admitted.
Delivery 5 E 500 E
Delivery section 25 E without hospitalization
950 E incl. two days of hospitalization
Source: interviews with providers
3.4. Key challenges in the health sector
Quality is considered to be poor at government facilities. This mainly relates to process aspects (long waiting times, friendliness, cleanliness, privacy). Furthermore, many Swazi in rural areas have limited access to a doctor in those facilities, and it is likely that the doctor they see is an expatriate. People complain that many expatriate doctors do not speak Siswati, creating communication barriers. However, it is reported that the nurses that help translating are not perceived as patient or friendly.
Another quality concern consists in drug non-availability and stock-outs, which is due to problems within the drug supply system. Procurement is done centrally and turns out to be a lengthy process. Also, drug kits are not always adjusted to what facilities need, and it takes very long to order additionally required drugs.
Currently, no accreditation scheme or area-wide quality management system is in place.
However, the Ministry for Health has set up a unit in charge of “Quality of Care” to strengthen its focus on quality. Moreover, selected hospitals take part of a pilot on quality improvement in collaboration with COHSASA (the Council of Health Service Accreditation of South Africa). The COHSASA program assists health care facilities to implement quality standards based on a set of principles, endorsed by ISQua that are specifically designed to ensure that health care services be safe, legal, efficient and effective. Feedback from hospital doctors on COHSASA is less enthusiastic: The process is considered as very time-consuming involving lots of paper work, but the key informant felt that it does not help and that there is no impact on quality.
4. Findings from stakeholder consultations
This chapter presents the stakeholder views that were gathered during the first mission.
Ministerial stakeholders gave their opinion on the feasibility and implications of a SHI.
For potential beneficiaries, key questions focused on people's interest in a SHI scheme, their potential willingness and ability to pay contributions, their position on the governance and management of such a scheme. During the meetings with provider- related stakeholders, issues on purchasing and provider payment mechanisms, quality management and accreditation were equally discussed.
Questions and concerns raised by the stakeholders during the second mission will be addressed in Chapter 5 and 6.
4.1. Views from stakeholders
In general, the stakeholder discussed showed that there is a very good knowledge and understanding of the health insurance concept. A large part of middle class employees appears to know the principles of prepayment. Many of them would like to join a health insurance, but cannot afford the premiums of SwaziMed. Even many of the informal sector workers are familiar with health insurance principles either through their own experience or since they know other people who benefit from private health insurance schemes.
Thus, the existing knowledge and familiarity with the principles of health insurance is a good starting point. The question of whether one receives one's contributions back in case of non-use comes up, but nevertheless the need for making prepayments is realized.
However, it must also be noted that many of the stakeholders, even though addressed as representatives of the community, often responded for themselves as urban middle class employees.
The following paragraphs provide a summary of the stakeholders' views.
Need for awareness raising and explanation:
All beneficiary stakeholders emphasized that there is need to explain the scheme to people so that they internalize it and understand its benefits. The traditional leadership structure is considered to be very important. Therefore, they could be involved in explaining to the rural population the principles of a SHI.
Ability and willingness to pay:
For the formal sector employees, i.e. those with a fixed salary, proposed contribution rates ranged from 2.5% to 10% (employee share only). Other respondents said that it should be "half of what you pay for other insurances". It was also gathered that only once people really understand how it works will they be willing to pay higher contributions.
Various respondents stated that informal sector workers could afford about E 50 a month per household. For example, the rural health motivators said specifically that E 50 is possible for those who can work. Others said that each household could at least afford E 20.
Collection of contributions from the informal sector:
The informal sector is nowhere formally represented at national level, despite the fact that about 50% of informal sector workers are organized as estimated by key respondents. To collect contributions from informal sector workers, the following suggestions were made:
There must be flexibility, and it is important that people will not have to travel long distances.
There could be designated days where the collectors come to the community (to save transport costs): People are organized in groups, for which they have their set meetings.
They could decide on a day to pay, and the mobile office could come to collect for the group.
There could be the option to pay through banks
Microfinance institutions are an option, but they are not available all over, such that there remain some inaccessibility issues.
Each "Ikundluwa" (traditional territorial structure") has its meetings: People could pay before this day.
Exemption from contributions and identification of the poor:
The community representatives consulted stated that in principle they know who is poor in their community. Physical visits and observations of their households could confirm this.
Benefit package:
Respondents definitively expect private health care in the package. They have less interest in government health care, if service quality remains at the current level. In their view, there must be a clear difference to what they can currently access. A revolving concern of those already on SwaziMed was whether the SHI would imply less benefits than currently available through a PHI scheme.
Governance:
None of the stakeholders wanted the government to run the scheme. While some preferred a private company, they were likewise concerned about the higher costs this would imply. As such, in conclusion, the stakeholder discussions focused around a parastatal that should run the scheme. It was also felt that people should be involved in decision-making through wide stakeholder representation.
Referral scheme to South Africa:
Various stakeholders support the idea of merging the Medical Referral Schemes with the SHI scheme, under the condition that the new SHI scheme would not be controlled by the Government.
