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