For Americans, the beginning of 2014 marked the launch of a new healthcare system popularly known as “Obamacare”. This health insurance coverage is expected to cut the number of uninsured in half, or about 25 million people, in the next 10 years. Under the much publicized scheme, the US government plans to reshape the healthcare system by allowing as many as seven million people to buy insurance and 8.7 million new beneficiaries to enroll in 2014 alone. It is not only the US that is reforming its health care system. Hoping to cover close to half of the population within the next 20 years, Ethiopia too has recently embarked on a quest to provide social and community-based health insurance services throughout the country. The recently introduced social health insurance is expected to serve pensioners and citizens who pay income tax, while the community-based programme targets those who are not part of the formal economy.
This mandatory health insurance programme will be implemented based on the principle of risk sharing. Contributions from individuals are pooled into a fund that health providers utilize. If the person being insured goes through a change in circumstances then, there will be a ‘pay out’ returned.
The community-based health insurance, on the other hand, is voluntary. Expanding health insurance should reduce people’s out of pocket expenses which currently makes up 37Pct of health expenditures in Ethiopia. The program is expected to be launched next year and the government hopes that by increasing the population covered through health insurance to 20Pct in the next five years people will be able to save money while increasing their quality of life.
People who are poor are less likely to have access to health care and so they are sick more often. Since there has not been a lot of money available to provide medical care for those who can not afford it and since a lot of the advances in health practices cost a significant amount of money and people are hesitant to take on the risk of providing those potentially costly services, people without a lot of money have been unable to afford treatment. As a result, despite efforts to improve healthcare over the last 15 years, the population still faces a high rate of morbidity and mortality.
According to the 2011 household income, consumption and expenditure survey (HICES) by the Central Statistical Agency (CSA), the mortality rate of children under the age of five was 88 deaths per 1,000 live births. Almost half of those occurred during the first month.
Ethiopia’s life expectancy is still an astonishingly low 54 years, according to the Health Sector Development Plan IV launched by the Ministry of Health (MoH). The plan considers 29.6Pct of Ethiopians to be living below the poverty line, (30.4Pct in rural areas and 25.7Pct in urban areas).
In addition, based on the HICES, 16Pct of women and 18Pct of men are likely to die between 15 and 50.
Currently only one percent of the Ethiopian population is insured. Insurance companies in Ethiopia only cover two percent of the health expenses while the government and donors cover 31 and 37Pct, respectively. The patients, on the other hand, cover 30Pct of the cost. This is measured by the per capita expenditure on health services. For Ethiopia this figure is USD 8. According to the World Health Organization (WHO) the minimum standard should be USD 34.
Since 1998 the government has attempted to reform the health care system. Cost sharing and health insurance have been two of the major possible solutions.
Protect the sick
Health insurance is a new concept in Ethiopia. It was only in 2010 that the parliament ratified the social health insurance proclamation. Subsequently, the Council of Ministers issued a regulation endorsing the establishment of the Ethiopian Health Insurance Agency, which has the task of implementing the proclamation. This Agency is responsible for collecting contributions and making agreements with institutions that provide health services.
After a 13 member delegation led by Roman Tesfaye, director general of the Agency visited Ghana, back in March 2013, to study Ghana’s national health insurance scheme, which has been praised for its adequate room for the poor, they planned to implement a similar program by January 2014. However, it has been postponed for an unspecified period. The government seems to want to promote it at the grassroots level before they start it nationally.
“We are doing well in terms of launching the community based social insurance”, Mengistu Bekele (MD), deputy general manager of the agency told EBR; “However, we need time to prepare before implementing it nationally.”
Under the health insurance program, permanent employees of governmental, private, and non-governmental organizations will contribute three percent of their salary to take part. Although organizations will be allowed the option of providing another type of health insurance coverage, they will have to participate in the programme by contributing three percent of the employee’s salary each month unless they have less than ten permanent employees. Pensioners will be obliged to contribute one percent of their monthly pension income to join the scheme while the government will also contribute three and one percent to cover the health insurance premiums of civil servants and pensioners, respectively. According to the new schedule, civil servants have to be registered in their respective regions and offices first and get a medical card before February 7, 2014.
The Agency currently has 24 branch offices to provide health insurance services all over the country.
“This will be applied for only civil serevants, however for the private and NGO employees we will announce the registration date soon, ”said Mengistu.
So far the Agency has been busy managing the pilot insurance scheme designed for the Community Based Health Insurance programme. Preparation to launch the scheme in 13 districts of the Tigray, Amhara, Oromia and Southern Nations, Nationalities and Peoples regional states have been finalized. The programme covers 1.45 million people in the four regions. To be eligible for the service, an individual needs to save ETB120 to 180 per household each year. The government will also contribute close to 35Pct of the total medical expense.
Health facilities status, their readiness
Primarily public health facilities in Addis Ababa and other regional towns, that will provide the service, have been selected and identified by the Agency. These facilities will provide most types of medical treatment: excluding dialysis, organ transplants; drug related illness and medication imported from overseas.
Critics, however, fear that the health insurance program might be biting off more than it can chew. Many of the health stations included in the program do not currently have enough medical staff, rooms, equipment or medicine. For Joseph Kutzine, health economist at the WHO, before countries introduce a massive health insurance program they need to address their current health related challenges.
Stakeholders also raised the same concern.
“It will be difficult to manage the number of patients unless the government is well prepared,” a senior official of the Ethiopian Public Health Association reflected to EBR.
In 2010 public health reforms were introduced and some hospitals have seen an improvement. Quality of care has gone up in some, yet it remains below standard in most.
The number of people seeking treatment for chronic diseases at higher level medical centres is very high, and, since there is a mismatch between demand and supply of services, patients in Ethiopia are forced to wait for a long time or go abroad in search of care.
Some professionals look at how many people visit outpatient health centres to measure how accessible services are. This figure is known as outpatient department attendance (OPD). The per capita figure is used to show demand and supply of care.
In the last fiscal year alone, slightly over 28.93 million OPD visits were provided. This is an average of 0.34 OPD visits per person per year at all public health facilities in Ethiopia.
Wide variations were observed across regions; ranging between 0.78 visits per person per year in Addis Ababa and 0.12 in the Ethiopian Somali Region, according to the annual report of the MoH. Considering the number of health facilities in the country, which stood at 16,048 health posts, 3,525 health centres and 127 hospitals, it will be difficult to carry the additional burden the new scheme will bring.
However, the government says the new health facilities currently being constricted will help minimize the problem:
“Since there are many health facilities under construction nationwide, we are not that much concerned about it, the deputy general manager of the agency reflected.
Impact on private sector
Every reform has a negative as well as positive spill over effect on the private sector. The recently announced social health insurance is not an exception. Although the health insurance coverage is in its primary stages in Ethiopia, compared with most Sub Saharan African countries, most insurance companies in Ethiopia will be affected by the reform, at least in the future.
“Although there are few policy holders at the time, the introduction of the new scheme might decrease those already covered or block those who want to buy health insurance in the future, Kiros Jirane, CEO of Africa Insurance told EBR.
Unlike insurance companies, private health service providers are divided about the possible impacts of the new scheme. Most of them hope that the scheme will not erode their market since a considerable number of people still prefer quality service which is not available in most public facilities. In fact they are interested in being included in the package as the fee will not be attractive for those private health facilities which have expensive medical facilities. On the other hand, there are some which say they should be included into the scheme to be profitable and continue to provide quality service in the future. Industry observers also believe that without including the private sector, which has a comparative number and quality compared with the public institutions, the scheme might not meet the intended goal. According to the deputy general manager, the government wants to include the private sector.
What is new?
The health insurance programme will include coverage for families as well. This, according to the government and stakeholders will allow people with lower incomes to access healthcare at an affordable price. In addition, the cost of healthcare for civil servants will be covered totally by the insurance, unlike the current system where the government only covers half of the cost. In the future, when the size of the formal economy expands, the risk of incurring a high cost will be spread to keep premium levels down. However, for this to happen the scheme should be designed in a way that keeps premiums low. This, however, contradicts the announcement by the Agency which predicts increasing contributions from both sides as time goes by.
Well educated administrators are needed to run the system, skilled in: data collection, statistical analysis, claims handling, financial management, incentives and negotiation. The Agency is expected to hire 1,287 employees, of which 30Pct will be support staff, according to the assessment made by USAID. So far half of the hires have been made by the Agency.
The financial challenge
Who pays how much for what determines how many people obtain treatment, and how healthy the population is. Let us look at the case of an average civil servant like Yonas Hailu. He works at the Addis Ababa City administration and earns a gross income of 2,500 birr. When the new program comes into effect, he will have to contribute three percent of his monthly income into the new system. This means he will have an additional 75 birr taken out of his monthly salary, leaving him with 2,425 in his pocket when he gets paid.
Now it might seem like 75 birr a month is a small price to pay for better access to healthcare. But right now he spends 1,800 a month on his house rent and food. (This is not a lot of food nor are these luxurious accommodations). In other words this is a fixed expense, and if anything it is likely to rise in the near future. Then he sends 200 birr a month to his mother and his transportation expenses are around 150 birr a month.
“Strictly speaking, I have to borrow more than 300 birr from my friends in order to cover my monthly expense, I would rather remain uninsured than seek additional loans from my friends”, he told EBR in frustration.
Private companies and NGOs will also be affected by the new scheme. In addition to the pension contribution expected from the employer, which currently stands at 10Pct, they will be forced to transfer three percent of their employees’ gross salary each month. The proposal to allow people covered by health insurance could end up costing the government millions of Birr also. The government will be subjected to additional expenses to cover its share towards the scheme. According to a study conducted by the MoH in 2010, the government will incur 319.15 million birr to cover the 1.07 million civil servants and 340,000 pensioners. Since the contribution is expected to increase each year, the government expenditure towards the scheme is expected to reach 524.2 million birr within ten years. Nevertheless, industry observers and stakeholders believe that most Ethiopians will be impacted by the reform one way or another and it will change the market landscape for healthcare. EBR
2nd Year • February 2014 • No 12