DESIGN ELEMENT 4: BENEFITS PACKAGES AND COST CONTAINMENT

1. DESIGN ELEMENT 4: BENEFITS PACKAGES AND COST CONTAINMENT Hong Wang, MD, PhD HS20/20 Project 10/20/2014October 19-23

2. Figure 1: Design elements for a health insurance scheme Feasibility of Insurance Design and Implementation Insurance Financing options Population coverage Benefits package Provider engage-ment Organiza- tional structure Opera-tional process Monitoring and Evaluation

3. Objectives of this element Consider how to determine which services should be in the benefits package Understand the trade-offs between benefits and financial resources availability Getting familiar with key cost containment methods

4. What “should” be in benefit package Personal priorities Private goods (foods, curative health services) Rivalrous Exclusive Catastrophic illness - financial risk protection Unpredictable Large financial loss Frequent minor illness - health improvement Health/comfortable Probability of financial return Social priorities Externality One person’s action has impact on others External benefit: has positive/good impacts (treatment of infectious disease, immunization) External cost: has negative/bad impacts (smoking) Merit good Judged based on the needs, should be apply universally to everyone, and not depend on the ability and willingness to pay (priority services such as family planning service, MCH)

5. The potential benefits of including priority services/social priorities Improve health through the increase of use of the services Merit goods (i.e. MCH, FP, and other priority services Externality (i.e. immunization services) Prevent from further health damage Improve service delivery Increase availability Increase quality and continuum of care Reduce financial burden Prevent from further catastrophic illness Increase the efficiency of health resource utilization

6. Provider’s capabilities • Availability of health care providers • Types • Quantities • Distributions • Effectiveness of health care interventions • Cost-effectiveness

7. The balance between resource availability and benefit coverage • Premium from enrollee • Employment benefit • Government subsidy • Donor support • Reimbursements • Administrative costs • Reinsurance fund Resources = Expenditures

8. The balance between resource availability and benefit coverage • Reimbursements • Benefit package • Price of services • Number of services • Reimbursement rates • Premium from enrollee • Employment benefit • Government subsidy • Donor support Resources = Expenditures

9. The statement of a benefits package? What is covered – services, drugs, diseases What is NOT covered Limits on coverage for example: X number of outpatient services per year, y days of hospital care Reimbursement ceiling Deductibles, coinsurance, and ceiling if any (be careful that high user fee may affect the access of services to the poor!)

10. Potential co-payment from users % population Coinsurance Deductible Medical expenditure Ceiling Sources: Paul Feldstein, Health Care Economics, Delmar Publishers Inc, 1993

11. Key cost control methods from Benefit package design Demand side Co-payment Mandatory enrollment and eligibility policies Waiting periods for reimbursement Supply side Gate keeper and referral system Case review system development Standardize services Provider payment methods

12. Discussion questions • Who should pay for the services that have externalities and the priority services and how to integrate these services into health insurance system? • If the total fund is not available, what should insurance scheme cover first, the catastrophic illness or frequent minor and priority services first? • How to increase the services utilization among the poor from benefit design perspectives?

13. Thank you