Performance of Health Financing Function and Overview of Main Policy Challenges

1. Performance of Health Financing Function and Overview of Main Policy Challenges BakhutiShengelia Senior Health Specialist East Asia and Pacific Region, Human Development Network The World Bank Georgian Health Care 2020 Washington DC, February 1-2, 2010

2. Outline • Current architecture of the Georgian health care system • Framework for evaluating the performance of the financing system • Health expenditure profile and trends • The issue of out-of-pocket payments • Composition of private expenditure and drivers of cost inflation • Financial access to health services • Impact of health care costs on households and equity in health financing • Conclusions and Policy issues to be address

3. Organization of Health Financing

4. What Do We Mean By Performance of the Health Financing System? Sub-functions Performance goals Protection of population from financial risk/shocks Raising resources Pooling Ensuring access to services for all when needed Purchasing Fairness of financial contribution

5. who pays for health care? HOW MUCH are we spending on health?

6. Health Expenditures in Relation to GDP In 2007 - 8.6% of GDP In 2009 – 10.1% of GDP EU – 8.9% CIS – 5.5%

7. Per Capita Total Health Spending • US$245 equivalent (GEL409.9) • In $PPP terms – $459 • CIS in $PPP terms – $621

8. Trends in Health System Financing2001-2009 (GEL,000,000) Private increased by 320% Public increased by 560% Other sources by 230% Source: National Health Accounts 2001-2009, MOH

9. Composition of Health Expenditures 98% of private spending is out of pocket

10. Out-of-Pocket Payments in Georgia and the rest of the European Region Out of pocket payments as % of THE (2008)

11. Why Are the Out-of-Pocket Payments Bad?

12. How Much Priority Does the Health Sector Enjoy in the Government Spending? The size of the health care spending in the total government spending is the direct measure of how much priority the government gives to the health of the nation! Source: National Health Accounts, Georgia, WHO HFA database.

13. How Would Health Spending Change if the Government Gave More Priority to Health?

14. Does Health Financing System Provide Adequate Access? Can People Get Care When They Need it?

15. Trends in Health Insurance Coverage

16. Utilization of Health Services Notes: (1) Significance of difference not tested; (2) Statistical significance of difference with baseline figure: *** p<0.01; ** p<0.05; * p<0.1.

17. Do Georgians Use More or Less Health Care Compared to the Rest of the Region? Outpatient contacts per person per year - 7, in 1990 Outpatient contacts per person per year – 1.9 in 2009

18. Cost of Care is a Serious Access Barrier

19. Composition of Per Capita Private Spending (in GEL) 435% increase in pharmaceutical spending 323% increase in inpatient spending 289% increase in outpatient spending Source: National Health Accounts, MoH

20. Expenditure on Pharmaceuticals as % of Total Health Expenditure (OECD versus Georgia, 2008) Private Expenditure of Pharmaceuticals as % of Total Private Expenditure on Health Sources: NHA 2009, Georgia, MOH; OECD health database, HUES Georgia 2010.

21. Inflation of Cost of Drugs and Its Impact on Private Health Expenditures Inflation between 2007 - 2009 Changing the pattern of private spending between 2007 - 2010

22. Price of Drugs in Georgia Versus Other EU Countries

23. Estimated Average Combined Wholesale and Retail Margins, Georgia and Five EU Countries Source: Georgia Programmatic Poverty, Technical Note #2, June 28, 2010. World Bank (data based on the WB survey and OBIG)

24. How Do Health Care Costs Impact Households? How Equitable is the System?

25. Private Spending on Health in Relation to Total Household Private Consumption Source: National Health Accounts

26. Impact of Out of Pocket Expenditures on Household Economy

27. Catastrophic Health Expenditures Source: Georgia Poverty Assessment, 2009, World Bank.

28. Health Care is an Important Domestic Policy Issue Main problems cited by households, 2007-2009

29. Equity In Financial Access

30. Government Tries to Improve Financial Access for Economically Vulnerable Groups Free hospital benefits among various groups in 2010 Source: HSUE Survey 2010

31. Impact of Medical Insurance Program for Economically Vulnerable Groups

32. Targeting Performance of MIP

33. Investing in Health Care is Considered top Policy Priority for the Government by Predominant Majority of the Population Source: Georgia Poverty Assessment, World Bank, April 2009

34. Main Policy Challenges • Increasing the role of the state in financing health care and increasing its strategic purchasing role • Pooling the private resources to ensure better risk coverage, solidarity and cross subsidization among the population • Reducing the out-of-pocket expenditures and increasing the share of pre-paid expenditure in the private spending • Stronger regulation of pharmaceutical sector and reducing the price of medicines • Extending the benefit package to include drug benefits • Improve targeting of Medical Insurance Program for the poor and deepening the coverage • Increasing the awareness of population about their health care benefits