Table 1 shows the general health financing indicators in the selected countries.
Table 1
General characteristics of health financing indicators in selected countries
| Turkey | South Korea (2011) | Thailand (2012) | Indonesia (2014) |
Classification by income level | Upper-middle-income | High-income | Upper-middle-income | -Lower-middle-income |
Gross national income per capita (PPP international $, 2013) | 18,760 | 33,440 | 13,510 | 9,260 |
Total expenditure on health per capita (Intl $, 2014) | 1,036 | 2,531 | 600 | 299 |
Total health expenditure as % of GDP | 6.1 | 7.4 | 4.5 | 2.8 |
Public expenditure on health as % of total expenditure in health | 73 | 55.3 | 76 | 37.8 |
Private expenditure on health as % of total expenditure in health | 27–37 | 44.7 | 24 | 62.2 |
Government health spending as % of total government spending | 9.8–13.9 | 15.2 | 11 | 5.7 |
OOP payments as % of total expenditure on health | 17.4 | 35.2 | 11.6 | 46.9 |
Policy objectives: Reasons behind moving toward merging of insurance funds
Each of the selected countries has executed fund merging due to its own specific reasons and problems in their health system. For instance, in South Korea, merging health insurance schemes was not implemented to control or reduce the administration costs. Inequity in health financing across different income and job groups, differences in financial capacity across insurance funds, and chronic financial instability of some rural insurance funds stimulated the foundational change in the national insurance structure in South Korea13. In Indonesia one of the main reasons for passing the law to merge five government insurance funds was to reduce administrative costs. In Turkey, the five existing insurance schemes had various services packages and different contractual arrangements with health care service providers, which had led to inefficiency and inequity in the health system. In Thailand, each health insurance scheme had its own specific rules, regulations and benefit packages for its own beneficiaries. The uninsured had to pay high prices in governmental health centers or choose private centers. Improper and inequitable distribution of government subsidies across the aforementioned insurance schemes had extremely affected the productivity level and benefits of each scheme 18,19. Table 2 shows more details about the main reasons behind merging in the four selected countries.
Table 2
The reasons for moving toward merging of insurance funds in the selected countries
Country | Reasons |
South Korea | - Inequity in financing and differences in financial capacities of health insurance funds13 - Inequity in access to health services due to cost shifting and imposing higher fees on the uninsured persons by the providers as the health insurance schemes reimbursed providers based on a fixed fee table for their beneficiaries20 - Inequity in health financing across different income and job groups13 - Differences in financial capacity across insurance funds13 - Chronic financial instability of some rural insurance funds13 - Many funds with small size were unable to integrate their resources effectively21 - Unwillingness of health insurance funds to merge and improve risk pooling due to the lack of competition among them21 - Horizontal financial inequality as the self-insured in poor areas paid a greater portion of their income than their counterparts in rich areas. Also in some areas people with a similar income would pay different contributions for the same benefits based on their insurance type13 |
Turkey | - Insufficient and inequitable financing in the health system. Until 1990, nearly 3.8% of the GDP was allocated to the health system, which was much lower than the OECD and other European countries with similar revenue (7.4%) - Low health costs combining with an unjust and fragmented insurance system - Five insurance schemes with various services packages and different contractual arrangements with health care service providers - Different contribution rates, benefit packages with different range and depth of services, various access rules and privileges among different insurance schemes - Inequities in access to health services between western developed areas and eastern underdeveloped areas, between the rich and the poor, and between urban and rural areas11 |
Thailand | - Several health insurance schemes with different size of population overage, the definition of eligibility, benefit package, payment method, financial resources, per capita expenditures, per capita subsidy, rules, and regulations. - The uninsured had to pay high prices in governmental health centers or choose private centers. - A low number of people with private insurance. - Improper and inequitable distribution of government subsidies across the insurance schemes which had extremely affected the productivity level and benefits of insurance schemes18,19 - High skewness in population coverage with about 70% of the population was under the coverage of the four public health insurance schemes, while the remaining 30%, more than 15 million people, were not covered by any medical insurance and had to pay high out-of-pocket expenditures for health care services and medicine22 - Inefficiency in almost all of the schemes due to various reasons such as adverse selection, moral hazards, and allocative inefficiency22 |
Indonesia | - Inequity in health insurance system - Low payment rates of the social health insurance than governmental medical tariffs to hospitals for government employees, - Seriously insufficient financial support for the poor and vulnerable groups such as pregnant mothers, children under five and the elderly 23 - Low cross subsidies, high administrative costs, different benefit packages for different groups of population, - Inequities in access to the benefit packages16 |
Table 3
Social health insurance structure before and after the merger
| | Scheme | Population eligibility | Benefit package | Financing | Affiliation |
Turkey | Before | the Social Insurance Organisation, 1945 | blue collar workers (49.49%) | Pre-paid short-term medical and maternal benefits, employment related accident and occupational disease benefits; long-term benefits for old age, disability and survivor pensions; did not provide or pay for preventive services | Employees (5% of salary), employers (6%), state subsidized (8.5% employer share 5% employee share) | Attached to the Ministry of Labour and Social Security until May 2006, transferred to the Social Security Institution |
Bağ-Kur, 1971 | self-employed people, artisans, and organised groups (23.43%) | All outpatient and inpatient diagnosis and treatment. The insured were required to pay health insurance premiums for at least 8 months and have no record of default of health insurance and long term insurance premiums | 20% premiums collected from beneficiaries. The scheme worked on a reimbursement system | Attached to the Ministry of Labour and Social Security until May 2006, transferred to the Social Security Institution |
the Government Employees Retirement Fund, 1949 | Retired civil servants and their dependents (13%) | Diagnosis and treatment | 20% of the deduction of the Government Employees Retirement Fund (State share as employer), 16% of the deduction of the Government Employees Retirement Fund (participant share); funded through the contributions of the active civil servants and their employers (general budget revenues) | Attached to the Ministry of Labour and Social Security until May 2006, transferred to the Social Security Institution |
the Active Civil Servants Insurance Fund, 1965 | civil servants in work and their dependents | Diagnosis and treatment | Benefits were financed by general tax revenues; no premiums were assessed for active civil servants while they were covered directly through their employers | Attached to the Ministry of Finance through their institutions until 2010, transferred to the Social Security Institution in January 2010 |
the Green Card, 1992 | Uninsured poor individuals (15%) | Inpatient and ambulatory care, pharmaceuticals | General budget (100%) | Attached to the Ministry of Finance through the Ministry of Health, will be transferred to the Social Security Institution by the end of 2012 |
After merging | General Health Insurance scheme, 2006 | Turkish citizens, refugees, foreigners residing in Turkey for more than 1 year | (1) Primary care, rehabilitation, preventive services; (2) ambulatory and inpatient care; (3) maternal benefits as well as in vitro fertilization treatment; (4) partial general oral and dental care; (5) blood and blood products, bone marrow, vaccination, medicine, medical devices and equipment | 12.5% of a person’s gross income, and employee (5%), and employer (7.5%) salary deductions. The rate for people who are only dependent on GHIS is 12% of their earnings. The contribution of the state will be 3% of insured earnings as the basis for premiums | Attached to the Ministry of Labour and Social Security through the Social Security Institution |
| | Scheme | Population eligibility | Benefit package | Financing | Affiliation |
South Korea | Before | (A single) social health insurance scheme, 1979 | government employees and teachers and their dependents (based on employment) | The benefit package of health insurance mainly includes curative services, but includes biannual health checkups and vaccination is provided free of charge in public health centres Benefit package was the same for all in South Korea even before the merger of insurance societies in 2000 | For industrial workers and government and school employees, contribution is proportional to wage income and shared equally between the employee and employer. Before the merger of insurance societies in 2000, the average contribution rate was 5.6% (of wage income) for government and school employees. | the Ministry of Health and Welfare |
140 social health insurance schemes, 1977 | for industrial workers and their dependents | ″ | For industrial workers and government and school employees, contribution is proportional to wage income and shared equally between the employee and employer. 3.75% for industrial workers, with a range of 3.0–4.2% depending on the insurance society | the Ministry of Health and Welfare |
about 230 health insurance societies (92 in rural and 135 in urban areas), 1981 | for the self-employed and workers in firms with less than five employees, based on residential area | ″ | | the Ministry of Health and Welfare |
Medicaid, 1977 | for the poor (3–5% of the population) | ″ | | the Ministry of Health and Welfare |
| After | the National Health Insurance Corporation (NHIC), 2000 | All population | ″ | As of 2006, the contribution rate was 4.48% (NHIC 2007). | |
| | Scheme | Population eligibility | Benefit package | Financing | Affiliation |
Thailand | before | Medical Welfare Scheme, 1975 | low-income individuals, elderly (those older than 60) and all children younger than 12, the disabled, monks and religious leaders, and war veterans (32% in 1999) | free medical care at public facilities: outpatient care, inpatient care, diagnostics, and medicines, Annual physical checkup (41% of the whole population in 1997) | general tax revenue | Ministry of Public Health |
Civil Servant Medical Bene®t Scheme (CSMBS), 1980 | Civil servants themselves, their parents, spouses and up to three children under 18 years old (9%) | Inpatient services, outpatient services, Annual physical checkup | general tax revenue | Ministry of Finance |
the Social Security Scheme (SSS), 1990 | Formal workers in firms with over 10 employees for non-work related sickness, maternity, invalidity and funeral grants (7%) | Inpatient services, outpatient services, prevention, health promotion | compulsory tripartite (employers, employees and the government) contributions of 1.5% of payroll each | Ministry of Labor |
The Health Card Project (HCP) | Covers non-poor households, mostly in rural areas, who can voluntarily buy a card which attracts a matching tax subsidy and which gives them access to free care at public facilities as long as they follow referral channels (16% in 1999) | Inpatient services, outpatient services, Annual physical checkup, prevention, health promotion | Household: B 500 + per year, government subsidy B 1,000 per year | Ministry of Public Health |
after | The Universal Coverage scheme (2002) | All the uninsured, voluntary health card holders, and those covered by the medical welfare scheme under a single unified program (47 million, 74% whole population) | Inpatient services, outpatient services, prevention, health promotion | General tax, non-contributory | National Health Security Office (NHSO) |
CSMBS | As before | As before | As before | As before |
SSS | As before | As before | As before | As before |
| | Scheme | Population eligibility | Benefit package | Financing | Affiliation |
Indonesia | Before | Civil Servant Social Health Insurance Scheme (Askes) | All civil servants and pensioners of civil servants and military personnel | All members entitle to comprehensive benefits considered medically necessary | 2% of their basic monthly salary, regardless of their marital or family status | State own company |
Jamsostek | Social Health Insurance Scheme for Private Employee | The benefits are in kind, provided through various health care providers contracted. Other Jamsostek programs pay cash benefits to the beneficiaries. | Only employers are mandated to pay premium of 3% (singles) and 6% (married) of employees | --------- |
Commercial Health Insurance | They are actually non insurance companies selling health insurance to | comprehensive health services | ----- | Run by the owner |
The Social Safety Net Schemes | Poor people | Providing different block grants of financial assistance for poor family to access health care services | Public budget | |
After | national health insurance programme (JKN), 2014 | All citizens | comprehensive basic benefit package, outpatient and inpatient care at primary level up to tertiary hospital level | 5% of salary of salaried workers and their family members (Employers, with contribution from employees); 5% of monthly pension for pensioners, 5% of 45% of civil servant basic salary for Veterans or their widows; Public budget for poor people, | National Social Security Agency (Badan Penyelenggara Jaminan Sosial – BPJS), BPJS Health for health-care24 |
Process Of Merging:
Before the merger of all insurance schemes in Korea in 2000, there were three social health insurances for: (1) government employees and teachers and their relatives (one fund), (2) industrial workers and their relatives with nearly 140 insurance schemes and (3) the self-employed and workers in firms with less than 5 workers, with nearly 230 insurance schemes (92 funds in rural and 135 fund in urban areas). Also, there was another scheme called Medicaid for the poor which covered 3–5% of the remaining population20. Health insurance for employees was based on where they worked and, for the self-employed, on where they lived. For the health scheme of employees, large companies had their own insurance while small and medium-sized companies were a part of insurance schemes existing in their geographical area20. In October 1998, the health insurance funds for self-employed workers, teachers and government employees were merged and created the National Health Insurance Corporation (NHIC). In July 2000, the funds for industrial workers were merged with the NHIC, and the national health insurance of Korea became a single payer insurance system. The NHIC had separate funds for government and school employees, industrial workers and the self-employed. The insurance funds for industrial workers and government and school employees were merged together in 2001 and this new fund was merged with the fund of the self-employed in 2003. Therefore, the single payer system was established in 200313. In Korea, ass claim review and payment to health care providers were centralized even before the merger and all health insurance schemes followed the same statutory benefit packages, the process of merging didn’t face challenges in these areas20.
There were 5 funds in Turkey before the merger as follows: 1- The Social Insurance Organization (SIO) which provided health services and pension for employees of the private sector, blue collar workers of the public sector and agricultural workers as well as their dependents, and it covered 47.91% of the entire population in 2007. 2- Bag-Kur or the Social Insurance Agency for Merchants, Artisans and the Self-employed which covered the self-employed, comprising include 22.5% of the population. This scheme does not directly provide medical services, but purchases the required services through contracting with public and some private health sector. 3- The Government Employees Retirement Fund (GERF) which was a combination of health insurance and pension fund covered 15% of the population in 2007. This fund covered in-patient and outpatient services. Similar to the Bag-Kur, this fund did not have medical centers of its own and purchased services from the public or private sector. 4- The Government Employees Insurance Fund 5- The Green Card Program: In 1992, the government introduced the Green Card Program for helping the poor who could not pay for in-patient services11,16,25. The number of people having the Green Card was more than 14 million in 2007. In 2006, a single system titled “the General Health Insurance Scheme (GHIS)” was established within the Ministry of Labor and Social Security, to merge all existing health funds including the Social Insurance Organization, the Social Insurance Agency of Merchants, Artisans and the Self-Employed, and the Government Employees Retirement Fund under one umbrella, “Social Security Institution” 26−28.
In 2006, the Grand Assembly ratified the Social Insurance and the General Health Insurance Law to bring together the five health insurance schemes within a unified General Health Insurance scheme. The Turkish Medical Association, medical professionals unions and the Republican People’s Party opposed the law in the constitutional court. In light of pending presidential and general elections, the government postponed the enforcement of the law until 1 October 2008. Before implementation of the law in 2008, it was modified three times and three schemes including the Social Insurance Organisation, Bağ-Kur, and the Government Employees Retirement Fund were transferred to the Social Security Institution. In the next step, the Active Civil Servants Health Insurance Scheme in January 2010 and the Green Card scheme in 2012 were transferred to the Social Security Institution respectively11.
Through the HTP in Turkey, synchronizing the health benefits and coverage across the different health insurance schemes including Green Card began even before establishment of the Social Security Institution. In 2005, Green Card holders were given access to outpatient care and pharmaceuticals and Social Insurance Organization beneficiaries were given access to all public hospitals and pharmacies. In 2006, the pharmaceutical positive list was integrated across all health insurance schemes, including that of Green Card holders. In 2007, legislative measures mandated that all Turkish citizens would have access to free primary care, even if were not covered under the social security system. Under the Health Implementation Decree of 2007 (Resmi Gazete, 2007), benefits across the formal health insurance schemes were further harmonized. The enforcement of the GHIS law in October 2008 has completed the harmonization of the benefits package.
In Thailand, the structure of insurances before the merger was as follows: The Medical Welfare Scheme: It was a free program covering the elderly (older than 60) and children under 12, the disabled, monks, religious leaders, and veterans. Also, there was the Civil Servant Medical Benefit Scheme (CSMBS) which covered government employees and retirees, of government enterprise employees and retirees, and family members. This scheme is considered the most generous insurance scheme in the country. The other scheme is the Social Security Scheme (SSS) which was established to cover the illnesses and injuries of the private sector employees (but not their dependents). The Voluntary Health Card Scheme (VHCS) was the continuance of a community financing initiative of 1983 which started as a scheme for covering the workers of the informal sector22. The three main insurance schemes of Thailand after merging are the Universal Coverage scheme, the CSMBS under the administration of the ministry of Finance, and the Social Security scheme under the administration of the Social Security Organization. The Universal Coverage scheme covered all the uninsured, voluntary health card holders, and those covered by the medical welfare scheme under a single unified program.22
In Indonesia, the structure of insurance included the following organization before the merger: 1- Civil Servant Social Health Insurance Scheme (Askes), which covered all government employees and retirees and military personnel. 2- The Private Employee Social Health Insurance Scheme (Jamsostek). 3- The Commercial Health Insurance scheme JPKM (HMOs), which is entirely similar to the Health Maintenance Organization (HMO) of the US. The JPKM insurance is classified under commercial insurance, and provides in kind benefits which are managed by various managed care organizations that are not insurance companies. The Traditional Health Insurance: an insurance law which was passed in 1992 allowed insurance companies to sell health products. The ministry of finance was the regulating sponsor of the insurance companies. Thus, general and life insurance companies started to sell health insurance. Many insurance companies which had long-standing relationships with the industry for selling life and general insurance, managed to easily persuade the industry to sell health insurance to employers. The Social Safety Net schemes which are parts of the health care financing schemes on micro levels, include three different financial resources to assure the poor’s access to necessary health services23,29.
Since 2014, Indonesia has started the implementation of universal health insurance scheme, JKN. Implementation started by merging the existing public insurance schemes,
including Askes, JPK Jamsostek and Jamkesmas. According to the Roadmap of
National Health Insurance, it is supposed that all Indonesian citizens will be covered by the BPJS Health by January 2019.24
Policy Champions And Mobilizing Support:
Political Support And Political Stability:
One of the main contributing factors which made the merger of health insurance funds possible (as a part of transformation plan) in Turkey possible was the political stability of the government and being in power for a relatively long period of time28. Enjoying a majority in the Grand National Assembly enabled the government to follow and implement structural changes in the health insurance system11.
Contextual factors facilitating implementation of merging:
Economic Growth And Stability And Financial Feasibility:
In South Korea, the expansion of the health insurance to the self-employed or the workers in the informal sector was a significant challenge for the Universal Coverage scheme. Economic and political factors facilitated the expansion of the insurance to the self-employed, which was the last group that joined the National Health Insurance. The economic growth of the 1980s improved the financial power of the self-employed to pay for the insurance. At that time, the economic growth increased by 12 percent. Also, the government had the financial power to subsidize the self-employed 21. A strong political regime and significant economic growth were effective on the compulsory registration for insurance and cooperation of employers to pay half of the contributions of the employees; and there were few problems related to false reports of wages or evading registration20. In Turkey, the economic stability and fast growth of GDP, which occurred between 2003 and 2012, provided the required financial capacity, enabling the government to invest in social affairs. As economic growth increased, the government increased the health budget and investment in the health sector. Also, the investments of the private sector in health were increasing. Along with the stable growth of GDP, new laws and methods improved tax collection, and balanced economic policies increased tax collection and decreased inflation and unemployment rates. Increased tax revenues of the government, encouraging privatization and foreign investments enabled the government to expand the coverage of the Green Card using the public budget revenues and establish the universal public health insurance11. In Thailand, in accordance with the spirit of the 1997 constitution, the Universal Coverage Committee was established in 2000 to assess the potential alternatives for the universal coverage. This committee studied and confirmed the financial feasibility of achieving universal coverage and stated that assuming an efficient insurance system, it can be affordable. In total, B 100 billion was predicted for the universal coverage per year, which was not much higher than the B 76 billion which was spent annually by different health insurance schemes and the public health budget at that time22. Thailand committed itself to expanding coverage under the Universal Coverage Scheme (UCS) in 2002, after the Asian financial crisis when macroeconomic growth prospects were still fragile. However, economic growth has been one of the important enabling factors underpinning the subsequent expansion of UHC in many countries once they adopted UHC14.
Comprehensive Information System:
In Thailand, the first problem was to identify the uninsured (those who were not covered by SSS or CSMBS) considering the fact that there was no database of CSMBS beneficiaries available. Consequently, a comprehensive information system was quickly established using a government registration database to avoid the duplication of health insurance benefits. This was not an easy task since more than 50 million records had to be created 22.
A Comprehensive Strategy Based On Evidence:
The HTP scheme in Turkey was devised based on the evidence and experience of other countries such as Belgium, Cuba, Denmark, Estonia, Finland, Mexico, Thailand, and England. The Ministry of Health successfully benefited from the cooperation of international agencies and national and international experts. Along with international experience, local experience and studies related to the coverage and efficiency of the health sector and obstacles ahead of the health system of Turkey were used11.
Other factors that facilitated the merger of insurances as a part of the Health Transformation Plan in Turkey included creating a receptive environment, considering health as the fundamental right of people, constant learning and monitoring of the programs, and flexible implementation11.
The resistances and limitations ahead of the merger:
Opposition Aroused By Population Groups Enjoying Better Benefit Package:
Most countries have gradually extended the universal health coverage. Due to the complex process, the required effort to achieve the support and agreement of the interest groups and the time-span needed for developing the organizational and technical capacities, countries choose a gradual approach toward providing insurance cover for different groups. The experience of countries show that the gradual health coverage development approach leads to the creation of multiple risk pools for different population groups with different levels of coverage. This creates new challenges for the assurance of equal coverage and redistribution of resources across risk pools, and once they are established, it will be politically difficult to merge or integrate them since this means that the privileged organized groups must lose some of their benefits in favor of other population groups14. Therefore, moving toward a single insurance and consolidation of insurance funds, like any other large-scale reform in the health system, have always faced resistance from interest groups, which will be discussed in the following sections.
One of the most important challenges and resistances facing of the merger of the funds is the objection of insurances with more generous packages, especially when the single insurance is affected by the low performance in the past, and understanding of low quality benefit packages due to insufficient premium level23. In many countries, there are different schemes for government employees, private sector staff, and the self-employed, and each has its specific benefit package. For instance, in Thailand, government employees use a more generous benefit package. Equalization of benefit packages for all funds will face oppositions from stronger funds 20. In Thailand, the labor unions were concerned about the transferring of budget from the Social Security Fund to the Universal Coverage scheme, and considered the benefits of the Universal Coverage to be lower than what they already had. The unions organized several street protests to demonstrate their concerns against the merger of the Social Security scheme with the Universal Coverage Scheme22. The harmonization of the three government health insurance schemes is still the focal point of debate after the beginning of the universal coverage in Thailand. Inequality between these three schemes has challenged the right to public health care as the right to access health care with equal standards for all the people of Thailand. Recent studies showed that there is difference in benefit packages, access to high cost medicines and procedures and also payment methods and remuneration rates provided by these three schemes30,31.
Using public hospitals and health care centers by the members of health insurance with poor packages and financing can cause distrust among those who enjoy currently high quality health services in private sector financed by strong and private insurance. Private employees may think that the single insurance provides low-quality health care which is currently provided for the members of weak insurance schemes. In order to solve this problem, it is better that the single insurance scheme focus on those who are not under coverage of any fund fist. Gradually, the compulsory insurance fund should improve the quality of its services while simultaneously proving that it is possible to provide high-quality services with lower prices and contribution rates than private health insurance23. The differences in benefit packages across health insurance funds will lead to social classification and in turn portability problems between various funds, especially when migration rates from rural areas to urban areas are high.
In order to merge the funds and create a national health insurance to provide equal benefit packages for all, it may be necessary for the government to make greater investments and provide more financial support to develop infrastructures in rural and remote areas for the underprivileged groups. In Korea, unlike the industrial workers, the extension of insurance to the self-employed faced tough resistance. Farmers wanted a rise in government subsidies and development of health centers in rural areas to improve their access. The government was forced to comply. At first, the government subsidy to the self-employed was about half of the total revenue of the self-employed insurance fund 20. In Korea, despite high migration rates from rural areas to urban areas, they did not face any serious challenge in this regard as benefit packages of different schemes were the same even before the merger of funds20.
Concerns of workers and employers about increase in contribution rates:
In Thailand, a strong opposition was formed by the members of the Social Security Scheme (SSS), especially labor unions, against the expansion of SSS to other groups, because they feared that the SSS’s resources would be used as subsidy for the rest of the population. The Social Security Office was concerned about the actuarial feasibility and the limited support from the employers30. In Korea, the employers which paid half of the contribution of the employees were among the potential opponents, since they were concerned that due to the problem of income assessment in the self-employed, the unified insurance system would place more pressure on industrial employers and workers to pay their contribution20. In Indonesia, the private sector employers may refuse to join the National Health Insurance since they are afraid that the contribution rates might increase. Also the current competitive market may oppose formation of any kind of mandatory health insurance23. In, Indonesia, during the passing of the law in the parliament, strong resistance was formed by labor unions and employers’ organizations32. Also, the Ministry of Labor was against the unified insurance bill. Initially, the Ministry believed that the bill would put more pressure on the workers and that the Ministry might lose control over the social security funds of private employees. Under the social security system before the merger, government employees paid all the contribution themselves, while private sector employees did not make any contribution. The National Health Insurance Bill proposed a shared contribution between employers (government as the employer of government employees) and employees. The private sector employees who did not have any contribution until then, were strongly against the bill. The minister of labor threatened to veto the bill if the shared contribution was approved by the parliament. Even employers’ organizations, business offices, and several government authorities rejected the mandatory essence of the Social Security. Employers were concerned about the amount of contribution which would be specified for them. They had some estimation based on their calculations, and opposed bill since they concerned about the probable financial problems that might be imposed by the bill32.
Concerns about identifying and setting rational contribution rates for informal workers:
Also, in countries that a large part of the population is active in the informal sector, there are problems related to identifying and collecting contributions of the self-employed, part-time workers, and seasonal workers23. In Korea, the problem of identifying the income and contribution of the self-employed was the main problem to integrate financial contributions of employees and the self-employed33.
Opposition Aroused By Trade Union Concerning About Downsizing:
In Korea, the structural change and reduction of personnel was one of the intended goals of National Health Insurance system which was faced with the strong opposition by the trade union that was the representative of its employees. This opposition was a serious barrier to achieve expected reduction in the number of personnel and overall administrative costs 13.
Concerns about inconsistency between merger law and national laws such as constitutions:
In Turkey, although the law of the General Health Insurance Scheme (GHIS) was approved by the Turkish Grand National Assembly on May 31, 2006, and it was expected to be implemented on January 1, 2007, the opposing party (the Republican People’s Party) claimed that the law was against the constitution. This law faced the opposition of the Turkish Medical Association and other professional medical unions, and was challenged in the constitutional court. The law was revised three times before its implementation. The government postponed the enactment date until July 1, 2007 in order to make the necessary changes. In the light of the presidential and general elections, politicians convinced the government to further postpone the implementation until January 1, 2008. The final revised version of the law was enacted on April 17, 2008 and implemented on October 1, 200828. In Thailand, the Medical Association supported the Universal Coverage Bill but showed opposition to the medical responsibility clause included in the bill. The Medical Association was concerned about the increase in the purchasing power of single national insurance scheme11.
The merging policy positive consequences:
It is worth to specify that what kind of problems can be solved by consolidation of health insurance schemes in the health system and health financing area. Also, the clear explanation of potential achievements can be effective on supporting the implementation of the program and reducing the resistances by opposing actors. In the selected countries, we can point to the following benefits as the consequences of consolidation:
1- Improving Health Financial Equity
Combination of health insurance schemes, changing financial flows, and increase of the power of health insurance system as a result of combination, can significantly and positively improve the equity in health financing. Although health equity improvements can’t be attributed only to consolidation or reduction in the numbers of health insurance funds, they have been the most important ones. For instance, in South Korea, the out-of-pocket share of the total health costs was reduced from 63% in 1983 to 38% in 200420. Also, out-of-pocket share in Turkey was 19% of the total health costs three years after the implementation of the program, which was considered fairly low 34. In South Korea, the merger of health funds of the self-employed created the same contribution rates for all the self-employed across the country. The National Health Insurance considered some discounts for under-privileged groups based on their income and geographical location. 62% of the households were paying a lower contribution compared to the times before the merger while the residents of one the richest counties in Seoul paid greater contribution (36.3% increase in average rate) than before the merger. Therefore, the merger had improved the equity in financing among the self-employed society 13. On the other hand, the uniform system had improved the contribution equity among the industrial workers. The equalization of the contribution rates after the merger of the industrial workers funds showed that 56% of the insured pay a lower contribution. The contribution of the employees with more than 1300 US dollars’ income increased. This meant that the more they earned the higher contribution they paid. The amount of changes in contribution differed based on the number of employees. The contribution of the employees of firms with less than 10 employees was reduced by 17% while the contribution of the employees of firms with more than one thousand employees increased by 19.4%13.
2- Reducing The Administrative Costs
Bigger funds will improve the economies of scale, which will in turn maximize the benefits provided for the members. It is estimated that in Indonesia, by implementing the National Health Insurance, similar to the schemes in Taiwan, the Medicare in the US, the Medicare in Australia, the National Health Insurance in Korea and the Philippines, the administrative costs will be reduced to lower than 5%, and can be even further reduced to 3% of the total costs23. In Korea, many funds did not have economies of scale due to their small size, and it seemed that the merger would reduce the administrative costs. Before the merger, the administrative costs were 4.8% for the Health Insurance Scheme of the government and school employees (the single insurance), and 9.5% for the insurance scheme of the self-employed. In 2004, the administrative costs of the National Health Insurance were reduced to 4% of the total costs20. In Korea, after the merger of the regional funds of the self-employed with the fund of government employees and school teachers in 1998, 227 insurance funds of the self-employed and 19 funds of the government employees were reduced to 162 regional funds, and the number of personnel was reduced from 10849 to 9073 in December 1999 13.
3- Reaching Risk Pooling And Cross-subsidies In National Level
The merger of insurance funds has the benefit of pooling risks across the country13 in such a way that pooling all of the people into a single fund maximizes the redistribution of financial burden for health services, which in turn will provide the possibility of cross-subsidy from the rich to the poor, from the young to the old, from the healthy to the sick, and from richer areas to poorer areas of the country23.
4- Controlling The Total Health Care Expenditures
The international experiences show that the single payer system is more powerful and more efficient in controlling the total health care expenditures13,23. Regarding risk pooling efficiency and financial stability, the single payer is more preferable 20. The collection of contributions will be integrated with other social insurance funds as a result of merging. In the single insurance system, collection of contributions will be much more efficient than the collection of contributions by different health insurance schemes separately in a fragmented system. On the other hand, the more efficient cost management and financial stability of bigger insurance scheme will lead to more stable premiums, and the employers do not need to negotiate with private insurances over the premium and benefits each year. Bargaining with different health insurance funds requires special skills and understanding of the benefits and costs of healthcare services. Therefore, single payer helps the employers focus on their work. On the other hand, the employees do not need to concern about changing insurers over time. Also, the non-profit nature of the single insurance will inject any profit back into services or improvements in packages for the society23.
5- Improving strategic planning and increase competition among health care providers
In addition to the improvement of equity in contributions and reduction of administrative costs, the single-payer system has more power in bargaining with providers through creating a monopolistic purchaser13. The single insurance has the capacity and inclination to purchase medical care cautiously, which will improve the efficiency of the new system13. Also, the single insurance system will increase the competition among providers, since the single insurance is the only payer and provides a free choice of providers for the people23.
6- Equity In Benefit Package And Health Care Utilization
The single insurance system can enhance insurance packages and extend the coverage in favor of the poor and the members of weaker insurances. For instance, it is expected that in Indonesia, the uniform service package for civil servants and the private sector employees will create better clarity, equity, and understanding of the package for providers and members 23. In Turkey too, although the Green Card Program was initially created as a separate fund for the poor, it was managed by the Social Security Institute as a part of the Universal Health Insurance in 2012 35. The expansion of the Green card program was accompanied by increase in benefit package such as coverage of outpatient medicine and reduction of the costs for many people11,34(4, 22). In 2003, the Green Card Program covered only 2.4 million people while 19 million people were poor. However, this number increased to 8.3 million in 2005, and then to 10.2 million in 201111.
7- Reaching universal health coverage and leaving no one behind
Normally, one of the consequences of the multiple insurances is that despite existing different health insurance organizations alongside each other, a part of the populations is not covered by any insurance for different reasons. Achieving universal coverage can be considered as one of the advantages of merging insurance funds. In 2002, Thailand achieved universal coverage through a strong government with political commitment, supported by civil society and great knowledge, and in 2014, nearly 99% of the population were under coverage.
8- Creating a single information bank and removing the coverage duplication
The single insurance system will lead to the concentration of the statistics and information of beneficiaries. In the National Health Insurance of Indonesia, information system and social security number will be unified across all social security schemes using a unique social security number. The uniform information system will reduce the duplication of coverage and membership, and will lead to a higher efficiency and easier transfer of benefits with changing the job in the dynamic labor market23. Before the General Health Insurance Scheme (GHIS) in Turkey, different statistics were presented by different information system for health insurance population coverage statistics, ranging from 67.2–84.5%. In one case 101.15% was reported. These differences were result of lack of single information system. The Organization for Economic Co-operation and Development of Turkey reported that many people have more than one insurance policy, which leads to duplication and an increase in the number of the insured records 28.
9- Paving the way for implementing other contributing health reforms
Moreover, merging and reducing the number of health insurance funds can create a window of opportunity for implementing extra reforms in the health system. These reforms were less likely to be implemented before due to the multiple insurance schemes working alongside each other. For instance, in Indonesia it is expected that creating a national health insurance scheme with higher number of beneficiaries and higher power of negotiation with the providers increase the chances of implementing per capita payment or other prospective payment methods like DRG. These prospective methods will improve the efficiency of the system. Also, another reform which leads to a higher efficiency of the health system is the better implementation of the family physician program and the referral system. An increase in the number of the insured provides the possibility of using a gatekeeper system and improves the utilization of the family physician as the gatekeeper23. One of the challenges of many health systems in human resources is the unbalanced distribution and concentration of providers in big cities. Pooling of funds will improve the equality of the redistribution of providers in all areas. Under a single fund, the money will follow the patient. Currently, about 25% of all physicians in Indonesia are living and working in Jakarta (Providing services for nearly 8% of the population) 23.
The probable risk and negative consequences of merging:
Beside the positive effects, policy reforms like merging health insurance funds together may cause unpredicted side-effects in the health system in the short and long run, which need to be predicted to prevent.
1- Decreasing The Responsiveness To The Insured’ Rights
A single payer may reduce efficiency due to increasing the bureaucracy and decreasing responsiveness; however, in many developing countries with multiple health insurance schemes where people do not have real right to choose between different funds, the efficiency lost as a result of merging may not be significant13. In a single payer system, the insured do not have the chance of choosing and changing the insurer when the health services are not satisfactory which can lead to dissatisfaction, especially in rich families. However, we need to know that the right to choose the provider is much more important and significant than the right to choose the insurer. Insurers are only payers, and have little effect on the process and outcomes of the treatment. In the single payer system, the free choice of the provider and increased competition among providers can increase the satisfaction of the beneficiaries23.
2- The Possibility Of Increasing Bureaucracy
Bureaucracy and centralized policy making at a national level may result in mismanagement and reducing the speed of decision making. However, some authority and independency should be delegated from national level to the regional administration in some areas like contractual methods and levels of payments to the providers.
3- Risk of moral hazard and catastrophe of shared resources
The single payer system might face moral hazards. Before the merger, each fund is responsible for its own financial outcomes, and the insured are interested in the financial saving and keeping their own fund financially sustainable. However, after the merger, they may be less concerned about controlling health expenditures, and health service utilization may increase. As the financial resources are shared with the whole population, collection of the contributions from the self-employed may not be done as actively as before 13.
4- Risk of facing more politics and less flexibility in making health insurance decisions at national level
After the merger and under a single insurance system, major decisions on the health insurance, such as adapting premiums and benefit packages, will become national issues rather than being a local concern. For instance, the process of adjusting contributions to cope with increasing health costs will mostly be political and less flexible13. However, the single insurance system can provide this opportunity to highlight some neglected health insurance policy decisions previously in the fragmented health insurance system at a national level13.
5- Need For More Financial Support By The Government
One issue that must be considered while merging insurance funds is that the long-term financing of the single fund must be guaranteed. In Thailand, the technocrats in the Ministry of Finance stated their concerns about potential problems with long-term outcomes of the budget in the program, which was supposed to be financed through taxation. Also, they said that the program could increase public debts which were already high at the time 22. However, one significant question is that how much the consolidation may affect the costs and consumption of health care services in practice 13. In Thailand after the merger, there are concerns about financial stability of the universal health coverage program due to the changes in the age constitution of the population and in the technologies22. In South Korea, the National Health Insurance program has experienced financial instabilities. Those opposing the merger claim that moral hazards and inflexibility in increasing the contributions after the merger have caused financial crises. In most countries, government engage financially only in some public schemes or for some groups of population, while after merging, the single national scheme needs more support by the government in financing since the financial instability of the single insurance system emphasizes the need for the intervention of government13. In Turkey, the health system’s share of GDP quickly increased form 5.4% in 2000 to 6.7% in 2009. This number was constant in 2010 and 201111. On the other hand, in Indonesia, the obligation of government as an employer to pay 3% contribution compared to the currently-paid 0.5%, will require an additional cost of 1.3 trillion rupees annually. Also, obliging the central and local government to pay contribution for the poor will require 5–8 trillion rupees from the central and local budget. The existing financial problems of the government might postpone the coverage of the poor 23.
Other contributing health reforms alongside merging:
In Turkey, alongside merging health insurance funds, new roles were defined for the Ministry of Health in a way to enhance the stewardship role, and assigning executive (operational) responsibilities to new organizations11. Between 2003 and 2010, during which the Ministry of Health was responsible for the management of the hospitals which were affiliated with the Social Security Organization and the Green Card Program, the role of the ministry was emphasized. Also, after the announcement of the law of the reorganization of the Ministry of Health and the autonomy of hospitals, the ministry of health focused on devising strategies and policies, assessing the performance of the health system, and monitoring the responsiveness and inter-divisional coordination. The executive responsibilities related to public health, concluding contracts, providing health services, and assessing health technologies were assigned to new quasi-governmental organizations. After the introduction of the uniform public health insurance, the Social Security Organization took over the management of the Green Card Program11.
Another structural reform was the transformation of the hospitals of Turkey. Public hospitals such as hospitals of the Social Security Organization which were not being managed by universities or military organizations were transferred to the Ministry of Health in 2005 under the Health Transformation Program (HTP). The apparent reason for this action was to ensure uniformity among public health providers in terms of service quality; however, the subtle motivation was to improve the process of transferring hospitals to local governments which was considered within the framework of public administration reforms28.
Along with other reforms, the health transformation plan conducted four new key programs in the human resources department in order to emphasize the problems related to the shortage of human resources in the health system. The first program was implemented to increase the number of schools and colleges for medicine, nursing, midwifery and other related fields. The second program included a raise in wages and incentives based on performance for hospitals and primary health care centers, and the possibility for constant salary rise for healthcare employees. The third program focused on concluding new contracts with the health employees and purchasing services from the private sector. And finally, the fourth program was the law of prohibiting dual practice for physicians, which was passed in 2010. Based on this law, the physicians who were not employed by the Ministry of Health had to work full time in government hospitals. Also, they were banned from working in the private sector at the same time28. In Thailand, the wide geographical coverage of health care facilities of the Ministry of Public Health (MOPH) was an important foundation for the implementation of the universal coverage scheme. This meant that the members of the scheme – many of whom were living in rural areas – had access to the services. In 1970, Thailand began to build more hospitals and train more nurses and doctors, and as a consequence, the ratio of the population to beds, nurses, and doctors was significantly improved by 1990 31.
Emphasizing On Primary Health Care Services
In Thailand, the Universal Coverage scheme, aiming to provide equal access to health care for all, has three defined characteristics focusing on the constraining total health care expenditures: UHC scheme is financed by taxation providing free-of-charge services, a comprehensive service package focusing on primary health care such as prevention of illnesses and improving the health status, and using fixed capped budget to reimburse provider31.
In Thailand, the Universal Coverage program is trying to use financial mechanisms to improve primary health care. The main financial resource of the Universal Coverage scheme is the taxation revenue which is paid annually by the government per person (1899 baht per person in 2007) (28, 29). This amount is directly paid to the providers that have a contract as per capita 36(30). In 2005, the health transformation plan in Turkey introduced a family physician-centered primary care model and emphasized on increasing resources in three areas – physical resources, human resources, and creating capacity for human resources. Based on this model, each family physician provided services more than what was provided in rural health center or health centers, to a population of 4000 people. After 2005, about 20000 family physician teams were formed. The existing infrastructures were improved and most rural health centers and health centers were kept or merged with family physician centers. Until 2011, nearly 6250 new family physician centers were founded11.
Need For Moving Towards Close-ended Payment Methods
In Thailand another significant reform was change of the payment method. In the UHC insurance scheme, payment for outpatient services is in form of capitation and the government pays this capitation to the contracted centers, based on the number of people who are registered in these centers. The amount of this capitation is calculated annually. For hospital services, the employed method is based on diagnostic-related groups. Also, prevention and health promotion services are included in the basic package, and the method of payment to providers is based on the capitation system along with the performance-based payment37.
Using close-ended methods of payment in most health insurance funds has led to an increase in efficiency, a decrease in costs, and reasonable use of services. Emergency and accident health services are reimbursed by a separate central fund22. In South Korea, since the beginning of the National Health System, fee-for-service payment has been used to reimburse the providers, which has led to an increase in the volume of health services utilization. In order to change the fee-for-service system into a prospective DRG system, the new system was implemented voluntarily as a pilot study in some health care institutes. The results were positive, and it had positive effects on the behavior of the providers. However, due to the oppositions of providers, the new system was not expanded to all providers. Currently, changing the payment system into DRG or capitation is one of the main challenges of the health insurance system20.
The Purchaser-provider Split:
One of the significant innovations was done on a parallel with introducing UHC scheme was the establishment of the National Health Security Office (NHSO) in Thailand to act as a purchasing agency for the beneficiaries of the Universal Coverage scheme. In fact, the purpose was to separate the purchaser from the provider. This meant that the Ministry of Public Health will not have much control over the government expenses related to the public health services 31.
The NHSO was established as a quasi-government organization with the minister of public health as the head of its executive board. Operation and management of the Universal Coverage scheme fund was transferred from the Ministry of Health to the NHSO as the purchaser of health care for the members of the Universal Coverage Scheme22.