Overview of the National Health Insurance Scheme (NHIS)
The development of the NHIS is hinged on the WHO resolution [
7], Uganda's Constitution [
23], the National Health Policy [
24] and the Health Sector Strategic Plan I & II [
25]. The 1995 Constitution emphasises that the state shall take all practical measures to ensure the provision of basic medical services to the population. The goal of the National Health Policy (NHP) is to ensure attainment of a good standard of health by all Ugandans and to promote a healthy and productive life [
24].
The Health Sector Strategic Plan I (2000/1-2004/5) and II (2005/6-2009/10) highlighted development of alternative health financing mechanisms among which is Social health insurance (SHI) [
25]. A feasibility study undertaken in 2001 recommended that Uganda pursues a strategy of starting up SHI gradually, by initially covering only civil servants and their families located in large cities plus workers and their families employed by large companies such as those employing 250 workers or more. The study recommended that step-by-step, the scheme could be expanded to include all workers and their families in the formal sector, and hopefully the informal sector as well [
26]. In 2006, the Government of Uganda asked the MoH to design a Health insurance (HI) scheme through a cabinet minute No. 63 (CT 2006) to the Ministry of health (MoH). The Minister of Health established a national task force on health insurance, with representation from all relevant stakeholders to spearhead drafting of the Bill and design issues. Stakeholders include MoH, Ministry of Finance, Ministry of labor and gender, Ministry of public service, trade Unions, Federation of Uganda employers. The purpose of the Bill is to diversify and strengthen health care financing, stimulate providers to provide good quality services at affordable prices and increase welfare gain in health care through financial risk protection.
Collection of funds
The scheme design is at an advanced stage and revenue and expenditure simulation has been undertaken. The scheme proposes to enroll all public servants initially, three years later enrol formal private sector over a period of three years, and enrolment of the informal sector starting in year seven gradually attaining universal coverage in 15 year's time. In the interim, the formal private sector employees have an option of making their own arrangements with private insurance providers on a voluntary basis. Revenue and expenditure simulation has estimated a 4% payment from salary from the formal sector employee (public and private sector) with an additional 4% from the employer. In the case of civil servants, the 4% will be paid by the government. It is estimated that 25% of the population are categorised the poorest of the poor [
10], these will join the scheme from year seven on wards and their premium will be paid for using subsidies from either government or donor funds. Each paying member can bring along four (4) dependants to benefit from the scheme. According to the plan, before the informal sector and the poorest of the poor get onto the insurance scheme, free government services will be improved to ensure that they also access an acceptable quality of services. They may also enrol in community health insurance schemes on a voluntary basis.
In the current revenue and expenditure simulation, no copayments or deductibles are envisaged. Given the proposed contribution rates noted previously, the formal sector would be paying 4% of their salaries and employer paying 4%. Average annual wages for public employees are UgShs1,115,270 (US$558). The 4% represents annual contribution of UgShs44,612 (US$22) per paying member. With an additional 4% from the government (US$22) per government employee enrolled into the scheme. The informal sector will pay an annual contribution of UgShs 80,000 (US$41) per paying member. The challenge remains the fact that the informal sector which is non-taxable is large, accounting for close to 90% of the work force, and a significant proportion of these fall in the poorest quintile. These may be better reached through government proving services in full through tax revenues.
The proposal for the scheme to deduct a standard proportion of income (4%), rather than a flat fee, on one hand is considered to be progressive because people would make different contributions on the basis of their income levels. On the other hand, however, an even more progressive contribution would be that which charges a lower percentage contribution for lower incomes and a higher percentage for higher incomes. In view of this, the proposed contribution structure for the NHIS is only proportional but not progressive.
Population covered and pooling of resources
It is proposed that the scheme starts with employees in the public sector. While this option is being considered in recognition of the fact that implementation needs to be gradual as experience in management of the scheme is developed, the strategy has equity and other important implications. Firstly, salaries in the public sector are relatively low compared to those in the private sector, implying that initially collections would be relatively low. Low collections are likely to impact on effectiveness of NHIS management and ability to provide a comprehensive benefit package of reasonable quality. Obviously, the smaller the amount of money collected, the smaller the package it can purchase. Average annual wages for public sector employees are UgShs1,115,270 (US$558). At a set contribution of 4% of employee salary and employer paying an additional 4%, this gives an annual contribution of US$44 per paying member plus the four (4) dependants translating into an annual contribution of US$9 per benefiting member. This is too low to buy a meaningful package of services. A minimum health care package in Uganda has been estimated to cost US$40 per capita [
19]. Bringing the informal sector on board would pose even more challenges given the fact that the estimated contribution of US$41 per paying member is again low. A relatively bigger package would be possible with income subsidization in place, if the formal private sector is included (because of the higher salaries there). On the other hand, it is true that implementation of NHIS will be easiest starting with government employees, because the payroll is one place and the reform is relatively less likely to meet resistance as when it is proposed in the private sector.
Secondly, the speed at which the scheme is rolled out to other formally employed people in the private sector determines the extent to which the scheme is able to create a larger pool of funds and wider coverage. A smaller pool and low coverage will have less benefits of cross-subsidisation. Obviously, the performance of the scheme in the initial years (when only civil servants are covered) will highly determine the acceptability of the scheme by employees in the remaining formal sector.
Thirdly, the proposal to have NHIS covering employees in the public sector and later the employees in the remaining formal sector gradually may not result in a reasonable coverage for the existing population, mainly due to the high levels of unemployment and subsistence existence (especially in rural areas), as well as the existence of a growing informal sector that is not well regulated. This means that NHIS is likely to cover only a relatively small proportion of the population, and benefits of being covered by insurance will therefore be enjoyed by only a few people. The NHIS design proposes that for every contributing employee four dependents will be covered. Considering the large family sizes in Uganda and the fact that about 56% of the population are below the age of 18 years, this means that some dependents of contributing employees will not be covered by insurance. If one can make additional contributions per dependent, then can have more than four dependants enrolled on the scheme although details of how much is to paid for an additional dependants are yet to be worked out. In phase one, only 2.2% of the population will be covered and this will increase only minimally in phase 2 to 5 - 9% by the sixth year of implementing the scheme. Given this low coverage, the scope of NHIS to increase the scope for financial cross subsidisation would be limited.
Purchasing of services
The proposed provider payment mechanisms include fee for service, capitation and a combination. The allocation of resources under the NHIS, if the option of paying providers on a fee-for-service basis is adopted, will be driven by the utilisation of services. The extent to which resource allocation is equitable (i.e. more resources being given to people or areas with the greatest need) depends on the degree to which frivolous use will be managed, and also on the extent to which access to services is equitable in the physical sense. In other words, if the NHIS accredits more providers in urban areas (e.g. because they have met the requirements of quality and scope of services available), it means that people living in the rural areas (who are covered by insurance) would have limited access to services, whether or not the need is greatest there. By implication, more resources would then end up in the places with the highest levels of utilisation, which might be partly due to better access to services. If these issues are not addressed, then resource allocation under NHIS might end up being inequitable, with a bias towards the places with the highest number of accredited providers.
Provision of services and the benefit package
Gradual implementation also has implications for the arrangements with service providers. Providers for insured members will include public hospitals and Health Centre IVs (which are mini hospitals); accredited private-not-for-profit facilities and private-for-profit facilities. In the interim period when the scheme has been implemented only for employees in the public sector, there is likelihood for two-tier service provision where some services are available for people insured under NHIS and other people for instance, insured privately. This situation is likely to result in comparisons between benefit packages and quality of services for the different groups, and might negatively impact on acceptability of NHIS in the long-run.
The insured population under NHIS and those insured privately will access services from accredited providers. OOP payments will be made by those who seek care from the private sector while provision of free services will continue for the non insured seeking care in public facilities. Provision of free services in public facilities will continue to face challenges of inadequate inputs like, medicines stock-outs given the fact that projected allocation for health for the period 2010/2011 to 2012/2013, shows no increase in the health sector budget [
18]. The implication of this modality, especially in the public facilities, would be provision of inferior quality services for the non insured compared to services provided to the insured population. On the other hand, continued payment of OOP especially in the private sector which is currently not regulated, impacts negatively on meeting financial risk protection objective.
Integration with existing financing mechanisms
Uganda's sources of health care financing mainly include government, donors and households. There are some minimal contributions made through voluntary insurance and from firms. Currently, there is limited pre-paid financing, very limited financial protection (due to high out-of-pocket spending), fragmentation within and between financing mechanisms, and limited cross-subsidisation. Overall, the health care financing landscape is relatively inequitable and fragmented. One of the important potentials of the NHIS would be to address some of these challenges. Specifically, if successfully implemented, NHIS has the potential of improving cross-subsidisation through the creation of large pools (if high coverage is attained), reducing out-of-pocket spending, providing some financial protection, and reducing fragmentation between financing mechanisms. Unfortunately, the current NHIS design does not explicitly mention how the scheme would fit in with the existing financing mechanisms. So far, the scheme has been developed independently, without mention of how it would be integrated within the existing financing mechanisms. For example, there is no explicit mention of how publicly-funded services will be affected by the introduction of the NHIS (e.g. would the insurance contribution made by government for public employees be deducted from the total budget the health sector has been receiving? How will quality of services be ensured in the public facilities that are not accredited under NHIS? Should a person covered under the NHIS also be able to access the free services from public facilities?). Similarly, although the design mentions that private insurance will offer complimentary package, it is not clear what the role and collaboration arrangements of private health insurance agencies will be after the introduction of mandatory health insurance.