Health insurance: A miracle cure or false hope?

After withstanding four years of harsh criticism for its proposal to introduce a national health insurance scheme, the government is reviving the idea. Not only that: It’s raising the stakes.

While its earlier-and widely criticised-approach would have started modestly by providing insurance only to the narrow slice of the population that works in the civil and formal sectors, the new proposal being written by the Ministry of Health will seek to cover the vast majority of Ugandans, including people who work in the informal as well as the formal sectors.

The plan is designed to achieve two very ambitious goals at once: to increase the total amount of money available for health care while making health care affordable to everyone. The theory is simple. If everybody pays a relatively modest amount, so much revenue will be collected that everybody who gets sick can get better treatment than is available today. But the realities, both political and practical are enormous. Indeed countries all over the world, from the United States of America to Uganda, have had a hard time turning the theory into practice.

Sector challenges
In Uganda, the government faces skepticism from many who doubt that it could run such a big programme efficiently and free of corruption. The Ministry of Health is plagued with graft scandals.

In 2005, the Global Fund cut funds to the ministry after three ministers and other well-connected people were accused of abusing money for HIV/Aids TB and malaria.

Just last week, the top three officials in charge of the Malaria Control Programme were charged with diverting malaria funds to their own private enterprises. And in the last five years, the ministry has had at least four permanent secretaries. The most recent one, Dr Sam Zaramba, who was expected to clean up the ministry, resigned in February after just six months in office.

There are also doubts of what this new system would mean for the current system of the government-provided health care. More so given the deplorable physical condition in which public health care infrastructure finds itself in today.

While there’s widespread dissatisfaction with government care, health insurance could become a pretext for the government to withdraw entirely as a health provider. Government officials deny that is the intention. They also say social health insurance would supplement rather than replace existing private insurance. But they do not deny that social health insurance represents an enormous administrative challenge, especially in a country like Uganda with a vast majority of people-as many as 90 per cent working in the informal sector.

It is unclear how many such workers even earn cash incomes, or how the government could collect premium payments from them.
“The challenges of implementing such a scheme are many,” says Dr Richard Alia, a health specialist and former consultant for the World Bank in Kampala.

“The income of most people is so little that people don’t want to part with money at a time when they are not sick. Yet it’s an investment.”

While the previous plan received strong opposition, interest groups are waiting to learn the details of the new plan before taking a strong position.

The Federation of Uganda Employers’ Executive Director, Ms Rosemary Ssenabulya, said for the scheme to avoid falling into any corruption pitfalls, a strong regulatory body should be put in place. Given all the challenges, why is government not giving up on its plan for a national health insurance?
Because the country’s health sector is ailing. The hospital system is broken and the burden of disease is rising.

A Ministry of Health master plan estimates it will cost more than Shs1.5 trillion annually to deliver the ideal health services that Ugandans would want to have--roughly twice the amount currently available.

Presently, the health care spending is Shs734 billion of the total national budget, including donor contributions.
This figure falls far short of what is needed to provide adequate care for all Ugandans given that much of the donor money comes when it has already been allocated for specific programmes.

“At the end of the day, our hands are tied because even if we have all this money coming from the donors, we are not free to move it from one place to another,”explained Dr Francis Runumi, the chief planner at the Ministry of Health.

Dr Runumi could not estimate how much additional revenue the health insurance system could produce, although officials have said the new scheme would not be used to offset current spending.

Limited financing and investment in the health sector, which partly results from the country’s narrow tax base and the government’s varied order of priorities, means there simply are not enough facilities, services, health workers and medicines to care for everybody. And even where services are available, individuals often cannot afford the soaring costs of treatment in private facilities.

Dr Runumi said the new proposal, which is still under discussion, is supposed to address both problems. Contributions would come from workers, the self-employed, enterprises and government. The contributions would then be pooled and services would be provided only to those who need them.

As a result, the financial risks associated with ill health in the population as a whole would be shared by all contributors, and because everybody would contribute based on income, the cost would be manageable.

“In insurance, the rich and those who do not fall sick regularly will subsidise the poor or those who fall sick regularly,” said Dr Alia.

Dr Runumi said the plan would set a uniform standard of care for every Ugandan and would include provisions to control the current high medical costs that are especially burdensome for the majority poor.

It is not clear how the plan would be run, or what role private insurers would play.

Dr Ian Clarke, the chief executive officer of International Hospital Kampala (IHK), said he needed to look at the new proposal before commenting on it.

He, however, said should government introduce its own scheme, even if it includes the informal sector, they would be willing to work together in the market. IHK already is providing private health insurance.

Dr Clarke has previously been very critical of the plan to introduce a national health insurance scheme, saying it cannot work in a health system deficient of services.

Defending the need for a health scheme, Dr Runumi said the government is already hard pressed, with several competing demands, and it’s only natural that alternative funding sources are found to finance the health sector.

“Through the health insurance scheme, everybody can contribute some little money so that when they fall sick, they can go to a facility, find health workers and good quality service. That’s the only way forward,” said Dr Runumi.

Immediate concern
The most immediate concern though with the revised plan is how the government can collect enough money from people who are not part of the cash economy or formal sector.

Secondly, what guarantees can there be that this money will be safe from the sticky fingers of the irreparably corrupt public service officers in whose care it might be placed? Ugandans will remember how Shs11 billion in private sector workers’ savings was siphoned out of the National Social Security Fund with the connivance of former finance minister Ezra Suruma and current security minister Amama Mbabazi, in a questionable land transaction.

Dr Chris Baryomunsi, the vice chairperson of the Social Service Committee of Parliament, acknowledges that the government faces an uphill task in collecting money from the informal sector if it goes ahead to include them in the new plan.

But he said such a scheme would start with organised groups of the sector like traders through their associations.

Although the government failed to get the support of the formal sector, Dr Baryomunsi believes if people in the informal sector are sensitised well, they can rally behind the new proposal.
“Health insurance is good but it has been poorly misunderstood by the public. If we are to introduce it, then this calls for more public education. We also need to improve our health facilities because people might be reluctant to contribute if they cannot get quality services.”

Dr Alia explains that the formal sector, which had been previously proposed in the initial plan for a national health scheme, is too small and the money collected from this group of people would run out too fast.

“By including the informal sector, you are increasing the number of people making the contributions and it will have the rich who do not fall sick regularly to subsidise the poor or those who fall sick regularly. If the contributions are many, cumulatively there will be enough money to buy medical products,”he said

Here is how Dr Alia says such a scheme would work.In health insurance, the contribution is usually a percentage of one’s monthly income. If that contribution is, say, 10 per cent, then if an income of someone in the informal sector is Shs50,000 a month, then 10 per cent of that will be just Shs5,000. And such an individual will be able to access the medical care equally like someone who will contribute Shs100,000 or more.

Dr Alia explains that many people cannot afford proper medical care when they are sick, let alone treatment for catastrophic illnesses that would require millions of shillings to treat. But an insurance cover would take care of such illnesses.
The challenge that may arise is that those with chronic diseases will be willing to register, a situation Dr Alia described as adverse selection.

“This is dangerous because the money for the scheme will run out quickly. We also need the healthy ones to register so that if they don’t fall sick, they’ll subsidise the sick.”

Rwanda example
Among other things, the Ministry of Health is looking at the Rwandan health approach which has provisions to cover public, formal private sector and people in the informal sector.
Tanzania has also implemented a successful health scheme that Uganda can learn from.

But formal sector workers feel a compulsory scheme-with or without the informal sector- will take a huge bite out of their wages since many are already covered by their employers under private arrangements. These same workers view the scheme as another disingenuous plot by the government to ‘tax’ them on top of the already heavy income tax burden they are shouldering.

“Our fear is that many of the workers are already covered. Now if a new scheme to include the informal sector is going to be introduced, how will this huge money be managed given our history of corruption with schemes like the social security fund,” asked Mr Bruno Pajobo, a lawmaker representing workers' interests.

Mr Pajobo said a compulsory insurance scheme is not viable in an-already inefficient health system.

“Our hospitals don’t have even the basic supplies like drugs. Why should we think that a health scheme is going to make miracles? Unless the ministry of health comes up with a more workable approach to finance the health sector, we shall not accept this scheme,” said Mr Pajobo.
Dr Francis Epetait, another lawmaker and shadow health minister, said while the idea of national health insurance is good, people should be allowed to choose between a public and private scheme.

“Many people already have private health coverage and they have been getting good very good services. What we should be encouraging now is a public private partnership where the government can work with other players already in the market,” said Dr Epetait.

He is wary that given the past corruption tainted record of the ministry, many people are not willing to risk their savings when they are not sick.

Dr Alia said the health sector, in its current status leaves a lot to be desired and thus poses a great challenge when it comes to implementing the scheme. “Uganda will need to identify health units with good facilities otherwise the clients will complain,” he said.

Uganda's health care system at a glance

• One national referral hospital-Mulago
• One national referral mental hospital-Butabika
• 11 regional referral hospitals
• We have 39 general hospitals,
• 161 health centre IVs and hundreds of health centre IIIs and IIs.
• According to Ministry of Health, only 53 per cent of all health work force (including doctors, nurses, clinicians, pharmacists etc ) are filled nationally and 47 per cent are vacant.
  Uganda currently has only four companies; Jubilee Insurance, East African Underwriters, Insurance Company of East Africa Ltd and International Hospital Kampala through Microcare that provide health insurance, according to the Uganda Insurer's Association
  Services offered;
  -General medical health cover
  -Critical illnesses cover