IMPORTANCE OF HEALTH INSURANCE IN PAKISTAN

EXECUTIVE SUMMARY
. The topic of this research paper makes it quite special in the wake of scenario experienced by almost entire population of this country. Right from the common citizen up to the upper class, people are facing consequences related to their health in one way or the other. We know the number of people in Pakistan living below the poverty line, living without potable water, without health care, without education, without basic

sanitation facilities and without much more. It shows that our country is a very poor country and it has not been provided with even the bare necessities of life. Health Insurance in law and economics is a form of risk management and can be defined as the equitable transfer of the risk of a loss from one entity to another in exchange of a premium. Whatever insurance industry we have experienced in Pakistan, can be described as a business rather than an industry meant for the welfare of the in affordable poor people of Pakistan. Unlike United States of America and India, where the government and the NGOs are playing their due role in making the health insurance policy flourish in their respective countries, Pakistan is lacking in both the financially strong government to bear the cost of such scheme as well as the willing NGOs and philanthropists. Hence what is required is some serious efforts on part of the government not to let anyone exploit and fleece the handicapped population of the country; instead play its long awaited role of giving immediate and cost effective relief to its citizens at large through efficient and corruption free public health sector; Government on one hand can make judicious use of public funds, and simultaneously work on improving the affordability of the poor masses.

ACRONYMS
FD OPD SENWA EFU LP GOS ICU CT MRI SGA & CD Finance Department Out Patient Department Sindh Employees New Welfare Association Eastern Federal Union Local Purchase Government of Sindh Intensive Care Unit Computed Tomography Magnetic Resonance Image Services Department HMO SLIC HELP OASDHI IRDA CGHS ESIS GIC SCHIP ERISA PSDP MDG BISP Health Maintenance Organization State Life Insurance Corporation Health Expenditure & livelihood Protection for Poor Old Age Survivors, Disability and Health Insurance Insurance Regulatory Development Authority Central Government Health Scheme Employee State Insurance Scheme Government Insurance Corporation State Children Health Insurance Programme Employee Retirement Income Security Act Public Sector Development Programme Millennium Development Goals Benazir Income Support Programme General Administration & coordination

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INTRODUCTION
Health insurance is defined as the coverage of expenditure incurred on the medical or surgical treatment of a citizen of a country against some premium paid by the citizen or state promoted social security plan. Implementation of health insurance policy is long overdue in Pakistan especially in the prevalent deteriorating health conditions of the population at large. In Pakistan almost half of the population is low income and 99% of this population is uninsured and 97% of their health care expenses are out of their own pockets. It is high time that government should come up with some implementable policy to give umbrella protection of health insurance to all the masses of Pakistan rather than the prevalent policy of insurance cover at individual or institutional level. In Pakistan, public healthcare provision has not been successful in creating health security for the poor. The sector remains grossly under-funded, with public expenditure on health counting for barely 0.5 per cent of the GDP of which close to 75 per cent is spent on salaries. There are only two countries in the world Nigeria and Sudan that spend less than this proportion on health. It is around one per cent for India, two per cent for Bangladesh and Nepal and three per cent for China, while for most developed countries it ranges from five to seven percent. More than 80 per cent of the total healthcare expenditure is spent by the private sector and almost all of this represents private out-of-pocket expenditure on curative care consultations and in-patient diagnostic care, laboratory tests and medicines. The health sector has acquired a notorious reputation for inefficiency and corruption at all levels. Most of the government-operated outlets for primary healthcare, except perhaps in Punjab, are on the verge of total collapse. There are some forms of social welfare protection instruments in many countries like

unemployment benefits or social security for the needy, driven by the belief that it is the primary responsibility of the state to look after its citizens. Free or subsidized healthcare is also one such instrument. Poverty reduction and health outcomes are integrally linked as improved health outcomes contribute to reduction in poverty
1

and vice versa. Several studies have shown that expenditure on healthcare is more effective in reducing poverty than expenditure on poverty alleviation programmes. Those hardest hit by lack of health coverage are the poor, who suffer from higher levels of mortality and malnutrition than the rich. The point is that low levels of expenditure, poor quality of services, and inefficiencies have failed to provide decent health cover for the poor. This has raised the need for alternative financing mechanisms and instruments to achieve this objective, that is health insurance to improve the access of the poor to health services an instrument now being developed by insurance companies in the private sector for the more affluent households and for employees of corporate entities. The poor can also make small, periodic contributions that could go towards meeting their healthcare needs. Hence, the need for setting up a health insurance scheme for low-income groups. The government of India introduced the Universal Health Insurance scheme targeting the poor in 2003. The premium was set at Rs365 per annum for an individual and Rs548 for a family of five. The government gives a subsidy of Rs100 per family below the poverty line. The benefits include

reimbursement of expenditure of up to Rs30,000 and illness compensation of Rs50 per day for the period of hospitalization of the earning head of the family. There is a provision of coverage for Rs 25,000 in case of death of an earning head of family in an accident. The problem with the scheme is that the premium is too low for the insurance companies to offer good coverage and too high for the poor to pay upfront. Thus so far only two per cent of the policies have been sold to the people living below the poverty line. Pakistan, by learning from the experiences of India and other developing countries, can introduce its own scheme that addresses the kind of weaknesses identified here. To make the scheme financially viable, the transaction costs for the insurance companies can be lowered by educating the people to buy insurance as a group contract (important characteristics for which would be age and sex of members) so that risks and contributions are pooled more effectively, while flexibility in

payment of premium and the system of certifying claims and healthcare provision
2

can be improved by the introduction of an agency that acts as an intermediary between the target community and the insurer. For the poorest of the poor who cannot make any contribution, health insurance will not be relevant. For them there would be continuing need to provide free access to public health facilities or subsidized healthcare in private facilities. Health insurance as a financing mechanism would be appropriate only when part of the cost is recovered from the beneficiaries. It would make sense only when the beneficiaries are in a position to contribute something, provided, of course, this offers a means for the low-income groups to meet their priority health needs in a cost-efficient manner

Problem Statement
As Pakistans public health care sector is under resourced and overwhelmed, the will of the government to adopt health insurance as a public policy remains doubtful. Low income families are conceptually entitled to free health care through government hospitals but in practical terms they end up paying the related costs. Insurance companies have focused on the top of the pyramidthe corporate elite rather than the base which represents much larger population of low income families whose biggest issue is affordability; hence there is a dire need to customize a micro insurance scheme for the poor focusing on enhanced affordability and reducing costs. Health insurance is beyond doubt a remedial solution as it plays a key role in economic growth and human welfare provided it is handled with utmost care and managed with highest professional standards with special emphasis on how to include those not formally employed.

Hypothesis
Since health insurance policy cannot be implemented in Pakistan keeping in view the affordability by the poor masses with under-funded, inefficient and reluctant public sector, attention needs to be diverted towards much more improved health services through government/charity hospitals and regulation of private

health sector.

Scope of the Study

The scope/objectives of the study are: To locate any such prevalent facility from public and private sector which can satisfy the people of Pakistans medical requirements. To examine the attempts made by the government to implement the policy of health insurance at federal and provincial level. To assess the medical needs of the citizen of Pakistan and governments capability to meet their requirements. To analyze the affordability of masses to take advantage of this policy of health insurance and the potential and intention of the government to make it functional. And lastly to identify important areas which require urgent reforms to make Health insurance policy workable and subsequently to recommend the probable solution for resolving the dilemma in a most befitting manner.

Research Methodology
The research paper is mainly based on the secondary data which was gathered from various sources like books, reports, newspaper articles, internet and research conducted in the past. The primary data is also gathered through interviews from the concerned officials of public sector like secretary finance GOS, health insurance agents and general perception of the public as well as personal observation. On the basis of the primary and secondary data, the qualitative research will be conducted to address the problems relating to the hypothetical problem.

Literature Review
For writing this research paper, in depth study of various books, reports, newspaper articles and net search was carried out. The literature that was reviewed on the subject reflected not only the views and analysis of the authors, who in their own right are authority on the subject, but also incorporating the views and soliciting the ideas of othe stakeholders and finally the experience of those who are somehow involved in the subject of Health Insurance.

The material that I have gone through during writing of this research paper also included deliberations by government officials to examine the pros and cons of the health insurance scheme in Pakistan. To properly analyze and assess the extent of success and failure of

implementation of Health Insurance Policy in the province of Sindh, assistance has also been sought from the officials of Finance Department GOS right up to the level of secretary and special secretary. The websites have also been frequently visited to go through various

researches already taken on the subject. Studies undertaken by Karim Khan Qamar in Pakistan, Finance Department GOS in Sindh province and David Bickelhaupt in USA are very useful reading on the given subject. The close relationship of insurance to the environment within which it operates is being examined more now than ever before. Although some experts warn that the social insurance area is growing too fast in competition with the voluntary health insurance system, most agree that the application of insurance techniques to individual, social, and combined individual-social problems will all be important in the future. (David L.Bickelhaupt,1983)

SECTION-1 NEED FOR HEALTH INSURANCE IN PAKISTAN

1.1 Prevalent Conditions of Health Care in Pakistan
Healthcare in Pakistan is administered mainly in the private sector which accounts for approximately 80% of all outpatient visits. The public sector was until recently led by the Ministry of Health, however the Ministry was abolished in June 2011 and all health responsibilities (mainly planning and fund allocation) were devolved to provincial Health Departments which had until now been the main implementers of public sector health programs. Like other South Asian countries, health and sanitation infrastructure is adequate in urban areas but is generally poor in rural areas. About 19% of the population and 30% of children under age of five are malnourished. Ministry of Health of Pakistan states that health expenditure of period 200708 was 3.791 billion Pakistani rupees while that spent on development was 14.272 billion.1 Basic health indicators Indicators of the functioning of health system are equally important as indicators of health status of a population of a country. The most prominent among them are the governance, stewardship, delivery of service, health financing and other inputs into the health sector at all levels of human resources i.e. doctors, paramedics and availability of medicines.2 Although some indicators on health financing have been included herewith, the list is not complete due to data gaps. The health financing indicators show that although allocations have increased, Pakistan still spends 0.67% of its GDP on health with a percentage of the budget going unutilized. In addition, some allocation disparities are evident, and alternate mechanisms of financing health have not been mainstreamed into the delivery of care. Therefore, in addition to the need for greater increments in allocation, there is a need to address allocation disparities, improve
1 2

en.wikipedia.org/wiki/Health_care_in_Pakistan accessed on 15/3/2012 www.heartfile.org/pdf/GWP-II.pdf accessed on 20/3/2012

utilization

and

develop

alternative

approaches

to

heath

financing,

albeit

with

safeguards against creating access and affordability issues for the poor.3 Primary Health Care is defined as "essential health care based on practical, scientifically sound and socially acceptable methods and technology made

universally accessible to individuals and families in the community through their full participation and at a cost that the community and the country can afford to maintain at every stage of their development in the spirit of self-determination" Primary Health Care delivery is considered the most effective and cost efficient method of improving health for its citizens. In this article, we examine the multifactorial reasons for its failure in Pakistan.4 Looking at Primary Health Care in isolation from other services that impact the standard of living in a given community is a mistake. However, this is a vast subject and beyond the scope of this article. By necessity, we will keep our focus on Basic Health Unit (BHU) which is one of the programs that is considered vital in providing primary health care in rural areas.5 In order to understand the complexity of the problem, we will first summarize how Pakistans overarching Federal Health Policy & Planning impacts the delivery of Primary Health Care at the BHU level.6 Pakistan's health indicators, health funding, and health and sanitation

infrastructure are generally poor, particularly in rural areas. About 19 percent of the population is malnourisheda higher rate than the 17 percent average for

developing countriesand 30 percent of children under age five are malnourished. Leading causes of sickness and death include gastroenteritis, respiratory infections, congenital abnormalities, tuberculosis, malaria, and typhoid fever.7 Hepatitis B and C are also rampant, with approximately 3 million cases of each in the country. The cost of curing or treating these illnesses is many times more than preventing them.

3 4

www.heartfile.org/pdf/GWP-II.pdf insaf.pk/Portals/.../FAILURE%20ANALYSIS%20%20%206-28-09.p... 5 insaf.pk/Portals/.../FAILURE%20ANALYSIS%20%20%206-28-09.p... 66 insaf.pk/Portals/.../FAILURE%20ANALYSIS%20%20%206-28-09.p... 7 britishpakistanfoundation.com/healthcare

In 2007 there were 85 physicians for every 100,000 persons in Pakistan. There are only 62,651 nurses all over the nation, which highlights the problem of nurse-to doctor ratio. Delivery of health in rural areas is designed to be met by a strong force of 100,000 Lady Health Workers (primary health care providers). According to the World Health Organization, Pakistan's total health expenditures amounted to 2.0 percent of gross domestic product (GDP) in 2006, (but according to Economic survey of 2005-6, Pakistan spent 0.75% of GDP on health sector). Per capita health expenditures were US$51 (2006). The government provided 24.4 percent of total health expenditure, with the remainder 75% being entirely private, out-of pocket expenses.
Failure Analysis of Primary Health Care in Pakistan & Recommendations for change M. Asad Khan, MD Insaf Research Wing 2009

1.2

Hostile Factors for Implementation of Health Insurance Policy

There is a host of causes for losses in health insurance business. The

companies are forces into unwarranted and negative premium rate cutting due to unavoidable market competition. This practice results in underwriting policies with lower than required premiums. There is no appropriate actuarial database for health insurance in Pakistan to assess premiums for underwriting the policies which results in the Non-Tariff nature of this business. The nature of this business forces heavy management and administrative expenses. There is a general lack of understanding and education in customers due to the nature of health insurance, which requires a rather higher education and literacy rate. It is difficult to control compliance due to nature of hospitals available in the country. Generally the patient/customer prefers to choose few state of the art hospitals having higher treatment cost. At present there is lack of coordination among various stake holders like users, hospitals and operational personals of the insurance companies which also result in absence of mutual understanding and appropriate controls. It is also found that number of health insured individuals with various insurance companies is still not adequate to make it a profitable business as normally expected according to laws of large numbers which is essential for any business to prosper.

ISSUES IN HEALTH INSURANCE Need for a variety of products micro insurance to international coverage birth to old age Clarity in policy terms, conditions, exclusions Need for Services Cashless, toll free nos., quick response Curtailment of Costs

State life is in existence since 1972 and it controls 97% of the market share of life premia. But unfortunately SLIC did not venture in the field of health insurance whole heartedly. Normally in all developed countries i.e. USA, Canada, UK, Europe and Japan all life insurers sell health insurance, and in abundance. Why they sell sickness insurance is because they have huge funds to invest, not only to earn profit but also to fulfill their socioeconomic responsibilities. But who has prevented life insurers in Pakistan to write this class of business? They can also take the lead; but unfortunately their hands have been tied by our government. The Insurance Act, 1938 does not permit life insurers in Pakistan to write health insurance as a separate class of business but they can write it as a rider of life policy. Hence a Pakistani citizen has to take life policy whether he can afford it or not, or does he need it or not, he must take a life policy, otherwise he cannot take health insurance. What an irony!

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SECTION-2 RESOURCES
2.1 Role of private insurance companies.8
The majority of general insurance companies have started to market Health Insurance product in Pakistan and the market trend confirms that it is getting popular. There is a steady growth of the premium rate for this product. Presently, in Pakistan, the cumulative health insurance premium lies in the range of rupees 500 to 750 million. The companies have very cautiously adopted this product due to the highly technical nature of this business with a lack of experienced manpower due to the fact that this is a low profit business at least in the initial phases. The larger insurance companies have maintained the health insurance product for a considerable time with the rest of market is in the process of adding this product in their business portfolios. A whole lot of new insurance companies are

being launched with the plans to include Health Insurance as its product. New Jubilee Insurance is the most experienced company offering health insurance in Pakistan. They have excellent expertise of this product with a significant share of health premium. EFU Insurance has formed a joint venture with the German Allianz as major stake holder to create the first health insurance company of Pakistan known as Allianz -EFU Health. EFU Insurance has been successful in gaining access to corporate and individual clientele after executing this product on its own. They have been successful in gaining access in the market with a respectable share in business yet there is still a wait to the question of profitability. The company has also started the novel product of individual health insurance but on a limited basis. Adamjee Insurance being the largest general insurance company in the country was the first to initiate the health insurance policy decades earlier but till recently had kept this product dormant. They have earned a considerable premium

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under the product health premium yet it is negligible in comparison to its overall premium. The older insurance companies American Life and Commercial Union have been offering corporate or group health insurance but their market acceptability was not high. The Commercial Union transferred its insurance business to New Jubilee insurance in Pakistan. Askari General Insurance Company is relatively a new insurance company but in terms of premium, it has progressed to be among the first ten insurance companies of Pakistan. Askari since its inception has offered health insurance. With one of the best available manpower running health insurance in the country, they have the second highest premium collection from Health insurance in their overall premium collection. PICIC Insurance Limited writes all classes of general insurance business. PICIC Insurance provides quality medical insurance facility to its clients. Their special feature is cashless facility which can be availed by using Health Insurance Credit Card. This facility is available at all network hospitals which are spread all over country. Expert medical advice and support is provided to clients. The public sector company, State Life Insurance is largest insurance

company of Pakistan but it is not offering health insurance business currently.

2.2 Role of NGOs and charity hospitals.9

With 70 per cent of population in India living in rural areas and 95 per cent of work-force working in unorganized sectors, and disproportionately large percentage of these populations living below poverty line, there is strong need to develop social security mechanisms for this segment of population. This need for security is further increased because the poor are the most vulnerable for ill health, accidents, death, desertion, social disruptions such as riots, loss of housing, job and other means of livelihood. There are some efforts in this direction of providing social security to the poor by a few NGOs. The most prominent among them is that of Self Employed Women's Association (SEWA). The other scheme by government

books.google.com.pk/books?isbn=8178357828... 12

insurance companies developed to focus on poor is called Jan Arogya Bima Policy which was introduced in 1995 and covers expenditure up to Rs. 5000 for a premium of Rs. 70 per annum. It is estimated that about 5 million people are covered under various NGO insurance schemes. The experience from other countries suggest that in developed countries such as USA, UK, the health insurance have grown out of small nonprofit schemes. A large share of health insurance market in USA is in not-for-profit sector. There is need in India to promote these schemes as they address the needs of the poor. Over the last few years in India small and big NGO's like Tribhuvandas, SEW A, ACCORD etc. have implemented the insurance schemes. Many of these schemes are designed to meet the needs of the poorer segments of the community. They have developed several innovations such as Mechanism of monitoring the performance, Pricing of various services, Integration of various risks in one single product, Linking of insurance schemes with savings, Coverage of many services not included in market based schemes such as maternity services, transportation, coverage of risks such as from riots, floods etc. Some NGOs have developed special linkages with public health systems, private facilities and also accessed resources through insurance companies

2.3
with

Social Security Organizations.10

Social Security Punjab has approximately 28,000 industrial units registered it. The number of secured/registered workers is about 530,000, with

dependents about 320,000. It has a network of dispensaries and hospitals in major cities of Punjab, which are mostly situated near industries. It provides medical care facilities to the secured workers and their families. These include
10

OPD and Indoor in its own Hospitals and Dispensaries, Dental Care,

gis.emro.who.int/.../Health%20care%20financing%20and%20expend...Similar 13

Surgeries (including Cardiac Surgery at Lahore Hospital), Physiotherapy, Diagnostics, Haemodialysis unit in Islamabad hospital, Full Maternity Care services (in hospitals only), Provision of ambulance, Blood transfusion, Provision of spectacles, artificial aids and dentures, Payment of diet charges on admission of workers and their dependents at the rate of Rs.40/day and to the T.B and Cancer Patients at the rate of Rs.50/day. Medical care to survivors of deceased workers for one year, and to seasonal workers for six months. Reimbursements of expenses of Government Hospitals. In addition, cash benefits (wages) during sickness, injury and disability and Pension to survivor of deceased (due to employment injury).

The financial figures for the year 2001-02 show that this department had a total income from all sources of Rs.1262 Millions, for this year. After all the expenses, there was a net surplus of Rs.343 Millions. Applying the Law of Economy of Scales, it would mean that increasing the number of contributors should increase this surplus more, as the purchase of inputs in large-scale, will cost less and there will be more effect of risk-spreading. But following factors also need to be considered: Contributions to Social Security are authorized and enforced by the laws and are mandatory. Secondly, it is the employer who is paying for the workers and not the workers themselves. Thirdly the utilization-pattern of these health services is not been analyzed and there is no information available about their current utilization rate and whether there is any capacity to handle an increase in the demand of services. This prepaid public insurance system is still efficient than the individual out-ofpocket payments as it takes into account a few, large, economical transactions in the
14

purchase of health interventions, instead of many single transactions occurring at the private health outlets in the province. Employees social security benefit organization: Employees social security benefit organization provides health cover to

industrial workers and families allover the country. In Punjab alone it covers 544,800 workers and their 3228600 dependents. It has a network of 14 hospitals and other health facilities in the province and has about 1300 indoor beds. Mainly curative services are provided to the secured workers and their families. Pakistan Bait-ul-Mal: Pakistan Bait-ul-Mal comes under the jurisdiction of

ministry of social welfare and special education and has a wide network in all the provinces and districts with its head office in Islamabad. It is running a number of projects in the health, education and social sectors, on behalf of the government of Pakistan, in partnership with various donors and organizations. Tawana Pakistan is a social sector project aiming at improving the nutritional status of the girl child in 29 high poverty districts of Pakistan. It also helps in improving school enrolment and retention of girls in the schools and is covering around half a million children in the targeted districts at primary level. Bait-ul-Mal provides individual financial assistance (IFA) to the poor, destitute women, orphans and disabled persons for medical treatment and rehabilitation Others: A number of organizations in public sector are performing a commendable job in provision of healthcare at various segments. These include Pakistan

Telecommunication organization, Fauji Foundation, Armed Forces Institutions and others.TP

2.4 Role of Public Sector:

Since we have entered into a scenario of post 18th Amendment, the provincial governments are free to make their own policies as the relevant ministries have been devolved to the respective provinces.

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Now the onus is on the provinces now to formulate a policy for providing health care to the people either through a Health Insurance Scheme or improving its present health care system. Here we can study an effort already made by the Sindh Government to provide health insurance cover, at the beginning to its employees, as a pilot project and its further extension if results are fruitful. A meeting of the provincial cabinet was held on July 30th,2005 under the chairmanship of Chief Minister, Sindh wherein it was decided to provide health insurance cover to all employees of Sindh Government.*

Finance Department, as a test case initiated a pilot project whereby health insurance cover was provided to all government employees of Sindh working at the Sindh secretariat only. The intent was to weigh benefits and costs and if successful the facility may be extended to all employees of the Sindh Government. Since july 2006 several annual contracts were awarded to private insurance firms for providing health cover to approximately 22000 lives which included around 2400 employees and their families. Every year an approximate amount of Rs100 million is spent.

Over the five years of this initiative, the Finance Department has continuously tried to make improvements in the facilities being extended to insured employees, but the insurance companies failed to come up to the expectations of the employees. Moreover the incidents of fake and forged reimbursement claims by the government employees have increased multifold. Over the said period of time neither the insurance companies nor the people insured had achieved the stage of maturity to provide and avail the world class health cover benefits. Thus it is felt that if the Government now tries to expand the cover to other non-secretariat employees, it will not yield desired results. A summary was moved for Chief Minister Sindh in November,2010 by Finance Department to discontinue this facility as it was discriminatory to other employees of Sindh Government and on the basis of enhancement of Medical Allowance of the
16

non-gazetted staff and 15% medical allowance to gazetted officers. In addition the fake medical claims with the collaboration of insurance companies was another reason. Hence the scheme was discontinued from 2010 and the tenders floated for the period from 2010-2013 were also cancelled.

One can see here that at the first instance, the General Insurance companies who were contacted by the government, expressed their inability to provide health insurance to all the employees of Sindh Government due to capacity and financial constraints. However MS/ Allianz EFU Health Insurance Limited agreed to insure 7000 employees including both secretariat (4000) and non-secretariat(3000)

employees along with the spouse, children and dependent parents at the annual premium of Rs 4276.00 per person.

Secondly it was no doubt a scheme which was discriminatory in nature that Sindh Government is only catering Sindh secretariat employees; instead this policy should have been extended across the board for all Sindh Government employees. Thirdly there was a financial constraint on part of the Government also as they were required to pay Rs 9.733 billion annual premium to insurance companies to give health cover to 540740 provincial as well as dist. Government employees (BPS 1 to BPS 22) at the premium of Rs 3000 per life. If we take an average of 6 per family, the total number of lives to be insured comes to 3,244,440.

And lastly there was an element of corruption which was detected on the basis of false and fake insurance claims of employees in collaboration of insurance

companies as both are the beneficiaries in this business. It is because of the inherent culture prevailing in the society. Since there was no bonus for the employees who do not claim for the entire policy period, they can go for forged claims to get the benefit.

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SECTION-3 NEED FOR DESIGNING HEALTH INSURANCE IN PAKISTAN

3.1 Health Card Scheme. Pakistan needs to bring reform strategy to its much neglected health sector; For this a Health card scheme can be introduced which will cover the essential primary health care services as well as Hospital care at a secondary level. To make it a successful scheme, private sector, especially NGOs can play its due leading role. A voluntary insurance scheme can also be managed by regional Health Boards to be formed as suggested from time to time. Way back in 1997 the then Finance

Minister declared at a seminar that the National Health card Scheme would be launched very soon to provide health facilities to the poor and the middle class. Under this scheme the government was planning to lease out its medical facilities to doctors who will be paid a lump sum per person registered per year to provide health care to the public. Knowing the limited scope of the existing scheme, it is not clear what facilities a health card bearer, who would pay a meager premium per year, would get. If he can only get the professional services of a doctor, this would hardly be sufficient Diagnostic services like X-rays, laboratory tests etc would be needed in many cases as an aid to treatment. These are very costly besides, medicines would be required whose prices are soaring every day. If diagnostic services and

medicines would not be available under this scheme, then the purpose of this very scheme would be defeated. Therefore the facilities should be clearly defined. This scheme also envisages that the government was considering to launch it as a pilot project in some rural areas. Rural operations in respect of health care had never been a successful venture. Hence its launching would also be plagued with lots of ifs and buts. Lastly who would control the funds collected from individuals against each health card? This part of scheme is to be elaborated too. It is also true that the government would not like to abandon its role in expanding primary health
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facilities, if health care is to be made available to everyone. At present only 55% of the population has access to health services i.e. over 60 million people do not have any health services. They are uncared for and cannot afford the health care. Although the government is sincere in eradicating the social evils in order to provide the masses with a healthy and prosperous life, but the government cannot do this herculean task alone because it needs billions and billions of rupees. Unfortunately the government is already short of funds. Therefore the remedy lies in approaching the Private sector to come forward and shoulder the responsibility of the government in such altruistic ventures. But we also know that the private sector has the reputation of investing in those projects where there is profit.

3.2

Factors affecting premium.

So far the bulk of health insurance business premium comprises of largely

corporate clients. Personal / Individual health insurance has a huge potential but most of the insurance companies are not fully prepared to market this product due to lack of expertise and exposure to this aspect of insurance. Health Insurance has however gained substantial business momentum in the past couple of years in the Pakistan insurance market. This being a new product with excellent customer acceptability gave insurance industry another opening for their premium generation. However being in the early stages of its life cycle, this product has produced some difficulty in creating profitability for the insurance companies in Pakistan. This fact is evident by making a comparative study of companies who are marketing insurance business. In Pakistan today most of its general insurance companies are marketing the product of Health Insurance. It is evident from the market trend that this product is gaining popularity. The growth rate of premium of this product is steadily growing. The cumulative health insurance premium in Pakistan presently lies between rupees 500 to 750 million. The highly technical nature of this business and lack of

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manpower expertise in this market together with the fact that its a low profit business at least in the initial phases the trend to adopt this product is cautious.11 Cost Drivers in Health Insurance Technology / Specialization Prescription Drugs Medical Inflation Moral Hazard / Adverse Selection Usage Increase New treatments Unnecessary treatments

3.3

Hospital networks associated with Health insurance.12

There are some 75-100 hospitals all over the country that is on approved

panel list and contract of all the insurance companies doing health insurance business. Most of these hospitals in Pakistan are not fully aware with the concept and working of health insurance. This is an added factor in hindering the pace of progress for health insurance to grow in the country. The basic infrastructure of insurance oriented hospital appears to be an important organ in establishing health insurance business. Except for few most of them are below any good standards worthy of insurance business. It will be obvious that the best amongst these are attracting the largest share of insurance patients. Agha Khan University Hospital Karachi and Shifa Intl. Hospital Islamabad are leading hospitals in this respect. The concept of building up some hospitals by the insurance companies to provide services to its customer is vaguely present in some minds. This may be a good idea in order to curtail losses of the insurer but this appears to be a little premature. Some sort of collaboration between the insurance company and hospital may become possible in future especially in area of executing Personal / Individual Health Insurance.

11

gis.emro.who.int/HealthSystemObservatory/.../Pakistan/...Similar gis.emro.who.int/HealthSystemObservatory/.../Pakistan/...Similar 20

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SECTION-4 COMPARATIVE STUDY OF HEALTH INSURANCE POLICY WITH OTHER COUNTRIES

4.1 India and other developing countries13
Over the last 50 years India has achieved a lot in terms of health improvement. But still India is way behind many fast developing countries such as China, Vietnam and Sri Lanka in health indicators (Satia et al 1999). In case of government funded health care system, the quality and access of services has always remained major concern. A very rapidly growing private health market has developed in India. This private sector bridges most of the gaps between what government offers and what people need. However, with proliferation of various health care technologies and general price rise, the cost of care has also become very expensive and unaffordable to large segment of population. The government and people have started exploring various health financing options to manage problems arising out of growing set of complexities of private sector growth, increasing cost of care and changing epidemiological pattern of diseases. The new economic policy and liberalization process followed by the

Government of India since 1991 paved the way for privatization of insurance sector in the country. Health insurance, which remained highly underdeveloped and a less significant segment of the product portfolios of the nationalized insurance

companies in India, is now poised for a fundamental change in its approach and management. The Insurance Regulatory and Development Authority (IRDA) Bill, recently passed in the Indian Parliament, is important beginning of changes having significant implications for the health sector. The privatization of insurance and constitution IRDA envisage to improve the performance of the state insurance sector in the country by increasing benefits from competition in terms of lowered costs and increased level of consumer satisfaction. However, the implications of the entry of private insurance companies in health

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sector are not very clear. The recent policy changes will have been far reaching and would have major implications for the growth and development of the health

sector. There are several contentious issues pertaining to development in this sector and these need critical examination. These also highlight the critical need for

policy formulation and assessment. Unless privatization and development of health insurance is managed well it may have negative impact of a large segment of population in the country. During the last 50 years India has developed a large government health infrastructure with more than 150 medical colleges, 450 district hospitals, 3000 health care especially to

Community Health Centers, 20,000 Primary Health Care centers and 130,000 SubHealth Centers. On top of this there are large number of private and NGO health facilities and practitioners scatters though out the country. Over the past 50 years India has made considerable progress in improving its health status. Death rate has reduced from 40 to 9 per thousand, infant mortality rate reduced from 161 to 71 per thousand live births and life expectancy increased from 31 to 63 years. India spends about 6% of GDP on health expenditure. Private health care expenditure is 75% or 4.25% of GDP and most of the rest (1.75%) is government funding. At present, the insurance coverage is negligible. Most of the public funding is for preventive, promotive and primary care programmes while private expenditure is largely for curative care. Over the period the private health care expenditure has grown at the rate of 12.84% per annum and for each one percent increase in per capital income the private health care expenditure has increased by 1.47%. Number of private doctors and private clinical facilities are also expanding exponentially. Indian health financing scene raises number of challenges, which are: increasing health care costs, high financial burden on poor eroding their incomes, increasing burden of new diseases and health risks and neglect of preventive and primary care and public health functions due to underfunding of the government health care.
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Given

the

above

scenario

exploring

health-financing

options

becomes

critical.

Health Insurance is considered one of the financing mechanisms to overcome some of the problems of our system. Health insurance is very well established in many countries. But in India it is a new concept except for the organized sector employees. In India only about 2 per

cent of total health expenditure is funded by public/social health insurance while 18 per cent is funded by government budget. In many other low and middle countries contribution of social health insurance is much higher It is estimated that the Indian health care industry is now worth of Rs. 96,000 crore and expected to surge by 10,000 crore annually. The share of insurance market in above figure is insignificant. Out of one billion population of India 315 million people are estimated to be insurable and have capacity to spend Rs. 1000 as premium per annum. Many global insurance companies have plans to get into insurance business in India. Market research, detailed planning and effective income

insurance importance. Given the health financing and demand scenario, health insurance has a wider scope in present day situations in India. However, it requires careful and significant understanding and training. There are various types of health coverage in India. Based on ownership the existing health insurance schemes can be broadly divided into categories such as: Government or state-based systems Market-based systems (private and voluntary) Employer provided insurance schemes Member organization (NGO or cooperative)-based systems effort to tap Indian health insurance market with proper

Government or state-based systems include Central Government Health Scheme (CGHS) and Employees State Insurance Scheme (ESIS). It is estimated that employer managed systems cover about 20-30 million of population. The schemes run by member-based organizations cover about 5 per cent of population in various ways. Market-based systems (voluntary and private) have Mediclaim scheme which covers about 2 million of population. There are many employers who reimburse
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costs of medical expenses of the employees with or without contribution from the employee. It is estimated that about 20 million employees may be covered by such

reimbursement arrangements. There are several government and private employers such as Railway and Armed forces and public sector enterprises that run their own health services for employees and families. It is estimated that about 30 million employees may be covered under such employer managed health services . General Insurance Corporation (GIC) and its four subsidiary companies and Life Insurance Corporation (LIC) of India have various health insurance products. Health insurance in a narrow sense would be an individual or group purchasing health care coverage in advance by paying a fee called premium. In its broader sense, it would be any arrangement that helps to defer, delay, reduce or altogether avoid payment for health care incurred by individuals and households. Given the appropriateness of this definition in the Indian context, this is the definition, we would adopt. The health insurance market in India is very limited covering about categorized as: 1) Voluntary health insurance schemes or private-for-profit schemes; 2) Employer-based schemes; 3) Insurance offered by NGOs / community based health insurance, and 4) Mandatory health insurance schemes or government run schemes (namely ESIS, CGHS). Voluntary health insurance schemes or private-for-profit schemes14 In private insurance, buyers are willing to pay premium to an insurance company that pools people with similar risks and insures them for health expenses. The key distinction is that the premiums are set at a level, which provides a profit to third party and provider institutions. Premiums are based on an assessment of the risk status of the consumer (or of the group of employees) and the level of benefits provided, rather than as a proportion of the consumers income. In the public sector, the General Insurance Corporation (GIC) and its four subsidiary companies (National Insurance Corporation, New India Assurance 10% of the total population. The existing schemes can be

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Company, Oriental Insurance Company and United Insurance Company) and the Life Insurance Corporation (LIC) of India provide voluntary insurance schemes. Of the various schemes offered, Mediclaim is the main product of the GIC. The Medical Insurance Scheme or Mediclaim was introduced in November 1986 and it covers individuals and groups with persons aged 5 80 yrs. The year 1999 marked the beginning of a new era for health insurance in the Indian context. With the passing of the Insurance Regulatory Development

Authority Bill (IRDA) the insurance sector was opened to private and foreign participation, thereby paving the way for the entry of private health insurance companies. The Bill also facilitated the establishment of an authority to protect the interests of the insurance holders by regulating, promoting and ensuring orderly growth of the insurance industry. ICICI Lombard: ICICI Lombard offers Group Health Insurance Policy. This policy is available to those aged 5 80 years, (with children being covered with their parents) and is given to corporate bodies, institutions, and associations. The sum insured is minimum Rs 15 000/- and a maximum of Rs 500 000/-. The premium chargeable depends upon the age of the person and the sum insured selected. . Royal Sundaram Group: The Shakthi Health Shield policy offered by the Royal Sundaram group can be availed by members of the womens group, their spouses and dependent children. No age limits apply. The premium for adults aged up to 45 years is Rs 125 per year, for those aged more than 45 years is Rs 175 per year. Children are covered at Rs 65 per year. Under this policy, hospital benefits up to Rs 7 000 per annum can be availed, with a limit per claim of Rs 5 000. Other benefits include maternity benefit of Rs 3. Insurance offered by NGOs / community-based health insurance Communitybased funds refer to schemes where members prepay a set amount each year for specified services. The premia are usually flat rate (not income-related) and

therefore not progressive. Making profit is not the purpose of these funds, but rather improving access to services. Often there is a problem with adverse selection because of a large number of high-risk members, since premiums are not based on
25

assessment of individual risk status. Exemptions may be adopted as a means of assisting the poor, but this will also have adverse effect on the ability of the insurance fund to meet the cost of benefits. Community-based schemes are typically targeted at poorer populations living in communities Central Government Health Scheme (CGHS) Since 1954, all employees of the Central Government (present and retired); some autonomous and semi-government organizations, MPs, judges, freedom fighters and journalists are covered under the Central Government Health Scheme (CGHS). This scheme was designed to replace the cumbersome and expensive system of reimbursements (GOI, 1994). It aims at providing comprehensive medical care to the Central Government employees and the benefits offered include all outpatient facilities, and preventive and promotive care in dispensaries. Inpatient facilities in government hospitals and approved private hospitals are also covered. This scheme is mainly funded through Central Government funds, with premiums ranging from Rs 15 to Rs 150 per month based on salary scales. The coverage of this scheme has grown substantially with provision for the non-allopathic systems of medicine as well as for allopathy. Beneficiaries at this moment are around 432 000, spread across 22 cities. Employee and State Insurance Scheme (ESIS) The enactment of the Employees State Insurance Act in 1948 led to formulation of the Employees State Insurance Scheme. This scheme provides protection to employees against loss of wages due to inability to work due to sickness, maternity, disability and death due to employment injury.

4.2

United States of America

The regulation and administration of the Health Care Finance in United States

of America is incoherent as reflected by its Financing. Although it is termed as a Free Market System yet the government pays for more than two-third of all care. The government programs directly insure one third of the population and for those who obtain private coverage one-third of the bill is paid through tax subsidy. And about 15 percent of Americans lack any health insurance at all.

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The variant coverage arrangements add to the complexity. Several Americans covered under traditional Medicare, still have conventional insurance where they can consult any provider they wish without the need for prior approval. A managed care system is adopted by majority of the private polices in which the insurer oversees coverage, but there is an assortment of managed care

arrangements which span from restrictive HMOs to flexible point-of-service plans. American health insurance has a complex structure. The three foremost of interest are the link between employment and coverage, the effect of financing mechanisms on the business side of health care, and the intertwined roles of government and the private sector. It is imperative to understand that financing is central to the overall health care system as it is in every other industry because any business is shaped by the flow of money. In todays practice the employment-insurance link produces several

disagreeable effects which consist of the inaccessibility of insurance for those without regular employment at companies that offer health benefits and crushing financial burden on firms that do insure their workers. To need to create an alternative universal system is created based on the discussion of the disadvantages of employment-based insurance. This universal system would cover everyone regardless of employment status. Primary care physicians tend to favor a single payer national system while specialists tend to oppose the idea. Large employers increasingly favor a national system which would take the burden of coverage off of their shoulders, while smaller companies tend to fear the possible tax effects of a new government program. Hospitals generally favor a national system that would reimburse them for the uncompensated emergency room care that they must provide. A hidden and important force is insurance brokers, who exert significant political influence in support of the present employment-based system because it is the basis for their business. The universal coverage necessarily means a single-payer, government-run

system. However, this is only one kind of approach. The Clinton proposal of the 1990s called for multiple private players under federal coordination. A prominent
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current proposal would mandate that individuals purchase coverage for themselves in the private market. By presenting the many different ways in which universal coverage could be achieved and the advantages and disadvantages of each, students can see the complexities that reform presents. The balance between the government and private roles in health care finance is particularly complex. The single most important government role is the

administration of Medicare. An important topic for student discussion is the pervasive influence of Medicare on American health care beyond its insurance for the elderly. After the successful implementation of DRG reimbursement in the 1980s, many private insurers followed suit. The business dynamics of DRGs have altered hospital-physician relations, with many institutions structuring their medical staffs based on utilization efficiency and profitability in addition to quality. Today, Medicare is piloting programs to rank hospitals according to quality criteria and to base physician reimbursement on performance measures. If successful, these innovations are certain to spread to private payers. Medicaid is the ultimate example of a complex federal-state relationship. Understanding the complicated arrangements through which the states administer Medicaid benefits under federal oversight is a daunting task. Medicaid is now supplemented by state Childrens Health Insurance Programs (SCHIP). It can be used to explore the balance between state-level flexibility and federally-imposed consistency that pervades much health policy. Regulation of the private insurance market best demonstrates the

interconnectedness of disparate regulatory roles in this sphere. In theory, private insurance is regulated by the states. However, in health care, the situation is far from straightforward. The federal Employee Retirement Income Security Act of 1974 (ERISA) exempts many aspects of coverage from state jurisdiction in a convoluted manner that defies clear legal analysis. Federal mandates through

COBRA and HIPAA govern key aspects of the initiation and termination of employment coverage. Perhaps most importantly of all, federal and state tax exemptions for premiums paid by employers and employees fund almost one-third of all premiums. A taste of this complexity will help students to appreciate the
28

difficulties that all parties, providers and patients alike, have in navigating the system. Antitrust enforcement highlights most starkly the differences between health care and the traditional business model. The roles of buyers and sellers are reversed from the situation that the architects of antitrust law envisioned. The federal Sherman Act was passed in 1890 to protect small purchasers from large monopolies that fixed prices, limited supply, and engaged in predatory practices. In many aspects of health care, however, the actual buyers are not the patients but rather large insurance companies, which often have monopoly power in their markets. The sellers are often small providers, such as physician practices. The potential for abuse is mostly on the buyer side, yet the Sherman Act mostly restricts the sellers. For this reason, physicians are limited in their ability to collectively bargain with HMOs over reimbursement rates and health systems are limited in the amount of market share they can acquire to gain bargaining leverage.

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SECTION-5: ANALYSIS
5.1
example

Government intentions and capability.

Government intentions and capability are very much evident from the latest of announcement of Health insurance scheme launched. State Life

Insurance Corporation Chairman Shahid Aziz Siddiqui and BISP Secretary recently signed an agreement for the health insurance scheme. But this was done at the expense of 1.78 million beneficiaries of Benazir Income Support Programme which were removed from the list of beneficiaries because of budgetary constraints. Currently about six million families registered with the BISP receive the stipend. It was announced by BISP chief that under the programme a health insurance scheme had been launched which will provide free medical treatment to 75000 needy and deserving families. This scheme had been started in Faisalabad where Rs 25000 would be given to each deserving family to get treatment from six private hospitals on panel. Once this scheme is spread across the country, about six million more people will be benefited during the current financial year. Government has also consulted private insurance companies before launching the scheme. They are planning to open the counters of the State Life Insurance Corporation in hospitals where the charges will be deducted from the card presented by the beneficiaries (card holders) after getting the treatment. The money would be recouped every year to the cards as per ceiling that can only be used for the treatment of in-house / admitted patients. This insurance scheme is being financed and technically supported by World Bank and German company, GIZ. Health scheme is actually one of the four components of BISP which was announced but yet to be proved successful after its implementation and operation. It is quite imperative from the above mentioned scheme that Government has initiated this scheme on a very small scale as compared to the total population and that too on a localized basis. Resultantly it is presumed that it is not intended by the
30

Government as a general policy to cover the masses at large so the benefit should reach every corner of the country. It is probably a smart political move to gain short term favours of the public and to win their votes for the coming elections. Another important factor is that the scheme is launched at the cost of another scheme which was already benefitting other group of people, thus bringing sad news for them. What was needed is altogether a new and well designed scheme at a national level or to be adopted at a provincial level specially in the backdrop of 18th amendment, wherein the provinces can take the initiative and lead from the front to alleviate the basic health requirements of the poor and needy citizens.

5.2

Availability of funds and health financing.

The Government of Pakistan has been spending 0.6 to 1.19% of its GDP and

5.1 to 11.6% of its development expenditure on health over the last 10 years. However, these figures reflect spending by the Ministry of Health and the departments of health and do not take into account other public sector health services, which are delivered by the Employees Social Security institutions, military sources, the Ministry of Population Welfare and other semiautonomous government agencies. These estimates are also not inclusive of the expenses incurred on treating government employees, who are entitled to free treatment in government hospitals costs that are not clearly visible. The actual level of total public sector expenditure on the health sector is, therefore, difficult to calculate; however, estimates place this figure at 3.5% of the GDP. Even this is meager by many standards. It has been reported that the total health expenditure doubled in the period 1991/92 to 1997/98; significant increases in budgetary allocations for health have also been achieved more recently with a 100% increase observed over the last five years. However, these figures are not adjusted for inflation and population increase and thus the real per-capita growth in health expenditure is never reported. This needs to be determined in order to make a compelling argument for further increases. Enhanced allocations must also

favourably impact the ratio between development and non-development budgets. A

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comparison

of

the

2003/04

federal

and

provincial

development

and

non-

development budgets shows a major dominance of non-development budget in the provinces? See Figure 6. This gap reflective of a worrying trend appears to have widened over the last 10 years whereas at the federal level, trends have been favourable. Health is a national issue in which federation, provinces, districts and other partners have important stakes. The existing resource allocation and budgeting system is based upon budgetary demands covering both the development and revenue side of the expenses. Budget submissions are supposed to be proposed by those who manage and hold the budgets. It is on record that averagely speaking about 80% of the health budget over the last decade has been provided by government of Pakistan through its federal and provincial health ministries and ministry of population welfare. The remaining amount comes from the donor contributions which is approximately 21% and mostly spent on preventive programmes and also used for technical assistance, community development and consultancies; This donor share has been fluctuating from 4-16% in the federal PSDP for the last 5 years but this contribution has significantly increased as a result of the global changes in political scenario. The public sector is spending Rs 375.00 (US$ 6.4) per head on health of Pakistani population in 2004-5, as per our analysis. The share of donors and international agencies is Rs 80.00 (US$ 1.3) per person out of the total amount. The reported per capita health spending (THE) in Pakistan is estimated as US$ 18 of which only one third is spent by the public sector resources. This estimate is comparable with our analysis. The minimum level of financing needed to cover essential interventions by the public sector health care systems amounts to US$ 30-40 per capita. By this account Pakistan needs to increase its current health sector spending significantly. In many ways Pakistans resource gap is huge- both local and donor- which is required to provide health care to all Pakistanis by a certain target date. Pakistan is already lagging behind in achieving MDG targets in the two important areas of maternal and child health. At the pace shown in the last about 15 years it will not be
32

possible to meet the required reduction in infant and maternal mortality in the next 10 years i.e. by the year 2015.

Achieving the MDG targets for Pakistan will not be a likelihood unless investment is increased substantially in these two areas of mother and child health in the public sector by the government and donors alike. A large amount of money spent in public sector on health actually is used up for recurring expenses rather than development. Pakistan is facing lot of challenges as far as its healthcare financing is concerned. In broader terms, the country's overall social sector financing needs to be scaled up further to make it responsive to the real needs. Two major sources of the financing i.e. public and private sector are working in vertical directions with no linkages in the areas of financing and service delivery. According to estimates public sector provides 23 percent of the total health expenditures while rest of 77% comes from out-of-pocket expenditures in the private sector (CMH, WG 3, 2002). Only one million of the population is covered through social insurance provided by Employees Social Security organization (Medium Term Development Framework, 2005), while another 0.93 million people have heath cover through PIA, Pakistan Railways, WAPDA, PTCL and Fauji Foundation. Armed forces institutions also provide medical cover to their employees (Inventory of Health and Population Investment in Pakistan, 2005). Besides, public sector organizations, civil society is also contributing towards health of the population through its limited resources. Organizations like Edhi Foundation, Aga Khan Foundation, social marketing

initiatives and others are providing healthcare to people in different parts of the country. Therefore, it is worth considering how a gigantic health sector infrastructure of 916 hospitals, 552 Rural Health Centers (RHCs), 5,301 Basic Health Units (BHUs) and 4,582 dispensaries (Economic Survey 2004-05) is being financed through general tax revenue. It seems that due to displaced priorities, public sector funding for health could not reach one percent of the GDP over the next few fiscal years. According to estimates health expenditures over the last fiscal year were 0.6
33

percent of the GDP (ibid) which is quite low as compared to the figures of first seven years of the previous decade.

However, according to the recent Economic Survey health expenditure has been rising at 14 percent per anum on the average over the last three years. Despite the fact that the overall percentage of GDP is lower now than when compared to the years ranging from 1995-96 to 2001-02. A regional cross-country comparison shows that Pakistan has to go a long way in scaling up health expenditures. This is obvious from table 2, which illustrates that Pakistan's total health expenditure on health is 3.2 percent of the GDP; this is 6.1, 6.0 and 3.7 in case of India, Iran and Sri Lanka, respectively. While the per capita health expenditure in Pakistan is US$ 18 out of which, public sector provides only US$4; the rest comes from private sources i.e. out-of-pocket payments. In case of India, Iran, Sri Lanka these figures are US$30 and 6; US$104 and 50; US$32 and 16, respectively. The data from the last ten years reveals that public sector health expenditure has yet to reach at least 1 percent of the GDP. The low level of the health expenditure in Pakistan can be described simply to be less than the actual needs; the level of funding is not comparable with other countries in the region; and that it's below internationally recommended standards i.e. WHO's recommendations.

5.3

Political Will15
The politicians of this country are mainly responsible for the non availability

of funds, who have mercilessly pillaged and plundered this country. It has been subjected to all kinds of exploitation since 1988 when democracy was reborn in Pakistan. Tall promises were made to the masses that their miserable lives would be turned into rich and healthy, Pakistan would become a paradise and medical care would be provided at the doorstep of each citizen. But unfortunately the reverse has been the fate of the masses. All dreams were shattered and instead of forging ahead the country had regressed in every sphere. Expenditure on Health is hardly 1% of the GDP and 3$ per adult per annum.
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Senior politicians representing all major political parties of the country have pledged to strengthen primary health care system in the country, if provided an opportunity by the people of Pakistan. Sharing their views at a dialogue forum," The Political Parties, The Health of People of Sindh and Election 2013," organized by Pakistan Medical Association Sindh, they also acknowledged that national priorities were needed to be set right.16 Senior leader of Pakistan Peoples Party, Taj Haider claimed that PPP

government, both at federal and Sindh level, during its current tenure had mainly focusing on prevention side. He was also of the view that the health has become an important issue after the 18th amendment in the constitution. The former senator and a senior office bearer of PPP -Karachi said efforts are also underway by the provincial government to reduce the cost of life saving drugs. He said there was also need to initiate National Health Insurance Scheme for the people of Pakistan. Despite severe resource constraints and frequent exposure to natural

calamities and manmade affliction in form of terrorism PPP and its allies have introduced series of schemes for improved healthcare schemes. It is in close collaboration with reputable national and international organizations that we not only have attempted to provide clean water and sanitation facility to the masses but also focussed on bringing about a change in public mindset about relevance of family planning, added the PPP leader. All basic medical facilities must be easily available to the rural population and also the public sector hospitals in urban areas must provide quality and efficient services to the patients who largely pertain to resourceless sections of the society.

5.4

Affordability factor
The government hospitals used to provide most services free. In certain places

Public sector formal user fees:17

medicines were also provided free of charge. Majority of government hospitals now charge minimal fees and other charges for food, laboratory and x-ray services. The rates are subsidized and are much below with those of the private sector. Certain
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new diagnostic facilities such as CT scan and MRI are also installed in public sector but the charges are comparable to those of private sector. However, a few hospitals still provide majority of these services free of cost to the patients but these are limited for the government servants only. In some hospitals the government servants are charged only a small percentage but the general public is made to pay the entire fees and hospital charges. All hospitals have their own system of charges for different services.

However, following is a generalized system adopted by some hospitals. Registration fee for OPD slip: paid at the time of first registration Rs. 5 -10 Charges for laboratory tests: Depends upon the test. Ranges from Rs. 30 - 200 Charges for x-rays: Again depends upon the type. Ranges from Rs. 16 100 Other services charged include, Inpatient (room and food charges) and blood bank.

The revenue generated in these heads is less than 1% of the total expenditure incurred by these public hospitals. Most of the public health facilities offer health services free of charge to the people. There is sometimes a nominal fee for registration, certain laboratory procedures, inpatient care etc. Financial assistance can sometimes be available from zakat fund, social security and other sources for those who are unable to pay. In primary health care facilities like RHCs, BHUs, etc. all the services are free of charge except for a nominal purchie (OPD slip) fees in some cases. The amount generated is minimal and that too is deposited in the DHO office and further into the treasury and cannot be used for the minor repair of equipment and facility. The implementation of public sector formal user fees has its own advantages and disadvantages. It may generate funds for the hospital to take care for its upgradation and provision of better facilities, but at the same time it may take away the only provision of health care for the non-affording class of patients who unfortunately constitute a large percentage of the patients visiting the public hospitals. The collection of formal user fee and charges poses several problems to the hospital administration. The maintenance of Accounts, their dispersal and pilferage of funds are only a few to mention. The autonomous bodies have the discretion to
36

utilize these funds, but other government organizations have to deposit it in government treasury. Private sector user fees:18 All most all the private sector is financed from fee for service. In the private sector the fees are not fixed or regulated, and a vide range of fees for services exist. This depends upon the location, level of care provided and reputation of the specialist on board etc. There is no regulatory mechanism of fee charges; it is controlled by the market forces trends. All curative, preventive, diagnostic and rehabilitative services are charged. Insurance is not the main source of financing. In majority of the private facilities there is no mechanism to provide for the poor segment of the society, but in some large reputed organizations such as Aga Khan Hospital, Shaukat Khanum Memorial Cancer Hospital and Shifa International, there are setups to provide for the deserving and poor patients who are provided with health care facilities free of cost. Public sector informal payments: scope, scale, issues and concerns19 There is no evidence of informal fees being charged in public sector. Also there is no official policy or provision of accepting such informal payments. However, some affording patients who get to visit public hospitals or facilities, on their own free will donate certain equipment or utility item for the center or hospital, such as BP apparatus, chairs, water coolers, coolers and air-conditioners etc. Cost Sharing20 Cost sharing mechanism is working on a limited scale in social security for labor (See section on social insurance). The public servants are also covered under cost sharing mechanisms but majority of population is not covered under any cost sharing mechanism.

18 19

gis.emro.who.int/.../Health%20care%20financing%20and%20expend...Similar gis.emro.who.int/.../Health%20care%20financing%20and%20expend...Similar 20 gis.emro.who.int/.../Health%20care%20financing%20and%20expend...Similar 37

CONCLUSION
In questioning the flexibility of Health Insurance to meet the expected challenges in the environment, one analyzes the projected environment to the year 2015 to wonder whether or not insurance can thrive, or even exist given the anticipated changes. Some fundamental changes in attitudes towards Health

Insurance are imminent with decrease in honesty, obedience to laws, charity and personal responsibility. Once these pillars of strength are no more there, the desire, need and significance of any insurance systems are not seen in the near future atleast. The soil of Pakistan is very hostile towards this kind of scheme atleast for the time being. The illiteracy and affordability issue of the poor masses on one hand and inadequacy on part of the Government are the two main reasons for this which are equally reinforced by exploitative nature of the insurance companies and rampant corruption in the society. The inefficiency of the health department in giving health care access to the poor cannot be defended anymore. Lots of public funds have gone to waste with little return to the people. The rampant corruption marred with inefficiency and poor planning has deprived the countrymen of the real fruit of the taxes. The time has come that Government should extend its favours to the poor people in a judicious way through a much improved Public sector Health Care system.

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RECOMMENDATIONS
Amendment in the Insurance Act is required to relieve the government of its major responsibility which will be shifted to private sector insurers. In this way, the government would be relieved of its major burden that might run into billions of rupees and the affording people of Pakistan would also be happy to have an access to this cover through private companies only where as poor people would benefit from the public sector Health Care system.

Regulation of Public and Private health care system is required through an Authority to give maximum benefit to the poor patients.

Health card scheme should be introduced through which every adult should be registered in localized/regional hospitals in both urban as well as rural areas The hospitals should invariably be of public sector with improved infra structure and added facilities of paramedics and medicines. Health care facility can be offered to all through panel Hospitals which will in turn get the year wise/ hospital wise release of funds on regular basis.

Creating awareness & meeting the demand for health care & financing

Enhancing affordability & reducing costs

Exorbitant treatment costs in the private sector health facilities to be checked and controlled through stringent laws to curb this malpractice.

39

Establishment of new public sector Hospitals, Dispensaries, BHUs. Under the able and competent management specially in remote areas for giving easy access to rural population. Judicious use of public funds is the need of the time as we cannot afford further irregular expenditure and embezzlement of government funds. Establishment of new Hospitals under Pubic Private Partnership An Authority may be constituted to regulate public and private health sector through prescribed rules and regulations. Medical Ethic Committee should be constituted to bring some kind of discipline, decorum and responsibility among the concerned persons. The Role of MAFIA to be identified and curbed which are playing their clandestine roles against the Public Health sector for their own vested interests.

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