In this jungle of deficits, disasters and crisis, health and health protection has become a major concern of the Nepali people. People belonging to all income levels seek protection from the financial risks associated with ill-health. Recognizing this, in 2005, the member states of World Health Organization (WHO) adopted a resolution encouraging countries to develop health financing systems aimed at providing universal coverage. Many middle- and low-income countries of the world are in the process of reforming their health financing system to move toward universal coverage of social health insurance model and are aiming to reduce reliance on direct payments (OOP or out-of-pocket payments).
One of the most practiced social health security model is risk-pooling and prepayment. The purpose of replacing direct OOP payments by prepayment is generally to insure that the target people who are unlucky and unable to earn enough resources in health care services can readily access those services without the fear of financial hardship or catastrophic health care costs. In Nepal, more than 55 percent of total health expenditure is financed through OOP payment by households at the time of service. Therefore, social health protection (SHP) and social health insurance (SHI) has become a matter of great concern for all health-related stakeholders in Nepal.
Laws in the country have made provisions for some health benefits to workers and employees in government and private formal sectors. However, there are no provisions for providing additional health benefits (apart from the free health care-related policies) to those employed in the agriculture sector (which comprises of more than 70 percent of the employed sector), overseas workers, the unemployed and those outside of the labor force (except for the retired army, police and armed police).
Public hospitals get subsidy to provide health care services but it is not adequate for hospital financing. Therefore, user fees are in vogue in secondary and tertiary hospitals. There are some micro/community health insurance schemes with limited coverage but virtually no social health protection/insurance scheme is in existence for formal and informal sectors. Private insurance scheme could not be implemented in rural areas because of market failure.
There are many feasible options of SHP/SHI suitable for Nepal. So, before starting SHI program, a detailed home work is needed that will identify the proper models and options, coverage, benefit packages to be offered for the beneficiaries, financing modalities and mechanism of social health protection and insurance schemes. It is extremely important to debate what sort of restructuring is needed in the health sector in the forthcoming federal form of governance.
Nepalis have now become quite aware and they know the importance of subsidized health services. But the scale of government revenue sources and tax base is still low and priority of government to health sector has not increased as much as expected—the share of health budget in the national budget has been hovering around 7 percent since the past four to five years. On the other side, the share of donor support in health expenditure has started to decline. In this context, existing ongoing universal free health care program, maternity program and other free targeted health care programs might be affected and be difficult to sustain in the coming years.
Usually, under the health financing model, there are three options: Payment through service recipient, payment by employer and creation of fund through public budget using tax. As per the requirements, its feasibility and potentiality, a mixed model also can be developed. In the context of health financing mechanism, pooling, purchasing and payment to service provider are basic issues. So, while developing the SHP plan and its institutional set up, socio-political and constitutional school of thought really can influence the concept and ideology.
Presently, we are governed by the Interim Constitution 2006. A new constitution is expected to be ready by November. In the given situation, the policy and institutional set up and administrative restructuring in the country can be expected to have a substantial impact on health sector in terms of governance, resource allocation and legal and policy environment. In the Interim Constitution, health and social security has been guaranteed as a fundamental right. But, none of the acts/rules have defined social security and basic health service. Proper attention has not been given on this significant issue.
The National Health Policy 1991 has aimed to upgrade the health standards of the majority of rural population by extending basic primary health care services and to provide the opportunity to rural people to enable them to obtain the benefits of modern medical institutions by making them accessible. But there is lack of practical action plans and the policy is under the course of revision. The Local Self Government Act seeks to remodel the country’s planning approach. National planning documents have accepted health as fundamental human rights and gives emphasis on equitable access to health services. The Government of Nepal has introduced a one percent social security tax on the first slab of the taxable income of all salaried people.
In this regard, a high-level committee has been formed consisting of different ministries, trade unions and employers’ associations. The committee members have committed to recommend on the revision of the Social Security Organization and Labor Acts as well as on the management and utilization of the security tax. As a regulating body, Insurance Board is working under Insurance Board Act and the Insurance Act. Restructuring of insurance sector is also under consideration and it is required to have a Nepal Insurance Authority (instead of Insurance Board) to develop and promote insurance business as well as formulate standards and guidelines.
One of the functions the Authority is expected to have is the right to provide suggestions to the government to formulate national policies and regulations for the sector. The Insurance Board is presently only authorized to regulate the for-profit insurance market. The Act does not address any specific provision with regard to cooperatives and community base health insurance.
Overall, the policies, programs and budget are scattered. Therefore, attention should be given on possible changes in the approach, governance and administrative structure while considering major reform process in the health sector. For this, creation of a Social Health Protection Fund (NSHPF) at national level by consolidating all forms of social health protection-related government programs/provisions and their allocated budget is expected to be a foundation stone for the management of the social health protection functions independently and to make the base for social health insurance.
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