Social health insurance still a new concept

Social health insurance covering most of the population is still a new concept in Pakistan, which requires major assistance and a lot of awareness raising, capacity building, and institutional development. So far, not much assistance has been given to the federal or provincial governments in the sector.
According to a study report, the World Bank has tried to support health insurance pilots in NWFP and Punjab (1 million dollars) in 2004, but these have been cancelled. The Japan Social Development Fund withdrew its funding because the project was not initiated on time as implementing NGOs could not solve their problems on ownership of the insurance. German agency for technical co-operation Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ) mainly provides TA to the provincial government of NWFP to finance health care.
The government of Punjab has made major efforts to study the possibility and feasibility of health insurance, elaborating on how to extend health insurance to the poor through federal or provincial government subsidies as well as on how to cover public servants.
According to report, the social health insurance is a concept developed in European industrialised countries and covers the whole population against financial losses due to illness and accidents. The concept has also been adapted to newly industrialised and developing countries. The People's Republic of China, the Republic of Korea, the Philippines, Mongolia, and Vietnam have developed social health insurance schemes. Their experiences can serve as a model for Pakistan, advised in the report.
According to a study, report revealed that Pakistan is ranked 138 of 173 countries covered by the United Nations Development Programme (UNDP) human development index with a population of 149 million growing by 1.9 percent per year. It falls under "low human development", while average growth of gross domestic product (GDP) was 4.6 percent in the 1990s, against 6.5 percent in the 1980s.
Over the last four years, economic growth has increased robustly, from 5.1 percent in FY2003 to 6.4 percent in FY2004, and jumping to 8.3 percent in FY2005. However, growth has not always led to poverty reduction.
Periods of high economic growth have witnessed declines in poverty, as in the 1980s, but also increases, as in the 1960s. Periods of low economic growth has seen poverty sharply increase, as in the 1990s, but also fall, as in the 1970s. Poverty was around 32 percent in 2001 according to latest figures.
Even though there is much needed for it, social protection is limited in all five areas identified by the ADB social protection strategy.
To help the poor, however, the federal and provincial governments, non-government organisations (NGOs), and the private sector are (i) improving governance in public sector institutions, (ii) creating jobs and income-generating opportunities, (iii) strengthening social safety net systems, and (iv) improving access to basic services.
Total expenditure on social protection represents around 2 percent of GDP, of which 90 percent is on social insurance and health care for selected groups, 5.3 percent of the poor receive some form of social protection, and around 10.0 percent of total social expenditure goes to the poor.
Formal social security systems are restricted to civil servants, the army, the police, as well as some formal sector enterprises (with five or more employees).
These schemes cover less than 3 percent of the total employed labour force. There are hardly any informal, traditional, community-based insurance arrangements (for example micro-insurance). There is also a gender and rural-urban bias in social protection schemes.
One major pillar of any social protection network is access to free or affordable healthcare. Major health incidents, especially those of catastrophic dimensions, may aggravate households' poverty or even bankrupt families. The development of the private health sector is also constrained by the low level of development of the health insurance industry.
The lack of access to health insurance poses a major problem for the financing of care for catastrophic episodes of illness and injuries. Risk pooling, for example through health insurance, may prevent households from falling into poverty, and those who are already poor will have the chance to get access to better health services. Health insurance thus greatly helps reduce and prevent poverty.
Even when health insurance does not pay for services, it can negotiate prices for health care and thus make the costs of services more transparent. At several levels, health insurance became an issue in Pakistan. The federal ministry of health is discussing how else to extend coverage of health insurance. The government of Punjab has installed a task force to look into the feasibility of providing health insurance for more people. Interest in the subject is thus increasing.
In general, public health expenditure is very low in Pakistan (3.5 percent of the public budget is spent on health, and public health expenditure is 0.7 percent of GDP). National public expenditure on health is 4 dollars per capita, while total expenditure on health is 18 dollars per capita.
This shows the high share of private health care spending, including households, which accounts for 75.6 percent of health care expenditure. Social health insurance covers only 5 percent of the population but represents about 40 percent of federal and provincial governments spending on health.
The health care financing system consists of three alternative protection schemes, where health insurance still represents a small segment.
The public has access to the public system financed by the federal and provincial governments. Public health care facilities comprised of basic health units, rural health centres, and public hospitals. Although public health care is supposed to be free, problems encountered are (i) frequent unofficial charges, (ii) lack of drugs and supplies (which have to be bought outside by the patients), and (iii) absenteeism of staff.
Employees in the formal sector are covered by the social security health insurance system (Employees Social Security Institution). The formal sector includes employees of private companies with a minimum number of employees (the number differs in province, from 5 to 10) and their families.
These social security institutions operate health facilities at the province level. With many facilities in rented buildings and the better ones in newly built facilities owned by the social security institutions, the quality of the facilities varies but is better than in the public sector.
Private insurance companies also offer health insurance. Despite the high cost, private insurance companies have filled a market segment purchasing and providing quality health care mainly as an employee benefit for private companies, because federal and provincial governments health services are so poor.
Group health insurance is offered by seven insurance companies and individual health insurance by one insurance company (Allianz EFU). Because of the high expenses, large companies self-insure or provide their own medical facilities for employees.
The poor receive some assistance mainly financed by two autonomous institutions - the Zakat fund (133 million dollars disbursed in 2003) and Bait-Ul-Maal (38 million dollars disbursed in 2003). The Zakat fund supports hospitals, which in turn help the eligible poor. Bait-Ul-Maal reimburses claims to those who have applied for assistance and are found to be eligible. Both funds, however, can only serve a small portion of the 50 million poor.
Those who do not avail themselves of health insurance or of the two funds, and do not want to use public providers because of their low quality, have to buy health care from private providers (doctors, dentists, clinics, hospitals, and pharmacies) or from the many traditional healers and quacks, especially in the rural areas. Even the poor frequently use private providers, which explains the high share of health expenditure from private households.