Health Economics Unit School of Public Health and Family Medicine University of Cape Town Private Health Insurance and Social Health Insurance - Developing Markets - An International Short Course 10 – 14 October 2005 Introduction The World Health Organization in December 2004 urged all member countries to consider mechanisms for pooling financing for healthcare, including Social Health Insurance, in order to achieve universal coverage. The Health Economics Unit at the University of Cape Town offers a 5-day short course addressing the changing role of health insurance in low- and middle-income countries. The course focuses on the financial management of risk pools in diverse settings covering a broad spectrum of insurance arrangements including community-based health insurance, private voluntary insurance for the formal sector and social or national health insurance. Objectives The objective is to give participants an understanding of the choices in the financing of healthcare and issues in private healthcare financing arrangements. The course combines the theoretical principles with practical illustrations, using examples from the private sector in South Africa as well as examples from other African countries. Although specific country examples may be used, the principles conveyed in the case studies have broad relevance. A core learning objective will be understanding the risks in pooled financing arrangements and techniques for managing those risks. The course will provide an understanding of the design and pricing of benefits and the impact of managed care on healthcare delivery costs. It also addresses the key questions: who should be covered by health insurance and how should providers be paid. Possible pathways towards universal coverage such as in social or national health insurance arrangements will be discussed. Target Audience The course will be of interest to: • Health economists. • Doctors and health professionals. • Actuaries and statisticians in healthcare financing. • Policy-makers and public sector officials dealing with public-private mix issues. • Researchers dealing with strategic healthcare financing issues. • Health insurance and hospital administrators who need an understanding of the developing framework for Social Health Insurance both in South Africa and other African countries. • Trustees and managers of health insurance schemes or pooled financing arrangements. • Candidates for the Masters in Public Health programme at UCT or UWC. Course Content • Market Failure in Health Care as a Rationale for Health Insurance This session discusses the deviations from market principles inherent in the allocation of medical services. We look at both the supply of medical services and the demand for health care and show how health insurance can address the so-called problem of market failure. • Efficiency and the Economics of Health Insurance The optimal design of any form of health insurance depends on the availability and distribution of information between the insurers, the clients and the suppliers of medical services. This session examines strategies to design insurance contracts to avoid undesirable outcomes such as ex-ante or ex-post moral hazard and adverse selection. • Equity Considerations in Health Insurance The private sector has often been associated with inequities in access to health services. This session addresses the issue by introducing tools to assess the equity impact of different modes of health services financing and provision within health insurance arrangements. • Actuarial Foundations of Health Insurance: Understanding Risk An understanding of risk factors in pooled arrangements is needed for pricing and risk management. South African studies are used to illustrate factors that affect the price of healthcare, such as age, gender, income and chronic disease. • Types of Health Insurance Most countries have some form of coverage of health risks. This session gives an overview of various forms of health insurance and their characteristics. Sometimes different forms of private coverage exist in parallel. This is illustrated by discussing the demarcation between indemnity business (medical schemes) and non-indemnity business (health insurance) in South Africa and the rationale for their regulatory separation. • Rationing in Health Insurance: Benefit Design as a Rationing Tool Healthcare resource allocation is framed as a rationing problem. The forms of rationing are discussed and benefit design is explored as a rationing tool using South African examples. • Needs in Relation to Ill Health A session on health care needs in relation to ill health highlights additional criteria for the design of benefit packages. • Rationale and Implementation of Minimum Benefits The Oregon system of rationing healthcare is outlined and the application of that methodology is shown as the basis for determining minimum benefits for healthcare in the private sector in South Africa. The links to constitutional rights and public sector care are shown. Practical issues experienced with a system of minimum benefits are illustrated. • Pricing Health Insurance The fundamentals of pricing for healthcare are explained. The pricing of minimum benefits in South Africa is used to demonstrate the principles of pricing in a community-rated environment. • Dealing with the Risk of Variability The nature of risk in pooled arrangements is explored in more detail. Techniques for managing the risk of variability include the use of large risk pools, minimum solvency margins, the use of reinsurance and the transfer and sharing of risk with healthcare providers in managed care. • Social Health Insurance or National Health Insurance The choice between Social Health Insurance and National Health Insurance is illustrated using results from an analysis of the potential impact in South Africa. • Non-formal sector options (CBHI, MHI) Health insurance options for the informal sector, such as community-based health insurance (CBHI) or mutual health insurance (MHI), and criteria for their feasibility in different environments will be discussed. The models will be illustrated with case studies from different African countries. • Risk Equalisation Techniques Risk equalisation or risk adjustment techniques have wide application in healthcare, from provider stabilisation to public sector budgeting to stabilisation of risk pools in a competitive environment. The experience of developing the South African Risk Equalisation Fund is used to illustrate the principles of risk equalisation. • Evaluating Insurance Choices in Different Contexts This session summarises policy makers’ choices along the spectrum of insurance arrangements from completely privately funded to public insurance. The implications of the different design elements will be assessed on the basis of equity and efficiency criteria. Course Fee This course is offered for non-degree purposes. Ideally, participants will have an acceptable undergraduate degree in medicine, economics, social science, finance, accounting, law or actuarial science. The fee for the 5-day course including lunches and teas is ZAR 7,500 (local participants) / USD 1,250 (international participants). On completion of the course, participants receive a certificate of attendance. Registration for the course starts 4 July 2005. Places are allocated to appropriate applicants on a first come – first served basis. The closing date for applications is 4 September 2005. Applicants will be informed of the outcome of their application shortly after the closing date. For further details and application forms contact: Ms. Andiswa Sifile Health Economics Unit School of Public Health and Family Medicine E-mail: asifile@heu.uct.ac.za Tel: (021) 406 6558 Fax: (021) 448 8152 For content-related and academic queries: Dr Michael Thiede Tel: (021) 406-6754 E-mail: mthiede@heu.uct.ac.za Associate Professor Heather McLeod Tel: (028) 572-1933 E-mail: hmcleod@iafrica.com