Social inclusion: Universal health coverage has brought nearly everyone into the system

The biggest lunge forward for Thailand’s health care system in recent years has been to put in place a form of universal health care. Not only has this brought many benefits to ordinary Thais, it has drawn many into the health care system who were unable to afford it hitherto. The public system has at the same time been working in tandem with private care, whose high-quality services have made the country a top choice for medical tourism, both for the region and the world.

The system also has its wrinkles. These range from holes in funding the public system to fiercer competition from the private one. A further shake-up, too, is on the way: the ASEAN Economic Community (AEC), a single market due to launch in 2015, will unleash trade among member nations, a prospect that is causing much debate. All the same, the country’s broad network of hospitals – the fruit of early investments in public health – and strong international reputation are likely to continue to lure investor interest.

Health Of The Nation

Thais are rightly proud of their achievements. Thailand reached nearly all of its Millennium Development Goals (MDGs) in health ahead of schedule, prompting it to pursue an “MDG-Plus” strategy in recent years. As early as 2004, the government announced it had halted, and indeed started to reverse, the incidence of malaria and HIV. Other improvements in public health – halving the incidence of hunger, extreme poverty or lack of access to clean water and sanitation – accompanied this news.

Thailand has certainly improved at prolonging life. According to the latest survey from the World Health Organisation (WHO), average life expectancy rose from 67 years in 1990 to 74 in 2011. Over the same period, infant mortality fell from 29 per thousand births to 11, and the number of children that die before age five fell from 35 per thousand to 12. The same data show that deaths from malaria and HIV/AIDS – illnesses specifically targeted by the MDGs on a global scale – are rare in Thailand and getting rarer. Deaths from malaria were 0.3 per 100,000 people in 2010. The figure for HIV/AIDS fell from 97 in 2001 to 33 in 2011; for tuberculosis among HIV-negative victims, it sank from 31 in 2000 to 14 in 2011 – well below the regional average.

These are heartening numbers. Still, Thailand shares many health issues faced by more developed countries. One is ageing: the slice of the population over 50 rose from 18% in 2000 to 23% in 2010 and is set to hit 28% by 2020, according to the National Statistics Office.

More complex diseases – cancer, diseases of the heart and kidneys – are also increasing, creating higher demand for treatment in these areas.

Drastic Change

Thailand has responded with reforms. The centrepiece was the 2001 launch of the Universal Coverage Scheme (UCS), which extended coverage to all citizens. Apart from the two other pillars of the Thai public health care system the UCS provided coverage to about 75% of the population within a year. As a result, some 18m people received comprehensive coverage for the first time. Today, nearly all of Thailand’s 67m people have it.

The other two pillars are the Civil Service Medical Benefit Scheme (CSMBS) and the Social Security Scheme (SSS). The first covers public employees, their parents and up to three of their children (until age 20), plus civil service retirees and their dependents. The second covers salaried private-sector employees – i.e. all who pay income tax – but not their dependents.

The UCS is meant to cover everyone else. One of its responsibilities is to cover Thailand’s vast informal sector, including many who work for low pay at family businesses and on farms. Such citizens were previously left outside the system, paying out of pocket when necessary and often subject to impoverishment in the event of a severe accident or illness. It is one great achievement of the UCS to have reduced this substantially: the incidence of impoverishment from health costs fell from 2.7% in 2000 (before the UCS) to just 0.5% by 2009.

In its early days, the UCS was known as the “30 baht” scheme, from the one-off charge its users had to pay.

Modelled on Malaysia’s “1 ringgit” co-pay for public health services, this token fee was revoked by the government of Prime Minister Sarayud Chulanont after the 2006 coup. The case against it had rested on two arguments: its discrimination against those with chronic conditions, who make frequent hospital visits, and on the burden of collection costs, which were deemed to exceed the BHT2bn ($65m) a year the scheme was thought to raise. The case for universality won out and, as of 2006, UCS users have received services for free.

The scheme has, throughout its life, enjoyed political support from all parties and is extremely popular with ordinary Thais. An independent study of the impact of the UCS in its first decade – published in 2012 and commissioned by the Health Systems Research Institute (HSRI) and the WHO’s South-east Asia office – found that some 90% of users said they were satisfied with the service in 2010, up from 83% in 2003. Among health care providers, many of whom initially opposed it, satisfaction rose from 39% in 2004 to 79% in 2010.

The universal system prioritises the development of primary care, thus reducing the poor’s reliance on emergency services. It has been praised by institutions such as the WHO for involving local stakeholders in its roll-out and evolution. The National Health Act of 2007 launched the National Health Assembly, a diverse gathering that draws participants from among the general public, community groups and other civic networks to develop and execute public health policy.

ORG Chart 

The National Health Commission (NHC), headed by the prime minister and established by the same 2007 law, sets the country’s health policies, direction, development and solutions. Its secretariat, the NHC Office, is headed by an executive board, and its vice-chairman is also head of the Ministry of Public Health (MOPH), which oversees not only the NHC but also a range of institutions and agencies such as the Sirindhorn College of Public Health, the Boromarajonani College of Nursing and bureaus of inspection and evaluation. The MOPH runs public hospitals through its Office of the Permanent Secretary. From these, the hierarchy follows on to regional hospitals in provincial centres, then to general hospitals in provincial capitals and district centres, and then to community hospitals, most of which provide only primary care and some of which may have just 10 beds. The private sector has a similar structure, except that small hospitals are generally referred to as health centres and often admit inpatients instead of referring them to a larger hospital.

Big Fish & Small

A few groups dominate the private sector. Two of the largest – Bangkok Dusit Medical Services (BGH), which runs the Bangkok Hospitals Group, and Bumrungrad Hospital Public Company (BH) – account for a large chunk of the medical tourism market (see analysis) and of private services. Of these, BGH has the wider reach, with hospitals in many provinces as well as Bangkok. Other important health institutions, some with specific mandates, are the HSRI, the Emergency Medical Institute of Thailand (EMIT) and the Thai Health Promotion Foundation (THPF, or ThaiHealth).

Another key body is the Government Pharmaceutical Organisation (GPO), a state enterprise that produces and supplies medicines. The MOPH produces a list of essential drugs, updating it every year after consulting with public physicians, and the GPO then manufactures its drugs to this list. Doctors generally prescribe GPO generics over branded drugs, given vast differences in price. Should they opt to prescribe the spendier, branded medicines, hospitals are obliged to pay the difference. As a result, private hospitals are the main customers for foreign drugs.

Most of the ingredients for locally manufactured drugs are imported. Pharmaceutical imports hit $1.7bn in 2011, according to the most recent data from the Thai Board of Investment (BOI). The main source countries were the US and Germany.

Thailand also has a big market for foreign medical supplies and equipment. Two-thirds of all medical devices are imported, in a market that was worth $795m in 2010 and $1bn in 2013, according to the BOI. Many global manufacturers of such kit have production outfits in Thailand, such as Bausch & Lomb, 3M, Johnson & Johnson, Siemens, GE Medical and Carl Zeiss.

Duties & Dollars

The three schemes arose at separate times for separate reasons. The UCS, the youngest and the broadest, is run by the National Health Security Office (NHSO), a branch of the MOPH established in early 2003 to administer the scheme. The SSS, launched in 1990, developed out of efforts to provide workplace insurance, and is run by the Social Security Office, a branch of the Ministry of Labour. The CSMBS, a civil service benefit and the oldest of the three, falls under the Ministry of Finance. From breadth and extent of coverage to money flows and authority, each branch therefore has a different structure.

The UCS – which covers 75% of the population according to the WHO-HSRI study – is funded entirely from general taxes. Services are rendered by both public and private health providers, which the state only registers and contracts under the scheme, leaving them otherwise free to compete for patients. Providers are paid in two ways: for outpatient care, by capitation (a fixed fee per head times the number of patients enrolled, usually disbursed as an advance lump sum at the start of each year); and for inpatient care, by reimbursement on a fee-for-service model. Prices for inpatient care are set by working out the typical cost burden of diagnosis-related groups (DRGs), and then imposing fixed prices by DRG uniformly throughout the system. The SSS, covering 16% of the populace, is financed much differently. Here, the employer, employee, and government each contribute 1.5% of the employee’s salary. Provision is by the same contract model as the UCS, but covers a wider range of services: comprehensive outpatient and inpatient care as well as prevention and health promotion, with very few exclusions. The CSMBS, which covers the remaining 9%, offers a broader package than even the SSS, and is available to dependents. Funding comes from general taxes, and provision is by public providers only, who are reimbursed directly for care on a fee-for-service model (with some fees set by DRG matrices), whether for outpatient or inpatient services. Spending varies greatly between schemes. According to the WHO-HSRI study, per-capita spending was $71 for the SSS and $79 for the UCS in 2010. For the CSMBS, the figure was far higher: $367. As for public versus private health expenditure, World Bank data show that during the 2009-11 period – the last for which figures are available – public health spending made up 75% of the total, the rest made up by private services.

Funding Conundrum

Though Thailand’s health care system has proved inclusive, ameliorative and indeed popular, paying for it has increasingly become a challenge. With two of the system’s three pillars funded entirely, and the third partly, from general taxes, the fiscal burden of health provision is a cause for concern.

According to WHO figures, health made up around 11% of the total government budget in 2000 (before the introduction of UCS) and 14.3% in 2010 (after it). In 2013, the figure dropped to about 10.6%, or BT254.95bn ($8.3bn), according to the Thai Bureau of the Budget. The system’s supporters say this dip suggests the budgetary strain is manageable. Its critics say it merely reflects an increase in other areas of spending, such as agricultural support. Others see a warning sign in the ease with which the government is handing out new licences to providers. “As health care costs continue to rise, the government’s accommodating stance towards compulsory licensing is being viewed by some multinational companies as a cost cutting measure rather than a genuine means of providing emergency care,” Virapatna Thakolsir, managing director of Biopharm Chemicals, told OBG.

Rate Debate

There are other controversies over payment methods. Some criticise the reimbursement model of the CSMBS, on the charge that patients may deny themselves a service they are unable to pay in advance.

A different debate concerns the SSS and UCS. The capitation model used to work out the budgets for these schemes shows considerable spread between the rates used to calculate payments. The SSS rate is around BT1500 ($49) a year; the UCS one around BT2000 ($65). Part of the reason for this is demographic. SSS members belong to the class that is least likely to need health services – those of working age. The UCS, by contrast, is more likely to be used by the elderly and the very young. Nonetheless, some insiders suggest that the SSS capitation rate is too low, and that this affects delivery of services. SSS members are thought likelier than other segments to find ways to treat their illness on their own, and to use more private health care. They are also the only group that makes a financial contribution of its own, in addition to paying general taxes.

The capitation fee for UCS, though higher than its SSS counterpart, is also widely considered too low. Hospital budgets, set by capitation at the start of the year, often come under strain before the end of their term. Some blame this on moral hazard – the free service encourages overuse. Whatever the cause, there is pressure to reintroduce the “30 baht” fee or, a likelier fix, to require wealthier people to pay more. A second effort calls for the NHSO to start talks with insurers on new financing models. A third advocates a move to harmonise the three pillars and eliminate the differences in standards, costs and payments between them.

To this end, in 2012 the government launched a package of reforms. One was to revamp emergency care so that it falls under the same rules regardless which scheme a patient belongs to. Another was to introduce a single-payment system for the UCS, making prices uniform throughout the system. A further reform set new rates for DRG payments according to the relative severity of a given malady, assigning to each a certain number, then allotting BT10,500 ($343) per unit.

Skills & Salaries

Funding and reform are not the only kind of challenge: so are industry training and the economics of wages. The relatively higher salaries paid to doctors in the private sector has caused a bout of “brain drain” – the tendency of the skilled to move to where the money is – in recent years. The reluctance of talent to move from big cities to rural areas, grounded in economic nature, has exacerbated inequities between regions in the provision of health care.

To counter this, the government has hiked public sector salaries and begun topping up the pay of those who opt to work in rural areas. That may not be enough. Doctors, especially those with families, consider more than just salary before moving into the countryside: they also want good schools for their children, clean conditions and various other measures of quality of life.

In the provinces, demand for quality health services is growing. As the forces of urbanisation churn on provincial capitals, workers move in, the population swells and wealth grows. The resulting gap between general demand and public sector provision is opening doors for private investors. Groups like BGH, with its regional network, are well placed to step through them.

To help fulfil the growing need for care, doctors are permitted to spread their work between private and public facilities, a practice becoming increasingly common. This may, however, simply shift the strain from the system to practitioners, increasing workloads for those doctors who remain in the public system without spurring an increase in doctor numbers.

Train & Retrain

Medical training in Thailand is generally of high quality, and its colleges of international standards. To capitalise on this, Thai authorities have plans to make the country an attractive centre for medical education (see analysis). Many graduates go on to work abroad, however; others go into the private sector. Another hitch is Thailand’s relatively low number of doctors per unit of population; the most recent WHO figures, from 2010, put the number at around three per 10,000. In Vietnam the figure was six.

One solution to the growing pressure on doctors could be the opening-up of labour markets. The Association of Southeast Asian Nations (ASEAN) is set to move towards an economic community, the AEC, in 2015. As part of the dismantling of barriers to capital and labour, as of 2012 private hospital groups were allowed to invest directly in other ASEAN countries. Though Thai law limits foreign ownership of health facilities to 49%, in 2015 this will rise to 70% for general hospitals (though stay at 49% for specialist units). The change may bring a wave of new investment.

Historically, private investment in Thai hospitals has been low, in part because of equity restrictions, in part because by law a hospital’s top management must be made up of physicians, who may be unfamiliar with private sector business models. Compounding the problem, all doctors are required to pass an exam – in Thai – before they are allowed to practice medicine in the country, effectively barring many foreign physicians. The AEC’s rules on free movement of labour between ASEAN countries may work against this barrier. Some sector professionals also fear that poor migrants from Cambodia, Myanmar and Vietnam will pour into Thailand for treatment as the borders open.

Outlook

Funding the UCS is likely to be the most pressing issue in the year ahead. Recent political tensions in the country only compound the uncertainty about what approach authorities may take. The Thai government will at least continue to press ahead with its plans for a medical hub. The private sector, too, looks likely to continue its expansion, especially in the provinces, with opportunities for foreign investors in medical education and training, equipment, supplies

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The Report: Thailand 2014

Education & Health chapter from The Report: Thailand 2014

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