In 2016, the Lao People’s Democratic Republic (Lao PDR) launched the National Health Insurance scheme (NHI) to support its commitment to achieve universal health coverage by 2025, later rolled out to all provinces (except Vientiane Capital) in 2017.
The scheme provides social health protection to the informal sector population and since its introduction, has increased the number of people protected – 94% of people are now covered by all social health protection schemes – and the use of public health services.
But, how effective has it been?
A crucial element of accessible healthcare for all is financial protection. This is achieved when direct payments made to obtain health services do not expose people to financial hardship or threaten living standards. As part of Lao PDR’s goal to achieve universal health coverage, the NHI aims to remove financial barriers to equitable access to care.
To understand the impact of the NHI on financial protection and access to care in Lao PDR, a new WHO – Ministry of Health – Lao Statistics Bureau report analyses data from the three most recent Lao Expenditure and Consumption Surveys (2007/2008, 2012/2013, and 2018/2019) – from before and after the introduction of the scheme.
The report presents key results and policy options to expand and improve coverage, alongside a short policy brief.
Key results of financial protection analysis
Health care utilization and access to care: rising but with significant gaps
The share of the population who sought care when they fell ill increased from 21% to 36% over the period, with richer quintiles more likely to seek care. In 2018/2019, poorer quintiles reported that geographical and financial barriers impacted their access to care, while the richer quintiles were concerned about the quality of services.
The poorest and near poorest quintiles were more likely to report limited access to care, with one in 10 households reporting difficulty in accessing health services in 2018/2019. Over this period, only 16.1% of the population reported having health insurance. Awareness of the NHI was lowest among the poorer consumption quintiles and people living in rural areas.
Out-of-pocket (OOP) payments and catastrophic health expenditure
OOP payments per capita per month decreased between the last two survey cycles across all quintiles.
Correspondingly, catastrophic health expenditure (spending more than 10% of the household budget on OOP payments) reduced significantly over the survey period. In 2018/2019, 4.1% of the population of Lao PDR incurred catastrophic spending due to OOP payments. This is a decrease from 6.8% in 2012/2013 and 4.2% in 2007/2008.
Spending on medicines was a driving factor for catastrophic health spending, comprising over 50% of OOP payments. The incidence of catastrophic spending was concentrated in the richer quintiles; however, these quintiles reported lower rates of barriers to access among those not seeking care.
Policy options and the way forward
The study confirms that current health policies related to the introduction and development of the NHI are on track to progress towards universal health coverage, although there is much room for improvement. Both trends of increasing healthcare use and declining incidence of catastrophic health expenditure suggest that the introduction of the NHI has had a positive impact on financial protection and, to a lesser extent, access to care in Lao PDR. Yet, significant gaps remain, especially for the poorest in Lao PDR.
It is important to note this progress was achieved before the COVID-19 pandemic and the current economic situation. A number of operational challenges for NHI and rising inflation risk long-term funding sustainability of the scheme. An updated NHI Strategy for 2021-2025 aims to address gaps and the changing context with revised strategic goals to strengthen the system and ensure its financial health and sustainability.
Policy options suggested in the report to address these gaps include:
- Increasing awareness of the NHI, especially among the poorest population, to address the low numbers of people reporting to have health insurance and therefore seeking care.
- Strengthening primary healthcare accessibility, availability and quality to reduce barriers to access health services, especially for the poor and people living in rural areas.
- Developing policy solutions to increase access to affordable and quality medicine to curb the large share of OOP expenditure on medicines resulting in catastrophic health expenditure. This might include improving primary health referral systems, strengthening co-payment exemption policies and creating new policies to regulate prices of medicines.
- In the long-term, expanding the NHI to Vientiane Capital, at least for the poorest population, to tackle the high local rate of catastrophic health expenditure.
More broadly, to strengthen the scheme, the health insurance system needs gradual improvements: moving toward being an independent institution outside the Ministry of Health (clear institutional separation of providers and purchaser) to procure services competitively from hospitals which are Ministry of Health-run; and becoming a semi-autonomous agency with financial autonomy and a reserve fund.
Highlighting the work completed, Dr Bounfeng Phoummalaysith, Lao PDR Minister of Health, said: “It is very timely to have this financial protection analysis to show the impact of the introduction of the NHI scheme on financial protection in Lao PDR. This analysis will allow the government to make informed policy decisions to better utilize its limited resources and develop policies to advance towards universal health coverage.”
WHO’s support for the joint report on financial protection analysis was made possible with funding from the Government of the Republic of Korea and the Government for Luxemburg through the Universal Health Coverage Partnership.