Best Practices in Healthcare
Financing: Sri Lanka Case
Ravi P. Rannan-Eliya
ECOSOC Annual Ministerial Review – Regional Ministerial Meeting on
Financing Strategies for Health Care
16-18 March, 2009
Colombo, Sri Lanka
WB Good Practices in Health Financing
1
Low healthcare spender
2
. . . yet good health at low cost
3
Good financial protection
4
. . . despite significant out-ofpocket spending
5
Formative origins in 1930s
• Democracy in 1931
– Made government accountable to people
– Income tax introduced
– Free education
• Autonomy from foreign influence
– Self-rule with freedom to find our own way
• Adequate resources
– Relatively good tax base
• Economic crisis and epidemics
– Impact of 1930s Global recession and 1934 Great
Malaria Epidemic
6
Consequences
• High priority given to risk protection
– High allocation of budget to inpatient care
and hospitals (>75%)
• Emphasis on physical access over
consumer quality
– Extensive network of rural facilities
– Pro-poor government spending
• Removal of financial barriers
– Abolition of user fees (1951)
7
Increase in public provision
8
% GDP
. . . despite falling health budgets
9
Made possible by 2-3% annual
increases in efficiency
10
Yet Sri Lanka is not a NHS
system
11
but a third model
• Developing countries cannot afford UK NHS
(“Beveridge”) model
– Cost of government financing free care for all: 5-8% of GDP
– Actual government budgets: 2-3% of GDP
• So only able to pay for 40-60% of overall needs
through public financing
– Typical outcome is that limited public services are captured
mostly by rich, leaving poor without services
– Rationing through spatial barriers, or informal costs
• Sri Lanka has solved this by successful mix of public
and private financing and provision
– Public services universal but used more by poor
– With public spending focusing on insurance function
12
Sri Lanka’s public-private mix
13
With self-selection of rich into
private sector
India
Bangladesh
50
Public
40
Private
30
Indonesia
60
60
50
50
40
40
30
30
20
20
10
10
20
10
0
Q1
Q2
Q3
Q4
0
Q5
0
Q1
Q2
Q3
Q4
Q5
Q1
Q2
Q3
Q4
Q5
Q4
Q5
Use of public and private inpatient services by income quintiles
Sri Lanka
Malaysia
Hong Kong
50
60
50
40
50
40
40
30
30
30
20
20
20
10
10
10
0
0
Q1
Q2
Q3
Q4
Q5
0
Q1
Q2
Q3
Q4
Q5
Q1
Q2
Q3
14
Key Messages
• Accountability to people is critical
• Government must provide insurance
through hospital care
• Improving efficiency is critical for
expanding coverage
• Never give up on public sector
• Manage the financing gap by prudent
use of voluntary private care
15