The social security scheme in Thailand: what lessons can be drawn?

PERGAMON

Social Science & Medicine 48 (1999) 913±923

The social security scheme in Thailand: what lessons can be drawn? Viroj Tangcharoensathien *, Anuwat Supachutikul, Jongkol Lertiendumrong Health Systems Research Institute, 5th Floor, Mental Health Department Bldg., Ministry of Public Health, Tiwanon Road, Nonthaburi 11000, Thailand

Abstract The Social Security Scheme was launched in 1990, covering formal sector private employees for non-work related sickness, maternity and invalidity including cash bene®ts and funeral grants. The scheme is ®nanced by tripartite contributions from government, employers and employees, each of 1.5% of payroll (total of 4.5%). The scheme decided to pay health care providers, whether public or private, on a ¯at rate capitation basis to cover both ambulatory and inpatient care. Registration of the insured with a contractor hospital was a necessary consequence of the chosen capitation payment system. The aim of this paper is to review the operation of the scheme, and to explore the implications of capitation payment and registration for utilisation levels and provider behaviour. A key weakness of the scheme's design is suggested to be the initial decision to give employers not employees the responsibility for choosing the registered hospitals. This was done for administrative reasons, but it contributed to low levels of use of the contractor hospitals. In addition, low levels of use were also probably the result of the potential for cream skimming, cost shifting from inpatient to ambulatory care and under-provision of patient care, though since monitoring mechanisms by the Social Security Oce were weak, these e€ects are dicult to detect conclusively. Mechanisms to improve utilisation levels were gradually introduced, such as employee choice of registered hospitals and the formation of sub-contractor networks to improve access to care. A bene®cial e€ect of the capitation payment system was that the Social Security Fund generated substantial reserves and expenditures on sickness bene®ts were well stabilised. The paper ends by recommending that future policy amendments should be guided by research and empirical ®ndings and that tougher monitoring and enforcement of quality of care standards are required. # 1999 Elsevier Science Ltd. All rights reserved. Keywords: Capitation payment; Utilisation pattern; Cost containment; Provider behaviour; Thailand

Introduction In Thailand, there are four categories of publicly organised health insurance and medical welfare systems covering 31.4 million people, 56% of the Thai population (Tangcharoensathien and Supachutikul, 1993a). The ®rst category, the public assistance scheme ®nanced by general tax revenues, covers 27% of the population consisting of low income households, the

* Corresponding author. Tel.: +66-2-951-1286/94; fax: +66-2-951-1295; e-mail: [email protected]

elderly (over 60 years) and primary school children. A means test based on income is used to allocate free health cards to poor households. Card holders are entitled to free care at designated outlets, mainly Ministry of Public Health (MOPH) subdistrict health centres manned by paramedics or district hospitals. Access to higher levels of care requires a referral letter. The second category includes the scheme for government ocials (Civil Servant Medical Bene®t Scheme, CSMBS) which is ®nanced by general tax revenue and provides generous bene®ts to civil servants themselves, their parents, spouses and up to three children under 18 years old. This is seen as a fringe bene®t for the

0277-9536/99/$ - see front matter # 1999 Elsevier Science Ltd. All rights reserved. PII: S 0 2 7 7 - 9 5 3 6 ( 9 8 ) 0 0 3 9 2 - X

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generally low paid government ocers. State enterprise employees and dependants have similar cover ®nanced by the enterprises. Approximately 10% of the population was covered by these schemes in 1996. Bene®ciaries in both schemes have free choice of providers, who are paid on a fee for service basis for both ambulatory and inpatient care. There is very little copayment when public services are used and almost 50% copayment for private hospital inpatient care (Tangcharoensathien et al., 1993b). The third category is a compulsory health insurance scheme known as the Social Security Scheme (SSS), ®nanced by compulsory tripartite (employers, employees and the government) contributions of 1.5% of payroll each and covering formal workers in ®rms with over 10 employees for non-work related sickness, maternity, invalidity and funeral grants. It covers the workers themselves and has not been extended to the families of workers except for maternity bene®ts. The same formal sector employees are also covered by the Workmen Compensation Scheme (WCS), ®nanced solely through employer contributions, for work-related sickness, disability and funeral grants. Bene®ciaries under the WCS have free choice of providers who are reimbursed on a fee for service basis with a limit of 30,000 Baht1 per illness episode. In 1996, the SSS covered 4.2 million people (7% of the Thai population). The WCS is compulsory and employers are not allowed to opt out. Although the SSS is also compulsory, employers who provide better bene®ts than the scheme are allowed to opt out. The last category is voluntary health insurance. The Health Card Project (HCP) covers non-poor households, mostly in rural areas, who can voluntarily buy a card which attracts a matching tax subsidy and which gives them access to free care at public facilities as long as they follow referral channels. Table 1 summarises the characteristics of the main schemes. They show great variation in terms of nature of scheme, bene®t packages, sources of ®nance, methods of paying providers and levels of copayment. There is a great di€erence in the tax subsidy provided to each scheme, favouring the civil servant scheme as compared to the low income and health card schemes. There is also a substantial di€erence in the expenditure per capita of each scheme (Supachutikul, 1996), with that of the civil servant scheme being 8 times that of the low income scheme. The Ministry of Public Health has recently tried to reduce this gap by increasing the public subsidy to the low income scheme. In addition, the civil servant scheme, which in recent years has experienced rapid cost increases of 18% per annum in 1

25 Baht equalled one US$1.00 in mid-1997.

real terms, is currently being reformed with particular attention being paid to reforming payment methods to improve cost containment and eciency (Tangcharoensathien, 1996). Capitation payment coupled with choice of provider are often recommended for compulsory insurance schemes, in an attempt to ensure both cost containment and quality of care (Barnum et al., 1995). Thailand already has experience of capitation payment and there is a need to evaluate the experience of capitation payment under the SSS in order to provide information that can guide the reform of the other schemes. The Thai experience in designing and implementing the scheme is also of great relevance to other countries who may be thinking of introducing similar approaches. This paper therefore aims to shed light on the Social Security Scheme and to draw lessons on its successes and failures. The discussion will focus on issues of scheme design, health care utilisation levels and supply side responses to the scheme and to a lesser extent on overall equity as there is very limited empirical evidence in this area. The paper brie¯y describes the operation of the scheme before presenting a framework for analysis. Findings of the assessment are followed by discussion and conclusions. Main features of the social security scheme The Social Security Scheme was intended to provide ®nancial security to formal sector private employees especially for sickness, maternity, invalidity and death. It was enacted on 1 September 1990, and implementation started within 6 months. In March 1991 the government, employers and employees started to contribute to the Social Security Fund (SSF). Phasing of implementation was planned, and four bene®ts were implemented in the initial phase in 1991: (a) non-work related sickness including cash bene®ts (with not less than 3 months' contributions as a qualifying period), (b) maternity including cash bene®ts for SS workers and spouses (7 month qualifying period), (c) invalidity (3 month qualifying period), (d) funeral grant for death (1 month qualifying period). There was a 6month sickness bene®t extension for those losing employment. In 1991, ®rms with more than 20 workers were required to participate. Coverage was increased to include ®rms with more than 10 workers in 1994. Compliance with contributions by employers and employees is high as there are both ®nes and imprisonment for evasion. By law, the minimum and maximum wages on which contributions are levied are 1,650 and 15,000 Baht per month respectively, a ratio of 1:9. However, the ocial minimum wage in 1996 was 4,800 Baht per month, so the actual ratio was 1:3. Thus high

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915

Table 1 Characteristics of health insurance and welfare schemes in Thailand Scheme characteristics

Low income, elderly scheme CSMBS

(I) Scheme nature (II) Population coverage, 1993 (%) (III) Bene®t package Ambulatory services Inpatient services

social welfare 21 + 6 only public designated public only

Choice of provider

referral line

Cash bene®t Conditions included

no all

SSS

WCS

HCP

fringe bene®t compulsory 11 7

compulsory 5

voluntary 5

public only public and private free

public and private public and private

public (MOPH) public (MOPH)

free

referral line

yes work related illness, injuries no no no no

no all no yes possible possible

no

private bed

tripartite 1.5% of payroll each SSO

employer, 0.2±2% of payroll with experience rating SSO

capitation

fee for service

household 500 Baht + tax 500 Baht Ministry of Public Health limited fee for service no

public and private public and private

private bed, special nurse, eye glasses

contract hospital or its network no yes all non-work related illness, injuries no 15 conditions yes yes yes no yes health education, immunisation special nurse private bed, special nurse

general tax

general tax

Financing body

Ministry of Public Health

Payment mechanism

global budget

Copayment

no 317

Ministry of Finance fee for service yes: IP at private hospitals 916

164

916

Conditions excluded Maternity bene®ts Annual physical checkup Prevention, health promotion Services not covered (IV) Financing Source of funds

Estimate per cap expenditure 1993 (Baht) Per capita tax subsidy 1992

no yes no very limited

maternity, emergency yes if beyond the services ceiling of 30,000 Baht 805

421

141

270

administration cost

68

Source: Pannarunothai and Tangcharoensathien (1993) and Supachutikul (1996).

and very high income earners contribute 3.1 times more than the minimum wage earners. These maximum and minimum rates have not been updated since 1990. The SS worker's annual contribution is income tax deductible. The cash bene®ts given are granted a personal income tax rebate to encourage employee compliance. The SSF is administered by a tripartite Social Security Board consisting of 15 members (®ve government ex-ocio, ®ve employer and ®ve employee representatives). The Social Security Oce (SSO), a department of the Ministry of Labour and Social Welfare, acts as the secretariat of the SS Board. A Medical Committee consisting of sixteen members appointed by the Labour Minister reports to the SS Board and is responsible for all the medical related policies.

During the scheme's inception in 1990, the MOPH worked closely with the Medical Committee, evaluating the ®nancial implications of di€erent methods of paying for medical care. It had originally been planned that sickness bene®t should cover only hospitalisation and should be based on fee for service reimbursement as in the WCS. However, during the inception of the SS Act in 1990, political pressure resulted in an extension of the sickness bene®t to include ambulatory care but without changing the level of contributions. Based on the 1989 WCS claim rate of 250 Baht per visit and 2,000 Baht per inpatient day and assuming three visits per capita per year and 0.3 hospital days per capita per year (IPSR, 1989), projected expenditure for sickness bene®ts alone (excluding cash bene®ts for maternity, invalidity and funerals) was estimated at 2,260 million Baht for 1.8 million SS workers, com-

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pared to the tripartite total contributions of 3,000 million Baht (Tangcharoensathien and Walee-Ittikul, 1991). Moreover, administrative costs for medical claims would have been immensely high with at least 5.6 million annual transactions. It was ®nancially impossible to adopt fee for service payment and technically impossible within the time frame for implementation. The adoption of capitation payment covering both ambulatory care and inpatient services was thus a result of ®nancial constraints during the scheme's inception and was a means of minimising administrative costs. It was also seen as a way to avoid future cost escalation. The SS Board approved the Medical Committee's proposal of a 700 Baht capitation (0US$28). The rate was calculated based on the assumptions of three ambulatory visits and 0.5 hospitalisation days per capita per year; and unit costs of 150 Baht per outpatient visit and 600 Baht per hospital day (Tangcharoensathien and Walee-Ittikul, 1991). The rate would be paid to hospitals meeting certain standards which focus on structural aspects (e.g. minimum of 100 beds, availability of equipment and quali®ed sta€ in various departments) and which would be chosen by the employer for his employees. The same capitation rate was o€ered regardless of whether the registered hospital was public or private. The hospital was required to meet all the health care needs of those registered with it, either itself or through referral arrangements with lower or higher level facilities, except for a few very high cost procedures which were ®nanced centrally. The concept of capitation was very new to the country and provoked resistance from health care providers, especially private hospitals. The design of the scheme stimulated competition for registered workers. Initially, private hospitals were hesitant about their involvement because they thought the capitation rate had been set too low. However, it soon became apparent that participation in the scheme was ®nancially worthwhile. Moreover, private hospitals were in a strong position to market their services based on their reputation for prompt service, cleanliness and friendliness of sta€ and did so aggressively. There was a signi®cant increase in the proportion of SS workers registered in private hospitals, from 17% of total SS workers in 1991 to 60% in 1996. The participation of private hospitals, expressed as a proportion of total contractor hospitals, increased from 13% in 1991 to 33% in 1995 when there were 126 2 Though note that a di€erent scheme (the WCS) covers workers for occupation-related illness and injuries, at least in theory reducing the risk of the cost of treating occupation-related illnesses falling on the SSS.

public contractor hospitals and 63 private contractor hospitals. The design of the SS scheme is thus based on a public contract model (OECD, 1992) involving the SSO as the sole insurer, compulsory income-related contributions and a single rate annual capitation payment by the SSO for each employee to ®nance both ambulatory and inpatient care services from the chosen public or private hospital, based on an annual contractual agreement. Provider income is related directly to the number of registered workers, not to service workload. The capitation fee is negotiated between the SSO Medical Committee and providers. The insured have free choice of provider once a year and there is no copayment at point of service. Under this model, there is considerable potential to achieve micro-economic eciency by a combination of consumer-led competition over quality, and the development of suitable incentives and regulations in the contracts between the SSO and the providers. However, both are subject to information constraints (OECD, 1992). Framework for assessment The scheme's design raises two key issues. Firstly, placing restrictions on where someone can go for health care had not previously been a feature of the design of schemes in Thailand and the practice of shopping around for medical care has been common. Hence the impact of the scheme's design on the insured worker and whether he or she sought care from the contractor hospital or continued to pay out of pocket for care elsewhere, was a key concern. Secondly, while the capitation payment system has the advantage from the perspective of the SSO of restraining costs and simplifying administration, there is an incentive for providers seeking to make a pro®t to minimise the cost of care. This could take a number of forms. Providers might seek to cream skim by either avoiding registering workers who were thought to have high risks of needing health care (e.g. workers in particular occupations2, or older workers), or by deliberately not serving their needs well and thus encouraging them to change their registered provider. Providers might also skimp on necessary services, for example continuing to treat a patient on an outpatient basis when accepted medical care protocols would require admission, or postponing elective surgery. In both cases, it might be expected that the education level and occupational status (white or blue collar) of the worker might be important. The lower the level and occupational status, the less well informed may be the worker about his or her medical care rights and the less well able to judge the quality of care being given.

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Table 2 SS worker health seeking behaviour, percent distribution Choices

Chotikirativet (1993) blue collar workers outpatient

(1) (2) (3) (4) (5) (6)

Self prescribed drugs Workplace clinics Registered hospitals Non-registered hospitals Private clinics Other

N

Panichprathompong (1994) white collar workers inpatient

outpatient

inpatient

29 27 5 18 17 4

± ± 67 33 ± ±

19 4 2 31 43 1

± ± 10 90 ± ±

1490

175

434

58

The two surveys shared the same de®nition of illness, using a 2 week recall period for outpatient care and 1 year for hospitalisation.

To obtain a conclusive answer to some of these questions, particularly those concerning cream-skimming and under-provision of services, requires detailed investigation of medical care practices. Some such research is underway (Tangcharoensathien et al., 1998), but faces great diculties given the generally poor quality of medical records, lack of computerisation of patient information, and minimal information required for monitoring standards of care by the SSO. This paper therefore relies on the routine information of the SSO on utilisation rates of the insured at registered hospitals and on the results of a number of surveys of health-seeking behaviour of the insured, to document levels of use and to seek to explain them. The paper also considers the behaviour of contractor hospitals and the response of the SSO to the low utilisation rates and what in¯uence this has had. In addition, the consequences of the scheme's design for the likely eciency of the system of care as a whole are addressed. Service utilisation There was generally a low utilisation rate by the insured at registered hospitals. Table 2 shows the results from 2 surveys which documented the choices of where the insured sought care for outpatient care and hospitalisation. The two health interview surveys used a 1 month recall period for acute illness and 1 year for hospitalisation. For ambulatory care, lower income blue collar workers, as reported by Chotikirativet (1993), most frequently used self prescribed drugs and workplace clinics (56%), followed by non-registered hospitals (18%) and private clinics (17%). Registered hospitals were used by only 5%. Higher income bank workers (Panichprathompong,

1994) used private clinics most commonly (43%), followed by non-registered hospitals (31%). Registered hospitals were used by 2% for outpatient care. For inpatient care, 67% of blue collars used registered hospitals while only 10% of white collar workers did so. There must have been a substantial ®nancial burden to SS workers for ambulatory and inpatient care obtained outside registered hospitals. A common trend has emerged as seen in Table 3. The utilisation rate at registered hospitals is very low for both outpatient and inpatient care. The routine monthly SSO reports (Table 4), based on data reported by all contractor hospitals, indicates a higher outpatient utilisation rate than the survey data in Table 3. Although the SSO claims its auditing is reliable, hospitals have a ®nancial incentive to over-report their caseloads (see below). In any case, the outpatient utilisation rates are still well below those anticipated when the scheme was designed (3 visits per capita per year). Table 4 indicates that the ambulatory care utilisation rate has been increasing, and that the rate for private hospitals is generally higher than that for public facilities, though the rate in public hospitals has increased more rapidly than that in private hospitals. In contrast, the admission rates have ¯uctuated and showed no increase but rather a slight downward trend. To set the admission rates for insured workers in context, the National Statistics Oce (1996) National Health and Welfare Survey found an admission rate of 0.049 per capita per year in the 15±60 year age group in urban areas. This population is comparable with SS workers in terms of demographic structure and availability of hospital services in urban areas. The 1996 SS worker admission rate at registered hospitals (0.031) was thus only 63% of the admission rate amongst the general population in the same age group.

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Table 3 Utilisation rate of insured for outpatient and inpatient care at registered hospitals from several surveys Source of information

Outpatient visits per person/year

Hospitalisation per person/year

Technical notes

Nitayaramphong et al. (1991) Chotikirativet (1993) Jiranatdilok (1993) Public hospitals Private hospitals Panichprathompong (1994)

0.33 0.36

0.02 0.079

0.09±0.42 0.51±1.27 0.30

0.007±0.017 0.001±0.034 0.008

hospital based data, whole country ®rm based interview, blue collar workers in Samutprakan hospital based data, all ®ve hospitals in Samutprakan

How can these low utilisation rates be explained? Several factors can be identi®ed. The ®rst is more a confounding factor than an in¯uence related to the design of the SS scheme. New ®rms set up after the Act came into force are compulsorily required to join the Scheme. Employers in existence when the Act was passed were not allowed to opt out from SS contributions unless they could prove their bene®t arrangements for sickness, maternity, invalidity and death compensation were better than those of the SSS. As the SSO's criteria were quite stringent, almost no ®rms are opted out. Since ®rms generally retained their previous arrangements, this has resulted in multiple insurance coverage amongst some groups of SS workers. White collar workers in particular often receive medical bene®ts as part of their employment contract. This is arranged either through contracting services with hospitals (employees have free choice of providers on a list) or through a group health insurance policy. For example, a survey showed that 24% of bank workers had life insurance policies and 39% had private health insurance coverage (Panichprathompong, 1994). As employer-provided medical bene®t has a more favourable service package than the SSS, such employees tend not to use SS registered hospitals. This is a factor which thus confounds the analysis of utilisation rates and their attribution to issues of scheme design. The

®rm based interview, white collar bank workers

magnitude of multiple coverage is unknown, but a€ects primarily white collar workers. It must result in contractor hospitals which care for these workers making a considerable pro®t on the capitation rate. Another key factor in¯uencing the utilisation rates is likely to have been employer choice of contractor hospitals. As mentioned above, since the SSO, a newly established department, had only 6 months to prepare for the implementation of the scheme, the right to choose the contractor hospital was given to the employer not the employee. It was easier to deal with 30,255 ®rms than 1.8 million individual workers. Employer choice may not have suited employee needs and preferences particularly in terms of geographical accessibility. Several reports have consistently indicated that reasons for not using registered hospitals are associated with inaccessibility and perceived poor quality of care (Chotikirativet, 1993; Panichprathompong, 1994). In this context, an interesting development has been the spontaneous initiation of a network of subcontractor clinics or small hospitals by some contractor hospitals, to ease problems of accessibility. Figures from one network showed that in 1995, the utilisation rate of ambulatory care was 1.56 visits per person per year, which was higher than the 1.14 visits per person per year for contractors without a network (Chayasriwong, 1996). Thus the expansion

Table 4 Utilisation rates of insured for outpatient and inpatient care at registered hospitals, 1992±1996 Utilisation rate

1992

1993

1994

1995

1996

OP utilisation rate (visits per capita per year) Public Private IP utilisation rate (admissions per capita per year) Public Private Average length of stay (days) Public Private

0.71 0.53 1.01 0.033 0.029 0.040 5.38 6.65 3.00

0.87 0.60 1.13 0.038 0.033 0.040 4.96 6.63 3.13

1.07 0.86 1.25 0.039 0.040 0.034 4.32 5.18 3.52

1.23 0.99 1.41 0.024 0.020 0.026 4.59 5.60 4.00

1.36 1.18 1.48 0.031 0.029 0.032 4.84 5.86 4.06

Source: SSO annual report, 1996.

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of networks may have contributed to the increase in outpatient utilisation rates apparent in Table 4. The lack of participation of employees in the registration process is likely to have limited their knowledge on the bene®ts of the scheme. In 1993, after several years of operation, 16% of blue collar workers (52% with primary school education only and 32% with secondary schooling) in Samutprakan province could not name their registered hospitals (Chotikirativet, 1993). Moreover, in 1994, a survey amongst white collar bank workers with higher levels of education (33% vocational training and 59% university) found that 78, 71 and 49% of the sample incorrectly named the 1991, 1992 and 1993 registered hospitals, respectively (Panichprathompong, 1994). This could not be explained by recall problems but rather by a lack of dialogue between employees and their personnel managers who chose the contractor hospital on their behalf. Another study found that 33% of workers in Nonthaburi did not know there were payroll deductions for SS contributions (Patichon, 1995). There were frequent informal reports of unethical behaviour amongst private hospitals, in giving ®nancial incentives to personnel managers or employers as part of their market promotion. This is further likely to have meant that the employers' choice of contractor hospital did not necessarily suit employee preferences and thus contributed to low utilisation rates. Whereas outpatient utilisation rates largely re¯ect worker choices, admission rates are more susceptible to control by contractor hospitals. Thus an in¯uence on the low admission rates may have been the deliberate control of admissions by contractor hospitals. Unfortunately, routine data are inadequate to examine this. Inpatient admissions expressed as a proportion of total outpatient visits amounted to only 1±3%, a proportion which is far lower than those for the general population using both public and private hospitals. However, since the design of the scheme channels outpatients to hospitals, this ratio is anyway likely to be lower for the insured and thus is dicult to interpret. Nonetheless, there is substantial circumstantial evidence that some hospitals placed excessive controls on admissions. For example, cases were publicised in the media and brought before the SSO Complaints Committee. Some private hospitals refused to provide elective surgery (such as inguinal hernia, thyroid gland) or chemotherapy for cancer and advised patients to change their registration to public hospitals, an example of cream skimming. SSO response to low service utilisation In response to criticism on low utilisation rates, the SSO introduced several measures. First, an information

919

package was produced and distributed through employer channels and the media. The aim was to increase workers' knowledge of their rights under the scheme but it is unlikely that this was e€ective as the information was very general and did not address the real problem of the degree of employee participation in the choice of registered hospital. Secondly, employee choice was introduced with a pilot project in Nonthaburi province in 1992, gradually covering 19 provinces in 1993, 39 in 1994, 59 in 1995 and all 75 provinces throughout the country by 1996. Bangkok with almost half of the total SS workers is the last province to be covered. Unfortunately there has still been no systematic evaluation of the e€ectiveness of employee choice. However the impact of employee choice is likely to have been limited by the way it was introduced. Any worker wanting to change the previous year's choice had to submit a request through their employer to the SSO. Otherwise, their registered hospital remained as chosen by the employer. Due to the communication gap between SS workers and the SSO, and market promotion by hospitals through employers or personnel managers, this process appears to have been cumbersome and ine€ective. Furthermore, workers were not given adequate information on the quality of care of each hospital, only the name and address being provided. The result was that only a small fraction actually changed hospital in subsequent years. In the pilot province of Nonthaburi, 8.2% and 9.7% of SS workers changed registered hospitals in 1992 and 1993 respectively (Patichon, 1995). Reasons for change were inaccessibility of the previous employer choice (52%) and dissatisfaction with quality of care (23%). Reasons for not changing were satisfaction with services (51%), no experience with registered hospitals (20%), complicated processes (13%) and not knowing they have the right to change (13%). Third, the SSO in 1995 introduced extra-capitation payments based on outpatient and inpatient caseloads. Each hospital received an extra 30 Baht capitation if its case load was within the top 30% of overall national caseloads. Higher percentages resulted in higher additional payments, with a ceiling of an additional 70 Baht for the top 10%. The SSO believes this type of supply-side incentive will improve the utilisation rate, but it also encourages over-reporting which will be dicult to identify and prevent. The slow increase of outpatient visits per person per year in Table 4, from 0.71 in 1992 to 1.36 in 1996, may thus be partly explained by a combination of the increased maturity of the scheme, improved workers' knowledge of their rights, the introduction of employee choice, the introduction of networks and the response of providers to the incentive payments. However, it is

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impossible to attribute the increase to any particular reform. Implications for system eciency In this section, we consider some implications of the scheme design for overall eciency. The ®rst implication of the design is the hospital emphasis created by the combination of capitation payment and contracts with hospitals. In particular, was it appropriate to provide 4.7 million outpatient visits in hospitals in 1995? Could patients have been served better by primary care clinics? In 1991, it was not considered possible for the SSO to contract separately for ambulatory services with primary medical care units (PMCs) and for inpatient services with hospitals, as there were an inadequate number of PMCs operated by full time physicians. However, the result has been a strengthening of the pre-existing hospital bias and continuing neglect of the importance of strengthening the primary care level. In particular, the scheme has encouraged hospital development. In response to the SSO requirement for contractor hospitals to have a minimum of 100 beds, there was a signi®cant growth of 100 bed private hospitals, especially in the area of Greater Bangkok. This exacerbated the over-supply of private hospital beds, which had anyway been expanding rapidly as a result of general economic growth in Thailand in the ®rst half of the 1990s. In addition, the pro®ts made by private hospitals helped to fuel the expansion of high technology services. For example, a private hospital chain was established in the suburbs of Bangkok and industrialised areas of Samutprakan, Nakornprathom and Prathumtani, mainly doing business with the SSO. These hospitals provided mainly ambulatory care and for several years generated signi®cant pro®ts which were used to install Computerised Tomographic scanners in most hospitals and thus encouraged excessive use of high technologies which has been an increasing feature of the private hospital market (Tangcharoensathien et al., 1995). The problem of the over-supply of private hospital beds has become obvious during the economic crisis in 1997±1998. Moreover, the hospital emphasis has weakened the role of workplace PMCs which in the past were used frequently (see Table 2). It is likely to be more costly to provide hospital-based ambulatory care than PMC based care. Thus the nature of the contract does not promote system eciency. In theory there is nothing to stop the contractor hospital providing clinics itself or subcontracting ambulatory care to existing primary care providers and the capitation payment gives it an incentive to do so if it is lower cost. In practice, however, most hospitals have been keen to

retain as much of the capitation payment as possible and the number of networks is still relatively few. There is a further problem of allocative eciency of the scheme design and operation, as there is still no policy on speci®c payment mechanisms to stimulate and promote health promotion activities. All sickness bene®ts are spent on curative care. A more positive implication of the scheme's design is that the management cost under capitation is lower than if a fee for service reimbursement model had been adopted. The information management system, quality monitoring and clinical audit take a substantial portion of the administration budget, but it is considered important to invest in tackling the problems of quality. Figures from 1994 indicate that the total management cost for the scheme was 590 million Baht, which was 4.2% of the total ®nancial ¯ows of 13,721.1 million Baht (10,462.3 million Baht in contributions and 3,258.8 million Baht in payments). In addition, the ®nancial status of the fund is very healthy. Table 5 shows that contributions to the Fund are signi®cantly higher than outlays. Overall contributions in the 5 years between 1991 to 1995 were 42,114.6 million Baht with a total outlay of 13,262.3 million Baht, resulting in a total surplus of 28,852.3 million Baht. There are other sources of income such as interest, pro®t from investments in government bonds and in public and private ®nancial institutions, which amounted to 5,498.5 million Baht during 1991± 1995. By December 1995, the value of the fund was 34,350.8 million Baht. The SSO is to be commended for its ecient Fund management which is the result of investment in several low risk ®nancial institutions, spreading the risk over several institutions, open and transparent competitive bidding among banks to provide the most attractive interest rate for its saving accounts and investments in public enterprises and government ®nancial institutions. It was reported that in the ®scal year 1995, there was a 11.6% return to the SSF. Discussion The scheme has undergone several reforms and adjustments over the past 5 years. It has consolidated the fund and maintained a good surplus through cautious strategies. It has proved that capitation is e€ective in cost containment through in¯uencing provider behaviour, and the capitation rate has been stable for several years. However, cost containment has been achieved at the expense of several major unintended negative consequences. The ®rst is the problem of low utilisation, due to some combination of employee ignorance of their bene®ts, initial employer choice of hospital which did not

V. Tangcharoensathien et al. / Social Science & Medicine 48 (1999) 913±923

921

Table 5 Contributions and expenditures of Social Security Fund, million Baht 1991 (1) SS workers coverage (million) (2) Contribution Employee and employer Government Total contribution (3) Expenditure Sickness bene®t Death compensation Maternity Invaliditya Total Expenditure Balance a

%

1992

%

1993

%

1994

%

1995

1.1

2.6

3.1

3.7

4.2

2785.7 1392.8 4178.5

4396.2 2198.1 6594.3

5554.4 2777.2 8331.6

6974.9 3487.4 10462.3

8428.0 4119.9 12547.9

753.2 16.9 3.6 ± 773.7 3404.8

97 2 1 0 100

1823.0 42.6 189.9 47.2 2102.7 4491.6

87 2 9 2 100

2136.4 60.7 326.9 120.4 2644.4 5687.2

81 2 12 5 100

2622.1 86.4 433.5 116.8 3258.8 7203.5

80 3 13 4 100

2912.2 187.0 1072.5 311 4482.7 8065.2

%

65 4 24 7 100

Inclusive of future commitment of compensation.Source: Social Security Oce (1992, 1993, 1994, 1995, 1996) annual reports.

meet the preferences of employees, problems of accessibility of the chosen hospital and hospital control of the quantity of care provided. Although evidence on health outcomes is lacking, formal complaints and stories publicised in the media give grounds to believe that some hospitals deliberately withheld necessary treatment. Changing from employer to employee choice may not have substantially increased consumer in¯uence due to the nature of current hospital selection procedures and lack of adequate information regarding choices for workers. The clinical aspect of quality is not easily understood by workers compared to the hotel component of services. Moreover, employee choice will not solve the problem of natural monopoly in some provinces where the MOPH provincial hospital is the sole provider. From 1997 onwards, when employee choice will become universal, the utilisation rate may gradually catch up with that of the general population. This will also be promoted by the extensions of networks which provide easier access to primary care. However, we would expect that problems of cost shifting and low quality of care will not be solved, unless the SSO introduces tougher monitoring mechanisms for quality of care. Thus the introduction of an SSO mechanism to ensure quality of care, focusing more on clinical outcomes than structural standards, is a major challenge. Clinical auditing is yet to develop. There has been no termination of contract by the SSO for hospitals who have breached their contractual obligations, especially on the ground of low quality of care. The scheme provides a good opportunity to develop hospital standards. Current work in the Health Systems Research Institute is focusing on the development of a scheme

of hospital accreditation for Thailand (Supachutikul, 1995), but there needs also to be ongoing monitoring of the outcomes of treatment. Another major weakness is the focus on curative services, through hospital-based contracts. This has led to the neglect of primary prevention programmes and active health promotion activities operated at the workplace. As the majority of SS workers are poorly educated young active adults, sex education, family planning and HIV/AIDS prevention, appropriate use of alcohol and anti-smoking advice are high priorities but have not been addressed by the SSS. E€orts need to be made in the future by the SSO, in collaboration with employers and trade unions and non-governmental organisations, to initiate healthy workplace activities. When talking about prevention, contractor hospitals generally think about annual physical check-ups and put pressure on the SSO to fund physical examination programmes outside the capitation payment. Although secondary prevention such as screening is cost-e€ective for speci®c age groups and risk factors, the proposal by contractor hospitals on general physical examination is the least cost-e€ective measure. The net yield will be lower than primary prevention by risk reduction in high risk behaviour groups. Such activities would be better initiated by PMCs in collaboration with the Health Promotion Fund currently being set up by the Ministry of Finance. The design and introduction of e€ective payment mechanisms within the SSS to promote these activities is a crucial issue. One approach would be to separate the payment for primary care and for hospital care. The Scheme is in a strong ®nancial position to initiate PMCs and contract PMCs to provide ambulatory care through capitation. Existing workplace clinics could be vitalised to be

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V. Tangcharoensathien et al. / Social Science & Medicine 48 (1999) 913±923

active PMCs providing primary prevention and health promotion services along with curative care. Hospitals could be contracted only for inpatient care. Well developed PMCs could serve as stepping stones for the reforms in other schemes such as the CSMBS.

Conclusions The contract model and capitation payment have demonstrated their ability to contain costs. However, more emphasis is required on several issues to avoid adverse consequences. Firstly, a stronger managerial, monitoring, incentive-setting and punishment role is required from the SSO. In addition, the scheme's operation and policy development should be guided more by research and empirical evidence. All e€orts should be made to avoid subjective and unnecessary political decisions. Political decisions should be made on the basis of informed options and transparency rather than group interests and lobbying. The further development of information systems will facilitate the systematic analysis of routine data. As there are limited data and evidence on equity issues to guide policy, research into equity is critically needed. Secondly, to increase consumer voice and sovereignty, we recommend that all employees both wanting and not wanting to change should choose their hospital annually. This should be a participatory and democratic process to sensitise workers to their own rights and privileges and to exercise their consumer voice. The SSO argues that it could not handle as many as 4.0 million transactions of choice in 1997. However, if on-line computers were fully introduced at the provincial level, it would be feasible. Thirdly, we propose that future policy reorientation should aim towards the development of PMCs providing ambulatory services separate from hospital inpatient services. The employee's own choice of a PMC would be more accessible than the currently chosen hospital and would also provide fertile ground for a better quality, comprehensive, curative±promotive±preventive integrated care. In the future, PMCs may provide the basis for the development of primary care fund holders which purchase hospital care. The SSS is in a strong position to give birth to and nurture the PMCs to provide comprehensive, e€ective and good quality care. This would serve as a stepping stone for active health promotion and public health intervention activities in collaboration with NGOs, trade unions and the workers. The SSO could use appropriate ®nancial incentives to facilitate this process. PMC development needs to be at the core of health systems reform in Thailand at the turn of the century.

This is possibly the ®rst description of the use of a public contract model for social health insurance in a developing country. It has highlighted many of the practical problems associated with the introduction of such a model, notably the implications of adopting capitation payment. However, it also highlights the strengths, notably the ability to contain costs and structure the system of care which is of vital importance as Thailand considers how best to move towards improved access to medical care for the substantial part of the population which currently has poorer access. Thailand's success in introducing compulsory health insurance while at the same time avoiding cost in¯ation stands in marked contrast to several other countries in the region. It is thus hoped that lessons drawn from this review provide a useful guide for other countries embarking on compulsory insurance schemes or reforming existing schemes.

Acknowledgements The authors wish to thank Professor Anne Mills of the London School of Hygiene and Tropical Medicine for her invaluable comments and suggestions of the paper and also the anonymous reviewers for their useful comments. The ®nancial supports by Health Systems Research Institute and Thailand Research Fund are highly appreciated.

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