Benefits and Universal Health Coverage: What Public Money Can Buy Given Budget Realities

March 23, 2017

Here in the US, the Congress is wrestling with proposals to replace the Obama-era health reform. One strategy on the table is to modify the benefits that are legally required to be included in health insurance policies; in her confirmation hearing, incoming CMS Administrator Seema Verma suggested that maternity care could be dropped from the list of essential benefits. Today, some legislators suggested that emergency care be dropped. Health economist Mark Pauly told the New York Times: “it’s problematic to offer subsidies without standards…you might end up with the government paying for plans that covered aromatherapy and not chemotherapy.”

While dropping maternity and emergency care from benefits sounds shocking and counterproductive, the impetus behind such suggestions come from a familiar place—the imperative to fit a range of necessary health care into a fixed fiscal envelope.

Of course, there are lots of other ways to save money in the US health system where we spend around 16 percent of GDP. But in the end, there are still hard decisions to be made.

What procedures, medicines, devices and diagnostics will be covered, and what not? How much will be covered and how much will be paid out of pocket? How much will those decisions affect people’s health and pocketbooks? The ever-evolving answers to these core policy questions are what determines the success of universal health coverage (UHC) everywhere in the world.

Earlier this month, I hosted a workshop on defining and updating health benefits packages for UHC with participants from seven sub-Saharan African countries, Indonesia, Thailand and China, as a final input into my forthcoming book on defining and adjusting health benefits with Ursula Giedion and Peter C. Smith, What’s In, What’s Out: Designing Benefits for Universal Health Coverage.

In every country, the budget constraint is different. But in every country, the decisions are hard and—in too many cases, as in the USA— the process in place to decide what’s in and what’s out comes down to political wrangling, and not what generates the most benefits, distributed as fairly as possible, given the budget available. That’s what the new book is about—how to structure the governance, process and methods needed to determine benefits in an on-going, politically feasible, ethical and sustainable way, subject to the budget constraint.

Some take-home messages from workshop participants:

Respect the budget constraint: In Malawi, Gerald Manthalu told of an essential health package on the books since 2004 that has never been fully funded. In 2011, the costs of provision came to $44 while only $15 was available to spend, and little has changed since. Worse, a fifth of district-level spending went to interventions not included in the already too-large package. Large coverage gaps for even the most basic and low cost of interventions have resulted. The lesson: benefits won’t translate into budgets if these are disconnected. (For more on this work, see here.)

When short of time, start with the evidence: Thailand’s Health Intervention and Technology Program’s Dr. Yot Teerawattananon reported on the government of Vietnam’s efforts to quickly review its health benefits plan, using an evidence-based approach to address costly overutilization. The group—led by Tran Thi Mai Oanh at HSPI—worked with Dr. Yot and his colleagues to analyze claims data from the country’s National Social Health Insurance program. Claims showed that 13 medicines accounted for 15 percent of all spending. The team reviewed the literature and assessed the indications for the use of each of these medicines, finding that only 22 percent of expenditure went to medicines being used for appropriate indications that represented good value for money in a country like Vietnam. The lesson: even without homemade cost-effectiveness data, existing evidence on value for money, adapted to a country’s system, can inform benefits inclusion choices, save money, and contribute to expanding access elsewhere. (For more on this work, see here.)

Global health aid is still mostly off-package and off-budget with implications for sustainability: One commonality emerged across multiple settings—most global health aid is still off-package and off-budget. While there are many reasons why this happens, if aid transitions are looming and the interventions and products they finance are good value for money, they need to find a way into the package to be publicly subsidized. For example, a recent paper by Caitlin Mazzilli and colleagues at Marie Stopes International found that “seven of ten [insurance schemes in] countries surveyed…keep contraception out of the reimbursable package.” As possible cuts to US aid loom, these and other exclusions (including antiretrovirals and anti-TB drugs) increasingly look like bad aid policy.

Establishing explicit benefits is a pre-requisite to smarter purchasing and accountability: As in the Pauly quote at the start of this blog, defining what will be covered creates a basis for understanding whether funds are spent wisely, determines funding allocations and payments, facilitates orderly adherence to budget limits, and creates enforceable accountability from patients, providers and marginalized groups. The Vietnam example shows that reimbursing medicines for inappropriate indications wastes money and can even damage health. Ursula Giedion led a discussion on how different countries use the tools of good governance for the processes of defining and adjusting packages; she signaled Chile’s legal framework to adjust its benefits every three years, accompanied by costing studies and input on social preferences, as well as their budgetary impact, with the Ministry of Health publishing all materials on its website and responding to citizen questions regularly.

The book What’s In, What’s Out: Designing Benefits for Universal Health Coverage is due out in the summer. Later this year, we’ll also release more insights and learning resources related to it.


CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.