Expanding Universal Population Coverage through Social Health Insurance in Egypt

Egypt's Road towards Social Health Insurance - The Road to be Traveled (4)


Today, the focus will be on the breadth of coverage of universal coverage; i.e. population coverage. The other two elements of universal coverage are: (i) the depth of coverage; i.e. the content of package of services provided; and (ii) the height of coverage; i.e. financial protection.


Financing of universal coverage could be achieved through a number of options, where essentially two of them are usually used: (i) a general tax revenue system; and (ii) a social health insurance scheme.  Under general tax revenue, health services will be provided by a network of public and in some instance private providers may be contracted, often referred to as a national health service or commonly known as NHS.   A classical example is the National Health System in the United Kingdom.  We will focus on population coverage using social health insurance.

Social health insurance, or commonly known as SHI, usually requires contributions and to succeed would require compulsory enrollment of all population.  However, this is not always the case applied.  The easiest groups to enroll, and usually the first, are the workers (civil servants and employees) in the government and public sector organizations, followed by employees in the private sector organizations and enterprises.  Contributions are necessary to fund the system and these come from the worker’s salary and the employer’s share of contribution.  It gets more difficult when enrollment of those self-employed starts as they need to pay both shares, being themselves the worker and the employer.  As they are sometimes better off, they would resist to get enrolled and according them pay more than others.  It becomes more complicated when enrollment of those working in the informal sector starts to happen.  These are difficult to know as well as difficult to reach. Many of them do not earn enough, usually not on a regular basis. If they have an employer, usually the first thing an employer would do is evade payment of his/her contribution.  Lastly, there are the poor who cannot afford to pay any contributions at all, and the government is expected to cover the cost of their contributions. The government could also consider covering fully or partially the cost of contributions of those workers in the formal sector. 


In Egypt, at this stage in 2011, we have all these mixes.  Part of the population is covered though general tax revenue. They are either accessing health care directly through the public health network, or indirectly financed through the Program on the Expense of State.  Workers in government, public and private organizations, school children, pensioners, widows are covered through the SHI system.  Pre-school aged children are covered through a voluntary system. The Health Insurance Organization owns its health care network of providers and to some smaller extent contracts other public health sector care organizations and the private sector.  Accordingly, those who are not covered by SHI (but theoretically covered by the system financed by general tax revenue) are the self-employed, those working in the informal sector, and the poor. In addition, an important group exists that don’t fall under the above mentioned categories, the dependants of HIO workers.  This group resulted because expansion of coverage did not follow the above mentioned trend and started to cover certain categories separately outside their families (preschool and school children).  To complicate the situation, there is a particular group that the law allowed to opt out of SHI, i.e., they are allowed to get covered either by their own network of service providers or they purchase insurance coverage from the private sector.  These are the public and private sector organizations and enterprises that pay a minimum percentage about 1%.   A main problem with that is that once the employees retire they are dumped back on the public system that is financed from general tax revenue, when they are sick and less able to pay and when the cost of their care is most expensive. 


Looking forward, extending SHI to new groups takes a long time usually decades and depends on the economic development of the country, in addition to other factors.  It usually happens on stages.  A strategy for population coverage will need to be developed and should be publicly discussed.  Efforts for building a consensus need to be devoted and decision need to be reached who should be covered first and in which sequence.  In the next few paragraphs, I would like to describe one of many possible scenarios to do that.  The priory setting for population coverage and the scenario for sequencing to be adopted by the Egyptians will need to be based on the country’s social, economic, fiscal, and political considerations at the time of decision.  A scenario is proposed below:

(1)  The first group recommended to be targeted is the dependants of HIO workers. This could be the easiest group to start with since the head of the household would already be registered and contributing through the HIO contribution system.  It would practical to use the existing social insurance system to extend HIO coverage to the dependents of its workers.  They could contribute towards their coverage at revised rates according to the size of the household and the defined benefits package for the new beneficiaries.

(2) The second group is the poor, the unemployed, and other vulnerable groups.  It is estimated that one out of every five Egyptians is living in poverty in 2009. This group of beneficiaries should, in principle, be eligible for exemption from premium contributions and copayments.  Their contributions will need to be fully subsidized through the government budget.   In order to target the exemptions effectively to minimize both leakage (extending benefits to the ineligible) and gaps (denying benefits to the eligible), the system used by the Ministry of Social Solidarity to identify the poor should be the basis for enrollment of the poor, even if there are questions about its targeting ability. This would need to be closely linked with the reforms in the social safety net and social assistance programs to ensure that the targeting system is actually reaching the poor. The subsidization of the poor under the SHI requires adequate and sustainable fiscal resources. A significant portion of the resources required is already available in the form of the historical supply-side subsidization of government health care providers. The challenge lies in shifting from supply-side subsidization to subsidization of premium payments for the poor. Another significant portion of the resources is available in the other types of subsidy, the energy subsidy.

(3) The third group and the most difficult to enroll is the currently do not contribute to or participate in the social insurance system. Their health care needs are covered through PTES for catastrophic illness, the public health care system, or through direct purchase of private health services especially if they are non-poor. To the extent that the recent tax reforms succeed in giving the informal workforce legal status, a segment of these workers will be brought into the formal social insurance system.  Participation in the social insurance system would require either enforcing a contribution system (means-tested) that estimates their income or assets, or establishing a contribution system (risk-rated) designed to encourage voluntary participation. Both systems involve administrative costs and certain risks. These risks could be mitigated if the self employed and informal sector workers could be organized into groups such as affinity groups and associations that could form the basis for a collective contribution mechanism. Finally, their willingness to contribute will depend on the perceived value of the benefits offered through social insurance. If the benefits are perceived to be inadequate and of poor quality, then the incentives would be to avoid contributions.

Because this scenario would significantly expand the number of HIO beneficiaries, this step would also require concurrent capacity building and reforms within the HIO to absorb these new beneficiaries.  Within SHI, a number of health insurance functions need to be operational.  For example registration, collection of contributions, contracting and reimbursement of providers usually should be executed.  Finally, we would like to emphasize that the SHI requires enrollment to be compulsory, to the extent possible.  Accordingly, for SHI to be more likely financially sustainable, the government would need to ensure that the premiums for preschool children are paid from government tax revenues and that those who opted out should pay their full share of premiums (employers and workers).


In summary, coverage of the dependants of HIO workers seem to be the most likely and feasible group to start with on the short term.  This is followed by coverage of the poor, which would require much longer time based on the available fiscal space; i.e. how much funds would be allocated for coverage of the poor or how much funds could reallocated from other sources such as energy subsidy or the PTES.  The last groups, which are usually the most difficult groups to enroll and cover are the self-employed and those working in the informal sector.  


Until we meet again...