The factors facilitating Egypt’s transition to Universal Coverage

Egypt's Road towards Social Health Insurance - The Road to be Traveled (5)

What could be the factors that would speed Egypt’s transition to expand universal coverage using social health insurance?  We will try to respond to this question based on the experiences of other countries and opinions of international experts.  In principle, the lower the country has in terms of income per capita, the smaller the formal sector, the higher the prevalence of poverty, and the higher the dependency ratio, the more it would be challenging to initiate or scale up SHI. 

Economic Development, in terms of a country’s annual general level of income (GNI) and growth rate. The greater the income per capita the more capacity enterprises and citizens will have to prepay SHI contributions.  The higher the wages and salaries, the more opportunity to finance a broader benefit entitlements and the less there could be an economic burden of payroll tax. Tax revenues are likely to increase with income, facilitating the subsequent channeling of any government subsidies into SHI. Steady economic growth, therefore, is likely to enhance the capacity to prepay.

In 2010 before the January 25^th revolution, Egypt’s GNI was about USD 2,440 and its growth rate ranged between 5-7% annually. As a result of the slow in economic activity post the revolution, growth rate is predicted to go down to 2% or less for 2011. Egypt’s current GNI is similar to the GNI of those countries adopting SHI at the time of its introduction such as Germany (USD 2,237 in 1883), Austria (USD 2,420 in 1887), Belgium (USD 1,808 in 1851), and Japan (USD 2,140 in 1922). The same applies to growth rates.  Economic growth was either high or at least steady for each of these countries during the transition period.

Structure of the Economy, in terms of the relative sizes of the formal sector and informal economy. Many developing countries do have sectors where a notable part of employment is informal, thus facing difficulties in assessing incomes and collecting contributions from workers who do not receive a formal salary. This hampers protecting those working in the informal economy as SHI scheme relies on contributions. The larger the formal sector employment, the ease it would be to administer mandated payroll tax on employers and employees.

In Egypt, informality has been on the rise mainly due to two reasons: (i) a reduction in employment by the public sector and replacing those by employment using temporary contracts; and (ii) creation of most of the jobs in the private sector that are informal. More than half of those working are in the informal economy (53%) with an increased estimation of 20% of pre-revolution level. Looking more in-depth, 58% of those working don’t contribute to any social security scheme, 63% are working without contract, and 13% are working without being paid. As the public sector is shrinking and being perceived as the place providing “safer” jobs, and given the private sector’s inability to produce formal sector jobs, the challenges for coverage by social health insurance increase. 

Urbanization, determined by the distribution of the population intended to be covered. Population living in urban areas, with minimum quality of infrastructure and communications, and higher population density, is likely to be easier to cover than a widely dispersed rural population. About 43% of Egypt is urbanized with governorates ranging from high as 100% urbanized such as Cairo to a low as 22.5% such as Sharkia.  The more urbanized the governorate the more insured people would be present.

Ability to administer, in terms of availability of skilled labor force with capacities in bookkeeping, banking, and information processing; and related markets, such as in financial services, other insurance businesses that can provide appropriately trained personnel, actuarial, and legal services. Presence of a sound administration of social security system is in place would be a favorable factor.

Although HIO has been present for about half a century, yet most of its experience is in service provision and has lost a number of experts who understood insurance without being properly replaced. The HIO payer functions will need efforts to be built and investment in this area would be a pre-requisite if Egypt would continue to pursue health insurance as a financing scheme for universal coverage. 

Poverty Prevalence, in terms of size of government’s contribution to subsidize their premiums and co-payments. The higher prevalence of poor and near poor Egyptians, the more the government would need to contribute and the higher the burden is on the government’s budget. The society as a whole, and not only the government, would need to define what appropriate level of solidarity it is ready to contribute to cross subsidize the services of its poor people either fully or partially for the near poor.  The higher the level of solidarity, the more SHI is able to provide protection to its most vulnerable segment of its population. While policymakers could impose solidarity; however, without a society that believes in solidarity, it will be difficult to sustain SHI.   

Two more important factors that need to considered.  The first is the presence of efficient functioning provider networks, in terms of (i) ability to provide an improved access to members; (ii) ability to provide greater choice of providers to members, and (ii) ability to provide an environment that allows for quality-based competition among providers.  The second is the government’s capacity to regulate for quality and manage grievance procedures.

In summary, Egypt’s ability to expand universal coverage through SHI will depend mainly on the following: (i) its ability to recover from the aftershocks of the revolution and resume its pre-revolution high growth rate, as well increase its level of GNI; (ii) its ability to formalize its economy with protected jobs; (iii) its ability to become more urbanized; (iv) its ability of building its health insurance administration system; (v) its level of poverty and society’s willingness to cross-subsidize the poor; (vi) its ownership of an efficient and functional provider network; and (vii) its ability to regulate.    

Until we meet again...

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...

Analyzing Universal Coverage of Health Care in Egypt

Egypt's Road towards Social Health Insurance - The Road to be Traveled (3)

Coverage could be analyzed in terms of breadth, depth, and height, with breadth indicating coverage in terms of population; depth indicating coverage in terms of service provided; and height indicating coverage in terms of the extent of financial protection. A universal coverage system can be evaluated as effective when the above three dimensions are completely filled securing access to adequate healthcare for all at an affordable price. I will try to compile below from different sources some of their findings about universal coverage of health care in Egypt.

In terms of breadth of coverage, coverage in terms of population, Egyptians' coverage is provided through a combination of social health insurance and subsidized government health services. Currently, Social health insurance coverage, provided through the Health Insurance Organization (HIO), covers about 42.3 million person, representing 57 percent of the population (as per the information provided by HIO official website). The bulk of the population under HIO coverage (74 percent) is schoolchildren and infants, and the smallest bulk (6% percent) is widows and pensioners.  The remaining 20% insured are from the active labor force. The Ministry of Health and Population (MoHP) and other government agencies function as an “insurer of last resort” providing free or substantially subsidized health services to the citizens not covered under HIO.  Further, a Program of Treatment at the Expense of State (PTES) was established to extend financial assistance to all Egyptian citizens for expenses incurred for government spending on health care.  Originally, it was designed to cover those not covered by HIO for catastrophic illness, however, its current coverage extended to those who can access it and its funding has been and still expanding.  

Taking a closer look at coverage by social health insurance, we can conclude that its coverage is fragmented by beneficiaries. For historical reasons, Egypt’s social insurance system has developed into multiple programs with different coverage and benefits package for various segments of the population, resulting in a patchwork of coverage. In a typical Egyptian family, the father, a public or private sector employee, will be covered by HIO Law No.79/1975; his wife, a government employee, would be covered by Law No.32/1975 or not covered if she is a housewife; his son, a university student, will not be covered; his daughter, a school student, will be covered by HIO Law No. 99/1992; and his infant child would be covered by a decree 380/ 1997. About one-half of the population, mostly the unemployed, self-employed, and informal sector workers and out-of-school children, are not covered under the HIO system.

In terms of depth of coverage, coverage by services provided, population are receiving different package of services based on the health care system they are accessing. The uninsured population depends on free or subsidized government health services through a nationwide network of government health care providers based on the package provided ranging from primary to tertiary health care services.  The main factors for determining access are services availability, quality, and level of funding. In the early years of 2000, MOHP introduced the concept of family medicine/family health services with the purpose of rationalizing of health services; reorganizing the delivery of primary health care services around families instead of individuals; establishing of family health services as the gatekeeper for the delivery of health care services, a clear referral system to be linked at a future point of time to health insurance; establishing quality standards for service delivery; and ensuring the availability of adequate funding for it through establishing family health funds.

The insured population receives an unlimited package of package of services as defined by law.  The different laws in effect under the HIO result in different systems of benefits and copayments, which complicate the effective administration of the program. Members of the same household have different coverage depending on their status within the household.

The “uninsured” population has access to the PTES for hospitalization and related high-cost health services. However, the PTES is a passive reimbursement scheme not related to any contribution systems or to a well defined benefits package. In a limited number of governorates access to primary care services is financed through the Family Health Fund, but this remains a pilot program without a clear institutional base.

In terms of height of coverage, the extent of financial protection, the best way to measure that is out-of-pocket expenditures.  Out-of-pocket expenditures represents the share of household spending on health care either paid directly to private health providers or pharmacies, or paid indirectly in terms of additional cost paid to receive public health services.  The more it increases the more the population is at risk and less covered by financial protection.  Despite the presence of different types of health coverage provided by the MoHP and the HIO, between 1996 and 2009 the share of direct household spending increased from 50 percent of total health spending to 72 percent. Based on an international report, the reasons for that were presented as follows: First, the level of benefits covered under the HIO or provided by MOHP and other government public health network could be perceived as limited in scope and requires beneficiaries to make additional payments to obtain services not covered. Second, the proportion of the labor force participating in HIO with ability to contribute regularly is low (only 20 percent). Third, the cost containment exercised by HIO could be shifting costs onto households. Fourth, the PTES requires a significant level of cost-sharing by patients; therefore, the expansion of PTES would be accompanied by a concomitant increase in household spending to cover the balance of payments. Fifth, the quality of subsidized government health services may be inadequate (shortage of drugs in health facilities, lack of responsiveness), forcing many households to seek private providers. Recent trends in budget allocation in government health services show that operating and maintenance costs have not kept pace with needs, possibly contributing to inadequate supply of drugs and other essential materials at government health care providers. This would leave many households heavily reliant on out-of-pocket spending and vulnerable to financial stress in the event of a catastrophic illness or injuries.

Until we meet again...

Is a century required to universally cover Egyptians with Social Health Insurance (SHI)?

Egypt's Road towards Social Health Insurance - The Road to be Traveled (2)

How much time to be expected for the Egyptians to be covered by health insurance? It took Egypt almost half a century to reach half of the Egyptians with health insurance coverage. Does it need Egypt another half of a century to cover its other half of population?

Some experts predict that it would take between 35-50 years to achieve universal coverage depending on the status of economic development of the country. Another group states that these predictions are based on historical world experience and therefore could be labeled “conservative”.  Let’s have a look at the experience of some of the well known countries for implementing social health insurance systems.

It took Germany more than a century (127 years) to achieve universal health insurance coverage following its establishment by Bismarck in 1883 by passing its first sickness law and it seems to be still developing. The largest part, almost 85% of the population, is covered by a basic national health insurance plan provided by the state, providing a standard level of coverage. The remainder 15% opted for private health insurance, which frequently offers additional benefits. It is claimed that only 0.3% or about 250,000 people in Germany are not insured.  A few of these uninsured people are extremely rich, not needing insurance, and most of them are poor unable to afford it.

In Japan, it took about 39 years to achieve universal coverage ignoring that many community-based health insurance schemes prevailed before that for decades.  The first health insurance law was issued in 1922, delayed its implementation to 1927 because of the Great Kanto Earthquake of 1923. The first “region-based” national health insurance law was issued in 1938, and was revised a number of times until universal coverage was declared in 1961 and the establishment of a Social Insurance Agency in 1962. However, development and revision of laws continued until maybe 1997 indicating that the process of development of social health insurance does not stop by achieving universal coverage but there would be room for further improvement probably to introduce more efficiency. Still you could note a lot of ongoing debate about health insurance coverage and costs.

In the Republic of Korea (ROK), it took 26 years to achieve universal population coverage from the inception of the statutory Health Insurance Act in 1963. ROK introduced compulsory health insurance program in 1977, and universal coverage was claimed in 1989. However, this was preceded by a voluntary program in 1965.  The relatively fast transition to universal coverage is mainly attributed to unexpected impressive increase in the average annual growth rate in GNP per capita of 13.3 per cent during the period 1977-89.

Further, it took 118 years in Belgium, 79 years in Austria, 72 years in Luxembourg, 48 years in Costa Rica to achieve universal health insurance coverage. As could be concluded from the above, not only universal health insurance needs time to grow, develop, and expand, it also happens on stages mainly depending on a country’s economic development, its ethical value system and other factors.  For example, it took 40 years in Austria (from 1890 to 1930) for population coverage to grow from 7 to 60 percent, and then another 35 years (from 1930 to 1965) to reach 96 percent. Further, it took 20 years for SHI to reach population coverage of 17 percent in Costa Rica (from 1941 to 1961), another 5 years to double coverage to 34 percent (1966), another 12 years to again double coverage to 74 percent (1978), and then another 13 years to attain 83 percent coverage (1991). 

It could be stated that Egypt introduced its health insurance scheme in 1936 and not as commonly known in 1964 by issuing Law 64/1936 that established employer’s responsibilities for work injuries.  Additional 5 laws were issued during the period 1936-1964. A Health Workers Organization was established in 1961 to provide health care services for the workers, which later became the Health Insurance Organization (HIO).  However, 1964 was considered the benchmark for the formal launching of health insurance through issuing a presidential decree 1209/1964 establishing the HIO taking over the responsibilities from the General Authority for Social Insurance and building on two laws defining the SHI premiums for government employees (Law 75/1964) and for public and private sector employees (Law 63/1964). The HIO started working in Alexandria with the intention of expanding SHI geographically to other regions and to the entire population.  Later, premiums were decreased for government employees (Law 32/1975). In the same year 1975, another law was issued defining additional benefits to government, public and private sector employees, as well as extending benefits to pensioners and widows (Law 79/1975). The latter two groups were covered without an employer contribution. It was not until 1992, that coverage was extended to school children (Law 99/1992), and followed by extending coverage to pre-school children (Law 380/1997).  If we take in consideration the evolvement of social health insurance since 1936, then some people might consider that it took Egypt about 75 years to reach coverage of health insurance of 57% based on HIO statistics.

Egypt might not be different from other countries and would need to own the enabling environment that allows social health insurance coverage to expand to the other half of the population. This would be the subject of a future blog.  

Until we meet again…

Egypt's Road towards Social Health Insurance - The Road to be Traveled (1)

In 2005, Egypt formally declared universal health insurance coverage of its population as its objective through the adoption of social health insurance (SHI).  This was an expansion to the original program that was introduced to Egypt's workers in 1964.  This coverage was expanded to those working in formal jobs in the public and private sector at different rates of contribution, allowing rich companies to opt out of the system. In addition, coverage was expanded to pensioners and widows. The latter coverage imposed additional burden on the system and it’s financing given the absence of contributions similar to those paid by the employers and due to the fact that these services are more expensive. All these measures might have disrupted the risk pooling function of the scheme limiting its capacity to raise enough funds to finance the system and its ability to provide the protection it is supposed to do. Thirty years later, with the inability of the system to cope with its expenses, SHI coverage was further compulsory expanded to Egypt's school children, and later, voluntary expanded to Egypt's preschool children. 

To date, insurance coverage has reached about half of the population, however; inequity is still a concern.  At the household level, a head of a family who is a civil servant and his daughter at school would be insured, while his housewife and his son in college wouldn’t be. Usually the poor and those working in the informal sector would not have access to health insurance services and would be expected to receive services at public health facilities.

The delay in expanding SHI coverage to the remaining half of Egypt’s population was blamed mainly on the underfunding of the health sector. Projections of a few billions of Egyptian pounds were quoted to be needed to fund the system in a sustainable manner.  While this remains true in case cost projections were built on estimating the cost per person for a certain package of services for a period of time; however, more money might not always mean better health; there might be room to introduce efficiency in the current system and make more funds available through running the system better.  Besides efficiency, there could be other areas that need to be examined.  Data indicates that the percent of Egypt’s GDP spent on health increased from 3.7% in 1995 to 5.9% in 2009; however, during the same period, the percentage of public health expenditures (which is what the government spends on health) from total expenditures on health decreased from one third to one fourth. Significantly, out-of-pocket expenditures (which are what the people spend on health) increased from half of the total expenditures on health in 1995 to nearly three quarters in 2009. These are considerably huge amounts of funds floating out of the pool of funds of SHI and decreasing more its ability of expanding its coverage.  Further and consistently, Egyptians spend one third of their treatment costs on pharmaceuticals. All of that suggest that there could be other factors that present obstacles on Egypt’s path to reach universal health insurance coverage.

But why do nations resort to SHI schemes in the first place? The most direct answer is to mobilize additional funds for health care. Underfunding of health care will lead to poor health outcomes, one of three main objectives of a health system.  The other two are usually rarely mentioned or given attention by those running health care systems, namely financial protection and client satisfaction, sometimes referred to as dignity. Financial protection means protection from large health expenditures that could bankrupt families leading to their impoverishment. Health expenditures were shown to be a primary cause of impoverishment, even for the rich and better off. Client satisfaction usually means to be treated in a humane form by your health care provider; in addition to many other things such as the perception that you are receiving quality care.  There are other reasons that a nation would resort to social health insurance.  William Hisao, the SHI guru mentioned some of these below, which could be valuable objectives by themselves: 

• to subsidize premiums for the poor rather than financing and providing universal health care for all, in case tax revenues are inadequate to fund health care of a reasonable quality for everyone
• to free up public funds so they can be targeted to public health goods and services;
• to separate the responsibilities for collecting and managing SHI financing from the responsibilities for providing health care to patients, whereby services are contracted from providers that are separate entities to be accountable to patients for the quality of services;
• to use the capacity of nongovernmental organizations (NGOs) and private providers to improve access by the insured to health care by means of contracting.

He concludes that SHI is a financing approach for mobilizing funds and pooling risks. The newly mobilized funds should be allocated for the poor and near-poor to improve their financial access to health care. SHI may be a solution for a critical part of a nation’s systemic health care problem, but is not necessarily a solution for the whole problem.

This is the first of a series of blogs that will discuss the application of social health insurance in Egypt and its feasibility within the guidance provided by international literature.

Until we meet again...