3.5 Voluntary private health insurance

3.4.4 Direct payments In the public sector, no official charges are incurred for inpatient/outpatient services. However, there are user charges only for paying wards. As a large segment of the population is not covered through prepayment insurance schemes, most private sector encounters would result in direct payments.

3.4.5 Informal payments Lewis (2006) reported that informal payments do occur to obtain admission to a hospital, obtain a bed and to receive subsidized medications. In a study conducted in Colombo involving 200 households, 61.2% of respondents said that they had used personal relationships with hospital staff to circumvent formal procedures such as reducing waiting time for consultation and procedures, while 52.0% pointed out that they had given money or gifts to hospital staff (Transparency International Sri Lanka and Friedrich Ebert Stiftung, 2009). There has not been any recent study on informal payments that patients may incur to obtain services, despite their being free.

3.5 Voluntary private health insurance

3.5.1 Private medical insurance schemes The Presidential Task Force on National Health Policy (1993) identified voluntary health insurance (VHI) as one mechanism to increase health sector financing. A report in 1997 (Rannan-Eliya, 1997) observed that:

• VHI expansion would support expansion of private health services, thus reducing the demand on government sector facilities where higher-income groups could opt for private health care. • VHI was seen as a mechanism with the potential to bring in additional financial resources for the private health sector, as the public sector has limitations on charging a fee from VHI. • VHI was also expected to support increased cost recovery by

MoH facilities, in particular with respect to “pay-beds” at Sri

Jayewardenapura General Hospital.

3.5.2 Market role and size Although the economy has grown and the upper middle-income group has expanded, the corresponding increase in VHI is relatively small. In 1990, the VHI penetration was less than 1% of total health expenditure (THE) (RannanEliya, 1997) and in 2013 it was 2.1% of CHE (Ministry of Health and Indigenous Medicine, 2016). Withanachchi (2009) reports that in 2004, it was estimated that VHI premiums account for 4.9% of THE. As a share of private health

insurance, VHI accounts for 9.7%, and around 10.4% of the total population have subscribed to long-term VHI (Withanachchi, 2009). VHI generally covers health risks that manifest less frequently and require expensive treatment in tertiary-care institutions. All insurance schemes offer coverage of inpatient treatment. Outpatient care is mostly covered too. The market has not been efficient enough to attract people adequately for VHI, which is reflected by its poor growth. Over time, with expanding per capita income, people’s expectations too have changed and there has been an expression of demand for private facilities within government hospitals to provide inpatient care. This has largely been from the upper- and middle-income groups. Government policies have in fact encouraged growth of the private health sector as a means of shifting more affluent people to access these services, whereby the government could focus more on providing care to lower-income groups. VHI schemes are largely based on the ability to pay. The increase in VHI is relatively small and mainly by the corporate sector for its employees. In fact, the growth of the private sector has not attracted a corresponding growth in VHI. Despite some growth in the health insurance market in recent years and many policies and competition between local companies, the overall contribution of private health insurance to health-care resource mobilization is still minimal in Sri Lanka.

3.5.3 Market structure One government organization (National Insurance Trust Fund [NITF]), one not-for-profit firm and 13 for-profit firms provide health insurance in Sri Lanka (Withanachchi, 2009). Since Sri Lankan health care is universal and accessible to all, private insurance coverage is small and often supplementary or complementary in nature, benefiting the higherincome groups.

Private VHI is largely by enrolment of employed groups and, to a very low extent, by individual enrolment (Govindaraj, Navaratne, Cavagnero, & Seshadri, 2014). Pooling of OOPEs and formulating an insurance model of financing is not relevant as the dominant government health-care delivery is not organized in a way that can accept insurance payments and inpatient private beds are still limited.

3.5.4 Market conduct Pricing and promotion strategies of private health insurance providers are diverse and decided by the industry. To some extent, the scope of services provided by the government health services would have an influence, as seen after the recent price reductions for essential drugs and devices by the MoH.