SSRN Id1623260

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T Th ha ai i l l a an nd d H He ea al l t t h h F Fi i n na an nc ci i n ng g R Re ev vi i e ew w 2 20 01 10 0

Thai working group on Observatory of Health Systems and Policy
Final version 31 May 2010

Thai Working Group on Observatory consists of

Viroj Tangcharoensathien, IHPP
Walaiporn Patcharanarumol, IHPP
Chitpranee Vasavid, IHPP
Phusit Prakongsai, IHPP
Pongpisut Jongudomsuk, Health Systems Research Institute
Samrit Srithamrongswat, Health Insurance Systems Development Office
Jadej Thammathataree, National Health Security Office

Acknowledgments This synthesis is supported by WHO SEARO in 2009

2

Table of contents

Introduction........................................................................................................................3
1. Health expenditure: how much is spent and on what? ........................................................4
2. Population coverage and entitlement: who is covered and what are the benefits? ............... 12
2.1 Population coverage ................................................................................................. 12
2.1.1 Thai populations ................................................................................................ 12
2.1.2 Migrant populations ........................................................................................... 14
2.2 Benefit package ....................................................................................................... 15
3. Revenue collection and sources of funds: where does money come from?.......................... 17
3.1 Compulsory sources of financing ............................................................................... 18
3.1.1 General Government Health Expenditure (GGHE).................................................. 18
3.1.2 Compulsory pay-roll tax...................................................................................... 20
3.2 Voluntary health insurance (VHI)............................................................................... 21
3.3 Out-of-pocket payments ........................................................................................... 22
3.4 External sources of funds.......................................................................................... 23
3.5 Equity in health financial contributions ....................................................................... 23
4. How money is pooled, allocated and purchased?.............................................................. 25
4.1 pooling agencies and allocation ................................................................................. 25
4.2 Mechanisms for allocating funds among pooling/purchasing agencies ........................... 26
5. Who spends the money? Purchasing and purchaser-provider relations .............................. 29
6. How different services and personnel were paid for: various payment methods .................. 32
6.1 Paying for health services ......................................................................................... 32
6.2 Paying for healthcare personnel ................................................................................ 32
7. Future challenges .......................................................................................................... 39
7.1 Managing Cost Drivers.............................................................................................. 39
7.2 Managing Benefit Package ........................................................................................ 39
7.3 Managing health systems.......................................................................................... 40
8. Conclusions................................................................................................................... 41
References ....................................................................................................................... 42
3

Introduction

Evidence on health care financing is vital for policy decision and monitoring progresses
towards achieving health financing goals of efficiency and equity in a country. However,
such evidence is limited and not available in a timely manner in most developing countries
especially in South-East Asia Region. The WHO Health Financing Strategy for the Asia
Pacific Region for 2010-2015 urges WHO member states to improve evidence on health
financing through promoting research and studies on macroeconomics and health, and
improving health financing information by expanding national and sub-national health
accounts
[1]
. National Health Accounts (NHA) in Thailand was initiated in 1994 and
sustained to date, in 2009 a 15 year series of 1994 to 2008 NHA was available in line with
the recommendation by the Systems of Health Account.

Based on Health in Transition (HIT) Template
[2]
, this study describes the configurations,
assesses health financing in Thailand in order to respond the following six major questions.
1. How much is spent on health of Thai population and on what services?
2. Who are covered and what are their benefits or entitlements?
3. Where does the health systems money come from?
4. How is money pooling, allocated and purchased?
5. Who spends the money?
6. How different services and health personnel are paid for, based on various models of
payment?

Each of the questions was addressed in the following sections 1-6 where Section 7 provides
a conclusion from such analysis. This paper has gone through a peer reviewed process by
partners involved health financing in Thailand.
4

1. Health expenditure: how much is spent and on what?

The Thai health care system has been financed by a mixture of health financing sources,
namely general taxes, social insurance contributions, private insurance premiums and direct
out-of-pocket payments. Health expenditure is income elastic; during the 1997 Asian
economic crisis, health spending reduced both by the government and households. The
introduction of the universal coverage (UC) policy fully implemented by 2002 significantly
increased public share of total health spending, while household out-of-pocket payments
significantly reduced. This is because the UC scheme is financed by general tax with a huge
coverage of more than 75% of total population.

After achieving universal coverage in 2002, there have been three major public insurance
schemes providing health insurance coverage for the entire population:
The Civil Servant Medical Benefit Scheme (CSMBS) which covers around 5.2 million, as
of early 2010, government employees and their dependants (parents, spouse and
children) as well as pensioners;
The Social Health Insurance (SHI) scheme which covers approximately 9.5 million
employees, as of early 2010, in the formal sector from non-work related health care
expenditures;
The UC scheme which covers the rest of the population and replaces all previous
government-subsidized health insurance schemes, namely the Voluntary Health Card
(VHC), the Low Income Card (LIC) scheme for the poor, the disabled, the elderly, and
children aged less than 12 years and include all the uninsured into this scheme.

5
Figure 1 Health care finance and service provision of Thailand after achieving UC in 2002
Health care finance and service provision of Thailand
after achieving universal coverage (UC)
General tax
General tax Standard Benefit
package
Tripartite contributions
Payroll taxes
Risk related
contributions
Capitation
Capitation & global
Co-payment budget with DRG for IP
Services
Fee for services
Fee for services - OP
Population
Patients
Ministry of Finance - CSMBS
(6 million beneficiaries)
National Health Insurance Office
The UC scheme (47 millions of pop.)
Social Security Office - SSS
(9 millions of formal employees)
Voluntary private insurance
Public & Private
Contractor networks

Figure 1 conceptualizes the relationship among three stakeholders: a) the population who
are responsible to pay personal income tax or corporate tax or indirect tax through
consumption items such as 7% Value Added Tax or contribute to SHI Fund if they are
private sector employees or employers. At the same time these beneficiaries may fall ill and
become patients; b) the public insurance purchasers consisting of Comptroller's General
Department (CGD) of the Ministry of Finance who is responsible for CSMBS, Social Security
Office (SSO) under the Ministry of Labour who is responsible for SHI and National Health
Security Office (NHSO), an independent public agency, responsible for the UC Scheme. In
addition to these three purchasers for the whole population, voluntary private insurances
also provide insurance coverage on a competitive basis mostly to the high income earners.;
and c) the public and private healthcare providers throughout the country.

International Health Policy Programme of the Ministry of Public Health (IHPP) and its
partners have developed and regularly updated National Health Accounts (NHA) of Thailand
since 1994, a complete series of 1994 to 2008 is now available
[3]
. By 2002, a full
application of OECD system of health accounts (SHA) using three dimensional matrix of
health financing agencies, healthcare functions and healthcare providers were applied to the
Thai NHA.

Evidence from the NHA indicates that total health expenditure (THE) of Thailand increased
significantly in nominal term from 127.6 billion Baht (approximately $5,106 million) in 1994
to 363.8 billion Baht (approximately $11,023 million) in 2008, an average annual nominal
growth rate of 5.2%; see Table 1.

6
The share of public financing increased from 45% in 1994 to 75% in 2008, particularly after
the introduction of the universal coverage scheme in 2002. It is worth noting that health
expenditure per capita between 2002-2006 after implementation of the UC policy ranged
from $74-122 per capita which was slightly different from the situation prior to achieving
UC, $61 per capita in 2001. The significant increase in THE per capita in 2008 which
reaches $171 per capita was affected by consistent increase in the utilization rate, unit cost
of services, salary adjustment in the government sectors.

Table 1: Total health expenditure and selected indicators on health spending, 1994-2007,
current prices
Indicator 1994 1997 2001 2002 2005 2006 2007 2008
THE, Total health
expenditure (million
Baht)
127,655 189,143 170,203 201,679 251,693 291,294 315,531 363,771
THE as % of GDP
3.5% 4.0% 3.3% 3.7% 3.5% 3.7% 3.7% 4.2
THE from public
financing agencies
(million Baht)
56,885 101,937 95,779 127,534 161,282 197,342 230,056 272,203
THE from private
financing agencies
(million Baht)
70,771 87,206 74,424 74,146 90,411 93,953 85,476 91,568
THE from public
financing agencies (%)
45% 54% 56% 63% 64% 68% 73% 75%
THE from private
financing agencies (%)
55% 46% 44% 37% 36% 32% 27% 25%
THE per capita (Baht
per capita per year)
2,160 3,110 2,732 3,211 4,032 4,636 5,005 5,739
THE per capita (USD)
86 99 61 74 100 122 144 171
Exchange rate
(Baht per 1 USD)
25 31 45 43 40 38 35 33
Source: NHA Working Group 2009
[4]

Total health expenditure (THE), as percent of Gross Domestic Product (GDP), has not been
much changed in 1994 to 2008. The ratio of THE to GDP ranged from 3.1 percent in 1994 to
3.8 percent in 1997 prior to Asian financial crisis. The ratio decreased in the subsequent
years to be 3.0 percent in 2001 as health expenditure grew less than the overall economy.
However, after the UC scheme, the ratios increased again and reached 3.4 percent in 2002
and increased to 3.7 and 4.2 percent in 2007 and 2008, respectively (Figure 2).

7
Figure 2 Total health expenditure of Thailand as percent of GDP, 1994 to 2008, at 2008
constant price

[4]

The real growth rate of operating health expenditure from 1995 to 2008 was not associated
with that of GDP. Prior to the 1997 financial crisis, the real growth rate of GDP ranged from
5% to 10%, while that of operating health expenditure ranged from 11% to 17%. However,
GDP fell significantly to -3% and -10% in 1997 and 1998, respectively as a result of Asian
economic crisis, but the government health budget was safeguarded from cut. The growth
rate of GDP slightly increased after the year 2001 showing a sign of recovery from crisis.
Furthermore, the growth rate of operating health expenditure was significantly increased
from 0-1 % during 1999-2001 to 18% in 2002, when the UC policy was first implemented.
After that period, the average growth rate of operating health expenditure was
approximately 8% per year (Figure 3).

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Figure 3 Real growth rate of GDP and operating health expenditure, 1994 to 2008

[4]

The proportion between government and private (non-government) financing sources
significantly changed twice in 1997 after the Asian financial crisis and in 2002 after the
introduction of UC scheme. Prior to 1997, the share of public health financing sources
ranged from 45% to 47%. After the economic crisis, despite budget cut, government health
budget was protected, the share of public financing sources increased to approximately 54-
56% from 1997 to 2001. As a result of UC policy introduced in 2002, the proportion of
public financing sources has been considerably increased from 63% in 2002 to 75% in 2008
(Figure 4) and vice versa, household out of pocket reduced significantly.

9
Figure 4 Share of government and non-government health financing sources from 1994 to
2008

[4]

When the annual growth rate of THE and GDP is grouped into two sets between the period of
1995-2000 and 2000-2007, the geometric mean of annual growth rate of THE during 2000-
2007 is equivalent to 10.84% which is higher than that of GDP (8.75%). The Asian financial
crisis in 1997 reduced the annual growth rate of GDP during 1995-2000 to be only 3.29%,
and the crisis also led to the greater reduction in THE to only 2.49 %. It is noteworthy that
in the normal situation, annual THE growth rate is higher than that of GDP, but during the
financial crisis, households significantly reduced their health expenditure, also government
reduced spending on capital investment due to prior heavy investment on this item during
the economic boom.

The government health spending (inclusive of all public financing agencies, MOPH, other
ministries including local government, government spending on CSMBS, SHI and UC) as
percent of total government spending increased from 18% during the period of 1995-2000
to 20.26% during 2000-2007. Table 2 indicates that the Thai government invested more on
health during 2000-2007 as reflected by the proportion of government health spending as a
percentage of GDP increased from 1.92% during the period prior to 2000 to 2.32% in the
period from 2000 to 2007. As a result of more investment in health by the government; the
proportion of household out-of-pocket payments to THE significantly decreased from 37.6%
during the period prior to 2000 to 26% during the period after 2000, see Table 2. There are
positive effects on the incidence of catastrophic health expenditure and impoverishment in
particular the government health spending directly benefited the poor, through district
health systems development, functioning primary healthcare
[5]
.
10
Table 2: Selected parameters of health care financing between the period of 1995-2000 and
2001-2007
1995-2000 2001-2007
Mean nominal annual growth rate in THE, geometric mean % 2.49% 10.84%
Mean nominal annual growth rate in GDP, geometric mean % 3.29% 8.75%
Mean total government spending, percent of GDP 10.67% 11.46%
Mean government health spending, percent of total government
spending*
17.99% 20.26%
Mean government health spending, percent of GDP 1.92% 2.32%
Mean out-of-pocket payments, percent of total expenditure on
health
37.59% 26.04%
Note * inclusive of all public financing agencies: MOPH, other ministries including local government
administrations, spending on CSMBS, SHI and UC.

Table 3 demonstrates a consistent pattern that expenditure on curative services dominates
total health spending, increased from 38.4% in 1997 to 43.5% in 2006; expenditure for
inpatient services increased from 26.2% in 1994 to 38.7% in 2007. The medical goods
dispensed to out-patient had gradually decreased from 6.5% in 1994 to approximately 4%
in 2007 (Table 3). At the same time, spending on capital formation had substantial
reduction, from 13.7% in 1994 to 5% in 2001. Even after UC, capital investment stayed
around 3% to 5%.

The prevention and the public health services accounted 7% to 8% of total spending during
1994-2001. It increased sharply to 12.4% in 2002 when UC was launched, but declined to
6.6% and 4.5% in 2007 and 2008, respectively.

Table 3: Healthcare spending profile, % of Total Health Expenditure, 1994 to 2008
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
In-patient
care*
26.2 25.9 26.6 25.6 26.1 31.5 30.8 32.6 30.2 34.1 33.4 33.8 35.3 37.0 36.2
Outpatient
care
42.6 41.7 42.0 38.4 37.3 41.4 40.7 40.3 43.8 44.7 43.9 43.3 41.5 40.9 42.3
Ancillary
services
0.0 0.0 0.0 0.0 0.2 0.2 0.1 0.2 0.3 0.2 0.4 0.4 0.2 0.2 0.2
Medical
goods**
6.5 6.4 4.9 4.4 5.7 5.6 6.3 6.1 4.0 3.9 4.2 4.3 4.8 3.9 4.4
Prevention,
public health
services
7.1 7.5 7.3 7.3 7.5 8.0 8.2 8.0 12.4 8.7 8.3 4.9 4.5 6.6 4.5
Health
administration
3.9 4.1 4.4 6.7 7.3 7.6 7.9 7.9 4.8 5.0 5.6 8.9 9.1 6.9 6.8
Total
recurrent
86.3 85.6 85.2 82.4 84.1 94.2 94.1 95.0 95.4 96.7 95.7 95.6 95.3 95.5 94.4
Gross capital
formation
13.7 14.4 14.8 17.6 15.9 5.8 5.9 5.0 4.6 3.3 4.3 4.4 4.7 4.5 5.6
THE 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100
Note * including long term care and rehabilitation services
** Expenditure on medicines and medical devices paid by households only. Note that
spending on outpatient and inpatient are inclusive of medicines and medical devices
[4]

In 2008, spending on ambulatory services and in-patient care was the lion share, public
health and disease prevention activities shared only 4.5%. The proportion of health
administration and capital investment was 6.8% and 5.6% respectively. The ancillary
service was a tiny amount, 0.2 percent. Based on hospital database; most expenditure on
11
ancillary services was included in outpatient care. Also expenditure on long-term nursing
care was included in inpatient and rehabilitation services and did not present in a separate
item.

In the light of scientific advancement, new technologies such as pharmaco-genomics,
surgical procedures and diagnostic imaging are expensive and unaffordable. OECD
experiences have shown that technology advancement is one of the very important cost
drivers
[6]
for which appropriate mechanisms should be introduced to generate evidence on
cost effectiveness and other information to guide decisions on technology adoptions.

As a result of these concerns, a long term, twenty-year financial projection was done, based
on analyses of data from various sources including health and welfare survey, national
health account 1994-2005, hospital input-output report and administrative inpatient
database, and the use of social budgeting models of International Labour Organization. By
2020, total health expenditure will be within the capacity of the government to afford, less
than 4.5% of GDP, whereby the general tax will be the highest share of financing sources for
universal coverage followed by CSMBS expenditure. Private household spending will be
equivalent to that of Social Health Insurance Scheme
[7]
. Historically, donors resources
have played insignificant role in financing health in Thailand, less than 0.05% of total health
spending since 1994, see Figure 5.

Figure 5 Long term health financing projection, 2006-2020 base year 1994-2005
Long term financing projection 2006-2020, base year 1994-2005,
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
2
0
1
7
2
0
1
8
2
0
1
9
2
0
2
0
MOPH Other ministries LGU CSMBS State Enterprises
UC SHI WCF Private ins Traffic ins
Employer benefit Household NGO ROW
Source
[7]

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2. Population coverage and entitlement: who is covered and what are
the benefits?

2.1 Population coverage

2.1.1 Thai populations

After the UC scheme was launched in 2002, Thailand had three public health insurance
schemes covered the whole population. The CSMBS provides health care free at point of
service for 5.2 million government employees and their dependants [including parents,
spouse and not more than two children less than 20 years old, and the pensioners].

The SHI protects 9 million private sector employees in any firm having more than one
employee, for non-work related conditions, while Workmens Compensation Fund covers
work related injuries, illnesses or deaths. Note that SHI covers individual worker, excluding
their dependants except maternity benefit which covers spouse of male beneficiaries.

Finally, the UC scheme covers the residual population who are neither CSMBS nor SHI
beneficiaries. UC replaces all previous government subsidized health insurance schemes
prior to 2001, namely the Low Income Card (LIC) scheme for the poor, the Voluntary Health
Card (VHC), the disabled, the elderly, and children aged less than 12 years. However,
private health insurance covers the affluent groups, 2.2% of total population. Table 4
describes key characteristics of these schemes.

Table 4 Characteristics of three public and private health insurance schemes
Insurance
scheme
Population coverage Financing
source
Mode of
provider
payment
Access to service
Civil Servant
Medical Benefit
Scheme
Government
employees plus
dependants
(parents, spouse
and up to two
children age <20)
9% General tax,
non-
contributory
scheme
Fee for service,
direct
disbursement to
mostly public
providers and
DRG for inpatient
care
Free choice of
public providers, no
registration
required
Social Health
Insurance
Private sector
employees,
excluding
dependants
16% Tri-partite
contribution,
equally shared
by employer,
employee and
the
government
Inclusive
capitation for
outpatient and
inpatient services
plus additional
adjusted
payments for
accident and
emergency and
high cost care,
utilization
percentile and
high risk
adjustment
Registered public
and private
competing
contractors
Universal
coverage
The rest of the
population not
covered by SHI
and CSMBS
75% General tax Capitation for
outpatients and
global budget plus
DRG for inpatients
Registered
contractor provider,
notably district
health system
13
Insurance
scheme
Population coverage Financing
source
Mode of
provider
payment
Access to service
plus additional
payments for
accident and
emergency and
high cost care
Private health
insurance

Additional health
insurance scheme
for those who can
afford premiums

2.2%
(additi
onal
insura
nce)
Health
insurance
premiums paid
by individuals
or households
Retrospective
reimbursement
Free choice of
health care
providers, either
public or private
providers
Source: Modify from Prakongsai et al
[8]

The CSMBS is a fringe benefit to government employees and dependents to compensate
relatively lower salary (compared to market rates) in the public sector. This is a tax-
financed non-contributory scheme. Government employees and pensioners and their
dependents including parents, spouses and not more than three children (less than 20 years
old) are generously provided with a wide range of medical services. The Royal Decree on
CSMBS was enacted in 1980, and designated the Comptrollers General Department (CGD)
of Finance Ministry to manage the CSMBS.

The SHI is a mandatory tripartite payroll-tax financed scheme equally contributed by
employers, employees, and the government for non-work-related illness and injuries,
maternity and cash allowances for disability, old age pension and death compensation. The
Social Security Act 1990 granted the statutory status to the Social Security Office (SSO)
though legally it is a Department under the jurisdiction of Ministry of Labour, but governed
by a tripartite governing board and guided by Medical Committee. The scheme started with
coverage of employees in enterprises with more than 20 workers in 1991 which it launched.
Then, it gradually extended to cover more than 10, more than five and finally more than one
worker in April 2003 after UC scheme was fully launched.

As of the end of 2003, the scheme covered around 7.76 million insured persons, although
this was expected to be over 10 million insured persons (Table 5). The 2006 SSO Annual
Report shows the number of SSS beneficiaries in 2006 was 9.1 million
[9]
. Note that SHI
requires hospital with more than 100 beds and other speciality requirement as a contractor
provider, therefore not many district hospitals with smaller size than 100 bed cannot serve
as SHI contractors.

Table 5 SHI members by type of registered contractors, 2001 to 2006
Type of contractor hospitals 2001 2002 2003 2004 2005 2006
MOPH Regional hospitals 16 16 16 16 17 17
MOPH Provincial hospitals 14 13 14 14 14 14
MOPH District hospitals 1 1 1 2 2 2
Other public hospitals 5 5 5 5 5 5
University hospitals 5 5 5 5 4 3
Private hospitals 58 59 60 60 59 58
Total, % 100 100 100 100 100 100
Total, million SHI members 5.9 6.7 7.8 8.2 8.6 9.1
Source: Analysis from database of Technical and Planning Division, Social Security Office of Thailand,
2001-2006

The Workmens Compensation Scheme (WCS), an employer liability scheme, covers work-
related injuries, illnesses and funeral grants. The WCS was enacted by the 1994 Workmens
14
Compensation Act replacing the Revolution Partys Decree No. 103 which gave birth to the
Scheme. The contribution was assessed as percentage, based on different types of
establishment and related risks of occupational injuries, of the total wages of employees.
The contribution rate varies from 0.2-1.0% of payroll based on risk rating of establishment
categorized by industrial classification. The rate is used for the first four years of
contribution. In the fifth year, this basic rate of contribution may increase or decrease
depending upon the accidents and deaths record of the establishment. This is called
experience rating. Higher accident records and higher claims from the Fund result in a
higher experience rate and thus the basic rate in the fifth year would be adjusted in line with
the increasing trend of compensation from the Fund. Details about the experience rates
are:

Firms whose loss ratio is less than 10% are granted a 70% reduction in the basic rate;
Firms whose loss ratio is 60-70% are not granted a reduction rate or are penalized by
an increase in the basic rate;
Firms whose loss ratio is 150% are penalized with an increase in the rate, to 200% of
the basic rate.

It is important to note that WCS and SHI covers the same population, though coverage by
WCS is reported to be lower.

The UC scheme covers the residual population who are neither CSMBS nor SSS beneficiaries.
The share of UC beneficiaries is approximately 75% of the entire population.

In addition to these three public insurance schemes, around five million populations or 8%
of total population was covered by voluntary private health insurance in 2004
[10]
. However,
the 2006 Health and Welfare Survey indicated a lower coverage of 1.4 million or 2.2% of
population
[11]
. Estimates from Surasiengsang
[10]
tend to be more reliable due to the
accuracy and completeness of data sources. There is a trend towards increasing coverage
by private commercial insurance, especially during favourable economic growth. After the
recovery from the 1997 economic crisis, a significant increase in premium collection was
observed in the NHA
[4]

2.1.2 Migrant populations

Thailand is a recipient country having more than two millions irregular migrants including
their dependants, spread throughout the country. Health services for the registered
migrants, a small fraction of total migrants were covered by their employers with full access
to health service. Employers pay some 2,000 Baht to cover one employee for a year, the
scheme is managed by the MOPH provincial health office.

For the large proportion of non-registered migrants, health services were partly or fully
covered, on a humanitarian basis, by the Thai MOPH. Patients who could not afford to pay
were exempted on a sliding scale. Budget subsidies for the huge amount of non-registered
migrants and their dependants are increasingly placing financial burden to the government.
A recent policy endorsed the universal coverage for half million stateless people in Thailand
financed by general tax revenue.

15
2.2 Benefit package

Though there is a slightly difference in the benefit package in terms of coverage of disease,
conditions and medical interventions, CSMBS significantly differs from other two public
insurance schemes in terms of access to private room and board and some new technology,
as a result of fee for service provider payment. Historically CSMBS and SHI did not cover
prevention and health promotion, the UC scheme provide prevention and health promotion
for the whole population not only UC members by extension of health promotion and disease
prevention to CSMBS and SHI members.

The CSMBS benefit package includes out-patient services and hospitalization, medical and
surgical services, emergency services, operation, expensive health services and medicines.
However, the benefit package excludes some services such as cosmetic surgery and
preventive services, except for annual health check-up. In fact the benefit package of the
three public health insurance schemes was quite comparable. The exception is CSMBS
members were entitled to stay in private ward while the major difference from two other
schemes (UC scheme and SHI) is the provider payment method.

With the application of fee for service payment, CSMBS granted free choice to public
providers (though access to private sector admission service was limited to life threatening
accident and emergency); beneficiaries could go to any public hospitals for receiving health
services, but recently in 2007 the Scheme encouraged the beneficiaries to register with a
preferred public hospital in order to receive outpatient services without paying upfront and
reimburse later. These public hospitals were direct disbursed by the Comptrollers General
Department (CGD) on a monthly basis for outpatient services they provided to CSMBS
members. The cashless services have resulted in exponential growth of outpatient
expenditure by the scheme see figure 7.

The 1990 Social Security Act article 62 defines the SHI benefit package to include diagnostic
and medical treatments, hospitalization including room, nutrition, and other treatments,
pharmacy and medical supplies for which quality is not lower than those included by the
National Drug list
[12]
. These benefits apply to all diseases except self-inflicted illness or
injuries. Health services must be provided until the patients have completely recovered.
Conditions are not a medical necessity (e.g. cosmetic purposes) and those that are too
expensive to provide are excluded from the benefit package. The Scheme applies a very
minimum number of negative lists.

In the design of the benefit package for the UC scheme, having harmonization in mind
among the reformists, the benefit package for UC scheme is very similar to that covered by
the SHI. It provides a comprehensive benefit package which includes ambulatory care,
hospitalization, laboratory investigation, dental care, disease prevention, health promotion
and many expensive medical services such as radiotherapy and chemotherapy for cancer
treatments, surgical operations, and healthcare for accidents and emergency illnesses.
Prescription drugs are also free of charge.

It should be noted that dental care differs between the UC scheme and SHI. The UC scheme
limits dental condition to be covered such as all basic such as extraction, filling, scaling and
acrylic partial and full dentures. SHI limits the maximum reimbursement level per annum.

As the UC scheme applies the capitation contract model, beneficiaries are required to
register with a preferred primary care network, though in fact there is no choice for UC
members. They are required to register to their local district health provider networks, for
which they resided. Due to geographical monopoly in rural areas; NHSO required
16
beneficiaries to register with provider network in their domicile districts, which is the MOPH
district provider network (consists of district hospitals and some 10-15 health centres).
However, UC members residing in urban city, there are choices of different public and
private network for which they are free to choose the network nearby their home.

As per NHSO rule, UC member can change their contractor provider network proximal to
their residence twice a year. This is to facilitate the internal temporary migration. To
achieve this, applicants need to prove that they reside in that area either through the
following proofs, (a) certification letter by house owner they reside, (b) by the village head
or other community leader, (c) by electricity or pipe water bills.

Beneficiaries are entitled to free services in the registered provider network only with
referral. Self referral by patients is liable to full payment. If the registered hospital cannot
provide appropriate treatment, patients are transferred to a higher level health facility such
as a provincial or regional hospital, and sometimes a university hospital without any cost
sharing; transferring provider is responsible to pay for services rendered by higher level of
outpatient care except admission services. This design is called fund holder primary care
network.

Although the UC benefit package is quite comprehensive, some expensive medical care, for
example, renal replacement therapy (RRT) for end-stage renal disease (ESRD) patients was,
in the inception phase, excluded from the benefit package due to the high costs of certain
procedures and the limited government health resources. However, RRT was now included
in the benefit package since early 2008 through cabinet resolution*

Health Intervention and Technology Assessment Program (HITAP) a spin-off program from
IHPP, initiated in 2007 with multi-sources of funding support, was mandated to conduct
technology assessment of health interventions. Increasingly HITAP plays a significant role in
assessing and providing recommendations to the National Subcommittee on Essential Drug
List and the Benefit Package Subcommittee of the National Health Security Board on which
benefit package should be included by the UC scheme. Recently recommendations by IHPP
to NHSB benefit package sub-committee were approved on the introduction of seasonal
influenza vaccination to elderly more than 65 years with certain chronic conditions.

*Renal replacement therapy (renal and peritoneal dialysis, and kidney transplantation) has
been included in the UC benefit package since end of 2007.
17
3. Revenue collection and sources of funds: where does money come
from?

Refer to Thai National Health Account
[4]
, there are five main funds of finance: general
government health expenditures (GGHE), social health insurance (SHI), private health
insurance, out-of-pocket (OOP) and the rest of world (ROW).

In 1994, the share of health care spending by GGHE was less than the private spending
(private health insurance and OOP). However, the proportion of GGHE gradually increased
and overtook the private spending, and became the dominant financing source after the
1997 Asian economic crisis and the emergence of the UC scheme in 2002 (Table 6).

SHI was not a major contributor in health expenditure. SHI accounts for 2.9% of THE in
1994 and gradually increased to about 7% in 2007. Household OOP had a lion share in
1994, 44.5% of THE, until the 1997 Asian economic crisis and then slowly and steadily
dropped to 19.2% in 2007. Funding size from the rest of the world is negligible.

Table 6 Percent distribution of five sources of finance, 1994-2007
Year GGHE
excluding SHI
SHI Private
Health
Insurances
Out-of-
Pocket
Rest of
the
World
THE THE
(Million
Thai Baht)
1994 41.7% 2.9% 10.9% 44.5% 0.1% 100% 127,655
1995 43.6% 3.3% 10.4% 42.6% 0.1% 100% 147,837
1996 43.8% 3.4% 10.3% 42.5% 0.0% 100% 177,103
1997 50.5% 3.4% 9.2% 36.9% 0.1% 100% 189,143
1998 49.8% 5.0% 9.8% 35.4% 0.0% 100% 172,811
1999 50.0% 4.9% 10.6% 34.5% 0.0% 100% 162,124
2000 50.8% 5.3% 10.1% 33.7% 0.0% 100% 167,147
2001 49.6% 6.6% 10.5% 33.1% 0.1% 100% 170,203
2002 57.7% 5.6% 9.3% 27.2% 0.3% 100% 201,679
2003 57.4% 6.2% 9.4% 26.8% 0.3% 100% 211,957
2004 58.1% 6.5% 9.0% 26.1% 0.2% 100% 228,041
2005 56.2% 7.9% 8.4% 27.2% 0.3% 100% 251,693
2006 60.3% 7.5% 9.3% 22.6% 0.3% 100% 291,294
2007 65.8% 7.1% 7.6% 19.2% 0.3% 100% 315,531
[3]

Note:
1 General Government Health Expenditures (GGHE) comprised of health expenditure spent by the ministry of public
health and other ministries, local government agencies, CSMBS, state enterprise and universal coverage scheme
since 2002.
2 Social Health Insurance (SHI) comprised of health expenditures through social health insurance fund and
workmen compensation fund.
3 Majority of private health insurances were voluntary basis (about 57% of all private insurances) while the rest
(43%) were compulsory traffic accident protection fund managed by private insurance companies.
4 Out-of-Pocket (OOP) were paid by household at point of services.
5 Rest of the World (ROW) means grants from bilateral and multilateral donors.

18
3.1 Compulsory sources of financing
3.1.1 General Government Health Expenditure (GGHE)

Between the year 1994 and 2007; GGHE was fluctuated within a range from 14.5% to
20.0% of General Government Expenditure (GGE); while GGE steadily increased from 9.8%
of GDP in 1994 to 12.2% in 2007 (Table 7).

Table 7 Key NHA parameters, 1994-2007
Gross Domestic
Product, GDP
(Million Baht)
General
Government
Consumption
Expenditure,
GGE (Million
Baht)
GGE as
% GDP
GGHE,
excluding
SHI (Million
Baht)
GGHE,
excluding
SHI, as %
GGE
1994 3,629,341 354,387 9.8% 53,182 15.0%
1995 4,186,212 414,403 9.9% 64,468 15.6%
1996 4,611,041 469,516 10.2% 77,537 16.5%
1997 4,732,610 476,705 10.1% 95,478 20.0%
1998 4,626,447 511,691 11.1% 86,055 16.8%
1999 4,637,079 533,041 11.5% 81,034 15.2%
2000 4,922,731 557,807 11.3% 84,924 15.2%
2001 5,133,502 581,117 11.3% 84,505 14.5%
2002 5,450,643 603,891 11.1% 116,325 19.3%
2003 5,917,369 636,002 10.7% 121,627 19.1%
2004 6,489,476 720,595 11.1% 132,575 18.4%
2005 7,092,893 843,649 11.9% 141,506 16.8%
2006 7,841,297 927,575 11.8% 175,587 18.9%
2007 8,493,311 1,037,571 12.2% 207,564 20.0%
[3]

Taxation is the main source of Thai government's revenue. A large part of tax collection is
responsible by three Department of the Ministry of FinanceThe Revenue Department, the
Excise Department, and Customs Department - which collectively account for about 85-90%
of the government's revenue collected (Table 8). The Revenue Department responsible for
personal and corporate income tax collection, contributes more than half of the total tax
collected. Liability of tax payers are prescribed by rules and regulations stipulated in the
Revenue Code.

In the tax revenue structure, the direct tax (personal income and corporate tax) is the
largest portion, follows by consumption tax (including value added taxVAT and a very
small role of business tax for small enterprises), excise tax and import and export duties
respectively. However, indirect tax combining all items has a large share than direct tax.
This tax profile has not changed between 1994 and 2007, except in the year 1998 and 1999,
two years after the 1997 Asian economic crisis; the consumption tax was larger than direct
tax (Table 8). The main source of direct tax is from personal income tax which applies very
progressive tax rates (Table 9).

Revenue Department had demonstrated an improved effectiveness of tax collection, now
totally in electronic submissions by March every year for personal income tax. However the
tax base is still narrow. There is no political will to introduce property and inheritance tax
though this was discussed by the Parliament in 2009.
19

There is only one earmark tax to healthcare, 2% levies on tobacco and alcohol consumption
was transferred by the Excise Department on a daily basis to the Thai Health Fund. The
Fund is governed by a Board chaired by the Prime Minister, aiming to campaign against
tobacco, alcohol and active health promotion activities by funding NGO and civil society and
government agencies to strengthen healthy enabling environment
[13]
.

Table 8 Structure of government revenue, 1994 and 2007
A A1 A2 A2.1 A2.2 A2.3 B C=A+
B

Year Tax Direct
tax
Indirect
tax
Consumption
tax, including
VAT
Excise
tax
Import-
export
duties
Non-tax
revenue
Total Total
(Million
Baht)
1994 88% 29% 59% 23% 20% 16% 12% 100% 707,546
1995 89% 30% 59% 24% 19% 16% 11% 100% 815,143
1996 90% 32% 58% 25% 19% 14% 10% 100% 895,291
1997 88% 31% 57% 26% 20% 11% 12% 100% 909,049
1998 88% 28% 61% 33% 19% 8% 12% 100% 815,681
1999 86% 28% 58% 29% 21% 8% 14% 100% 793,346
2000 87% 30% 57% 26% 20% 10% 13% 100% 817,595
2001 88% 31% 57% 26% 20% 10% 12% 100% 874,766
2002 89% 31% 57% 26% 22% 10% 11% 100% 958,373
2003 89% 31% 58% 25% 22% 10% 11% 100% 1,104,627
2004 91% 34% 57% 27% 22% 8% 9% 100% 1,258,805
2005 90% 35% 55% 28% 19% 7% 10% 100% 1,472,935
2006 90% 38% 52% 29% 17% 6% 10% 100% 1,581,524
2007 90% 39% 51% 29% 17% 5% 10% 100% 1,666,824
Source: Fiscal Policy Office, Ministry of Finance http://www.fpo.go.th/fiscaldata/Revweb.xls,
access 20 December 2009

Table 9 Progressive Tax Rates of Thai personal income tax
Taxable Income (baht per annum) Tax Rate (%)
0 - 150,000 Exempt
150,001 - 500,000 10
500,001 - 1,000,000 20
1,000,001 - 4,000,000 30
4,000,001 and over 37
Source: Revenue Department, Ministry of Finance: website
http://www.rd.go.th/publish/6045.0.html access 20 December 2009
Note: This rate is applicable in 2008 onwards

Through annual budget allocation, general government health expenditure covers
expenditures by CSMBS, UC and operating cost of public health facilities (mainly salary for
the health staffs), capital investment of public health facilities and contributions to the SHI,
as part of the tripartite contributions.

20
3.1.2 Compulsory pay-roll tax

A. Social Health Insurance (SHI)

SHI including other social security benefits (e.g. death compensation, sickness allowance,
disability) was successfully enacted in late 1990 and implemented in April 1991 covering
employees who worked in formal private sector. The scheme is a mandatory tripartite
contribution scheme, which is financed by an equal payroll tax paid by the employee, the
employer and the government. The scheme has been managed by the Social Security Office
(SSO) under the jurisdiction of Ministry of Labour.

Since the launch of SHI in 1991, the maximum salary for assessed contribution was fixed at
15,000 Baht per month and had never indexed since then. In 1991, the minimum wage was
3,000 Baht per month. The rich poor gap for contributory wage was 5 folds. Note that the
minimum wage was adjusted annual to catch up with inflation and announced by the
Ministry of Labour. Unfortunately, there is no revision of the maximum ceiling of
contributory wage, while the minimum wage slowly increased every year. As a result the
five folds rich poor gap gradually became narrower, and less progressive. This challenges
the notion of solidarity of social health insurance. However, the Social Security Office
demonstrates no political will to reverse the less progressive trend.

For four short-term benefits (medical, maternity, invalidity and death) requires 1.5% payroll
tax contribution by each party, the employee, employer and the government. Wage of each
employee is liable to reported and registered to SSO, so that by the end of each month,
employers are liable to deduct 1.5% from employee payrolls and contribute equally from
employer and wire transfer to the Social Security Fund. Failure to comply with, employers
are liable to financial fine and imprisonment. Government contribution to the Fund is
through annual budget allocation to SSO. In some financial crunch years, when the
Government cannot pay its contribution on time, the dues were retrospectively paid in
subsequent years.

In addition to a statutory insurance coverage for the employee, SHI also offer insurance
coverage to the voluntary members; according to article 39, e.g. the retirees. Contribution
for these members was solely by themselves; neither employer nor the government
provides matching contribution.

B. Workmens Compensation Fund (WCF)

The WCS was formally established on 16 March 1972. After more than two decades of
implementation, the 1994 Workmens Compensation Act replaced this outdated regulation.
The WCS office is one of the Divisions in the Social Security Office. The purpose of the new
Act was to replace individual employer liability and to provide a prompt and equitable
protection against injury, disease, disability or death resulting from employment through the
pooled risk of all private sector employers. The employees are entitled to benefits consisting
of medical and rehabilitation services and cash benefits including compensation and monthly
indemnity. In case of death due to work-related injuries and illness, a funeral grant is paid
to survivors.

Contributions to the WCF are mandatory and solely paid by employers on an annual basis.
The contributions are assessed on total wages of employees multiplied by the contribution
rate, according to the type of business. The contribution rate varies from 0.2-1.0% of
wages based on risk rating of establishment type classified by industrial classification. The
21
rate is used for the first four years of contribution. In the fifth year, this basic rate of
contribution may increase or decrease depending upon the accident record of the enterprise.
This is called experience rating. Higher accident records and higher claims from the fund
result in a higher experience rate and thus the basic rate in the fifth year may be adjusted in
line with the increasing trend of compensation from the Fund.

Similar to SHI, employers failure to comply with the contribution are liable to financial fine
and imprisonment.

3.2 Voluntary health insurance (VHI)

Since 2001, a voluntary public subsidized health insurance scheme (so called the Heath Card
project) was terminated and replaced by UC scheme. Today, only private VHI is available.

Private commercial insurance has been operating in the Thai market since 1929 for mostly
the better-off population. There are two major types of private health insurance companies:
the majority schemes are providing health insurance as part of life insurance policies, and
very small market of providing health insurance alone. Both types also provide individual
and group insurance policies.
[14, 15]
Private insurance companies are regulated by an
independent commission established by the 2007 Insurance Business Regulation and
Support Act. The agency called Office of Insurance Commission
[16]
. This is a major reform;
as formerly regulation of insurance business is done by the Department of Insurance belong
to Ministry of Commerce.

Membership is voluntary, prior physical examination and exclusion of existing conditions are
general practices. The elderly beyond 60 years old were usually not accepted by VHI. The
membership of health insurance policy is renewed annually. The population coverage by
voluntary private insurance was low about only 2.2% of total population.

Personal income tax relief was applied for the premium paid for VHI (including life
insurance). The premium was deducted as annual expenditure, in order to provide
incentives for voluntary insurance coverage. There is no complementary voluntary health
insurance to offer additional services with a reduced premium, as the benefit packages are
comprehensive by the three public insurance schemes. There has never been policy
discussion to introduce such complementary packages. As of today, benefit package offered
by all private health insurance are supplementary, it offers faster access to private
hospitals and increased consumer choice with a full premium. The society tends to tolerate
with the supplementary package; often VHI is annual renewal where premium are adjusted
based on previous year risk and reimbursement, and often exclude members reaching 60
years old, and certain pre conditions were excluded from being membership.

Unlike some countries in the European Region, when the SHI emerged in 1990, the decision
was made explicitly that SHI members cannot opt out from paying contribution to SHI, and
that no substitutive voluntary health insurance is allowed, SSO is the sole purchaser for
services on behalf of all SHI members.

A mandatory third party Traffic Victim Protection Act 1992 was carried by private for profit
insurance companies. All vehicle owners are liable to mandatory pay a premium to the
Scheme which covers treatment for traffic injuries and funeral grants for the victims. The
loss ratio of this scheme was low, approximately 40%, with huge administrative expenditure
and profit.

22
3.3 Out-of-pocket payments

When universal coverage was achieved and benefit packages were comprehensive, there
was a rapid and significant reduction in the proportion of out-of-pocket payments, see NHA
tables. Households are liable to pay out of pocket for services provided by public or private
health care facilities not covered by the benefit package of the three public health insurance
scheme e.g. private pharmacies, private clinic and private hospital or public provider
network without referral from registered network (the self referrals); or for services in the
negative lists announced by SHI and UC Scheme.

Services provided by the contractor providers were free without copayment by UC and SHI
members. There is no deductibles, no maximum ceiling of coverage, no extra-billing allowed
by healthcare providers. However, some services such as dental care covered by SHI, 250
Baht reimbursable per service not more than two services per annum. Service beyond 250
Baht has implicit copayment. In 2010, SHI lump sum payment of 12,000 Baht per
pregnancy for all related services such as anti-natal care, delivery, post natal care; there is
a implicit copayment when the actual payment by members beyond the lump sum. Fee
schedule for hemodialysis is 1,500 Baht per session, not more than 3,000 Baht per week;
there is implicit copayment if the services fee paid by members beyond the schedule. These
are SHI services covered outside the capitation for OP and IP services.

Unofficial or under-table payment is not common and socially unacceptable. Services are
literally free in all three schemes. There are still some practices of gratitude payment put in
an envelop for the special private attendance by obstetrician during birth delivery
particularly commonly practised by CSMBS members and the high income groups. Other
envelop payment is very uncommon.

Historically for the last fifty years since user charges were adopted in 1945, revenue
generated by public hospitals from OOP was allowed by the Finance Ministry to be kept in
these public hospitals. Revenue is not liable to transfer to the Treasury, but use of these
revenues is regulated by MOPH or other ministries rule and subject to external audit by the
Auditor Generals.

Since the UC launch in 2002, UC members were liable to copay a flat fee of 30 Baht
(US$0.7) per visit or admission; until a new government in November 2008 abolished this
copayment not only for political reasons, some poor UC members who were supposed to be
exempted from copayment but still had to pay due to poor exemption mechanisms.

There are some attempts to introduce copayment for medical care for UC members chose to
stay in private room, but the Council of State ruled unlawful as it is against the National
Health Security Act. Hospital can only charge for the private room and board, but not
medical care. Also there is current effort to introduce additional pay for medicines outside
the national essential drug list (which is referred as the drug package for UC, CSMBS and
SHI) or brand products. This was discouraged by the Government for fear of undermining
the national essential drug policy and the lower cost generic products and may result in two
tier systems, and non-confidence by patients in the non-copay systems.

Argument in favour of cost sharing to discourage moral hazard by beneficiaries is
counteracted by the fact that providers under close end provider payment methods, e.g.
capitation for outpatient and global budget plus Diagnostic Related Group for admissions
send strong signal over cost containment, and the fact of information asymmetry, it is very
unlikely to see moral hazard by the patients.

23
Other parallel systems are very small and mostly historical. For example, the State Railways
runs a small hospital in Bangkok in its headquarter at Makasan, mainly providing services to
their employees who are state enterprises; also the Tobacco Monopoly of Thailand also runs
a small hospital in Khlong Toey. Employees and dependants of state enterprises applied the
CSMBS rules and regulation.

Voluntary charitable funds play an insignificant role in financing health in Thailand, mostly
are small scale and has limited funding role, such as subsidized the poor who cannot afford
to pay hospital bills in the old days prior to 2002 universal coverage. A Chinese Poh Tek
Tung also mobilize charitable fund to maintain pre-hospital emergency services for traffic
accidents. However, the emergency medical services system was formalized by the 2008
Emergency Medical Services Act. These services were fully funded by NHSO for the whole
population.

There is no specific financing for mental healthcare. All covered by the three insurance
schemes, in particular acute psychotic patients who were admitted less than 15 days.
Beyond this benchmark, funding is through national mental health programme, whereby the
MOPH Mental Health Department is responsible for some 15 psychiatric hospitals throughout
the country. However, the maximum 15 days acute psychotic admission for UC members
were removed, for which it will take full effects in November 2010.

Long term care is not well developed, there is no specific funding for long term care, and
mostly not covered by public fund, households are responsible to support themselves either
through home care givers. There are a very limited number of long term care hospitals.

3.4 External sources of funds

External sources of fund is a tiny portion in Thai health financing system, only 0.1-0.3% of
THE between 1994 and 2007 (Table 6). Usually, mostly funding from the Global Funds to
fight with HIV/AIDS for fight HIV/AIDS epidemic, but still small scale compared to
government budget on ART.

3.5 Equity in health financial contributions

An EU funded EQUITAP study and subsequent studies conducted
[17]

[5]
, estimates a
Concentration Index of various sources of healthcare finance in Thailand, using NSO SES
data and National Health Account in its estimates, see Table 10.

24
Table 10 Financing Sources for healthcare and their progressivity
2002 2004 2006 Financing sources
CI* Fraction** CI* Fraction** CI* Fraction**
Direct tax 0.8221 0.20 0.8162 0.21 0.7687 0.23
Indirect tax 0.5594 0.38 0.5958 0.37 0.5512 0.33
Social insurance contribution 0.4975 0.06 0.4561 0.07 0.4492 0.08
Private insurance 0.3785 0.09 0.4221 0.09 0.4188 0.08
Direct payment 0.4883 0.27 0.4626 0.26 0.4705 0.28
Total 0.5719 1.00 0.5822 1.00 0.5593 1.00
Source
[5]

Note:
* Concentration Index (CI) based on Socio-Economic Survey (SES: 2002, 2004 and 2006). CI ranges from 1 to +
1, the closer to 1 the more progressive of financial contribution.
** Fraction of health expenditures by source was derived from Thailand National Health Account (figures in 2006
were estimated from 2005 data)

CI, an index of the distribution of payments, ranges (-1 to 1), a positive (negative) value
indicates the rich (poor) contributes a larger share than the poor (rich), a value of zero is
everyone pays the same irrespective of ability to pay.

Between 2002 and 2006, the proportion of total expenditure made up from direct tax
payments increased from 20% to 23% while the share from indirect tax payments fell from
38% to 33%. The proportion from household direct payments remained unchanged, at 27-
28%. Direct tax was the most progressive funding source, where the rich paid
proportionally more than the poor, followed by indirect tax, and SHI contribution. Private
insurance premiums and household OOP payment were both regressive. General tax finance
(direct, indirect tax and other government revenues) was therefore progressive. As
indicated in Table 10, the dominant share of general tax as a source of total health
expenditure in Thailand resulted in an overall progressive system. The overall CI remained
virtually unchanged over the three observations: 0.5719 in 2002, 0.5822 in 2004 and
0.5593 in 2006.

The main reason why the SHI contribution was less progressive was the 15,000 Baht
(approximately US$428) per month ceiling placed for the assessed contribution. This ceiling
has never indexed or revised since the 1990 SHI inception, resulting in consistent
movements towards less progressivity as workers wages have increased.

25
4. How money is pooled, allocated and purchased?

4.1 pooling agencies and allocation

There are four major insurers, Comptroller General Department for CSMBS, SSO for SHI,
NHSO for UC scheme, and private insurance firms for voluntary health insurance schemes.
These agencies play two roles, pooling funds and also purchase services on behalf of their
respective members.

Figure 6 Flows of funds to pooling agencies are described below.

In Figure 6, SSO play double roles, collective revenue and pooling, through mandatory
electronic transfer by employers of the payroll tax contributions on a monthly basis by
themselves and the equal portion deducted from the employee wages. Also SSO received
on an annual basis the government contribution as part of the tripartite financed scheme,
also annual operating budget for SSO, as it is one of the Departments under the jurisdiction
of the Ministry of Labour.

However, CGD responsible for CSMBS and NHSO for UC schemes did not have collection
role, but got annual budget allocation from the government through annual Budget Act.
Private insurance companies also play double roles, collecting premiums from their member
on an annual basis, pool them and purchase services for their members.

Private insurance
NHSO
SSO
CGD
Bureau of Budget
Revenue departments

Private insurance members
Pooling / purchasing agencies
26
The characteristic of the market structure of pooling and purchasing is multiple non-
competing insurers/purchasers. Multiple natures as there are four purchaser agencies.
Non-competing as each of the three insurers cover three distinct populations, namely the
private sector employees are mandatory covered by SHI, public sector employee by CSMBS,
and the rest of the population by UC scheme. There three public insurance schemes are not
competing for members. Unless when the SHI members become unemployed, they would
be automatically transferred to UC Scheme, or child dependants of CSMBS when reaching
beyond 20 years would be automatically transferred and covered by the UC scheme.
However, when UC members are employed by private sector, they would be covered by SHI
and removed from the UC scheme. Members of these three public insurance schemes are
not allowed to opt out from the schemes; though they can free to enrol in the voluntary
private health insurance schemes.

The size of budget for UC scheme was negotiated annually between the NHSO and Budget
Bureau, decision is made by the National Health Security Board, chaired by the Minister of
Health. The budget is proposed on the estimate total expenditure per UC member in the
year concerned, based on the last year utilization rate of outpatient, inpatient and projection
to the concern budget year, and the unit cost of outpatient and inpatient, also other
components such as prevention and health promotion services. In the past years, budget
increased as a result of significant increase in service utilization and labour cost as a result
of annual six percent government salary adjustments and inflation of other medical
products.

The size of budget for CSMBS was proposed by the CGD based on historical total
expenditure trend and projection to the budget year of concern. However, as a result of fee
for service for OP, although IP is paid on conventional DRG, there were significant cost
escalations for outpatient services. CGD over spent the approved budget, but cross
subsidized by the Central Fund earmarked for contingencies such as flood, drought.
Recently, cross subsidy is not permitted by the Constitution, and legal approval for
overspending is required by the Parliament.

The per capita expenditure for SHI is fixed by SSO and adjusted every few years. Similar to
UC scheme, the SHI estimate per capita total expenditure for the next year based on service
utilization rate and unit cost of services, including some other service components covered
outside the capitation.

Other parallel government health systems such as Ministry of Public Health for public health
programs, Ministry of Defence for arm force medical services and Ministry of Justice for
prison medical services are based on annual budget allocation, based on historical budget
with slight adjustment.

4.2 Mechanisms for allocating funds among pooling/purchasing agencies

Three public insurance purchasers have distinct purchasing mechanisms. UC scheme
estimated age adjusted capitation for outpatient services to a contractual unit, typically a
district health provider network (including district hospital, and 10-12 sub-district health
centres) based on number of total registered members with the network. NHSO also set a
national global budget ceiling for admission services, and based on electronic submission of
every inpatient discharged from hospitals the information on DRG and its respective relative
weight, that NHSO on a monthly basis, reimburses the total fund for admission services
incurred to individual hospital throughout the country. There are also some other additional
27
pay such as high cost services, e.g. bone marrow transplantation, for which a fee schedule is
applied to certified providers. Annual budget allocated to providers by NHSO is a hard
budget, it is not possible to pay beyond what is negotiated and approved, by the end of the
year, budget for medical services were fully disbursed and cannot be carried forward to next
fiscal year.

Table 11 shows the approved budget per capita UC members, slowly increased from US$
35.4 in 2003 to US$ 73.5 in 2010, the annual growth rate ranged from 5.2% in 2009 to
18.8% in 2006.

Table 11 Different components of approved budget per capita UC member, 2003-2010,
nominal price.
2003 2004 2005 2006 2007 2008 2009 2010
OP 47.7 37.3 38.2 35.1 33 29.6 29 30.2
IP 25.2 32 31.2 27.7 26.2 38.7 36.5 35.8
Prevention-Promotion 14.6 15.7 15 13.6 12.7 11.6 11.4 10.9
High cost 4.7 6.6 8.9 14.7 13.3 6.7 7.8 7.4
Other 7.8 8.4 6.7 8.9 14.8 13.4 15.3 15.7
Total 100% 100% 100% 100% 100% 100% 100% 100%
Baht per capita* 1202.4 1308.5 1396.3 1659.2 1958.3 2184.7 2296.3 2497.3
US$ per capita 35.4 38.5 41.1 48.8 57.6 64.2 67.5 73.5
Annual growth,% 8.8 6.7 18.8 18 11.5 5.2 8.8
Source: NHSO various years
Note: * include all items of special payment such as dialysis, ART and other additional pays.

SHI allocates non-risk adjusted capitation inclusive for OP and IP services to contractor
hospital based on the number of registered members with that contractor. Public and
private hospitals are competing contractors for SHI members, though private contractors
had higher share, 65% of total SHI members. Members have choices to change the
registration with their preferred contractor provider once a year or when they change their
employer, or domicile to facilitate better access to care. In return, contractors have to
report the service output both OP and IP (including DRG information) to the SSO on a
monthly basis. The number of registered members was monthly updated, both in and out
from the contractor.

Though the capitation budget allocated to contractor hospitals is a hard budget for services
covered by capitation where there is no additional pay, SSO pays incentive to contractor
providers for percentile of utilization rate, from 30 to 70 percentiles to provide incentives to
high utilization contractors. SSO also compensates high risk beneficiaries registered to each
contractor for some selected chronic conditions, See table 12.

Additionally, there are pays to providers based on fee schedule such as dialysis and other
high cost cases. These additional pays aim to mitigate the negative impact of capitation on
under-provision of services.

28
Table 12 SHI per capita budget for contractor: 2000 to 2009, Baht at current year price
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Capitation 1,100 1,100 1,100 1,100 1,100 1,250 1,250 1284 1,306 1,404, plus 77
Baht for level
2 of hospital
accreditation
Percentile of service
utilization
30-
100
30-100 30-100 30-100 30-100 30-100 30-100 30-100 30-100 30-100
Health risk
adjustment
- 150 150 150 150 205 205 211 233 457
Source: SSO various annual reports

CSMBS has limited capacity to act as a pro-active purchaser, it reimburses directly to
healthcare providers for outpatient bills on a monthly basis since 2007. Before 2007, it is a
fee for service reimbursement to CSMBS members, when members have to pay for service
upfront and reimburse later. For admission services, CGD did not set up a global budget
ceiling, but fully applies a conventional DRG style, the reimbursement rate per Relative
Weight varies hospital by hospital. Individual hospital has different compensation per DRG
relative weight. As a result, expenditure both for OP and IP increased significantly in
particular OP expenditure. CGD applies soft budget as in the past 15 years, it over spent
than the total annual budget approved.

VHI purchases services mostly from private providers. However, it introduces implicit
copayment as there are ceiling for all items of services, e.g. room and board, medical and
surgical interventions.

29
5. Who spends the money? Purchasing and purchaser-provider
relations

The dominant form of organizational relationship between purchasers and providers in
Thailand is contract model, except some government parallel systems apply integrated
model such as the State Railway set its budget to purchase services from its own State
Railway hospital in Makasan. The State Railway employs its own hospital staffs and provides
annual budget to finance the operation. Also Department of Correction prisoner medical
services owns a number of hospitals, employs staffs and fund directly. However, these
parallel systems play a very small provision role.

In the contract model, public and private health care providers are independent from and
are contracted by the third-party payers--in this case: the CGD for CSMBS, SSO for SHI and
NHSO for UC Scheme. There is a separation between purchaser and provider function in the
contract model, as commonly referred to as purchaser provider splits.

Table 13 Number of hospitals and health centres by different ministries, 2007
Bangkok Regional 75 Provinces
1. Hospitals
Bangkok Metropolis authority/ municipality 8 - -
Medical schools 5 6
MOPH Specialized/Regional / provincial hospitals 18 72 70
MOPH District hospitals 731
Other Ministries 10 - 60
State enterprise 4 -
Total hospitals 45 78 861
2. Health centres
Bangkok metropolis admin./municipality 77 - 214
MOPH health centres - - 9,762
MOPH community health post - - 311
Total health centres 77 - 10,287

The MOPH owns a lion share of healthcare provision in Thailand, particular 731 district
hospitals, 70 provincial hospitals, 72 regional and specialised hospitals located in 12 public
health regions, as well as 18 national referral- and specialised hospitals in Bangkok. See
table 13.

These public healthcare providers earn their revenue from the three public health insurance
schemes, also additional revenue from OOP paid by patients who opted out their
entitlement. After the 2002 launch of UC scheme, there is no more supply side financing.
SHI, CSMBS and UC scheme fully apply demand side financing.

30
Table 14 Summary detail of contracting mechanism for UC scheme and SHI
UC scheme SHI
Contractor
agency
National Health Security Office, national
level
Social Security Office, national level
Service under
contract
OP services and prevention and health
promotion services
Inclusive OP and IP services
Catchment
population
Typical: population reside in the
district. For internal migrant workers to
other provinces/ districts, they are
registered in their preferred provider
network.
No catchment areas, contractor providers
compete for registered members through
marketing and advertisement.
Contractor
providers
Typical: District health provider
network including district hospital and
all 10-15 health centres in the district
Competitive public private contractor
hospitals >100 beds with all other quality
requirement posed by SSO
Type of
contract
Block contracts, annual contract
based on agreed capitation rate for
outpatient services to a defined
number of registered UC members,
regardless of utilization
Block contract for inclusive outpatient
and inpatient service for a year
regardless of number of services
rendered to a defined number of SHI
member registered with the contractor.
For outpatient, in addition to block
contract, volume contract is given
based on the percentile of OP
utilization, for incentives not to under
provision of service.
Term of
contract
Annual contract renewal every year,
members can choose to register
Usually annual,
Choices of
members
Annual choice to register elsewhere Annual choice to register elsewhere
Monitoring
contract
Monthly electronic reporting of
throughput, number and profile of
outpatient visits
Monthly electronic reporting of throughput,
number and profile of outpatient visits
How contract
is developed?
Capitation rate for OP is based on
utilization rate and unit cost of services
projected to the contract year
Capitation rate is a combination of
utilization of OP and IP and unit cost of OP
and IP
Enforcement
of violation
Due to geographical monopoly, there is
no choice by NHSO not to contract the
only MOPH district provider network in
that district. Application of positive
engagement for quality and services
improvement and responsiveness,
social pressure and social accountability
are often found useful
Competitive market, members are urban
residents, where there are competing
qualified public and private contractor
hospitals. Termination of contract in
subsequent year (never been implemented
by SSO), or reduced number of registry
quota (implemented sometimes).
Choices of
contractor
agency
Not much choices in rural areas,
geographical monopolies is a problem,
however, MOPH district health providers
are non-profit, so far there is no much
problems
Competitive market
Rules and
standards
Same rule for all public and private
contractor providers
Same rule for all public and private
contractors

Table 14 summarizes the key characteristics of contracting mechanism for UC scheme and
SHI. Despite SSO is the predecessor of NHSO in term of contract experiences; the NHSO
outperformed in their design, implementation and enforcement of contracts, as there are no
medical personnel in the SSO, while NHSO staffs, not only medical background, but having
huge experiences in managing public health at provincial and MOPH levels.

31
In the CSMBS fee for services systems, the CGD applies the MOPH national standard fee
schedule for services update every 4-5 years (e.g. laboratory, surgical and medical
interventions and percent mark up of medicines) for MOPH providers for OP services.
Though there is no standard fee schedule produced by other non-MOPH public hospitals,
CGD applies and endorses the MOPH fee schedule to all other non-MOPH public hospitals as
a national fee schedule. Update by MOPH requires approval by the CGD.

Enforcement of overcharging and increased volume of unnecessary services are difficult.
Observation found supplier-induced demand, for example, excessive use of non-essential
medicines, brand products (which is 5 to 10 times more costly than respective generic
versions) and longer length of stay. Particular when hospitals directly reimburse OP
expenditure directly to the CGD, there is no financial barrier by the users, one observes a
rapid cost escalation in 2008 when direct disbursement was launched. Attempts to reform
CSMBS provider payment failed since 1994 to date due to entrench benefit and interests by
various stakeholders. Figure 7 provides a classic example of CSMBS cost escalation as a
result of fee for services with no copayment or maximum ceiling of service benefit.

Figure 7 CSMBS expenditure, 1990-2008, nominal price

CSMBS expenditure, 1990-2008, nominal price
0
10,000
20,000
30,000
40,000
50,000
60,000
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
m
i
l
l
i
o
n

B
a
h
t
OP
IP
Total

Source: CGD various years

Direct disbursement for OP service started in 2004 for some chronic diseases only, later in
2006, it extended to the pensioners and finally in 2007 direct disbursement was applied for
all CSMBS members
32
6. How different services and personnel were paid for: various
payment methods

6.1 Paying for health services

Table 15 describes how different health services were paid for by three public insurances
schemes as well as the voluntary health insurance schemes. We observe that there are
harmonization of payment for health services by NHSO and SSO as they applied the close
ended provider payment contract mode while the CGD applied fee for service opened ended
provider payment for outpatient services and conventional DRG for inpatient services.

6.2 Paying for healthcare personnel

Table 16 describes how different health personnel who worked in different level and public
and private health care services were paid no matter what sources of finance the providers
generated. There is quite a large gap of discrepancies across different public sector and
between public and private providers. This information leads towards how to harmonize
paying personnel and keep them work productively in the organizations.
33

Table 15 paying for health services
Paying for
services
Universal Coverage scheme Social Health Insurance CSMBS* Voluntary health
insurances
1. Primary/
ambulatory care
Capitation to contractor provider
network (mostly district health
providers including the district
hospital + all health centres or
Primary care units in the district)
based on number of registered
beneficiaries.

Capitation rate is based on
utilization rate and unit cost of
services in the previous year,
annual negotiated between NHSO
and Budget Bureau. Downstream
allocation to contractor provider
network is based on age adjusted
capitation for OP services.

Additional fee-for-service payments
in case of specific services and
medical equipments
Inclusive capitation for ambulatory
care, admission based on number
of registered beneficiary to
competing public and private
hospitals (having more than 100
beds and other facility and
professional requirement).

Additional risk-adjusted fix pay per
beneficiary for effective managing
chronics and high cost diseases,
additional pay per beneficiary for
utilization in the past year

medical equipments

Fee for services, directly
reimbursed to providers not
beneficiaries. Note, only public
providers are eligible.
Fee for services with
varying conditions,
more favourable benefit
for higher premium
2. Inpatient care Annual global budget was set
based on utilization and unit cost,
within this budget, case base
payment based on actual relative
weight points earned by providers
(mostly public)

medical equipments
Inclusive capitation for ambulatory
care, admission

medical equipments
Prior to 2008, conventional fee for
services for items of services, with
combination of fee schedule for
room and board, medical
appliances, and other specialised
services.

Conventional DRG was applied
recently 2008, Baht per relative
weight was announced upfront.
Fee for services with
ceiling of total
reimbursement per
admission
3. Prevention and
health
promotion
[personal
preventive and
health
promotion
services]
Capitation for providers (mostly
public) covers the whole Thai
population (not only UC members)
as a national scheme
Covered by NHSO Covered by NHSO Not covered
34
Paying for
services
insurances
4. Maternity and
pregnancy
including
antenatal care
and post-natal
care
Covered in inpatient care Additional fix pay for antenatal
services, delivery and post-natal
care, per confinement to
beneficiary, not more than 2
confinements
Covered in inpatient care Mostly covered in
inpatient care
5. Renal
replacement
therapy
NHSO negotiate purchase of
peritoneal dialysis solution through
Government Pharmaceutical
organization deliver to district
hospitals. NHSO purchases
hemodialysis from public private
centres based on fix fee,
copayment is fixed per
hemodialysis session by NHSO
Additional pay, fix fee per session
of dialysis, free choices by
beneficiaries, no control of provider
fee, implicit copayment when
actual fee beyond the rate given by
SSO
Similar arrangement to SHI,
separate additional pay, fix fee per
session of dialysis (but higher than
SHI), free choices by beneficiaries,
no control of provider fee
schedule, implicit copayment when
actual fee beyond the rate given
by CGD.

Not covered
6. Antiretroviral
services
NHSO purchases anti-retroviral
medicines through Vendor
Managed Inventory, additional pay
to providers for VCT, viral load
tests, registration of patients
required
SSO purchases and distribute anti-
retroviral medicines to providers,
additional pay to providers for VCT,
Viral Load tests, registration
required
Fee for services methods, covered
in ambulatory care
Not covered
7. Public health
services
National program responsible by
MOPH e.g. diseases surveillance,
covered the whole population
By law, services not covered, it is
covered by national program
By law, services not covered, it is
covered by national program
Not covered
8. Pharmaceutical
care
Pharmaceutical benefit referred to
medicines in the national Essential
Drug (ED) List is fully covered in
capitation fee for ambulatory care
and global budget + case base
payment for inpatient services
Drug benefit referred to National
ED lists.

Drug payment is included in the
inclusive capitation for ambulatory
and inpatient services
Drug benefit referred to National
ED lists.

Fee for services for drugs in
ambulatory care, and DRG for
admissions
Covered in ambulatory
and admission care
9. Rehabilitation covered in OP and IP budgets, fee
schedule for community
rehabilitation from a separated
rehabilitation and disabled budget.
covered in the capitation budget fully covered in facilities
10. Long term care Not covered Not covered Not covered Not covered
11. Emergency
Medical Services
[pre-hospital
care]
NHSO proposes budget for pre-
hospital care and referral to its
beneficiaries, fee per three
different types of services
Not covered Not covered
35
Paying for
services
insurances
12. Dental care Covered except costmetic
procedures and integrated in the
ambulatory care payment
Fee for services with ceiling, two
services per annum
Not covered except a few basic
dental services
Mostly not covered
13. Mental health
care
Fully covered in ambulatory care.
For admission, acute psychotic is
covered not more than 15 days of
admission [though this is abolish
and will take effect in November
2010], beyond this limits, covered
by national Psychiatric program
based on annual budget allocation
Aute psychotic is covered not more
than 15 days of admission
No limitation, fully covered by
ambulatory and admission
Not covered
14. Healthcare for
special
population, e.g.
prisoners,
military
personnel
Not covered, medical services for
prisoners are covered by
Department of Correction, routine
budget allocation, the Department
also manages some hospitals, or
referral to MOPH hospitals for
which payment is mostly fee for
services
Civil servants, military personnel
and their dependants are fully
covered by CSMBS

* There are increasing numbers of local government officials and employees of independent public organizations. The provider payment mechanism often applies
the CSMBS reimbursement model. Any reform in the CSMBS may have effects to these groups.

36
Table 16 paying for health personnel

Category of
professionals
Primary health
care centre
MOPH district
hospitals
MOPH
provincial/ regional
hospitals
University
hospitals
Private sector:
private clinics
Private sector:
hospitals
1. Medical doctors
in clinical
services
No MD at this level
of care
Mostly non-
specialists, they
are salary paid
(salary scale is
standard for all
civil servants
across sectors,
based on grade
when entry to
service), additional
pay includes non-
private practice
allowance, over
time allowance,
hardship
allowance, lump
sum allowance.
Specialty allowance
Mostly specialists, salary
paid, similar salary scale
as a civil servant, grade
are higher than district
hospital doctors due to
seniority and specialist
training. Other
allowances similar to that
of district hospital though
neither hardship nor lump
sum allowance are eligible
Mostly specialists,
recent reforms
when most
university hospitals
become
autonomous body,
higher salary scale
than civil servant
(1.4 times higher),
other allowances
Private clinics
provide diagnosis
and dispensing
medicines.
Charges for service
include doctor fee
and dispensing
medicines,
Different modes,
most common is fee
for service with
minimum monthly
guarantee. Rate of
pay varies by
seniority and
specialty, e.g. fee
per consultation,
surgical fees or
anaesthesiologist
fees. Other modes
are payment per
session of service,
e.g. 4 hr. of OP
consultation.
2. Professional
nurses
They can be either
civil servants or
non-civil servants
depending on
availability of civil
service posts. This
means they will be
introduced to the
same payment
mechanism as
professional nurses
in district hospitals.
Civil servants are
salary paid plus
other allowance
such as hardship
allowance,
allowance for
deficit health
professions (.),
in addition with
overtime payment.

Non-civil servant
e.g. contract staffs
are salary paid but
higher rate than
civil servant as
they are not entitle
to medical and
pension benefit.
Similar to that of MOPH
district hospitals. Usually
higher income from over
time shifts (and private
practices).
When university
hospitals become
autonomous,
nursing staffs are
contract staff (non-
civil servant
status), are salary
paid (with higher
scale than civil
servants), plus
other allowance
and incentives
Not common Salary paid, plus
other incentives such
as nursing license, or
specialisation such
as nurses in
Intensive Care Unit,
Cardiac Care Unit,
Dialysis unit; plus
other allowances,
annual bonus
37
Category of
professionals
Primary health
care centre
MOPH district
hospitals
MOPH
hospitals
University
hospitals
Private sector:
private clinics
Private sector:
hospitals
The rest of that
they will get the
same allowances
and pay as those
government
officers.
3. Dentists Dental nurse, or
dental assistants
are usually civil
servants, they are
salary paid.
Similar to doctors
in district hospitals,
almost all are civil
servants and salary
paid, plus other
incentives, e.g.
overtime payment,
hardship
allowance, non-
private practice
incentives, and
lump sum
allowance,
Similar to those work in
district hospitals
Status and
payment are quite
similar to that of
doctors in
university hospitals
Private dental
clinics earn living
from dental
services, based on
fee for services for
different services
rendered. The
fees cover medical
supplies, material
and their wages
Almost all paid
based on doctor fee
for different services
provided, annual
bonus
4. Pharmacists Not applicable at
this level.
Mostly they are
civil servant, but
increasing number
of contract staffs,
all are salary paid,
with a lower level
of incentives and
allowance
compared to
doctors and
dentists
Similar to those work in
district hospitals
Similar to those
work in provincial
hospitals
Pharmacists in
private pharmacy
earn living from
selling prescribed
medicines and over
the counter
medicine based on
fee for services for
each item of
medicine, for
which the mark up
covers their wage.
The mark up
varied greatly.
Salary paid, plus
other incentives such
over time payment,
and annual bonus
5. Public health
workers
Salary paid as
most are
government
officials
Salary paid as
most are
government
officials
Salary paid as most are
government officials.

However, not so many
staffs in provincial
hospitals
Not applicable Not applicable Not applicable
38
Category of
professionals
Primary health
care centre
MOPH district
hospitals
MOPH
hospitals
University
hospitals
Private sector:
private clinics
Private sector:
hospitals
6. Allied
professionals:
physiotherapists
, therapists,
medical
technologists
Not applicable at
this level of care
Salary paid as
most are
government
officials
Salary paid as most are
government officials
Salary paid,
contract staffs in
autonomous
university has
higher salary scale
than civil servants
Not applicable Salary paid with over
time payment

39
7. Future challenges

Despite success on coverage extension to the whole population in 2002 and equitable
outcome of the reforms; three main challenges were identified for which they require policy
attentions.

7.1 Managing Cost Drivers

Despite positive cost containment outcomes for SHI and UC schemes due to strategic
purchasing; three cost drivers challenge the long term financial sustainability as the majority
of financing comes from general tax revenue.

Demographic transition: the proportion of the elderly (more than 60 years) has increased
from 5.4% in 1960 to 11.8% in 2010
[18]
. Service utilization rate among elderly is 2.3 times
that of general population. With an increased proportion of elderly, there has been thus a
substantial increase in demand for health services.

Epidemiological transition: The 2004 Burden of Diseases confirms the 1999 BOD studies that
non-communicable diseases contribute to Disable Adjust Life Year (DALY) loss more than
communicable, nutritional, childhood and maternal diseases and injuries (The Thai Working
Group on Burden of Disease and Injuries, 2007). Proportion of DALY attributed to non-
communicable diseases to overall DALY also increased from 58.9% in 1999 to 65.7% in
2004.

It is not possible to halt demographic transitions; however maintaining a healthy ageing
population through effective primary and secondary prevention of chronic NCD for the
middle age groups can minimize the future demand for such expensive services
[19].

Effective interventions are needed to tackle shared risk factors, namely: tobacco use,
unhealthy diet, physical inactivity and harmful use of alcohol and, therefore, have to
influence not only health policies but also feature prominently in public policies
[20]
.

Despite the cost-ineffectiveness of renal replacement therapy for UC members who have
end-stage renal diseases; inequity across insurance schemes, catastrophic health spending
and impoverishment to households prompted the government to adopt dialysis into the
benefit package of the UC scheme in 2008. Once adopted, it is not possible to withdraw
from the benefit package except in the future where co-payments may be introduced.

7.2 Managing Benefit Package

Even rich governments cannot afford to keep abreast with and adopt all of advance health
technologies. There is a need for institutional capacity to generate evidence on
effectiveness, cost effectiveness and long term budget impact of new health technologies to
guide decisions on benefit package. The Health Intervention and Technology Assessment
Program (HITAP), a budding unit of IHPP will, in the future, evolve as a national focal point
in technology assessment of the country
[21]
.

Two major decision platforms worth mentioning, first the National Subcommittee on
Essential Drug (ED) List which reports its work to the National Committee on Drug Systems
Development chaired by the Prime Minister is responsible to review and update which
40
medicines are listed in the national ED list. The ED is referred to by all three insurance
schemes as drug benefit package, requires evidence on cost effective comparison to be
included or excluded from the List.

Second, the Sub-committee on Benefit Package which reports to the National Health
Security Board chaired by Minister of Health, is responsible to review and update, including
and excluding health interventions into the benefit package.
The assessment of interventions will involve a broad base stakeholder engagement on topics
submission and selections, for example, policy makers, royal colleges, industries, civil
society, patient groups and general lay public. The results of technology assessment would
be submitted to the two sub-committees for their reviews and further decision by relevant
bodies.

The performance of the two sub-committees ensures that benefit package is updated based
on hard evidence. The societal benchmark is adopted and an intervention is deemed cost
effective and worth public investment if its cost does not go beyond one GNI per capita to
gain one QALY from the said intervention
[22]
.

7.3 Managing health systems

There is a need to actively manage health systems in response to demographic and
epidemiological transitions. In the context of adequate and equitable distribution of health
infrastructure, there is no significant need for new infrastructure except maintenance for
effective operations.

The current health systems performance has been hampered by limited human resource in
comparison to other middle income countries, using the human resources for health to
population ratio. The human resource shortage problem is aggravated by the inequitable
distribution across geographical regions, though the gap gradually reduced.

In the context of trade in health services and regional trade agreement in the ASEAN, there
is a major trend of outflow of experienced professionals from public to private sectors within
the country and through migration outside the country.

The health systems are not very well equipped to provide high level of effective coverage of
essential interventions for chronic NCD, in particular diabetic and hypertension. For
example, the 3
rd
National Health Examination Survey in 2004 reported that only 36.7% of
total patients with high blood pressure and 29.2% of total diabetic patients have adequate
control of their conditions. Although the 4
th
National Health Examination Survey in 2009
reported a substantial improvement; 50.6% of patients with high blood pressure and 54.5%
of diabetic patients, there is still room for improvement.

There is also limited financial and systems investment as well as lack of effective
interventions in keeping the pre-elderly population group stay healthy in order to move
toward healthy elderly.

Long term care and the effective referral to and from acute hospital care and community
based care to accommodate increasing frail elderly who need health and social support
require clear policy and significant investment. Intersectoral actions between health and
social welfare departments are yet to be strengthened.

41
Despite a clear policy of NHSO to strengthen primary health care, the quality of health
services provided by primary care provider has still not satisfied or created public
confidence. Devolution of health centres, which are the main public primary care providers
in the rural area, to work under the direct supervision of local authorities, has started since
2007 but without any progress. However, according to the Thai Constitution of 2007,
devolution of health service provision to local authority especially at primary health care
level seems to be unavoidable and could affect health systems management.

8. Conclusions

The 2010 health financing review provides a snap shot on the sources of financing in
Thailand. After UC was successfully achieved by 2002, the whole population is covered by
one of the three public insurance scheme, as well as voluntary private health insurance. The
financing healthcare is dominated by general tax revenue, which is one of the most
progressive sources of funding. The level of THE, as percent of GDP, is modest; this is
within the fiscal capacity of the country to afford in long term, see long term projection of
total health expenditure by 2020.

One of the strengths of healthcare financing is strategic purchasing, with the application of
capitation contracting model as major mode of provider payment for SHI and UC Schemes.
Compared to fee for service reimbursement model, capitation contracting model has better
prospect of long term cost containment
[23]

Benefit package provided by the three public insurance schemes is generous and
comprehensive, almost all health service including high cost care are included; though a few
items of negative exclusion list are excluded such as cosmetic surgery. Comprehensive
coverage where services are provided free of charge results in extremely low prevalence of
catastrophic health spending and impoverishment; the poor resided in rural areas had better
access and use of health services from the district health provider network which serves as a
close to client service results in pro-poor public budget subsidies.

The administrative costs of the UC and SHI schemes are very low as NHSO relies on annual
budget approval through the Budget Act processes, and SSO collects revenue from
mandatory monthly wire transfer from the employers. The purchasing functions when apply
the capitation contract model, the administrative cost is much less where there is no need to
review and approve claims as is the case of CSMBS fee for service reimbursement model.

Benefit package was harmonized across three public insurance schemes facilitate movement
of members from one to another scheme, provider payment is better harmonized between
SHI and UC scheme, while CSMBS is still outstanding when it applies fee for service direct
disbursement for OP services, although CSMBS applies DRG systems for hospitalization
similar to that of the UC Scheme.

42

References

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