Dec. 1, 2023

Health Financing in Thailand. Universal Health Coverage with 3 health financing schemes.

Published May 12, 2023, 10:08 p.m. by Courtney

In thailand, health financing comes from a mix of public and private sources. The government provides the lion’s share of funding, with about three-quarters coming from tax revenue and the rest from social security contributions. Private health spending accounts for the remaining one-quarter of health expenditure.

thailand has achieved universal health coverage (UHC) for its citizens, with all residents eligible for free health care at public hospitals. However, out-of-pocket payments (OOP) are still common, accounting for nearly one-third of all health spending.

There are three main health financing schemes in thailand: the National Health Security Office (NHSO), the Civil Servant Medical Benefit Scheme (CSMBS), and the Social Security Office (SSO).

The NHSO is the largest health insurer in thailand, covering about 48 million people, or about 60% of the population. It is funded by general taxation and social security contributions, and provides free or subsidized care at public hospitals.

The CSMBS is a health insurance scheme for civil servants and their families. It is funded by payroll taxes and provides free or subsidized care at public hospitals.

The SSO is a health insurance scheme for private sector employees and their families. It is funded by payroll taxes and social security contributions, and provides free or subsidized care at public hospitals.

All three schemes cover a wide range of services, including inpatient and outpatient care, preventive care, dental care, and traditional Thai medicine. However, there are some important differences between them.

For example, the NHSO covers a larger share of the population than the other two schemes, but it does not cover non-essential services such as cosmetic surgery. The CSMBS covers a smaller share of the population but covers a wider range of services, including cosmetic surgery. The SSO covers a similar share of the population to the NHSO but does not cover as many services.

In addition to the three main health financing schemes, there are also a number of other smaller schemes, such as the Military Medical Benefit Scheme and the Royal Thai Police Medical Benefit Scheme.

The government is currently in the process of reforming the health financing system. The goal is to reduce OOP payments and increase financial protection for households. The reforms are still in the early stages, and it remains to be seen how successful they will be.

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hi and welcome back to our series on the

Thai health system in this video we're

going to look at the health financing in

Thailand throughout this video we'll

look at the history of health financing

in Thailand and how it led to the major

health reforms of 2001 we'll look at the

details of Thailand's three health

financing schemes that collectively

provide universal coverage and the

implications of payment mechanisms and

other features on the health system

let's start by looking at some of the

indicators for health financing in

Thailand the current health expenditures

which is the sum of all annual spending

on health equates to about six hundred

and thirty five international dollars in

purchasing power parity or PPP without

getting too technical and economic terms

the idea here in using international

dollars in PPP is to use a common

currency based on relative cost of items

between countries assuming that there is

a single true price for all goods so for

example if a computer costs a thousand

dollars in the US but that same computer

cost thirty thousand baht in Thailand

then we can assume that 30 baht is the

same as one US dollar and use that

in reality we do that for a whole set of

goods not just that one computer and

that's how we can compare health costs

in different currencies in equal terms

it allows us to make equal comparisons

across countries when we compare

Thailand's numbers to the US Japan and

Australia all more developed in

high-income countries we see that

Thailand spends much less on health care

we also see that relative to the

country's GDP which is the sum of all

economic activity in the country it's a

relatively small amount only 3.7 percent

these two numbers tell us that Thailand

is more frugal or efficient in health

care costs than the US Japan or

Australia the overall spending in total

dollars and in percentage of GDP more

resemble that of developing countries

another thing we can look at is where

the money is coming from three major

sources of spending and health any

Health System are general domestic

budget out-of-pocket spending and

voluntary health insurance what we see

is that in this regard Thailand more

resembles a developed countries

Thailand's figures are fairly comparable

to the US Japan and Australia which are

three highly developed economies with

around 80% of health expenditures

shouldered by the government and around

10 to 15 percent out-of-pocket so this

will be the question we'll try to answer

in today's video what is Thailand doing

to have this paradoxical situation in

which their overall spending resembles a

developing country but their financial

protection resembles an upper income

country before that we do that though

I'd like us to quickly compare Thailand

spending status with other regional

peers in Southeast Asia let's look first

at total spending Thailand spends more

on health care than many other Southeast

Asian countries but they're less than

the average here with the dotted line

again highlighting the relative

efficiency of the system if we look at

the share of spending that's

out-of-pocket compared to government

spending as a percentage of GDP we see

that normally as overall healthcare

expenditure increases which is usually

related to economic development we see

that the out-of-pocket spending

decreases this is sort of the average

here with the red dotted line and we can

even break this graph into quadrants

where you have health spending as a

percentage of GDP greater than and less

than 5% and as well as out-of-pocket

spending that's greater than were less

than 20% of total expenditures so in the

upper left or lower right quadrant we

might consider this sort of normal

conditions where most countries lie

either with the less developed and the

more developed economies generally


but this upper right quadrant is a bad

place to be

it means high spending but still mostly

out-of-pocket on the other hand this

lower left quadrant would be a good

place to be low overall spending and

very little out-of-pocket and that's

where we see Thailand within that lower

left quadrant so by all accounts

Thailand is in a relatively unusual

position with regards to its health

financing it's hailed as one of the best

examples of universal health coverage

and health financing in the world so

what's the secret well the first thing

we have to realize is that the Thai

government has had consistent dedication

to prioritizing government spending on

health care this figure here is reported

in inflation-adjusted dollars so the

increase that's shown here as the annual

increases on health care have outpaced

inflation since the year 2000 and

throughout that time it's been the

government that has annually increased

its commitment to the health system

allowing for out of pocket spending to

continually decrease at the same time a

robust private healthcare and health

insurance market has been maintained

allowing an alternative the public

healthcare system we see that private

prepaid health insurance has actually

increased reflecting the economic

development and the increased purchasing

power of many Thai people in the growing

middle and upper class as you can see in

this graph the year 2001 was a turning

point with regards to health financing

many people attribute the success of

Thailand's health financing system to

the popular Prime Minister of Thailand

taxing who governed from 2001 to 2006 in

that role and he won a landslide victory

he and his party in 2001 and their right

to attribute these successes to him and

his partisan stock scene and his party

campaigned on a platform of universal

health care access with a small

co-payment of 30 baht per visit an

amount that's roughly equal to a US

dollar this campaign promise earned the

resulting program the nickname of the 30

baht scheme which people still use to

this day despite the fact that the 30

baht co-payment no longer exists and

we'll talk about that later but it's

important to understand

and that a lot of important things have

happened prior to 2001 that made it a

perfect storm of events and allowed for

the implementation of those reforms in

2001 and importantly for health

financing Thailand had gained a lot of

experience experimenting with many forms

of health financing prior to 2001 the

road to universal health coverage began

in 1975 with the introduction of the

low-income card by 1981 the Ministry of

Public Health had issued 10 point 9

million low-income citizens a card that

allowed them to receive free or highly

subsidized health care at public health

facilities throughout the years the

program was expanded to include other

vocal groups including the elderly in

1992 children and disabled in 1993 and

veterans in 1994 and at that point the

program was renamed the medical welfare

scheme for the underprivileged the

low-income card scheme or medical

welfare scheme produced many valuable

lessons that helped shape the major

reforms of health financing and the

introduction of universal health

coverage in 2001 one thing they learned

is that it's hard to get people enrolled

while the application for the card was

free and had relatively simple criteria

the voluntary nature of the program

resulted in incomplete coverage of the

targeted poorer population approximately

89% of the eligible low-income group and

64 percent of the total eligible

population held cards in 1998 thus

despite nearly 25 years of effort many

of the targeted groups were still not

receiving the benefits of the program

and furthermore some card holders

avoided using the card due to its stigma

others reported discrimination and

reduced service at healthcare facilities

due to hospitals reluctance to serve

low-income patients on the other hand

the program also suffered from leakage

of ineligible non poor populations into

the program households often

underreported financial assets to meet

the eligibility criteria

by comparing census data for example it

was estimated that around 1/2 or 45% of

card holders were actually above the

poverty line and likely to be ineligible

for the program in both the case of the

under coverage and of leakage the

weakness of the schemes means testing

for income resulted from difficulties in

estimating income in Thailand the

informal employment sector has comprised

and still comprises a significant

portion of the Thai population seasonal

work such as agriculture and informal

work such as street vending and

household labor make it difficult to

estimate income so the experience showed

that using income as a qualifier for

healthcare coverage was difficult with

the informal economy of Thailand finally

in addition to learning how to enroll

people many lessons were learned about

how to purchase health care services or

make payments to the healthcare

providers and to do it equitably in the

early years the low income card formula

was based on healthcare utilization and

on population so densely populated

central region which had good access to

health care would have high utilization

so it received a disproportionately

better amount of funding while leaving

the north and the northeast regions

which had actually the highest

proportions of the poor population being

severely underfunded therefore it was

learned that the healthcare utilization

or demand side funding was not an

equitable way to allocate funding to the

healthcare delivery system

now at the same time in the 1980s

Thailand was also trying to expand

coverage to other target populations of

course the formal sector workers had

compulsory social health insurance

program that began in 1990 and we'll

talk about that later since that still

exists now and the civil servants had

their benefits beginning in 1978

they and we talked about the

underprivileged groups there was still a

significant part of the population that

still had no viable way to get financial

coverage for health services outside of

expensive private health insurance and

that really wasn't viable outside of

Bangkok at that time so in 1983 the Thai

government began piloting a voluntary

community-based health insurance program

the idea was that households would pay

in a small annual premium starting at

that time around five hundred baht and

that would be pooled and organized

locally it's the idea of community based

health insurance the the program

struggled though at first and it did

eventually grow as the national

government began to provide risk pooling

equalization fund and as well as

subsidies much like the low-income

scheme the voluntary health card scheme

provided several valuable lessons for

the 2001 when universal health coverage

was implemented first they learned that

adverse selection is a real risk

particularly following the Asian

financial crisis of 1997 in 1998 they

found that people waited to enroll until

they were sick and so this was another

indication that voluntary systems were

not effective at achieving universal

coverage secondly they learned about

cost reimbursement models for example

reimbursing hospitals with a

fee-for-service model led to high costs

therefore they would take the experience

of the health card scheme and use it to

improve cost control measures and

thirdly they learned the importance of

risk pooling local community-based

health insurance risk pools were

vulnerable there for sustainability

could best be achieved if the risk was

pooled across a large population so to

quickly recap there was a long march

starting in 1975 and culminating in 2001

to achieve universal health coverage

what's also remarkable was that Thailand

did that at the relatively low

development status of less than 2000

dollars GDP per

capita and only a few years in the wake

of the devastating financial crisis of

the late 90s so let's talk about the

three schemes that provide health

coverage to the Thai population today

first is the civil servant medical

benefit scheme this is for the

government employees and it's a fringe

benefit it was established in 1978

second we have the social security

scheme this is for formal workers in the

private sector it's a form of compulsory

social health insurance and it was

established in 1990 and third is the

universal health coverage scheme it's an

entitlement for all people and it's the

default coverage if you don't qualify

for the first two it was established

with the reforms of 2001 each scheme is

financed from a different funding source

and managed by a different organization

so here we can follow the the flow of

funds with these arrows and we can see

the key management organizations for the

three schemes here so I'll point out a

couple things that are important here

the civil servant medical benefit scheme

and the universal coverage scheme derive

all of their funding from the central

government budget taxes are collected

and the legislature allocates budget

annually in the case of civil servants

the Ministry of Finance is the purchaser

they make payments to the providers in

the case of UCS the purchaser is the

national health security office or NHS

OH Social Security also receives budget

allocated from the central government

but that only makes up a portion of

their funding primarily the social

security scheme is funded by payroll

deductions which are automatically

deducted from employee salaries and

matched by the employer the other thing

to note is that the reimbursement models

for each scheme differ and we'll go into

that those details later

let's focus on the civil servant scheme

first I want to point out two important

details here first the specific

Department of the Ministry of Finance

that's responsible for managing the

scheme is called the Comptroller

generals Department secondly I want to

point out that for each scheme they are

only reimbursing for health care

services in the case of public hospitals

which as you know dominate the health

care delivery market in Thailand the

Ministry of Public Health pays the

salaries and the operational budgets of

the hospitals and this concept is known

as a purchaser provider split the civil

servant scheme is eligible for

government officers including into

retirement as well as their dependents

overall it covers roughly 5 million

beneficiaries and it's the smallest of

the three as a fringe benefit it has one

of the most permissive terms for

services beneficiaries have wide

discretion to choose where they receive

their services and they have access to a

wider set of health services and

medicines compared to the other two

schemes importantly outpatient services

are reimbursed fee-for-service therefore

one of the biggest issues with this

scheme is the ballooning costs of

outpatient services as hospitals bill

for expensive imported and brand-name

medicines as you can see the fee for

service model has prevented any ability

for cost containment in addition any

attempts to reform this model have been

resisted as it's quite lucrative for

hospitals switching to the social

security fund we see the so called

tripartite funding that is equal

contributions from the employees the

employers and the government covering

roughly 10 million the social security

scheme is the second largest one in


it's eligible for private employees if

an employee works at a private company

they should automatic

enrolled by the employer into the system

and have contributions deducted from

their paycheck for big companies this is

no problem but for small companies there

are sometimes issues and there have even

been cases where employers don't

actually send in the paperwork and

register their employees into the system

and falsely deduct the money from

employee paychecks without registering

into the system although this is

relatively rare Social Security uses

capitation which pretty equally balances

the financial risk between purchaser and

provider because of this as well as the

fact that the social security scheme

tends to cover healthy working age

population Social Security is the most

financially sustainable and stable

scheme of the three finally we come to

UCS here we see that the NHS ou is the

purchaser the universal coverage scheme

covers the largest number of ties

roughly 49 million it's a comprehensive

package that covers nearly all major

services in the case of UCS the payment

model is solidly based on the lessons

learned from prior attempts that we

talked about earlier first there's

automatic enrollment so if you're not

eligible for civil servant or Social

Security you're automatically part of

UCS and secondly the payment mechanisms

are geared towards cost containment they

use a combination of global budget

capitation and diagnostic related group

or DRGs and the UCS approach which uses

closed-ended provider payments radically

changed hospital budgets in 2001 prior

to UCS most operating budgets and

resources were allocated to health

facilities through the provincial Health

Office and they were based on

utilization rates in the number of beds

like I mentioned unfortunately these

figures could be easily influenced by

politicians and result in corrupt

budgets under UCS however the outpatient

budget is allocated based on an age

adjusted capitation and the total

number of UCS members in the locale in

the locality with some adjustments for

inpatient services a global budget is

calculated that they'll spend overall

and for each of the 13 public health

regions an inpatient expenditure is

reimbursed based on the cost weight of

the DRG the reason that a global budget

is necessary to constrain total

inpatient spending is because DRGs alone

can be manipulated by pushing patients

into a higher cost DRG which is a

concept referred to as DRG creep for

example by adding extra procedures or

comorbidities it's a way of gaming the

system by capping a global budget it

reduces this incentive to over bill and

contains the cost for the government

another reason why closed-ended approach

to provider payments helps to control

costs is that it minimizes the risk of

supply-side moral hazard medical

providers have no financial incentive to

induce unnecessary demand which they

would have with a fee-for-service

payment method on the contrary because

providers have a financial incentive to

minimize costs it's actually a concern

with the UCS system that there could be

under provision of services so the NHS

au must remain vigilant with regular

monitoring and audits to protect against

this possibility when we consider the

three dimensions of universal health

coverage according to whio model we see

that on the x-axis Thailand is well

covered virtually the entire population

has had coverage since 2002 on the

y-axis we see that a high proportion of

the costs are covered the system doesn't

rely on deductibles on co-payments or

other fees almost all services in any

scheme are is free at the point of

service and it's for that reason that a

pocket spending remains small at 12% and

in fact this number mostly

flex elective costs for people that

voluntarily choose to access the private

health care system and finally when we

look on the z axis we see that the

benefits packages are very comprehensive

major surgeries anti-retro Rio and many

other expensive services are all covered

in all three schemes the impact of

thailand's health financing is

measurable catastrophic health

expenditures have dropped to affect only

1% of the population with both the

richest and the poorest quintile seeing

improvements health impoverishment has

also greatly reduced it's estimated that

perhaps 80 households per 1000 have

avoided medical impoverishment as a

direct result of the implementation of

universal health coverage

so in conclusion Thailand has used

nearly three decades of experience to

shape its health financing reforms that

it implemented in 2001 and it's used

that to produce an efficient and

equitable system built on three schemes

that achieves universal coverage that's

comparable to wealthy countries but at

the spending level of a developing

country it's been nearly 20 years though

since those reforms in Thailand faces

many pressures demographically

politically and economically we'll look

at some of those challenges in a later

video that's it for this video please

check out other videos in the series on

the Thai health system



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