Is free health care possible in Nepal?

12 December 2019

S P Kalaunee

Around the world, in rich countries and poor, financing healthcare is one of the biggest challenges. In poor countries, it becomes a life-or-death issue.

Over 40% of global healthcare expenses are still covered by patients and their families, and more than half the world’s population lacks access to essential health services. Medical bills push 100 million people into extreme poverty every year.

Nepal has taken remarkable strides in healthcare in past decades despite internal conflict and instability, but medical care is still unaffordable or inaccessible to most. More than half the healthcare expenditure of Nepalis is still covered out of pocket. Nearly a third of families spend over 10% of their annual income on medical care.

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Thursday, 12 December, is Universal Health Coverage Day, an important date to remind ourselves of the next steps we need to take to achieve healthcare for all. The 2015 constitution of Nepal declares basic and emergency healthcare as fundamental rights of citizens, putting the responsibility of financing such care on the state. Following federalism, municipal governments have got the responsibility to manage basic and essential care. A national health insurance bill has been passed and is being implemented.

The state guarantees quality healthcare without financial burden on citizens, for which the insurees pay Rs3,500 per year for a family of five, and receive care worth Rs100,000. This is expected to reduce the burden of out of pocket and catastrophic expenses, while the government covers the premium for citizens under the poverty line.

Poor health, Editorial

There is also a provision for free essential drugs and free treatment for patients with cardiovascular disease, cancer, spinal injuries, renal ailments and sickle cell anaemia, through the Disadvantaged Citizens Medical Treatment Fund.

None of these initiatives is being implemented fully yet, but with federalism Nepal has a chance to build an accountable and sustainable healthcare system. The country therefore needs to focus on the following areas to manage health financing to meet the targets of the Sustainable Development Goals:

Increase public sector healthcare investment to at least 7% of annual national budget. This should also be targeted towards reducing external aid.
Empower people for self-care and make treatment more strategic and efficient as the burden shifts from communicable to non-communicable diseases.
Focus on primary health care and improve services at the first point of care with comprehensive, accessible and community based care.
Coordinate multisectoral policy action involving education, agriculture and social behaviour.
Launch a priority national campaign to spread insurance coverage. Enrollment can be top-down starting with all government officials and then the public at large.

A mixed financing model using tax-based funds through the treasury, and premium-based funds through health insurance can work for public, private, community, and other hospitals that run under the state-non-state partnership. An example of state- non-partnership is Bayalpata Hospital in Achham district, managed through a public-private partnership between the ministry of health and population and the non-profit Nyaya Health Nepal, where insurance reimbursement covered over 60% of the hospital’s operating costs.

The hospital provides healthcare with no user fees. The care is extended from hospital to communities using a network of community health workers. How can care delivery with no user fee sustain? Can Nepal afford to provide such care to its entire population?

It is possible. The country should effectively implement the national health insurance program, and strategically invest tax based funding. In the mixed financing model, for a ‘district level hospital, insurance can cover 60% of healthcare operating costs, and tax-based funding can take care of the rest. But to ensure effectiveness, the tax-based investment will need to be unrestricted and tied to audited performance indicators. The cost of care should also incorporate the extension of hospital-based services into communities in the catchment area.

Bayalpata Hospital serves both as a primary care facility and also as a referral hospital. In this case, the tax-based contribution can be split into the three government tiers, with the federal government providing support for infrastructure, and provincial and local governments covering the cost of basic healthcare, and referral care not covered by the insurance.

Insurance reimbursement then covers the cost of insurance-covered care, the local government allocates funds required for basic and emergency healthcare, and the provincial government pays for managing the cost of referrals beyond insurance coverage.

Bayalpata Hospital provides basic and referral care, and its tax-based contribution can be split into the three government tiers, with the federal government providing support for basic infrastructure and provincial and local governments covering the cost of basic and referral care not covered by the insurance.

The proposed model has a 60:25:15 ratio to pay for health care, with 60% from insurance and provincial and local governments paying 25% and 15% of the cost. When the benefit package increases to cover the cost of healthcare without capitation, the share of health insurance coverage percentage will increase significantly, thereby reducing the tax-based direct public sector investment.

S P Kalaunee is Executive Director of Nyaya Health Nepal, which manages Bayalpata and other public hospitals in partnership with the ministry of health and population.

Is free health care possible in Nepal?

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