Digitizing National Health Financing

Gaps in Health Care Drive High Costs

Access to health care is a major issue in Asia and the Pacific. As COVID-19 swept across the region, it exposed critical gaps in health service delivery and social protection. It highlighted the urgency of achieving universal health care.

All countries aspire to universal health care coverage, which implies access to affordable, quality health services for all. Countries in Asia and the Pacific have varying levels of government-supported health care. However, many people in the region rely on private health care and pay out-of-pocket. For poor and vulnerable people, repeated or high out-of-pocket health care payments can erode household health and push some into deeper poverty.

Insurance is an effective mechanism to avoid catastrophic health care expenditure, since households can pay premiums in advance, balancing cost with benefits, or have governments pay for them if they are poor. In an insurance scheme, the healthy also cross-subsidize the sick, allowing lower premiums on average since the former do not use their benefits as frequently or intensely as the latter.

Catastrophic health spending refers to out-of-pocket medical payments exceeding 10% and 25% of the household’s total consumption or income. This hurts poor families most as spending even less than 10% of a household budget for health can be impoverishing when income is low.

Universal health care coverage policies aim to raise health insurance enrollment, such as through premium subsidies to poor people. However, progress toward universal health coverage in low-income and lower-middle-income countries falls below the global average. Recent data from the World Health Organization (WHO) show that most of the population facing catastrophic health payments was concentrated in low- and upper-middle-income countries in the WHO Western Pacific and South-East Asia Region.

“Millions across Asia and the Pacific are still facing too high out-of-pocket expenses for health care and receiving poor quality care for what they have paid,” said Arin Dutta, ADB senior health specialist. “ADB and partners are helping countries increase the coverage of affordable health care, for which expanding health insurance is one pathway. Making health insurance more effective means that insurers need to cover more people with the services they need, reduce inefficiency, incentivize quality of care, and improve the sustainability of their schemes across collecting funds and paying for health services.”

Digitizing National Health Insurance

Low population coverage, inefficient processes, and lack of financial sustainability hinder effective health insurance schemes, which are key pathways to universal health coverage. Many government-supported health insurers in Asia and the Pacific are lagging in using information technology (IT) to improve their processes.

In this context, modernizing national health insurance information systems is a critical reform. To address this, ADB, with resources from the High-Level Technology Fund and the Republic of Korea e-Asia and Knowledge Partnership Fund, is supporting several countries in the region to apply digital technology to improve health insurance business processes through the technical assistance (TA) Using Digital Technology to Improve National Health Financing in Asia and the Pacific. The first set of countries included in the TA are Armenia, Lao People’s Democratic Republic, and Nepal. Additional developing member countries are now being identified for inclusion in the TA.

The TA is assisting these countries ensure a more efficient and complete collection and analysis of all health insurance-related data, such as claims processing, beneficiary contributions, health care provider management, database interoperability, and linkages to other government information systems or social protection schemes. It is also helping them review their current policies, strategies, and readiness to apply digital technology. Finally, the TA will upgrade their IT systems, including mobile-based applications to speed up necessary digitization. The TA is also exploring the use of machine learning to support claims review and processing to allow insurers to overcome crippling personnel shortages. The expansion of access to and implementation of open source are also one of the crosscutting and low-cost solutions being considered.

Improving Health Care by Targeting Needs

The gains from the TA can help catalyze reforms toward greater digitization of health systems, driving more efficient and effective health insurance coverage. These improvements can help enhance access to care and affordability, hence, saving lives. A sound health insurance information system would give health care providers confidence that they will be reimbursed on time, incentivizing them to continue offering high-quality services for scheme members. Such systems also allow health system actors in ministries of health and insurance scheme offices to access accurate health care use, claims, reimbursement, and pharmacy dispensing records—information crucial to accurate and reliable health financing. These provide governments direction to improve overall health outcomes. Better health insurance information systems also allow governments to accurately assess patterns in the use of health care services, leading to improved long-term planning and resource allocation.

Digitization of health insurance information and management systems can facilitate accessible and affordable health care, potentially benefiting millions of people. Digitization that reduces the cost of health insurance coverage makes it easier for poor and vulnerable households to enroll in schemes. It improves the quality of care delivered and can be a pathway to financial security and improved well-being.

The TA is generating lessons and insights from the assessments it is conducting. It has already released a report on the key steps in using digital technology to improve a health insurance scheme’s processes, which includes learning from the Republic of Korea’s experience in designing and applying digitalization in its national health insurance system. Such knowledge can help trigger a change in the reform agenda of health insurers, helping them identify the improvements to modernize their information systems as appropriate to their maturity level in terms of population covered and years of operation. Such practical, doable steps are needed if health care payers in the region have to do more with less, even as countries attempt to make more rapid progress toward universal health coverage in the region.