MODEL FOR PUBLIC WATCH OVER THE HEALTH CARE SPENDING -THE CASE OF R. MACEDONIA

Pavlina Petrova
Yordanka Gancheva

Enabling a possibility for doing public control over the health care spending is a very important and even pressing task for the Macedonian society at the moment. Nevertheless the comparatively good legal preconditions for exercising control over the budget spending, the country continues facing serious problems in that area.

The right of citizens to know how their taxes and healthcare contributions have been spending is irrefutable. However, although the existing legal preconditions for exercising public control over the budget spending in Macedonia, there is no such practice yet. There could be a lot of reasons for that situation, but the most feasible one is that the citizens as individuals do not feel powerful enough and have no capacity to undertake such initiative. From other hand, the citizens associations and the civil society organizations as a whole probably have the knowledge and capacity to do it, but they still need an initial step by step model which will be improved by the practice in the coming years.

Participants

The model presupposes the active participation or at least willingness to participate of the following actors:

- local government units;

- Civil society organizations (CSOs) - budget watch groups, policy research institutes, customers protection associations, etc.;

- Ministry of Finance (MF);

- Health Insurance Fund (HIF);

- State Audit Office (SAO);

- Media.

The local government units are very important partners in that model. Although obliged by law to provide certain budget information, the local governments’ unwillingness to participate in the model could make it’s implementation rather difficult especially in a legal environment where the law on access to information does not have any practice yet and the court system is rather badly functioning.

CSOs will play the leading part in the budget watch model since they represent the citizens’ interests and have - the power to organize and accomplish the initiative; the capacity to obtain information; and the knowledge to analyze it and translate it in everyday language, i.e. making it comprehensible for the general public. Here the capacity of the already existing policy research institutes and customers protection associations could be of great use. For the need of simplicity, in our model we will call them - budget watch groups.

Health Insurance Fund, State Audit Office and the Ministry of Finance are also very important partners since they could ensure the transparency of the data needed for budget analyses.

The media is the partner which will distribute the information to the general public.

Step by step model

For preparing the model we will use the worldwide experience in that area simultaneously taking into account the local legal and institutional environment as well as proposing feasible changes if needed.

Step 1 - Data collection

The data collection is the core step of that model and it necessitates an active partnership between the central and local government authorities and the civil society organizations. Having in mind the Macedonian reality, meaning the lack of communication between the Government and the general public, that would be the most difficult step in the whole process. The CSOs should put tremendous efforts in order to get the Government used to releasing the necessary detailed budget information.

That step has two main components:

- Step 1.1. Giving the budget watch groups free access to data

- Step 1.2. Collecting and organizing budget data

Step 1.1. Giving free access to data to the budget watch groups

The Ministry of Finance, HIF, SAO and local government units are the main authorities possessing the data for the healthcare budget spending. According to the legislative provisions that data should be publicly available, however it is not easily accessible at present. There is not a functioning legal mechanism for officially requesting budget information, since the Law on Free Access to Public Information is newly adopted and does not have any practice yet [1]. Until the law adoption the voluntary participation in the model will continue being a crucial factor for its successful implementation.

Providing budget watch groups with free access to sessions of the Parliament and the local government councils, when the budget issues are discussed, will ensure further transparency, thus supporting the model implementation.

Step 1.2. Collecting and organizing budget data

Since the healthcare budget information is dispersed among several budget users, the first thing which should be done is to collect the information in one single place. This would be the job of the budget watch groups. In the process of collecting and organizing the budget data they could use the scheme of the national health accounts (NHA).

NHA is an internationally recognized framework that measures and tracks the use of total - public, private (including household), and donor – health care expenditures in a country. The national health accounts track the flow of funds through a health care system trying to answer the following questions:

- who finances health care?

- how much do they spend?

- where do their health funds go, i.e. what is the distribution among providers and ultimately among services provided?

- who benefits from that health expenditure pattern?

Expenditure data is presented in a standard set of tables that follow a user-friendly format intended for use by country policy makers and other stakeholders, including civil society and donor representatives.

Since NHA requires health care spending information from all health sector stakeholders it provides an overview of the entire health care system, which consequently allows NHA to serve as a budget spending monitoring tool as well.

NHA for individual countries were originally developed using ad hoc methods, but over the past 10 years the methodology has become more standardized, particularly in the OECD member countries. Increasingly, developing countries are seeking to use and adapt standard methods to generate reliable and valid estimates of NHA. Donor agencies, development banks, and international technical agencies support this effort, believing that better information yields better policy.

Applying the NHA system however insists for close cooperation and willingness to participate on behalf of the state authorities. The budget watch groups could be the driving force of the process ensuring its logistics, but the data should be provided by the information holders - in our case public authorities such as the MF, local government units, HIF and donors’ community.

For the needs of that step the NHA experts recommend preparing a data collecting plan. The plan should indicate what types of information are needed, including the time period covered and the desired detail of the data as well as the possible sources. The plan should also include a tentative timeframe within which the data will be acquired, although this time line will almost certainly change many times as the availability of the data is explored with the sources of those data.

A very important prerequisite to a good data plan is the preliminary sketch of the health system. Collecting data should be neither a random process nor an indiscriminate harvest of every number in sight; both are simply waste of efforts. Knowledge of what actors exist in the health system helps to focus time and resources on the most likely sources of information, without necessarily limiting the scope of their exploration.

It is also highly recommended to try to obtain the same information from at least two sources, i.e. to triangulate the data with the aim to check its authenticity and also to tackle with the issue of eventual misreporting done by some budget users.[2]

If the budget watch group wants to assess the effectiveness or appropriateness of the budget spending it should take into account not only the expenditures made by budget sources, but also those made by the private sector or by donors’ community. The tables below present some possible strengths and weaknesses of data sources, which should be taken into account. [3]


Table 1 Strength and weakness of data sources by origin of data

Origin
Strengths
Weaknesses
Government records

• Budget Expenditures;

• Economic censuses and surveys;

• Tax reports;

• Import and export statistics;

• Reports on transfers from external sources

• Most accessible of the different types of data;

• Reliable and accurate

• Comprehensive coverage of the relevant activity;

• Available on a regular basis

• Consistent reporting rules

• Official or unofficial barriers to data raised,
attributable to government security practices (such as Armed Forces hospitals and dispensaries’ accounts)


•Data distorted or misrepresented to protect or
advance a program;

•Data disaggregated into categories dictated by
regulation expenditure control (which often differ
from the provider or function categories required for health accounts)

• Audited data accessible with considerable lag
Other public records

• Ministry of health
annual reports

• Financing and regulatory agency reports

• One-time documents such as task force
reports, white papers, parliamentary
commission reports

• NGO reports or studies

• Academic studies

• International agency reports

 

Rich in details, focusing on specific issues

• Frequently comprehensive for relevant cells in tables

• Information collated for a specific enquiry that
may otherwise not be regularly monitored

 

• Typically focused on single dimensions - restricted geopolitical, demographic, socio-economic, epidemiological scope

• Variable analytical rigour

• Classifications may not match those needed for health accounts
Insurer records

• Individual companies


• Industry association
Special analyses of tax records or other
official reporting requirements

 

• Restricted to medical care and related expenditures

• More rapidly available after the end of the fiscal year than government budgetary reports

Frequently weak on functional detail
• Exclude co-payments, deductibles and other patient financial liabilities

• Absence of centralized information system or financial reporting

• Unwillingness to share proprietary data

• Difficulty in keeping track of all organizations in a rapidly-changing market makes it difficult to estimate an industry total
Provider records

• Financing and regulatory agencies
(administrative records and surveys)

• Industry associations

• Special analyses of tax records

 

• Specific and comprehensive for relevant cells

• Records contain little spending that falls outside the
boundaries of the accounts

 • Difficult to assure that all providers are represented by data
• Rapid turnover in small providers makes surveying difficult

• Incentives exist to inflate expenditure claims in financing systems with reimbursement and under-report taxable revenue

• Basic records may not be adjusted when tax and other authorities “correct” for fraud

• Reporting classifications designed for administrative and auditing purposes, not economic accountability

Household surveys and records and related reporting

• Censuses and surveys

• Academic and non-profit institution studies

• Marketing studies

 • Cross-classification with relevant demographic, economic,
social and other payer and user characteristics

• The only source of information on spending that occurs
in the “grey market”

• Detail on liabilities available only indirectly through other
sources

• Sampling and non-sampling errors in reporting can present major challenges to analyses and accuracy


• Patient not always aware of the full cost of medical services records

• Records relating mainly to personal medical services, few details may be usable to approximate the value of collective and public health services

 

The following two guides contain very useful detailed instructions about the data collecting stage:

- Guide to producing national health accounts with special applications for low-income and middle-income countries; The world Bank, World Health Organization, USAID; http://whqlibdoc.who.int/publications/2003/9241546077.pdf

- National Health Accounts Participants Manual; PHRplus and USAID;

http://www.iadb.org/sds/specialprograms/lachealthaccounts/Documents/Guide_NHA_Participant_Manual_EN.pdf

Step 2 - Making analyses

The second step of the model is to make analyses of the already collected budget data. The analyses could be done following different methods such as those of the NHA, PETS, Cost-benefit analyses, etc. The method, however, must be preliminarily chosen, already at the beginning of the data collection step, since the different analytical methods require different kind and scope of data.

NHA

The estimates generated during an NHA exercise can help to determine the level of efficiency of the health care system, and to identify the areas of under- or over-spending. Time trends in the NHA can demonstrate the impact of policy initiatives on public and private spending and productivity of the sector.

There are several methods for making NHA, which are divided in two groups - standard and non-standard approaches.

Standard methodological approaches are those based on existing internationally agreed-upon concepts, definitions, classifications and accounting procedures. They were developed by the United Nations Statistical Commission over the last 60 years and through an extensive process of consultations and consensus-building.

The advantages of using standard methods, include:

Uniform definitions for the boundaries of the health sector

Standard classifications of inputs and services

Valid comparisons across countries and over time

Most importantly, application of standard methods allows direct comparison of health system financial indicators with macro-economic indicators used by the Ministries of Finance and Central Banks.


The main disadvantage of the standard methods is their relative rigidity. For this reason, some non-standard approaches were developed that are based on extensions and modifications of the standard concepts and classifications, and/or on newly proposed sets of concepts, classifications, and accounting procedures. These allow greater flexibility in terms of data sources, health sector boundaries, and classifications, and for this reason allow more timely reporting of results and tend to present data in a manner more relevant to the needs of decision makers in the health sector.[4]

Taking into account the fact that the NHA exercise will be done by non-governmental budget watch groups the most appropriate method would be the so called “Harvard method”. It has been created in 1980s and is based on the administrative accounts.[5]

The Harvard method requires the availability of the following data:

- All types of expenditure data;

- Executed government budget;

- Employers’ records on social expenditures;

- Households goods and services expenditure surveys;

- Social expenditures of NGOs and their sources;

- Expenditures of international and foreign aid organizations;

- Records of insurance companies;

- Records of health care providers;

- Social, demographic, economic and health data of the beneficiaries of the health system;

The advantages of that method are as follows:

- Describes the flow of funds in a system from funders to providers;

- Flexible and adaptable to the needs of the Ministries of Health;

- Data organized in a manner relevant to health sector managers;

- Reflects national priorities;

- Allows the inclusion of expenditures peripheral to the health system (education, environment, sanitation);

- Appropriate for multiple payer systems;

- Broad disaggregation by sources of funding;

- Broader definition of health includes al activities that promote, restore, or maintain health;

- Requires a modest-sized team and 6-12 months to produce the first round of estimations.

The operational challenges of the Harvard method are that:

- Examines only expenditures, which does permit evaluation of the efficiency of the sector or its economic valorization;

- Not standardized, reflecting mainly national concerns, making difficult international comparisons;

- Lacks internal consistency;

- Mixes production and financing perspectives;

- Does not distinguish clearly between capital and recurrent expenditures;

- Does not distinguish between intermediate and final consumption;

- Institutionalization is as difficult as for the other methodologies.

The method is appropriate for public budget watch, since it could be applied by ministries of health, technical teams not linked with the government, universities, central banks, national income offices. Moreover, there are several guides and manuals describing in details the method and its implementation.[6]

Producing a NHA is not an easy job of course and will not be perfect at the beginning but it would be improved in the next years of implementation. Since the budget watch is not a single isolated action, the most important thing is to start the process. The methodology improvement and adjustment will come by practice.

Public Expenditure Tracking Survey

Other method which could be used for data analyses is the Public Expenditure Tracking Survey (PETS). PETS tracks the flow of resources through the budget system in order to determine how much of the originally allocated resources reaches the level or service they have been meant. It is useful as a tool for locating and quantifying political and bureaucratic capture, leakage of funds, and problems in the deployment of human and in-kind resources, such as staff, textbooks, and drugs. It can also be used to evaluate impediments to the reverse flow of information to account for actual expenditures. The tool explicitly recognizes the fact that the budget agents may have a strong incentive to misreport (or not report) key data. PETS deal with these data issues by using a multiangular data collection strategy (that is, a combination of information from different sources) and by carefully considering which sources and respondents have incentives to misreport and then identifying data sources that are the least contaminated by these incentives. The triangulation strategy of data collection serves as a means of cross-validating the information obtained separately from each source.[7]

Cost-Benefit Analyses

The collected data could be also analyzed by using some simple costs-benefits analyses’ methods, although it is not simple to do such analyses when the health is in question. The difficulties come from the fact that the human life and health should be expressed in figures and furthermore they should receive “a reasonable price”. However some cost-effectiveness of the budget spending still could be done.

In the first years the newly formed budget watch groups could start the public watch by doing simple cost-benefit analyses or by applying the NHA and PETS methodologies to a particular preliminary identified problem - be this the cost-effectiveness of a service or a service provider, or a local policy, etc. In the next years, when the capacity and the expertise of the budget watch group grows, it could start producing a real NHA or PETSs.

Step 3 - Distribution and communication of results

The analyses would not have any value if they don’t receive publicity and if they are not widely discussed with the stakeholders.

Since the aim of the model is not only to identify eventual problems or misuse of budget funds but also to suggest reasonable widely acceptable solutions, the analyses must be widely discussed with representatives of the central and local government authorities, civil society, experts community, international donors community and of course the media, which will provide the needed publicity.

The effective distribution and communication of the budget watch results insist for preparing a preliminary communication strategy, i.e. how to communicate the results, what kind of discussions to organize, where, whom to involve, which institutions, organizations or persons could be used as our allies, etc. That strategy could and most probably will be modified in the course of work, but it will provide a helpful general framework of the communication activities which should be implemented.

Step 4 - Undertaking initiatives for changes

The case when the solution is easily accepted by the state is the best one, but not very likely to happen. Usually the Government (be this central or local one) does not do changes in its behavior and spending without sufficient public pressure. Here the civil society and the media should unite their efforts in order to achieve some positive results.

The analyses of the Macedonian legislation showed that there are legal mechanisms for undertaking such initiatives - civil initiatives, citizens’ gatherings, referendums, etc. When the initiative is supported by serious respectable analyses the chance to succeed becomes bigger.

Some general remarks

In countries like Macedonia at present - with low level of effective transparency of budget spending, newly adopted Law on Free Access to Public Information with still missing practice and extremely weak civil society, steps 1 and 4 of the model will be the most difficult ones. However, although the difficulties and the eventual imperfection of the model it is extremely important to start its implementation, because this is the only possible way to create practice, which from its side will bring about further model improvement.

However, the model implementation insists for certain preconditions. The most important of them are:

the existence of effectively functioning Law on Free Access to Public Information, ensuring access to budget and public data;

reliable statistical data;

willingness on behalf of the state authorities (central and local one) to provide information and to cooperate with the budget watch group’s representatives.


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[1] The first draft of the law was initiated and prepared by experts from the NGO sector already in the year 2002[1]. During the last 3 years it underwent substantial changes and on 25 January 2006 was finally adopted. Its implementation will start in June 2006 until when the secondary legislation, specifying the detailed procedures, must be ready.

[2] Guide to producing national health accounts with special applications for low-income and middle-income countries; The world Bank, World Health Organization, USAID; http://whqlibdoc.who.int/publications/2003/9241546077.pdf

[3] Guide to producing national health accounts with special applications for low-income and middle-income countries; The world Bank, World Health Organization, USAID; http://whqlibdoc.who.int/publications/2003/9241546077.pdf

[4] http://www.iadb.org/sds/specialprograms/lachealthaccounts/CreatingHA/Standard_Methods_en.htm#Standard%20Approaches

[5] The method has been implementing in the following countries: Mexico; Colombia; El Salvador; Bolivia; Ecuador; Guatemala; Honduras; Peru; Dominican Republic; Nicaragua; Egypt; Jordan; Zambia; Philippines; Sri Lanka; India; Bangladesh; Japan; Hong Kong; Thailand; China; Poland; Czech Republic.

[6] The following guides will be of great use to a budget watch group:

- Producer's Guide to National Health Accounts with Special Applications for Low-Income and Middle-Income Countries
(http://whqlibdoc.who.int/publications/2003/9241546077.pdf)

- Instructor Manual - Producer's Guide to NHA
(http://www.iadb.org/sds/specialprograms/lachealthaccounts/Documents/Guide_NHA_Instructor_Manual_EN.pdf)

- Participant Manual - Producer's Guide to NHA
(http://www.iadb.org/sds/specialprograms/lachealthaccounts/Documents/Guide_NHA_Participant_Manual_EN.pdf)

[7] More detailed information about the PETS could be found in Jan Dehn, Ritva Reinikka, and Jakob Svensson, Survey Tools for Assessing Performance in Service Delivery (http://www1.worldbank.org/publicsector/pe/PETS1.pdf)