Making Health Financing Work for Poor People in Tanzania
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One approach would, therefore, be to change the NHIF to a subscriber-only financed scheme, with a contribution rate of 2.5 percent of salary. Subscribers would, therefore, save 0.5 percent of salary, while the government would save its entire contribution (about T Sh 47.4 billion in 2010/11), which could be applied to matching funds to help support the expansion of CHF membership. Although this application would still provide the NHIF with a bit of a cushion to absorb future utilization growth, the NHIF would need to strictly control its operating costs and to stop financing noninsurancerelated activities (for example, purchasing equipment and financing renovations) out of operating income. There are significant needs for improvement in health infrastructure and other HSS investments. The NHIF currently makes some of these types of investments, but the efforts are problematic in two respects. First, they are not strictly related to the core business of the NHIF, which is providing prepaid insurance to its subscribers. Second, the extent to which the investments are coordinated with the government’s overall HSS efforts is not clear. Thus, while funding such investments out of operating funds is not advisable, the accumulated surplus represents a unique opportunity to support the overall HSS initiative, thereby improving health facilities for NHIF members and nonmembers alike. One way to do this would be to redirect T Sh 250 billion of the estimated T Sh 300 billion in accumulated surplus toward a special Health System Strengthening Account within the NHIF, which could help finance the improvements and expansion of the health system that will be needed to accommodate improved insurance coverage. Planning for the use of the funds could be done through a joint process that would include the NHIF, the MoHSW, the PMO-RALG, the development partners, and other stakeholders. The account could also receive contributions from other sources, including development partners. Such an account would represent a significant legacy by past and current NHIF members to the health system as a whole, as well as a tribute to the first 10 years of NHIF operations. The remaining T Sh 50 billion would still be sufficient to cover 2.5 years of claims at current expenditure levels and should represent a suitable reserve, given that the NHIF is backed by the government and is a going concern. It is worth noting that established health insurance funds, such as that in Estonia, have reserves of just 8 percent of revenue, “legal reserves of 6 percent of its budget, and risk reserves of 2 percent” (Gottret, Schieber, and Waters 2008, 244). The prepayment scheme for the formal private sector is currently being run by the NSSF as one of the seven benefits that it provides. A review of the pension system done by the World Bank determined that the current pension system was unsustainable in its present form and that significant reforms would be needed. One option is to separate the financing of the pension and non-pension-related benefits. For the NSSF, this option would include the health insurance benefits (SHIB). The latest actuarial review of the NSSF determined that the current SHIB could be financed through 2.5 percent of payroll, which is consistent with what has been proposed for the NHIF (see earlier; also see Tanzania NSSF 2010). Rather than continuing to run the SHIB as a separate program within the NSSF, one approach would be to remove the SHIB from the NSSF and to provide coverage through the NHIF, with a total premium of 2.5 percent of salaries paid by employees. This approach would make the scheme for all formal sector workers the same and should result